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Tech Spending Remains Strong, Despite Economic Risks and Volatility

According to the new International Data Corporation (IDC) Worldwide Black Book just released, IT spending increased by 5% at constant currency in 2011, despite the worsening economic situation in Western Europe and volatility in other regions. Emerging markets continued to lead the way, with tech spending in the BRIC countries (Brazil, Russia, India and China) enjoying another year of double-digit growth. Strong demand for mobile devices and software across most regions ensured a positive finish to the year, despite the impact of the hard disk drive (HDD) shortage on PC markets.

In U.S. dollar terms, the IT industry grew by almost 9% in 2011, but year-to-year comparisons could be difficult for U.S.-based IT vendors this year if currency conditions are less favorable. In constant currency, IDC projects another year of 5% growth for worldwide IT spending in 2012. Hardware and software spending are each forecast to increase by 6% (in constant currency), with 4% growth in IT services.

Strongest growth in 2011 came from smartphones (+46%), software (+6%) and disk storage systems (+6%). Businesses continued to invest in infrastructure upgrades, along with new software applications and mobile devices (including tablets). These positive trends are expected to continue in 2012, when enterprise spending on network equipment will also accelerate as many organizations invest in network upgrades to cope with the continuing increase in digital information, which will meanwhile ensure another positive year for the storage market. By the end of 2012, the PC industry will also return to positive growth.

The macroeconomic crisis in Europe has already had a severe impact on IT spending in that region. Overall IT investment was flat in 2011, with declines in spending on PCs, servers, storage, peripherals and enterprise network equipment. The recovery in Europe will be a long haul, with less than 1% growth this year and 3% in 2013.

In other regions, however, the momentum of 2011 is still evident in recent polls, which show continuing enthusiasm for tech investment amongst businesses and consumers. In the U.S., where IT spending increased by 7% last year, 2012 is likely to bring another year of solid growth (5%) driven by mobile devices, software and network equipment. Japan will see a return to positive growth, after the declines triggered by last year’s tsunami and earthquake disaster. IT spending in Brazil, Russia, India and China will be up by 9%, 11%, 16% and 15%, respectively.
[Full Article]   Feb-12-2012


CEOs say Prospects Gloomy for Global Economy

Nearly half (48%) of the 1,258 CEOs polled worldwide believe the global economy will decline even further in the next 12 months, according to PwC’s 15th Annual Global CEO Survey. Just 15% said the global economy will improve during 2012.

However, nearly three times as many CEOs are confident in their own companies’ growth prospects for the next 12 months than in the outlook for the global economy, suggesting CEOs believe they have learned how to manage through difficult and volatile economic times.

Forty percent of CEOs said they are ‘very confident’ of revenue growth for their companies in the next 12 months, down from the 48% last year - though still up from the 31% who were ‘very confident’ in 2010.

In addition, more than half of CEOs worldwide expect to increase headcount in the next 12 months, although the picture changes from sector to sector with hiring much more likely in entertainment and media than elsewhere.

Unsurprisingly, the biggest decline in confidence was in Western Europe. Beset by the sovereign debt crisis, just a quarter of European CEOs said they were very confident of revenue growth, down sharply from nearly 40% last year. Short term confidence also fell among CEOs in Asia Pacific to 42% from 54% last year. China saw the biggest decline in confidence in the Asia Pacific region with 51% of CEOs feeling ‘very confident’, down from 72% last year.

There was also a marked decline in confidence in India with only 55% of Indian CEOs very confident of revenue growth, down from 88% last year. In the US, 41% of CEOs said they were very confident of short term growth, down from 45% last year. Confidence increased, however, among CEOs in Africa, where 57% said they were expecting growth, up from 50% last year.

  • Growth opportunities

  • According to the CEOs, the best strategic growth opportunities in the next 12 months will come from increasing share in existing markets and from developing new products and services, both cited by nearly one third of respondents. New market penetration, 18% and joint ventures and alliances, 10%, trailed as growth strategies. The number of CEOs planning M&A activity remains relatively low with prospects for a recovery in the deals market still looking some way off.

    The emerging markets remain a vital growth opportunity for CEOs. Overall, 59% agreed that growing markets were more important to their company's future than more developed economies. Almost half of CEOs from developed nations said that emerging markets were most important to their future. Top growth targets were the BRIC countries (Brazil, Russia, India and China), joined by the U.S. and Germany. In all, when asked to select the top three targets for growth, more than 60 different countries were named by CEOs.

    Seventy percent of CEOs plan to make changes to their strategy in the next 12 months, driven primarily by customer demand and economic conditions. Cost reduction remains a key, though declining, focus for CEOs; 76% reported they cut costs in the last 12 months, down from 84% the previous year. And 66% of CEOs said they would cut costs in the next 12 months.

  • The Talent Challenge

  • Finding and keeping the right talent remains a top concern for CEOs. Only 30% said they are ‘very confident’ they will have access to the talent needed to execute their company's strategy, and 43% believe that it has become more difficult to hire workers in their industry. Recruiting and retaining high potential middle managers is the biggest talent challenge, CEOs said, followed by hiring skilled production employees and younger workers.

    Despite the sluggish economy, businesses are gearing up to hire. More than half of CEOs said they had increased headcount in their organization in the past 12 months and about the same percentage expect hiring momentum to continue. More CEOs in Middle East/Africa followed by North America reported hiring increases in the past 12 months, while CEOs in Asia said they are most likely to add jobs in the coming year. Just 18% of CEOs said they expected to cut their workforce in the coming year, down from 23% who said they made cuts in the past 12 months.

    A potential shortfall of talent was also cited by 53% of CEOs as a threat to growth. The availability of skills was seen as a top concern across all geographic regions outside of Europe. Other frequently cited threats to growth included potential tax increases, cited by 55%, changing consumer spending patterns and behaviors, 50%; energy costs, 46%; inability to finance growth, 40%; new market entrants, 38%; supply chain security, 34%; and inadequacy of basic infrastructure, 30%.
    [Full Article]   Feb-05-2012


    Two Out of Three Consumers Switched Companies in 2011 Even Though they Gave Higher Marks for Service

    Two out of three (66 percent) consumers switched companies – including wireless phone, cable and utilities – as a result of poor customer service in 2011 even as their satisfaction with the services provided by those companies rose, according to new research released by Accenture. The research findings pose new challenges for marketers as they focus on building customer loyalty and improving market share in a very competitive business environment.

    Among the 10,000 consumers who responded, the proportion of those who switched companies for any reason between 2010 and 2011 rose in eight of the 10 industries included in the survey. Wireless phone, cable and gas/electric utilities providers each experienced the greatest increase in consumer switching – five percentage points. This includes consumers who switched entirely to another provider as well as those who continued to do business with their current provider but added services from another provider – a new, but growing trend.

    The survey also found that fewer than one-quarter (23 percent) of consumers surveyed feel “very loyal” to his or her providers, while 24 percent indicated that they had no loyalty at all. And, only half (49 percent) indicated that they are strongly influenced by at least one loyalty program offered by their service providers.

    At the same time, however, consumer satisfaction with their providers’ customer service actually increased in 2011 in 10 attributes measured by the survey. These attributes include the wait time for service (33 percent satisfied compared to 27 percent in 2010), the ability to resolve issues without speaking with an agent (38 percent satisfied compared to 33 percent in 2010) and speaking with just one customer service agent to resolve an issue (39 percent satisfied compared to 32 percent in 2010).

  • Blind Spots Emerge

  • The Accenture study identified a number of blind spots in the customer relationship that many companies appear to be overlooking. Addressing these issues may enable organizations to improve customer retention and stem the tide of switching. Most noteworthy among the blind spots identified:

  • Organizations are failing to offer consumers opportunities to engage with them, including through digital channels

  • Consumers expect a multi-channel experience, and in fact, 57 percent reported frustration when they were not able to access company information or purchase a product through the channels of their choice. And, according to the survey, social media sites have improved overall engagement of consumers with providers and their brands, up from 14 percent in 2010 to 21 percent in 2011. More than a quarter (27 percent)of consumers want companies to interact with them in social media environments even before they are customers, and 24 percent reported greater likelihood of doing business with providers that are actively engaged with social media.

  • Companies are overlooking signs that customers are itching to switch

  • Although complete switching from one service provider to another did not increase significantly, the rate of partial switching, in which consumers stay with their current provider but add another provider, is up in each of the 10 industries surveyed. Retail banking experienced a one percent drop (from 16 percent to 15 percent) in complete switching from 2010 to 2011, yet partial switching was up three percent (from 24 percent to 27 percent). Wireless phone companies experienced a two percent increase in complete switching year over year (from 19 percent to 21 percent), but when adding in those who made a partial switch, the combined switching rate increased by five percent (from 38 percent to 43 percent).

  • Companies are failing to keep promises they make on the service experience

  • The study found that consumers rate “having the service experience match the promise a company makes to me up front” as one of the most important areas of customer service. Yet the greatest service frustration cited is a provider’s failure to deliver on the service experience promised up front.
    [Full Article]   Feb-05-2012


    The Consumerization of IT Helps Level the SMB Playing Field Across the World, IDC Says

    Increased adoption and personal use of advanced technology is paying dividends for small and medium-sized businesses (SMBs) around the world as the consumerization of IT continues to expand, especially in developing countries. Survey research from International Data Corporation (IDC) found that SMBs in developing countries are much more likely to encourage the use of worker-owned technology, allowing employee smartphones, netbooks, and media tablets to be connected to company networks to run a host of different business applications.

    Additionally, SMBs in developed countries (e.g., the United States, the United Kingdom, Germany, Japan) typically indicate higher levels of advanced technology use, from notebook PC to wireless networks, than do similarly sized firms in developing countries (e.g., China, Brazil). However, the gap closes quickly when portable computing/communications products are added to the mix. SMBs in developing countries are keeping pace with their more developed counterparts when it comes to providing employees with smartphones, netbooks/mini notebooks, and media tablets. In some cases, they are actually more likely to provide these products to their staff.

    Additional findings from IDC's research include the following:

  • Independent of region, medium-sized firms are more likely to provide employees with advanced mobile devices than are small businesses (SBs).

  • China SMBs are providing company-owned smartphones to employees most often.

  • In developed countries, 33.7% of SBs and 46.7% of MBs indicated they provide access to the business network for employee-owned smartphones.

  • [Full Article]   Jan-29-2012


    One in Three Consumers Consider Highly Trained Employees the Most Important Factor

    Empathica Inc., a provider of Customer Experience Management (CEM) solutions, announced that its Consumer Insights Panel survey of 5,000 U.S. and Canadian consumers found that nearly a third of consumers consider highly knowledgeable and well-trained employees as the most important element of their luxury purchase experience.

    Survey results also showed that consumers are very willing to walk out of a luxury retail store if they are not receiving the one-on-one attention they need. In fact, three out of four consumers said they buy either nothing -- or less than what they would normally purchase -- if there are not enough employees in the store to assist them.

    Despite the importance of individual attention at luxury retailer stores, many consumers think today’s brands aren’t delivering. Only 38% of consumers said they receive better customer service in luxury retail than in non-luxury retail. On the other hand, if employees are eager to serve customers, a full 80% of survey respondents said it would have a positive impact on their perception of the brand and affect their future business with the store.

    Top Luxury Service Elements that Consumers Value, From Most Important to Least Important:

  • Highly knowledgeable and well-trained employees

  • One-on-one customer service

  • Brand exclusivity

  • Welcoming store atmosphere

  • Many employees available to serve them

  • [Full Article]   Jan-29-2012


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