ICT Industry Market Brief 2012

An Expert's View about IT and Telecommunications in Austria

Posted on: 19 Jul 2012

Similar to other countries, the IT services market in Austria features a small but significant number of client-focused vendors (niche vendors).

Insert Report Title Here Page 1 of 6 Austria: ICT Industry Market Brief 2012 Ingeborg Doblinger March 2012 Computer Software and Services In 2010, total packaged software sales reached approximately $1,990.8 million (€1,433.4 million) of which application software represented $1,470.0 million (€1,058.4 million) and systems infrastructure software represented $520.8 million (€375 million). The value of IT services totaled $3,690.5 million (€2,657.2 million) in 2010. Of this, total operations management accounted for $862.2 million (€620.8 million); system implementation accounted for $1,420.4 million (€1,022.7 million); support services $904.8 million (€651.5 million); planning $392.6 million (€282.7 million); and IT training and education $110.5 million (€79.6 million). The expected annual growth rate for 2011 for software will be 4.5% and 2.5% for services. In 2012, the annual growth rate is estimated at 4.1% for software and 3.1% for services. The information system outsourcing foundation market was again the largest market in 2010, followed by systems integration and hardware support and installation. Combined finance was the largest vertical market in terms of IT services spending, while the combined manufacturing vertical market ranked second for the first time, and the combined government vertical market fell one spot to third. Research indicates that cloud and virtualization services will be among the most important drivers of IT services spending in 2011 and beyond. End users increasingly require help evaluating cloud offerings and will implement cloud models and subsequently integrate cloud services from multiple vendors. Virtualization will still be a strong driver as companies continue to seek ways to reduce costs and increase efficiency. During tough economic periods, virtualization is among the most-demanded IT service, as it can help increase business efficiency. In order to succeed in 2012, vendors should be prepared for more political and economic uncertainty and should therefore avoid total dependency on public-sector spending, as large fiscal deficits and increasing economic uncertainty have restricted government budgets. U.S. IT suppliers would be well advised to focus on their existing client bases, providing high-quality software and services and demonstrating additional effort to ensure customer satisfaction. In 2010, the IT services market in Austria totaled $3.69 billion, representing a year-on-year decline of 2.5% in U.S. dollar terms. The systems integration category accounted for the largest share of IT services revenue at 11.9%, followed by hardware support and installation with 10.3% export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE Insert Report Title Here Page 2 of 6 and network and desktop outsourcing at 10.2%. The combined outsourcing category comprised 44.1% of the IT services market in 2010. Siemens was the leading IT services provider in 2010, with IT services revenue of $720.23 million and 17.0% market share. Raiffeisen Informatik ranked second, with $575.39 million and 13.6% market share. IBM ranked third, with $332.50 million and 7.8% market share. BRZ and Hewlett Packard were under the top five IT services providers in 2010, with 6.0% and 5.7% market share, respectively. Combined finance was the largest vertical market in 2010, with $866.45 million in services related spending and 23.5% market share. The combined manufacturing vertical placed second, with 18.5% share from IT services investments of $682.88 million. Combined government ranked as the third-largest vertical market in 2010, with IT services investments of $665.37 million and 18.0% market share. Telecommunications was the fourth-largest market in the country, accounting for $304.57 million in IT services revenue and 8.3% market share. The IT market grew 5.1% in 2010 and totaled $8.68 billion. The hardware and packaged software segments increased 19.7% while the services marked declined 2.5%. Hardware accounted for 34.5% of IT spending in the country, IT services amounted to 42.5%, and software accounted for the remaining 23.0%. The total IT market is expected to grow by 4.0% in 2011 to a value of $9.02 billion. Captive Market Players Similar to other countries, the IT services market in Austria features a small but significant number of client-focused vendors (niche vendors). Bundesrechenzentrum (BRZ) is the most important company within this group in Austria. The BRZ group consists of the parent company BRZ, and its subsidiary BIT-S. An independent but state-owned company, BRZ has an exclusive connection with the Austrian public sector. As the IT provider to the federal government, it is the nation’s leading company in developing, implementing, and managing e-government solutions. BRZ has a staff of 1,100 professionals and reported total revenue of $284.02 million in 2010, all of which derived from the business of IT services. BRZ’s strategic target markets are the federal ministries, state authorities, outsourced institutions of the state, universities, and social insurance agencies. Due to its extensive knowledge of administration processes and long-term continuous collaboration with ministries, BRZ can provide diverse services to these government agencies. It subcontracts approximately 50% of its business to third parties. iT-Austria, another important niche player on the Austrian IT market was established in 1998 after the merger of the datacenters of Creditanstalt Bankverein and Erste Bank with Spardat Austria. When Hypo Vereinsbank Munich took over Bank Austria in 2001, iT-Austria was responsible for its international network. iT-Austria offers hardware and systems maintenance, security, and Internet and telephony services, as well as support and consulting. export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE Insert Report Title Here Page 3 of 6 In addition, the firm operates three datacenters in Austria from which it supports both its local and foreign clients. However, in 2010 the company was divided into two operating units. These two companies are now called Bank Austria Global Information Services and IT Solutions AT Spardat. This development resulted from the two banking groups, Unicredit and Erste Bank, drifting apart. Software as a service (SaaS) is becoming a formidable offering now, particularly in the CRM, collaboration, and security segments as the cost structure makes it attractive for customers trying to reduce spending. As a result, SaaS will gain momentum on the Austrian IT market and will require services related to integration with other applications. As companies are reducing costs to increase efficiency, virtualization is increasingly being used in IT service delivery models. In difficult economic situations, virtualization is the one of the most demanded IT projects because of customer’s desires to lower costs and improve efficiency. Decisions on hardware upgrades and regarding Windows 7 are prompting organizations to take a fresh approach to the client. Virtualization stands out as the technology that enables organizations to manage the pace of change in their infrastructure. The immediate benefit for IT is having more control over the user experience, combined with improved security, a more effective business strategy, and better management of clients in areas such as software deployment and updates. Due to the age of most PC infrastructure, many organizations need to make decisions now about the future direction of their desktop strategy and are therefore evaluating a wide range of technologies. Austrian companies and government organizations are not fully convinced about the benefits of cloud services, and they are not comfortable with the potential negatives of cloud computing, such as legal or security issues surrounding public cloud provisions. End users are seeking assistance in evaluating cloud offerings and drawing up business cases, and they will eventually proceed with implementing cloud models and integrating cloud and SaaS (software as a service) services from different vendors. Elements of cloud and SaaS are already being incorporated into outsourcing services as a way to supplement traditional delivery models. Cloud computing creates another point for vendors as they attempt to meet the needs of existing and new customers. Demand for outsourcing deals increased slightly in 2010 and will continue to do so in 2011. The business sector will continue to focus on cost and headcount reduction and process standardization and simplification. Virtualization, consolidation, and the cloud will play key roles in infrastructure outsourcing. During 2012 and 2013, these technologies will be adopted by an increasing number of organizations. When the economic climate stabilizes, many businesses will start to invest in new IT projects again. New projects will be focused on costs and efficiency, as well as on optimizing the flexibility of organizations to meet business demands. The convergence of voice, video, and data networks is another way to save costs for many firms. Applications and software capable of running unified communications are the focus of many new investments. The market is steadily moving toward unified communications, a single platform capable of consolidating messaging, voice, mail, videoconferencing, data sharing, export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE Insert Report Title Here Page 4 of 6 telephony, and other methods of communications or data exchange. Industry experts expect unified communications projects to increase demand for consulting and integration services, as well as management of hosted solutions. The increasing number of personal devices accessing corporate networks, applications, and data security and data protection issues take on a whole different level of importance. Consumerization will focus on the necessity of processes that reduce security risks and policies that give clear indications to users of what can and cannot be done with personal devices in the work environment. This will push demand for IT consulting, security services, hardware and software support and distribution, application management, asset management, policy management, and other services protecting the work environment. The security market continues to expand, largely as a reaction to the rapidly changing nature of threats and vulnerabilities for enterprises. As more customers implement integrated product solutions for security and protection, corresponding services that follow the same model are likewise in demand. Industry experts believe that integrated and comprehensive security support services can help target the small and medium-sized business segment in these challenging economic times. SMEs are looking for complete security solutions for their IT environments, both on the product side and for support services. Designing and implementing integrated security support solutions offers opportunities for both systems integrators and pure-play security vendors in 2010 and beyond. Creating a comprehensive, integrated security product and service portfolio can lead to additional opportunities in this space. The market for security software totaled $100 million in 2010, which represents an increase of 7% from 2009.The estimated growth rate for 2011 is 6.6%. The security software market is maturing but also evolving. Developing organizations have mostly ended the first adoption phase of security tools. The first phase was driven by security considerations such as risk and threat mitigation. The second phase started in 2010. Organizations renew the existing solutions, extend security coverage to mobile and consumer devices and apply extended compliance process. Market driver is still risk mitigation, but compliance to external and alignment to internal policy has become another driver for adoption, budget, and project. Security and compliance are not a choice anymore for major organizations. They can do very little except follow the rules, apply the recommendations, and follow the standards. In light of the economic uncertainty, companies do not want to invest in projects carrying substantial risk. Investment will mainly be in the areas of reducing cost and increasing efficiency. As always during an economic crisis, the sales cycle and decision making progress will be longer than usual, and will complicate the closing of new deals. While the public sector has cut costs in many areas, the government has not published any details about the awaited cost savings, which has unsettled both end-user organizations and vendors. The government’s cost cutting will strongly hit IT spending in the public sector, traditionally one of the country’s most important vertical markets in terms of IT spending. export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE Insert Report Title Here Page 5 of 6 Industry experts forecast that most IT deploy and support services spending will be cut to the absolute minimum, resulting in a massive drop in this segment. In addition, hardware shipments and software license rates are expected to decline. Microsoft is the largest IT software vendor in Austria, followed by IBM, Oracle, SAP, Symantec, Hewlett Packard, Computer Associates, EMC, Adobe and Siemens. However, there are approximately 30 additional U.S. IT firms selling their products and services in Austria. In addition, there is strong competition from European and Asian suppliers in this market. Sub-Sector Best Prospects Accelerated adoption of virtualization will create opportunities for vendors of infrastructure software that deliver products that manage this increasingly virtualized IT environment, particularly around performance monitoring, provisioning, compliance reporting, cluster visibility, and change and configuration management. Demand for multifunctional security solutions and security software is rising significantly. Security technology is an important foundational element for many of the leading growth drivers in the IT market today, including Web services and digital identity services. Opportunities The best opportunities for sales of U.S. software in Austria appear to be in the Internet systems engineering and applications consultancy, data bank and communications software/office automation, security, education, application development, operation management, systems integration, outsourcing, cloud computing, client virtualization, unified communications such as convergence of voice, video and data networks, archiving, content and document management, business intelligence and IT consulting. The primary end-users are industry, financial services, public administration, production, telecommunications, trade, health, energy, distribution and electronic banking. export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE Insert Report Title Here Page 6 of 6 Web Resources ADV (EDP Association) Austrian Computer Society Trattnerhof 2 D a m p f s c h iffstrasse 4 A-1010 Wien A - 1 0 3 0 W ien Tel. +43-1-5330913 T e l . : + 4 3 1 5120235-0 Fax: +43-1- 5330913-77 F a x : +43 1 5120235-9 www.adv.at w w w . o c g . a t IDC Austria Währinger Strasse 61 A-1090 Wien Tel: +43 1 526 73 28 Fax: +43 1 526 73 29 www.idc-austria.at U.S. Commercial Service Contact Information Ingeborg Doblinger Commercial Specialist U.S. Commercial Service, Vienna Austria Email: Ingeborg.Doblinger@trade.gov Phone: +43-1-31 339 2120 Fax: +43-1-310 69 17 Website: http://www.buyusa.gov/austria/ export.gov The U.S. Commercial Service – Your Global Business Partner. 800-USA-TRADE
Posted: 19 July 2012

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