The Race Is On! Which States and Vertical Markets Should IT Vendors Target for Growth? Jessica...
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The Race Is On! Which States and Vertical Markets Should IT Vendors Target for Growth? Jessica Goepfert Program Manager U.S. Vertical Research Juan Orozco Senior Analyst Global Research Organization
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Transcript of The Race Is On! Which States and Vertical Markets Should IT Vendors Target for Growth? Jessica...
The Race Is On!Which States and Vertical Markets Should IT
Vendors Target for Growth?
Jessica GoepfertProgram Manager
U.S. Vertical ResearchJuan Orozco
Senior AnalystGlobal Research Organization
Agenda
Economic outlook
Vertical IT budget and spending outlook
U.S. Black Book overview
Optimal investing for growth– Example of IT services firm
Essential guidance
Question & answer session
Assess the Current Condition
GDP ↑
GDP ↑
Assess the Current Condition
GDP ↑
Assess the Current Condition
GDP ↑
Assess the Current Condition
Assess the Current Condition
GDP ↑
On the path to recovery
0% 20% 40% 60% 80% 100%
Total North America
Resources sector
Banking & credit inst.
Insurance
Telecommunications
Financial svcs.
Retail trade
Wholesale trade
Communications
Process mfg.
Assess the Current Condition
Resources, financial services, and
telecommunications are most optimistic
Q: What is your outlook on the business prospects for your organization today?N = 1,278
Source: IDC’s Enterprise Technology Trends Survey, Preliminary 2004
Assess the Current Condition
Source: IDC, 2004
U.S. IT Spending ForecastMarket Size
(000s)
0
20
40
60
80
100
0% 1% 2% 3% 4% 5% 6% 7%
Financial services
Manufacturing
Retail and Wholesale
Communications & Media
Resources and ConstructionHealth Care
Services
TransportationUtilities
5-Year CAGR %
Top Ten Largest States, 2003 IT Spending
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Georgia
North Carolina
New Jersey
Ohio
Pennsylvania
Florida
Illinois
Texas
New York
California
Source: United States Black Book: State IT Spending Vertical Market, 2004
Source: United States Black Book: State IT Spending by Vertical Market, 2004
1. California
2. New York
3. Texas
4. Illinois
5. Florida
6. Pennsylvania
7. Ohio
8. New Jersey
9. North Carolina
10. New Jersey
Greatest IT Greatest IT SpendSpend
1. Arizona
2. Nevada
3. New Mexico
4. North Carolina
5. Connecticut
6. Utah
7. Maryland
8. Georgia
9. New Hampshire
10. Texas
Highest CAGRS
Top Ten States by IT Spending, 2003
1. California
2. New York
3.3. TexasTexas
4. Illinois
5. Florida
6. Pennsylvania
7. Ohio
8. New Jersey
9.9. North CarolinaNorth Carolina
10. New Jersey
1.1. ArizonaArizona
2. Nevada
3. New Mexico
4.4. North CarolinaNorth Carolina
5. Connecticut
6. Utah
7. Maryland
8. Georgia
9. New Hampshire
10.10. TexasTexas
Spotlight: Arizona
Arizona as a whole is recovering at a faster clip than the U.S.
Opportunity is around discrete manufacturing (high tech, aerospace and defense)
Motorola production facility at risk in Phoenix
Average cost of doing business in Arizona
A change in political party could impact aerospace and defense industry
Spotlight: North Carolina
Opportunity is in the banking industry
Positioned to recover at a pace faster than the nation, despite dependence on textiles
Wachovia and Banknorth Group are among the largest employers in the state
Lower cost of doing business
ManufacturingManufacturing Financial Service Retail / Wholesale
Up-and-Comers Vary by Vertical
We’re a small IT services firm in NY
Our tasks:– Determine the best locations to set up new offices – Develop a sales and marketing strategy for a new
banking solution
Criteria– Market coverage must be at least $15B in 2003– Overall CAGR of at least 5%– Set up budget $1.5 M
Set the Stage
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IT Services in Banking
640 to 3,320 (11)350 to 640 (11)270 to 350 (5)130 to 270 (10)20 to 130 (14)
CAGR
$ 9.4
$ 4.85$ 1.21
Source: United States Black Book: State IT Spending by Vertical Market, 2004
Focus on IT Services in Banking
New York 6.17%
California 4.60%
Texas 5.16%
Illinois 6.00%
North Carolina 9.32%
Florida 4.15%
Ohio 5.67%
Pennsylvania 2.13%
Michigan 5.12%
Georgia 5.27%
California
Ohio
North Carolina
Florida
Illinois
Texas
United StatesOptimal Investment Markets (US$ M)
2,570 to 4,060 (2)2,400 to 2,570 (2)1,910 to 2,400 (2)
Optimal Investment Solution
Source: IDC, 2004
Solution Constraints2003 total market opportunity (M)
15,353 15,000
CAGR (%) 6.6% 5.0%
Total investment $1,368,000 $1,500,000
TexasTexas
Essential Guidance
Plan for where the market is going, not just where it is
Recognize the various costs of doing business in a particular state
Take into account regional trends and cultural differences and tailor marketing accordingly
Cut through the hype and the noise
It’s not all about the data
In Search of State IT Dollars
Budget Shortfalls Will Impact 5 Largest States
4.0%
4.2%
4.4%
4.6%
4.8%
5.0%
5.2%
New Jersey Ohio Texas New York California
Source: IDC, May 2003. Preliminary data.
Avg. CAGR = 5.2%
IT Spending 5-Year CAGR (5 Largest States)2002–’07 CAGR
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Michigan Illinois Florida Arizona Washington
Find New Top Spenders
Source: IDC, May 2003. Preliminary data.
Avg. CAGR = 5.2%
IT Spending 5-Year CAGR (5 Fast Growing States)2002–’07 CAGR
