MILAN, Italy, September 5, 2002 -- IT spending growth in the Western European discrete manufacturing market will remain marginal as a result of the economic environment, according to a recent report by IDC. Growth of 4.2% is expected in 2002, picking up to approximately 6% in 2003, with a rebound to double-digit growth by 2005, representing a CAGR of 8.5% between 2001 and 2006.
Growth in software spending in the discrete manufacturing sector remains stable, and IDC forecasts the highest growth rates in this area with double-digit growth of 10.4% in 2002. Sequential growth will be witnessed in this space over the forecast period, reaching 16.4% growth in 2006, representing an increase from $5.6 billion in 2002 to $9.9 billion in 2006 and a CAGR of 15%.
IDC forecast that Western European discrete manufacturing IT services will generate moderate growth in 2002 at 7.3%. Investments in consulting and operations management, illustrating growth rates of 9% and 8.3% respectively, will drive IT services spending. IDC expects that the IT services market within discrete manufacturing will grow from $9.3 billion in 2002 to 12.7 billion in 2006, representing a CAGR of 8.1%.
"In 2002, discrete manufacturing organizations are confronted with a consistently more complex and ever-changing business environment. Therefore, to be successful today, they are looking to develop more flexible organizations and manufacturing facilities, which are agile and adaptable enough to exploit emerging opportunities and react quickly to changing market conditions", says Jennifer Thomson, senior research analyst for the European IT Opportunity: Manufacturing program.
Within the Western European discrete manufacturing sector, automotive, high-tech electronics, and industrial machinery sub-verticals account for the lions share of IT spending, with high-tech electronics and automotive manufacturers being the most advanced in the adoption of sophisticated IT solutions. However, these sub-vertical industries are also those that have been most affected by the recent economic downturn. IT spending is now largely focused on enhancing supply chain and business management, attaining real-time links between design and manufacturing functions, creating greater access to the customer, and enhancing customer retention and satisfaction. This is reflected in the continued double-digit growth of software solution spending in 2002, with the automotive and electronic sub-vertical industries achieving year-on-year growth rates of 11.7% and 10.3% respectively, while hardware investments continue to depict negative growth of -3.2% and -4.4%.
Jennifer Thomson continues, "For many manufacturers, the rules of competition have changed and it is now a case of value chain versus value chain. Therefore companies are not only looking to share information but also workflows with their extended enterprise. Of particular importance for players in the high-tech and automotive space is the ability to achieve real-time visibility across the extended value chain. Speed of reaction is now vital, and visibility of the supply chain together with a clear view of customer demands is strategically important".
IT Spending in Western Europe Discrete Manufacturing Sector, Forecast and Analysis Update, 2001-2006 (IDC #VC01J) offers an up-to-date overview of IT spending trends and forecasts in the European discrete manufacturing sub-vertical industries. The report starts from trends affecting IT demand in the European discrete manufacturing markets, then goes on to examine the major drivers and trends in IT adoption. On the quantitative side, the focus is on spending in hardware, packaged software, and IT services for the major European countries. Forecast data is split for the following sub-vertical industries: automotive, aerospace, electronics, wearing apparel, leather and footwear, printing and publishing, industrial machinery, and other discrete manufacturing. This report is available to purchase from your local IDC office.
About IDC
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.
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For more information, contact:
Jennifer Thomson
+39 02 28457 365
jthomson@idc.com
Explore new economic landscapes, technology solutions, and strategies for IT investments at IDC's European IT Forum.
Date: September 16-17, 2002
Location: Grimaldi Forum, Monaco
For more information, visit http://www.idc.com/itforum02.