Smaller UK software and IT services companies are best
placed to survive theglobal financial squeeze, with more
than half forecasting double-digit growth in 2008.
But larger organisations are less positive about their growth,
says software suppliers trade association
Intellect,
reflecting
analyst predictions that the UK software market as a whole is
moving toward recession.
According to an online survey of more than 100 mainly small to
medium-sized companies, suppliers are challenging gloomy economic
projections, with 53% of respondents predicting double-digit growth
compared with 49% the previous year.
But the report said 30% of the businesses expecting 15% or
greater organic growth had turnovers of £0-£20m and were mainly
towards the lower end.
Despite the positive tone of the findings, industry observers
have advised IT departments to ensure they are protected if key
suppliers go out of business.
Dai Davis, partner at law firm Brooke North, said that from a
risk management point of view, end-users needed to identify what
software was business critical and make sure they either had
access to the source code if their supplier went under, or at least
had an alternative supplier lined up.
"Forewarned is forearmed, so end-users should also take a closer
look at the financial strength of suppliers of critical systems and
assess the risk of them surviving any recession," he said.
Carrie Hartnell, transformational business programme manager at
Intellect, said the industry's SMEs with up to 250 employees
remained extremely positive.
"Any recession will have casualties, but smaller companies will
feel the pinch less because they tend to be niche players that
understand the market and work closely with customers to help
deliver extra value to the business in difficult times," she
said.
Hartnell said smaller companies' specialist focus and ability to
be more flexible and innovative, as well as form symbiotic
partnerships with customers, had enabled them to dominate markets
such as financial services.
Intellect's report said SMEs were now working in a global way,
identifying international opportunities rather than focusing on
home markets.
in the report, 57% of respondents saw globalisation as having a
positive or very positive impact on their business. The year
before, 59% identified globalisation as having a neutral or
negative impact on their business.
"The UK is more open and less protectionist and has been
promoting globalisation for some time, with the result that SMEs
understand the benefits and are seizing the opportunities, which
will be good for the local industry in the long run," Hartnell
said.
Advice to IT departments for a downturn
- Make sure you have access to the source code of
business-critical applications.
- Have a dual software strategy to cover key applications.
- Identify an alternative software supplier that could replace
critical systems.
- Look at the financial strength of suppliers and conduct a risk
assessment.