European IT market will begin slow recovery next year

The IT market in Europe will continue to lag other regions next year, but a progressive recovery will start, according to Pierre Audoin Consultants (PAC)

The IT market in Europe will continue to lag behind other regions next year, but a progressive recovery will start, according to Pierre Audoin Consultants (PAC).

Despite the hype over technologies such as cloud, big data and mobility, the European business of IT suppliers has stagnated.

The European IT market has remained clearly behind expectations in 2013. And 2014 will certainly bring no major acceleration. However, a progressive recovery will start during the year, earlier or later depending on the country,” said Christophe Châlons, chief analyst at PAC.

“Nevertheless, these new topics are materialising in more and more projects of growing importance across all countries and industries,” he said.

Châlons added that the market is clearly split in two – with legacy systems that underpin businesses that require heavy maintenance, and then new technologies to drive business. 

“In a nutshell, users want to spend less on their legacy IT and are willing to invest the resulting savings on innovation. To achieve this, transformation will be key,” he said.

This echoes the trend of businesses appointing additional senior IT staff to split up the work of CIOs. Chief digital officers are increasingly being appointed, for example. 

Châlons said cloud computing is at “the heart of this transformation”.

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“On the one hand, moving to cloud models will help reduce the TCO [total cost of ownership] of the IT, alongside further improvements in industrialisation, automation, standardisation, and offshore, mainly affecting administrative applications.

“On the other hand, cloud computing is also at the heart of innovative IT since it provides the required agility and speed to implement new applications and business models, mainly linked with the increasing digitisation of the economy. This digitisation has been disrupting entire value chains, ecosystems and the competitive landscape in all industries – and the mutation process will further accelerate.”

PAC revealed that 36% of European businesses will spend more on digital transformation in 2014 than in 2013. It also revealed that 48% will spend more on mobile devices and apps, and 37% will spend more on business intelligence software.

“No doubt, there will be interesting opportunities, both on the ‘legacy’ and on the ‘innovative’ IT. However, the market will be more challenging than ever, forcing suppliers to sharpen their profiles and better define their sweet spots and their added value. 

"Cloud computing, analytics, mobility, digital, and security will be the key growth segments at market level. However, there will still be substantial opportunities in legacy IT, especially with services such as application management and infrastructure outsourcing. No matter the segment – ‘legacy’ or ‘innovation’ – the right business model, including both the right delivery model and the right value proposition, will make the difference,” said Châlons.

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