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Slovenia Information Technology Report Q1 2011
Business Monitor International, Jan 2011, Pages: 56
Business Monitor International's Slovenia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Slovenia's information technology industry.
Slovenian IT spending is projected to achieve single-digit growth in 2011, as the market consolidates a tentative recovery from the impact of the economic crisis. The recovery is expected to gather pace in H211, but risks remain to the downside, as deleveraging remains an underlying economic factor.
PC sales dropped by around 15% during a market contraction in 2009 but shipments entered positive growth territory again in Q110. BMI expects Slovenian IT spending to grow again in 2011, building on single-digit growth in 2010, which was due in part to base effects.
The fundamentals of rising incomes in a context of below-EU-average PC penetration mean this small IT market should advance at a compound annual growth rate (CAGR) of 6% over the 2011-2015 forecast period. IT spending growth is dependent however on business and consumer confidence in a sustained economic recovery.
Industry Developments Slovenia is determined to consolidate its status as one of the most advanced of the 2004 EU accession states. EU funding for its Competitiveness and Innovations programme for the 2007-2013 period includes substantial sums to support ICT policies. There are also additional sums for entrepreneurship and innovation, which can have IT applications.
Across the public sector, tenders continued to be issued during the economic slowdown. Health is one priority area. In 2009, the Health Insurance Institute of Slovenia announced that it would roll out a new electronic health insurance card system. The new system will use a card that will eventually be carried by every Slovenian citizen and presented at the point of healthcare delivery.
Competitive Landscape IBM won a major contract in March 2010 when the Slovenian Tax Administration awarded the US vendor a US$404mn contract to modernise its tax collection system. IBM won the tender ahead of rival bidders Hermes SoftLab and HP. The new system is due to be operational by 2014.
This success continued a good run in the public sector for IBM, which in 2009 won the contract from the Health Insurance Institute of Slovenia to roll out the electronic health insurance card system based on IBM technology.
International brands have consolidated their position in Slovenia’s PC market, with HP still the leader in terms of overall PC market share in FY09, followed by Acer, Lenovo, Dell and Fujitsu-Siemens. As the hard-copy peripherals segment approaches saturation the top three vendors, HP, Samsung and Canon, have nearly three-quarters of the market.
Computer Sales Slovenian sales of computer hardware (including desktops, notebooks and accessories) are projected at US$555mn in 2011, with modest single-digit growth compared with the previous year. In Q110, the market achieved single-digit shipment growth, in contrast to the sharp declines in regional neighbours such as Serbia and Croatia. However, there was downward pressure on prices because of the popularity of lower-priced notebooks and netbooks, which drove volume sales.
In 2011, migrations to Microsoft’s Windows 7 operating system retain the potential to help trigger a cycle of hardware upgrades, although much will depend on business and consumer confidence. There could also be a boost from procurement previously delayed as a result of the economic situation, although due to the impact of fiscal austerity programmes, most growth is likely to be in the second half of the year.
Software The software market in Slovenia is projected at US$231mn in 2011, with a consolidation of single-digit growth, following the sharp deceleration in 2009. The economic crisis led some companies to review IT budgets or look to defer systems updates, and margins pressure encouraged them to focus on reducing costs. However, solid market growth is expected during the forecast period through to 2015, with software revenues growing faster than that of hardware at a CAGR of 7%.
Slovenia is a relatively mature software market for the region and the relative saturation (79%) of the large enterprise market in terms of basic enterprise resource planning (ERP) applications should encourage vendors to look to other products to maintain growth, or else focus more on vertical specialisms. Although large and very large enterprises still constitute around half of the spending on enterprise application solutions (EAS) in Slovenia, more than 64% of new installations are reported to come from small and medium-sized businesses. New cloud computing offerings and increased competition in this segment should fuel further demand from end-users to utilise this technology.
IT Services The Slovenian IT services market is projected to grow to around US$313mn in 2011 with a consolidation of single-digit growth following the economic crisis. The market is expected to pick up from the second half of 2011 and a 7% 2011-2015 CAGR is projected, with support and maintenance accounting for more than 25% of these revenues.
Despite the economic downturn, IT services companies continued to benefit from IT projects tendered across various sectors ranging from the public sector to banks, education, retail and financial institutions. In the long term, the IT services market is set to expand as Slovenian organisations upgrade IT systems to gain or maintain competitive advantage following EU accession. Telecoms service providers represent an opportunity for IT vendors due to rapidly growing demand for data-intensive mobile applications.
E-Readiness The Slovenian government statistics body, SORS, has released new data about information and communication technology (ICT) adoption by enterprises. The statistics, from Q108, comprise a fascinating picture of the utilisation of ICT by enterprises of various sizes and of attitudes towards IT spending.
The overall picture suggests room for further market development, particularly among smaller and medium companies, but also a need for continuing education by vendors. Internet access is now nearly ubiquitous, at 97% among companies with 10 employees or more, up 1% from the same period of the previous year. Broadband access reached 80% among the same group.
The large majority of companies still use the internet mainly for email and information rather than ecommerce. Nearly 30% of enterprises with 10 or more people do not even have a website. Only 18% of large companies enable online ordering on their website and only 5% enable online payment. The corresponding figures for small and medium companies are even lower.
In the case of intranet, there is a clear gap between larger companies and smaller ones; 75% of larger companies had an intranet, compared with just 40% of medium companies (50-250 employees) and 26% of small companies. Intranet usage was highest in computer-related business and lowest in the construction and hotel sectors.
In the financial sector, access to internet was 100%, as was e-government usage; 35% of enterprises in the financial sector believed that the implementation of ICT projects in the past year had significantly improved work routine and the development of new products and services, considerably higher than the average for all sectors.
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