Canadian enterprises are still focused on using technology to improve productivity, but the quest for revenue is catching up, according to a forecast by IDC Canada.
The Toronto-based market research firm hosted a Webcast Thursday that offered a mid-year look at where users are investing in IT and the economic factors that could cause shifts in purchase patterns. IDC Canada said overall IT spending will continue to grow at 3.3 per cent this year, or one or two time gross domestic product, versus 3.9 per cent in the United States. The company is also not expecting a recession in Canada, although its analysts predicted the level of discrepancy between the Canadian and U.S. dollar will not last much longer.
Vito Mabrucco, IDC Canada’s managing director, said that beyond market sizing, the company also surveyed users about their overall goals they are using IT to reach. Productivity improvement topped the list at 21 per cent, but Mabrucco noted that figure is down from 26 per cent last year. Using IT to drive revenue, meanwhile, was up one percentage point last year to 19 per cent, followed by attracting and retaining a skilled workforce.
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IDC Canada also reported a slight rise in the appreciation of IT as a business enabler, with survey respondents says they see significant, rather than merely moderate impact from technology purchases.
“Executives who were sceptical at first are starting to realize that IT is important to the success of an organization,” Mabrucco said, adding that there has been a corresponding change in how senior technology executives are viewed within the enterprise. “In the last three years, we continue to see a shift of CIOs reporting back to the CEO, rather than moving them further down the organization.”
IT spending in Canada is generally unbalanced by region and by vertical, Mabrucco said. The western region is showing strong growth, for example, probably fuelled by the boom in oil prices. Sectors like energy and public sector are shelling out for IT, but manufacturing is continuing to decline or hold back.
Customer relationship management (CRM) products are expected to lead the software spending category at 7.7 per cent, driven by telecommunications firms who are trying to reduce customer churn and capture new market share by improving their billing systems. IDC is also seeing 7.6 per cent growth in collaboration software such as instant messaging and videoconferencing as companies try to cut back on their travel expenses. Standalone software products focused on one feature set may be affected by spending patterns however, as more CRM products include supply chain management and other functionality, Mabrucco said.
Security products will lead the system infrastructure software market, while storage management will likely underperform in the short term, according to Mabrucco.
In hardware, portable PCs will exceed desktop sales with 17.5 per cent of the market, with further changes expected as the costs begin to collide. Mabrucco noted that in some cases there is now only a $135 price differential between a desktop and a notebook. “We’re also seeing a lot of notebook type of capabilities in a fully functional cell phone,” he added. “That’s when you know you’re breaking another barrier and another inhibitor to adoption.”
Virtualization is clearly having an impact on the Canadian server market, which is only growing at 1.5 per cent, but Mabrucco noted there are some strong areas within that, including blades, which are growing at 10 per cent.
IDC’s forecast is based on the work of 35 Canadian analysts.