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IDC FUTURESCAN is a collection of metrics of IT industry leading indicators and customer surveys. Values are
based on expectations of future growth, with a value of 1000 equating to zero growth and each 10 points representing roughly 1% of expected growth.
These are external indicators only and don't represent IDC's forecast for the market, which is based on many more inputs and which relies on strict methodologies
and market definitions.
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This Month's Results
A rare event – the stars have moved into perfect alignment, so that external market indicators and internal IT buyer surveys have arrived at the same expectations for IT spending growth in the next 12 months. Not only that, but both sides of the coin are pointing upwards on the back of another month of stock market gains and improving business confidence. The Futurescan index is now indicating IT spending growth of just less than 6% in the next 12 months, as Line of Business (LOB) managers in particular have raised their expectations over the past two months.
However, it would be a mistake to suggest that all in the garden of IT markets is rosy. Stocks are going up, but short-term forecasts for GDP and corporate profits are going down. LOB managers are bullish, but CIO confidence has plateaued. IT revenues since March are best described as choppy and uneven, with some vendors reporting difficulty in closing deals at the end of the quarter. The full impact of the sequester cuts is still being factored into forecasts for the economy in the second half of the year, and an apparent slowdown in China could spell more trouble for the global economy. Given that we’re halfway through the year, and our index is a predictor of tech spending over the next 12 months until mid-2014, we think that the downside will be more apparent in the second half of 2013. Investors are clearly banking on the notion that next year will bring calmer waters and plain sailing.
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History
The most dramatic change has been in the Buyer Intent polls, where an apparent surge in Line of Business (LOB) manager confidence has driven the overall survey back to the peak it briefly scaled in February (after the ‘fiscal cliff’ and before the ‘sequester’). Market indicators are also edging up, mainly due to stock market gains. Economic forecasts for the second half of 2013 have in fact edged down, but the outlook for 2014 looks pretty solid (we’re assuming GDP growth in the US of 2.7% next year, versus just 1.9% growth in 2013). Beneath the surface, things are more volatile – IT revenues at the end of Q1 were volatile, and corporate profits have softened. We’re all hoping that economists, stock market investors and LOB managers are correct in their belief that the medium term will be stronger than the near term.
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Buyer Intent History:
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Unlike February, when the Buyer Intent poll previously spiked upwards, it’s all about one segment of respondents this time around. Line of Business (LOB) managers are now predicting that tech spending will increase by 8% in the next 12 months. That sounds mighty hopeful and optimistic to us, and it’s notable that CIOs are still holding onto their cards (forecasting growth of closer to 3%). Perhaps the enthusiasm of stock market investors has been contagious, and LOB managers are willing to look beyond the uncertainty and volatility of the near term with hope and expectation that things will be much brighter in 2014. When two lines diverge, the truth is probably somewhere in the middle.
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Market Indicators History
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IT revenues have actually been trending down since the start of this year, as some vendors reported difficulty in closing deals at the end of Q1. With so much political uncertainty swirling around the short-term economic outlook, spending patterns are likely to remain choppy for the next 2-3 quarters. Economic forecasts for 2013 have also softened since last month, and the overall rise in our macroeconomic index is entirely due to the strength of the S&P 500 compared to six months ago. A mixed picture, then, but with a common theme: short-term uncertainty, but with an increasing bedrock of confidence in the outlook for 2014 and beyond.
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The Buyer Intent metric is based on surveys of 400-500 U.S. CIOs and line-of-business executives on their expectations for IT spending growth during
the next 12 months. Results are carefully weighted to be representative of the U.S. market. These surveys are conducted monthly by the Quantitative Research Group
(QRG) within IDC's Global Research Organization.
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The Market Indicator metric combines inputs from economic and IT industry supply-side indicators including:
- The stock market (S&P 500 over last 6 months)
- Current interest rates
- The current GDP forecast for the next 12 months
- The current US corporate profit forecast (next 12 months)
- The IDC IT Revenue Forecaster (% revenue growth expected next 2 quarters)
IDC combines and weights the inputs using information developed in its Leading IT Indicators program on the relationship of macroeconomic trends to IT spending.
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IDC FUTURESCAN is a collection of metrics of IT industry leading indicators and customer surveys. Values are based on expectations of future growth, with a value
of 1000 equating to zero growth and each 10 points representing roughly 1% of expected growth.
These are external indicators only and don't represent IDC's forecast for the market, which is based on many more inputs and which relies on strict methodologies
and market definitions.
For more information about any of IDC's Black Books or other GRO products, please contact Amie White at awhite@idc.com
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