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

Contact InfoQuestions?

Please email us at

Jessica Goepfertjgoepfert@idc.com

Juan Orozcojorozco@idc.com

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