Dramatic economic and regulatory changes have impacted IT spending during the past few years, but critical areas of IT investment can still be traced to the evolving needs of each vertical industry. What is driving growth and change within your industry? How does your midsize organization compare? Are you planning IT initiatives that will keep you competitive?

Following are IT Spending Highlights by Key Industries:

Manufacturing
Manufacturers are driving IT initiatives to maximize established IT investments and cost savings projects, such as extending ERP and SCM implementations, and application and server consolidation. Tactical, pragmatic deployments that require quantifiable business benefits are in demand. In the near future, manufacturers will begin to incorporate Web services, sophisticated alert management and business analytics more vigorously into their enterprise architectures.

Retail and Wholesale
Retailers are not making huge increases in IT spending this year, but they are making moderate increases in IT spending, as well as dramatically changing how the budget is spent. Retailers view IT as an area of strategic investment, and as they move from a technophobic to a technocentric view of IT, they will become much more aggressive in the pursuit and adoption of technology. Strong retailers will invest in technology that will both improve operational efficiencies and drive revenues, including a shift away from customer applications to prepackaged software.

Financial Services
Financial services organizations continue to spend cautiously in 2003, with resilient spending in the banking sector, constrained spending in securities, and increased IT spending in insurance. Optimization will prevail, along with revamped CRM strategies; while new clusters of spending include branch transformation and flexible infrastructure initiatives in securities and insurance. Four technologies that will change the face of financial services by 2006 include Web services, smart cards, automated clearinghouse (ACH) and radio frequency identification devices (RFID). Further, IT outsourcing and business process outsourcing (BPO) will become a larger part of the value chain in financial services.

Transportation
The last few years have been very difficult for the transportation industry, but protecting the global supply chain is an increasingly important objective. Supply chain IT investments are expected for cargo security improvements and real-time shipment tracking via portals, private exchanges and wireless devices and applications. Security spending also occupies a rising share of IT investments. Trusted traveler and trusted employee solutions will slowly proliferate, including biometric identification. Continued installation of airport passenger self-check-in kiosks will take place, as will labor-saving tools and frequent traveler services.

Regional and Local Government
Regional and local government will continue to be fiscally challenged with technology focused on revenue generation, cost management, and agency-specific development. In this environment, three areas continue to receive IT investments over the short term: revenue generating functions (such as integrated tax systems and red light runners), cost management solutions (an ERP renaissance), and infrastructure security.

Healthcare
There are a number of drivers for IT investments in the healthcare market including patient safety, the push for process standardization and automation, and HIPAA requirements. Providers deem HIPAA strategy, clinical systems and IT strategy as its top three priorities, while payers consider e-health, claims management and HIPAA as primary concerns. Across the industry, healthcare organizations are investigating the benefits and costs of IT and business process outsourcing.

Communications
The communications industry is extremely selective in choosing IT projects. Areas of growth will continue in revenue assurance strategies and fraud management strategies – two areas that provide tangible debt reduction and revenue increases. Investments in network security, consolidation of databases, and business support systems will continue.

Utilities
The IT focus for utilities is to enhance established systems and business processes that improve customer service, drive greater operational efficiencies, increase reliability and safety, and address physical and cybersecurity threats. As such, utilities are investing in business solutions such as SCM, business-to-business software, wireless capabilities, industry-specific applications and ERP than are many other industries.

Forward thinking midsize organizations will plan IT investments around the applications, processes, infrastructure and competencies needed to build and maintain a competitive advantage and proactively establish the necessary building blocks.

Meet with your industry peers to discuss key successes and misfires this fall at Midsize Enterprise Summit. Click here to qualify to attend as our guest.

References
Market Statistics
Recovery on the Horizon for Worldwide Vertical Market: 2001-2006 Forecast
Publication Date: March 19, 2003
Author: Cynthia Moore

Research Brief
Vertical Market Wins and Failures Predicted for 2006
Publication Date: November 4, 2002
Authors: Susan Cournoyer, Geraldine Cruz, Robert Goodwin, Venecia Liu, Cynthia Moore, Jeff Roster, Rishi Sood