IBM’s Market Insights study on Mid Market Dynamics indicates that the North American IT Market shows strong growth. The expected 2013 IT mid market size is at $94 Billion growing @ 4% p.a., the study predicts the growth story to continue through 2016 at 6% p.a. with market size at $111 Billion.
According to U.S. Census data, middle market companies take in more than $6 trillion in revenues and employs more than 30 million people annually. The middle market executives who led these companies are expressing renewed optimism in their business prospects compared to a year ago (based on study by CIT: ‘Voice of the Middle Market’).
Here’s a perspective on three key metrics (market drivers, market overview and Channel Trends) that presents unprecedented opportunities in the emerging mid market growth.
IT Market Drivers: The key IT spending drivers as we see it hinges around the economy and adoption of newer technologies like Cloud.
The economy is clearly on the rebound with unemployment, housing, retail sales, improving. The Mid market has bounced back from recession but is still conservative on IT spending. Cloud adoption is the biggest disruption as we see mid market move faster towards adoption of these scalable and utility value technologies.
IT Market Overview:
- Hardware is 10% of the market and forecast to grow 4.5% from 2013 – 2014
- Software is 17% of the market growing at 4.2%
- Services is 73% of the market and growing at 4.1%
- Solution Spend is 77% of the total IT market and growing at 3.2%
- Five Industries (Industrial, Wholesale, Banking, CSI & Retail) account for about half of Mid Market IT spend
- Health Provider, Life Sciences, Telecom and Utilities will grow the fastest in 2013 for total market and mid Market
Channel Trends: The large IT product vendors have started to derive more than half of their revenue through indirect channels. We are also seeing a trend of Hardware Commoditization driving down margins and motivating business partners to shift mix to higher margin software and services with a focus on consultative industry selling.
The implications of these limits are that customers will look to business partners to give integrated services for solutions. Business Partners will also have to differentiate themselves on investment, education and enabling solution areas like Cloud.
The opportunities that these throw up are self-evident. We see an opportunity for every business partner to leverage market shifts and emerging trends to displace incumbents. For the agile business partners there is opportunity to exploit on competitors missteps As with any IT Product Vendor, there is opportunity for Business Partners to sell the totality of offerings by the Product Vendor (e.g. Oracle EBS, JD Edwards with full suite Fusion applications), by delivering integrated Industry Specific Solution.
Source: IBM Market Insights, QMV3Q12, July 2012, measured, plan rate