The Western European IT market will be worth $286.9 billion by 2007, growing at a CAGR of 5.6% between 2003 and 2007, according to IDC‘s latest IT spending forecast study. In the short term, however, IT spending will be subdued and show only a slight increase. As a consequence it becomes increasingly important for IT vendors to segment the marketto correctly identify business opportunities.
Small and midsize businesses (SMBs, with up to 500 employees) will be the largest IT investors over the next five years, with an average quota of 52.7 per cent. However, IDC believes that IT spending by small companies (1 to 99 employees) will continue to suffer in the short term and many smaller organisations will continue to devote the bulk of their IT funds mainly to maintaining and upgrading their basic IS infrastructure.
“In the long term, small enterprises with stronger links to the value chain of larger organisations will be forced to invest in more compelling IT solutions to keep up with other competitors,” said Giuliana Folco, programme director, IDC European Vertical Markets.
Companies with 100 to 499 employees are expected to be the fastest-growing segment in Western Europe and offer good revenue opportunities to IT vendors. A more stable financial situation, coupled with increasing recognition of the value that IT can bring to their business, are spurring IT adoption in this market segment.
Small and medium businesses’ diversity across sectors/countries will continue to challenge IT vendors to provide “one-size-fits-all” solutions. Many vendors will take on that challenge. Those that will be able to offer the right balance between customisation and standardization while providing user-friendly applications at a reasonable cost will succeed in the SMB market.