Welcome to the June 2010 edition!

Welcome to this issue of the IDC Worldwide Vertical Markets Newsletter. Our newsletter examines recent events and offers opinions on key trends across 18 industries.   It is designed to enable technology buyers to engage with IDC Vertical Markets analysts, connect with colleagues, and share knowledge and best practices.  We appreciate your feedback - contact us at vertical_markets@idc.com and visit our online section at http://www.idc.com/vertical_markets/verticalm.jsp We hope you enjoy the content we have in store.

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 by: Giuliana Folco

With GDP expected to grow by some 1.1% in Western Europe (against 3.3% in the US), the recovery in IT spending will be gradual across most of Western European vertical markets.  

Total IT spending in the business segment (excluding the home-consumer sector) will remain flat in 2010, with a small decrease in hardware offset by a modest increase in software investments.  

On the positive side, ongoing investments in smart energy and customer facing systems will help drive demand in the utilities segment. The outlook for business and professional services remains very diversified depending on the vertical sub-segment, but overall expectations are for stronger than average IT demand, driven also by the introduction of the new EU services directive. Telecommunications will continue to provide good opportunities, driven primarily by infrastructure investments, focused both on expanding network coverage and on improving existing network capabilities, and by investments to offer value-added services, necessary to maintain profitability.  

After a strong decline in 2009, a small positive growth is anticipated in Western European manufacturing. IT investments are expected to grow faster in process manufacturing, while pent-up demand will drive spending in discrete manufacturing, starting in 2011.  

The situation in the Western European finance segment is stabilising, but the sector remains fragile, with strong uncertainty still dominating in some countries including the UK and Greece. We expect an overall improvement in the sector but some weaknesses will remain, pushing some major banks to continue to rein in discretionary IT projects in 2010.  

The transportation segment will keep on suffering, with traffic volumes and revenue yields still decreasing, while the retail sector will start offering new opportunities, which will become more evident in 2011.  

Within the public sector, demand will be different across countries and sub-segments. Overall, healthcare and local government will show a higher than average IT spending growth rate. However, we anticipate a downsizing in spending growth by institutions in central government, as central authorities in a number of Western European countries (including the U.K. and Spain) rationalize and reduce their IT costs to gradually reduce accumulated deficits.  

All these trends and many more are described in the new Q1 2010 Western European Vertical Markets IT spending pivot, which has just been released by the IDC European Vertical Market team.  

The pivot table covers IT spending details for:  

• 18 vertical markets: Agriculture, construction, mining; Banking; Business services; Central government; Communications; Discrete manufacturing; Education; Health; Insurance; Local government; Other; Other finance; Process manufacturing; Retail; Transport; Utilities; Wholesale; Home.
• 10 products/services: Networking, Other hardware, Personal Computers, Servers and disk systems within Hardware; Implementation, Maintenance and support, Operations, Planning, Training and education within IT services; and total Packaged software
• 16 Western European countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK    

To engage in a conversation with us or to learn more, contact us at vertical_markets@idc.com

Australian Utilities are Getting Smarter, But Don't Leave Your Customers in the Dark

by: Melissa Martin

According to a new report on the ICT Utilities market by International Data Corporation (IDC), smart metering deployment has the potential to be one of the most significant changes in the energy world, not only for utilities, but also for consumers.

The report titled, Australia Utilities ICT Market 2010 - 2013 Forecast and Analysis states the top ICT initiatives in the Utilities market during 2010 will include smart metering/meter data management, ERP upgrades, telecommunications, work and asset management (including mobile workforce and GIS) and customer portals/Web self-service. IDC also forecasts that ICT spending by the Utilities market in Australia will grow from $1.22 billion in 2010 to reach $1.44 billion by 2013.

Most utilities have already begun updating their ICT systems in preparation for mandated and extensive smart metering rollouts which will allow remote communications to/from the electricity meter. Ultimately smart meters will provide customer options to conserve energy and money; will allow for faster outage detection and resolution; will provide environmental benefits and will be the foundation for future smart homes, smart cities and smart grids.

In 2010 it will be imperative for utility companies to fully inform and educate the customer in order to get them excited about new technologies beyond the meter and into the house, to seek customers assistance with reducing energy use and helping the customer understand the rising cost of electricity.

IDC states that even without recent government directives, other drivers within utility  companies  would have  facilitated  the  development  of  smart metering and intelligent grid strategies in 2010. These drivers include the need to:

• Improve operational efficiencies and service quality
• Improvepublic perception and educate the customer
• Provide new customer products and services
• Address climate change issues
• Include improvements or planned enhancements in telecommunications platforms such as broadband and fibre optics
• Address security of supply and outage reduction
• Replacement upgrade aging infrastructure

This IDC study, Australia Utilities ICT Market 2010 - 2013 Forecast and Analysis (AU8036603S), focuses on the utilities sector in Australia, providing a map of where short and longer-term opportunities can be found, and highlights purchasing patterns for products and services by market. This IDC study is part of a series of reports focusing on specific vertical markets. Provided are actual ICT market sizing for 2009, along with forecasts for 2010 through 2013, including CAGRs. This report also includes a case study on Energy Australia and how they are successfully dealing with many of the current utility industry challenges.

To engage in a conversation with us or to learn more, contact us at vertical_markets@idc.com