U.S. IT vertical market trendlines, 1992 - information technology

With all the bizarre coinages (picocomputers, palmtops, parallel processors) and acronyms (OOP, RAID, GUI), industry people often forget that the comparatively bland "vertical market" is also somewhat peculiar to the IT universe of discourse.

Those unaware that we mean by it marketing to specific industries would get no help from the dictionary, which doesn't recognize the term. While some other industries (advertising and business services, for example) recognize "verticals," the term is rarely used with the specificity it is in the IT realm. The closest Webster's Unabridged gets is "situated at the highest point, directly overhead," which hints at the emotional resonance of the phrase to IT vendors looking for growth opportunities.

The industries in which computer suppliers' customers participate continues to be a primary focus for vendors, and therefore for IDC's research schedule. In the fourth quarter of 1991 IDC conducted some 1,600 interviews with IS executives at U.S. multiuser system sites and examined the results according to vertical markets. Among the most interesting findings where vertical market orientation had significant impact on responses were these:

* Despite the recession, over half of the survey

base registered some degree of forward

momentum in their central and end-user IS

spending in 1991. The best showing was in

health services, where 70% saw an increase

in their budgets. The worst was in retail,

with 41%. An average of 16% saw spending

decrease. Health services saw the least damage,

with only 6% reporting a downtick. In

insurance/other financial, miscellaneous

services, retail, and other, however, at least

a fifth reported lower spending.

* Survey respondents anticipate 5% growth

in IT budgets for 1992. Miscellaneous services

is notably optimistic for the new year,

with both insurance/other financial and

health services also above the overall average.

Nondurable manufacturing and retail

expect spending to be flat to slightly down,

while the other markets cluster closely

around the 5% mean.

* Over a fifth of the survey base (22%) said

that it had moved or was moving to client/server

computing. Transportation/communications/utilities

was the most committed,

with 34% signing off on this option.

Meanwhile 12% were planning a move, again

led by transportation/communications

utilities, at 22%. Another 15% would like to

move, but are unsure how.

* The survey base split almost exactly in half

when asked whether they were pursuing an

open systems strategy. Most vertical markets

did not stray too far from the mean in

their responses with the exception of banking

and wholesale, where 63% stated that

they were not pursuing an open systems

strategy.

* The highest interest level in systems integration

was registered by retail, where 37%

checked one or the other positive responses

(currently using systems integrators or by

considering using them). Among respondents

currently using systems integrators,

the highest rankings fell to banking and retail,

at 21% and 20%, respectively. However,

it is important to note that no vertical market

fell below double digits.

* An average of 44% of PCs were connected to

LANs at yearend 1991, ranging from around

a quarter in retail and banking to over half in

business services, miscellaneous services,

transportation/communications/utilities,

wholesale, and other. Respondents expect

this penetration of LANs to accelerate, with

an average of 60% of PCs attached to LANs

by yearend 1992. The projected ratio approaches

75% in three markets (business services,

miscellaneous services, and wholesale),

while only in the case of retail would the 1992

proportion not exceed the overall 1991 survey

average.

* The 44% of the survey base with LANs show a

marked preference for Novell, with 51% of

the relevant respondents supporting Netware.

The vertical variation runs from 39% of

the LANed wholesale base to 72% of health

services. Around a fifth (including some

possible double-counting) support either

Microsoft LAN Manager or IBM's LAN

Server, rising to almost 30% in banking. Banyan

Vines attracts 3% of the survey base with

LANs.

IDC's most comprehensive analysis of U.S. IS vertical markets is presented in the multiclient report U.S. IT Customer Directions and Spending Strategies - Vertical Market Usage and Plans (IDC #6335). The survey highlighted key issues, trends, and spending patterns in the following vertical market groupings:

*Banking *Insurance and Other Financial *Industrial Equipment Manufacturing *Other Durable Manufacturing *Nondurable Manufacturing *Health Services *Business Services *Miscellaneous Services *Transportation/Communications/Utilities *Retail *Wholesale *Other

For particular industries (two-digit SIC codes) within each IDC grouping, see the table appearing page 10.

Detailed results from two vertical segments, banking and health care are presented in this issue of the Gray Sheet. These data are only the beginning of the complete analysis of the activity within each vertical segment. Nonetheless, they still offer remarkable insight into each segment.

An even-more-general synopsis of results in each of the remaining vertical markets is s beginning on page six.

COPYRIGHT 1992 International Data Corporation
COPYRIGHT 2004 Gale Group