According to analysts, ICT investment across vertical markets will outpace Europe’s average GDP growth in the forthcoming years. In comparison to the Organisation for Economic Cooperation and Development’s nominal GDP forecast of 2.2% for the 2014 – 2016 period, total ICT spending by industries in the region is expected to increase at a much faster average year-on-year growth rate of 3.3% between 2014 and 2019.
Top five verticals for ICT investment
The top five industries that offer strategic and tactical opportunities for ICT market participants are energy and utilities, healthcare, ICT, transportation and manufacturing, according to Frost & Sullivan. All of these industries are at the forefront of the digitalisation drive to create a connected society.
Energy and utilities
The energy and utilities industry is keen to utilise ICT to complement its smart grid investments in projects such as substation upgrades. The sector recognises that maturing technology trends such as connectivity, IT/operational technology convergence, cloud and big data analytics are key enablers for achieving strong operational outcomes.
For example, the concept of the Internet of Things (IoT) has given rise to software and cloud-based solutions that allow utilities to connect sensors and thereby gain visibility into their operational assets’ status for better demand side management.
“Similarly, the realisation that machine-to-machine (M2M) technologies, mobility, cloud and wearables can significantly transform the way services are delivered and consumed has been driving ICT spending in the healthcare industry,” said Frost & Sullivan Information & Communication Technologies Senior Industry Analyst, Yiru Zhong. “To encourage continued ICT investments, however, it is critical for vendors to develop healthcare-specific value propositions.”
In the transportation industry, operational security issues as well as the need to integrate diverse and often siloed systems are spurring ICT spending. The industry’s interest lies in deploying next-generation networks, big data and analytics technologies, and M2M/IoT.
“Manufacturing or industrial automation is another industry ICT vendors should watch for opportunities,” noted Zhong. “IT-based solutions will fuel overall ICT spending in the industry as it becomes smarter with real-time integration of operational and enterprise systems.”
Adopting agile practices
The challenge for players in the European ICT community is to establish themselves as credible vendor partners to customers across various industries. For this, the ICT community must adopt agile practices to handle its organisation, technology portfolio, and customer acquisition activities.
Moreover, it should keep abreast of the strategies employed by market leaders in Germany, Poland and the United Kingdom, where above-average ICT spending growth rates and substantial industry-led initiatives for digital transformation have been observed.
Overall, the ICT industry is poised for a shake-up. New types of stakeholders will emerge and consolidation of traditional market leaders will intensify this year, leading to innovations in business models and the application of new technologies.