Verticals focus as NZ vendors tough it out

Peter Dinham
Thursday, 20 August 2009 10:37

IT Industry - Market

A shrinking market and tough economic conditions has New Zealand IT vendors turning their focus on verticals and trying to exploit their competitive strengths as they work through the global financial crisis.

According to a new study from IDC, New Zealand IT vendors are expected to target specific vertical markets as they look for “innovative ways to compete in a shrinking and increasingly finicky market.”

IDC reports in the study that the IT market in New Zealand will grow from NZ$5,911 million in 2008 to NZ$7,047 million in 2013, which IDC describes as a “modest CAGR of 3.6%.”

IDC New Zealand senior market analyst, Louise Francis says that while cost savings will dominate IT decision-making in 2009, it is essential for vendors to focus on “the minutiae of specific verticals rather than a generic approach. As a result targeted products and services will be a key competitive differentiator for the next twelve months."

Key findings by IDC reveal that the top three New Zealand verticals in 2009 will be government, finance (banking, financial services and insurance), and communications and media, which it says will account for 54.8% of business IT spending in 2009, increasing to 56.9% of spending by 2013.

Other finding by IDC include:

•    In 2009, the highest levels of growth in IT spending will occur in the utilities (5.2% year on year growth in 2009), healthcare (2.8%) and government (1.7%)
•    Verticals which are expected to exhibit the biggest declines in spending include finance, manufacturing, retail, transport, construction, wholesale and distribution.
•    Partnerships will play a vital role for vendors pursuing vertical markets, as will leveraging partner knowledge and networks within vertical industries.

IDC’s Francis issues a word of warning needs to those “seeking to pursue a vertical strategy."

According to Francis, vendors falsely claiming expertise or attempting to cover too many industries will “risk being seen as lacking focus or commitment to specific verticals, which may potentially dilute their success."