At first glance, the IT markets of EU member states in Central and Eastern Europe appear to be as cool as the rest of the European Economy.
The rule of thumb that IT markets typically exhibit twice the growth rate of GDP has fallen by the wayside, at least for 2015.
Depending on the source, GDP growth forecasts for most CEE EU member states run from around two per cent to 3.5 per cent (with Croatia a notable exception, where growth is expected to be flat).
Regionally, IT spending is expected to rise by a tepid three per cent in 2015 and to stay at that level every year up to 2018.
This is according to a media statement by International Data Corporation (IDC), global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets.
But these growth numbers are impacted by the hardware factor, the statement said. Falling prices, the continued migration from PCs to tablets and smartphones, and (to a lesser degree) crowding out by cloud-based services in the commercial sector, have largely cooled total hardware market value.
Annual average spending growth in the CEE hardware segment is expected to be just more than one per cent from 2013 to 2018.
“By contrast, spending on IT services and software is hot, and will grow almost four times as fast.” (At an annual average rate of 4.5 per cent, this is still not double the projected GDP growth.)
Though there are a few exceptions. For instance, education in Croatia and retail/wholesale in Bulgaria are hardware driven and will exhibit solid growth, while a number of hardware-driven sectors in Romania will struggle. But by and large, the region is shifting towards software and IT services to meet business and market challenges.
Manufacturing set to streamline: Largely equipped with hardware (both IT and manufacturing-specific machines and devices) and core ERP and management systems, manufacturers in EU CEE are now looking to add efficiency.
Supply-chain management and process management upgrades or installations are on the to-do lists along with their integration with back-office systems and with inventory and customer-facing applications.
Healthcare getting compliant: Regulations and the imposition of standards are helping to fuel IT investments in EU CEE.
At both national and regional levels, IT is increasingly deployed to help meet requirements focused on everything from quality of care and patient monitoring to interoperability and financial and activity reporting.
The increase in chronic disease prevalence has warmed decision makers to tools that can assist with prevention, detection, and long-term management. Finally, providers are hot for security tools to protect privacy as patient records get digitized.
Retailers and wholesalers competing for clients: Rather than seeing showrooming as a threat, many retailers in EU CEE will look for ways to make it work in their favour.
This will require solutions that take them closer to an omnichannel environment, integrate wholesaler systems into their own, and generate competitive intelligence, particularly on pricing.
Travel, airline booking, and product comparison websites are concurrently driving acceptance of online shopping and other ecommerce activity, further heating up demand for web and payment solutions.
Banking and finance looking to meet advanced expectations: Banks and other financial institutions tend to be among the most advanced organisations in the EU CEE region in terms of IT.
This stems from a need to create new products quickly and get them to market ahead of the competition.
Moreover, the use of ATMs and online banking have soared in the region, and customers increasingly expect services once only available in a bank office to be available through websites and smartphones.
Nevertheless, with so many solutions in place already, growth in the sector will be warm in most markets.
Government still focused on expanding eServices: While EU CEE government entities are generally slow to adopt new technologies, interest in the sector is increasing.
Though silos are still a major problem, centralised planning is often lacking, and budgets are too small (expect perhaps in the Czech Republic), egovernment initiatives are continuing across the region.