How does the IT Services Market develop?

Written by Charlotte Sunderkötter, reponsible for International Marketing

It is an undisputable fact that the IT Services Market is a highly dynamic area where innovations and novelties abound. To be successful in this market you have to embrace innovations, proactively drive changes and be open-minded. As a result of business trends such as globalization and the resulting complexity or shorter ‘time to market’, companies have to respond by re-inventing themselves with a new business model.
But how will the IT Services Market develop? What trends will foster future development?
First of all, as SAP announced some time ago, ‘on-premise’ is not the only software provision model anymore. Cloud and Mobility will rival these traditional models, making it easier to implement and access a system. This will permanently change the reality for a classic IT Service Provider.
As we saw at this year’s SAPPHIRE NOW conference in Orlando ERP is a mature business field where SAP does not see its future growth potential.
Although the Compounded Annual Growth Rate of new business fields such as Mobility, and In-Memory are quite high (i.e. Cloud 2010-2015: 29%, Source IDC) you can hear that SAP is expecting a real revenue impact from these innovations starting in 2013.

SAP’s addressable Market 2010 vs. 2015, Source: Own illustration according to IDC (2010)

What does this mean for an IT Service Provider?
From my perspective, it is advisable to use the “ramp-up” phase of these innovations to optimize the Go-to-Market approach and set the foundation for further technological innovations. More importantly, though, companies should strive to be one of the first tier development partners – don’t be afraid of innovations, use and test them whenever possible.

But which geographical markets are interesting with regards to the IT Service Markets’ growth rates?
According to Gartner (April 2010), currently the countries with the highest software revenue share are the following:


Total 10 Market Share Countries for the Worldwide ERP Software Revenue Market, 2007-2009 (Millions of Dollars), Source: Gartner (2010)

However, will these countries continue to be the top revenue markets in the future?
When having a look at the Compounded Annual Growth Rates of the IT Markets in various countries, you can answer the question with: “most probably not.” To depict the wide difference, here is an example: Germany’s IT Market is supposed to grow by 2.3% on average from 2009-2014, whereas China is expected to grow by 8.9% and India by 13.0% (Gartner 2010).
This gives us a hint that not only are the portfolios impacted by dynamics, but so too are the geographical markets of the future.
So again: what are the imperatives for an IT Services Provider facing these changes? You currently see a high degree of consolidation in the market, companies merge, share their forces, and leverage synergies to create something “bigger” to cope with the requirements of the markets. For certain, this can be one way to go. However, there are many other options available to you. There was a lot of talk about these other options at this year’s SAPPHIRE NOW conference in Orlando.

For starters:
• Specialize
• Go beyond ERP
• Observe carefully market opportunity in the BRIC (Brazil, Russia, India and China) countries and finally
• Innovate without disruption

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