IDC predicts buoyant Canadian IT market in 2007

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The Canadian information technology and communication (ICT) market is expected to experience continued growth this year, according to industry analysts.

Canadian firms are poised to spend more than $78.4 billion on ICT products and services in 2007, says a recently released study by IT consulting firm IDC Canada Inc. in Toronto.

“The economic environment remains strong and steady, providing large market targets for the ICT industry,” said Vito Mabrucco, managing director, IDC Canada.

The IDC report, titled: ‘Predictions 2007 – Competitive Realities Increasing’, said the industry is poised for a four to five per cent growth rate which will outstrip the 2.2 per cent gross domestic product (GDP) growth predicted by the Bank of Canada.

IDC Canada’s views were shared by another IT consulting firm.

“It’s going to be a cool year,” said Michael O’Neal, managing director, Info-Tech Research Group, Inc., in London, Ontario.

“The key message in 2007 is companies are finding new ways to deploy technology to improve their business.”

The IDC report said the ICT industry will be led by the business telecommunication industry with a potential $19.5 billion market, followed closely by consumer telecom and IT services — both at $18.1 billion. A close third is IT hardware at $15.4 billion, and software will trail at around $7.3 billion.

Contributing to the growth will be strong business cash flow, higher government revenues and surpluses, as well as a more stable business and political environment, said IDC.

Mabrucco said one of the sectors to watch will be technology as a service. “Technology is coming together. What’s really happening is that instead of massive contracts to a single vendor, firms are looking for application-specific outsourcers.”

This is a prediction shared by other analysts.

Among the growing sourcing options identified by IDC are: client services; server management; storage; networking; printing; applications software; infrastructure software; and IT services.

Info-Tech’s O’Neal said 2007 will also see an increased focus on infrastructure rebuilding to meet increasing needs. “As firms drive towards the data centre of the future, the hot solutions will come in the areas of service oriented architecture (SOA), networking, virtualization, blade servers and document management.” Vendor opportunities are also cited by IDC in the area of “software as a service” (SaaS). This is a model of delivery where a software company provides maintenance, technical and operational support to the buyer of the software.

Mabrucco said SaaS will hitch a ride on the customer relationship management (CRM) software growth estimated between $13 million and $27 million in 2007. “As CRM needs continue to grow, firms will switch to purchasing software services rather than mere software to avoid costly maintenance expenditures.”

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