Forrester Predicts Increased Tech Market Growth in 2017
Analyst firm Forrester has weighed in on the U.S. election cycle…kind of. In a recent blog post, Andrew Bartels said that under a continuation of the economic policies instituted under the Obama Administration and a Republican-majority Congress, Forrester is projecting an increased growth in the tech industry of 5.1 percent, up from its previous forecast of 4.4 percent.
According to Bartels, there are three main forces at play here:
- Moderate economic growth combined with low inflation – Rising wages and household income join forces with low unemployment and energy costs to drive U.S. economic growth in 2016 and 2017. In addition, a strong U.S. dollar continues to hinder exports and businesses hold off on investments as they wait to see the election outcomes. “The combination of these forces is keeping US real GDP growth in the 1.5 percent to 2.5 percent range; inflation in the 1 percent to 2 percent range, and nominal GDP around 4 percent, setting a floor under US tech spending growth.”
- Increased business technology and traditional information technology spending – American C-suites and line of business (LOB) executives are increasing spend on tech to help drive increased customer acquisition and retention. “Customer relationship management, eCommerce, marketing automation, customer service systems, and customer-related analytics will see growth of 10 percent or more, as will the related consulting and systems integration services.” In addition, spending will increase with back-office systems such as document management automation and HR management platforms as a way to decrease overall costs by streamlining core operations.
- Cloud cannibalizes traditional on-premises technology – Cloud technology like SaaS applications and cloud platform services means that cloud spending is increasing by a whopping 25 percent or more. However, this is offset in the overall tech market by a significant decrease in spending on on-prem technology and hardware. Soon, Forrester anticipates strong growth in top-line spending numbers as cloud comes to represent more than half of spend in this area, but we’re not there yet.
In addition, Bartels predicts that certain verticals will show varying trends. High-tech, transportation, and construction will see the strongest growth in tech spending in 2017, at 6 percent or more, but oil and gas and chemicals will cut spending next year, for example.
These trends will help inform channel partners’ strategies as they move into 2017, but one sentence in the report directly impacts the channel. “On the other hand, spending will be weak for computer and communications systems, for telecomm services, and for traditional outsourcing services,” Bartels writes. Now’s the time to increase your stickiness with existing customers in order to keep revenues up next year in that trusted advisor role.