TechMarketView SITS down

Analyst predicts a further two years of gloom for the software and IT services market

This year is set to be worse than 2010 for the software and IT services (SITS) market, according to analyst TechMarketView.

Its latest report, entitled The UK SITS Market Trends & Forecasts July 2011, predicts a three per cent shrinkage this year, compared with 2.8 per cent in 2010, and then a further one per cent decline in 2012.

Although there was a slight uptick in 2010, the analyst said, it was more likely due to the release of "pent-up" demand, rather than a return to business as usual. “Our concerns are exacerbated by distinctly moribund GDP growth, which seems to have most economy watchers downgrading their forecasts,” TechMarketView said.

“If nothing else, this injects even more uncertainty into capex decision-making. Indeed, very few of the captains of industry we regularly talk to are telling us that IT spending decisions are getting any quicker or any easier. We still believe that we remain in the midst of a five-year market decline in real terms, with growth remaining below GDP indefinitely.”

But disruption is the name of the game, with technologies such as cloud computing, mobile apps, social media and the consumerisation of IT "dramatically affecting" enterprise buying behaviour.

Unsurprisingly, TechMarketView claims cloud computing is having the "deepest and most fundamental" impact on the UK SITS market, and is set to represent nearly 30 per cent of the market by 2014.

And adapting to the cloud is key for SITS suppliers, it warned.

“We believe that the ‘winners’ in the cloud computing market – if indeed winners there be – will not necessarily be those suppliers whose cloud ‘proposition’ is the most agile/accessible/elastic/scalable etc,” the firm said. “It will be those who are able to adapt their operating model the quickest. Because those that do not – or cannot – will simply not make money from the cloud.”