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At IDC, we have been talking about the micro and macro-economic environment and classifying them as the winds of change. We talk about the headwinds associated with the pandemic, skills shortages and supply chain constraints coming at organizations. What we saw only one year ago, however, is that these headwinds were offset by tailwinds, which we saw as consumer demand, government stimulus and the drive to become a digital business. This is not what we see today.

When the winds of change become storms of disruption

Today, we are faced with record inflation, a tumbling stock market and an economy teetering on the brink of a global recession. These winds of change are coalescing into one big storm of disruption. Given this storm, it is critical for you to think about your planning in three periods, this year.

1. Near term. Tech vendors need to help your customers slice through the storms of disruption, especially since their traditional IT cost cutting playbook is a lot different in as “as a service economy”.

2. Mid-term. We believe companies will continue to invest in digital throughout the recession, but there will be a shift in what they invest in as they focus on scaling their digital business.
3. Long term. We are seeing a fundamental change to the way the global economy is being shaped and the way technology is being used to support the digital economy. It is critical for tech vendors to understand this future and navigate your customers through it.

Near term planning: slicing through the storms of disruption

The big question on everyone’s mind is the economy. The US economy shrank in the first half of the year. However,  we are at a 50-year low for unemployment. But, purchasing power of those wages has decreased as inflation hits a 40-year high.

During this time, we have been tracking enterprise buyer sentiment globally, especially as it relates to IT spending. IDC’s latest global Future Enteprrise Resiliency Survey (FERS) shows 72% of tech buyers and decision makers believe there will be a recession in the coming year; the majority believe the recession is beginning now or will take place in the first half of 2023, with many tech leaders in North America believing we are in a recession right now.

It does not matter whether or not the National Bureau of Economic Research declares a recession, because  the perception of tech buyers becomes our reality. If tech buyers believe a recession is coming, they will act rationally to adjust their tech spending to align with an anticipated drop in revenue.

The extent to which tech buyers decrease their IT spending will depend on how severe they perceive the recession will be. According to IDC’s latest FERS data, 55% of enterprise tech buyers believe there will be a moderate recession that will last 6-9 months. But this sentiment varies by region:

• North American buyers tend to be most optimistic with one third anticipating a mild recession
• Asia Pacific buyers tend to be in the middle of road with 60% anticipating a moderate recession
• Western Europe buyers are most pessimistic with 30% anticipating a severe recession

Based on this current outlook, we have run a downside scenario for Worldwide IT Spending in 2023. In this scenario, IT spending is expected to grow 4% in 2023, compared to our current forecast of 6.3%. Our research shows buyers are not planning to make wholesale cuts across all tech categories. Rather they will be selective about where they cut.

We believe previous recession playbooks will not be as effective as technology increasingly becomes sold and delivered “as a service” and used to drive digital business models.

In the past, the playbook consisted of 3 key maneuvers:

1. Delay capital expenditures by extended PC and infrastructure upgrades
2. Cut labor costs, especially contract staff
3. Delay the launch of new IT projects by a year

Why won’t these maneuvers have the same impact in an “as a service” and digital economy?

1. While enterprise will delay capital expenditures, it will not have as much of an impact as more of the IT budget is made up of operating expenses via “as a service” contracts. In fact, a recession could drive organizations towards more OPEX-based infrastructure expenditures sooner than they had planned, as they seek alternatives to potential CAPEX budget cuts.
2. Organizations are less likely to cut labor as there continues to be a skills shortage, especially around security and digital skills. Our research shows 42% of organizations increased their use of contract labor to address shortages in labor.
3. Delay the launch of new IT projects by a year. As technology is more closely tied to digital business goals like new revenue streams, organizations will only cut those projects with the lowest business impact. For example, a manufacturer may keep their connected products project because it is tied to 2023 revenue stream. But they may delay a project to experiment with the metaverse in their augmented maintenance program because the business impact is not clearly defined.

What tech suppliers can expect in 2023:

• Enterprises will increasingly set up and utilize IT FinOps teams to optimize cloud spend. According to our Cloud Pulse survey, 2/3rds of organizations report they are overspending on cloud by 30% or more.
• They will renegotiate XaaS contracts to embed price certainty. For example, they may negotiate a 4-year contract, as opposed to 3 years, to lock in the price or the price increase.
• They will eliminate SaaS tools that provide redundant functionality. For example, if they have both Zoom and Teams, they may eliminate one.
• They will reprioritize their open projects with the lens of short-term business impact.

Don’t miss similar blogs, where we discuss the recession on tech markets, planning and how to scale digital business.

Related Reading:

• Technology Strategy Research and Insights: Ms. Whalen’s international team of 1,100 analysts leverage research and advisory services to empower business transformation for the Global 2000, and counsel technology suppliers on creating effective offerings for the digital economy. Meredith Whalen (idc.com)

• IDC’s Guide to market sizing in an overheated economy:  Download our free guide to help you build a resilient strategic plan that helps you respond faster to change.  

The energy transition is gaining momentum as utility organizations aim toward net zero emission goals. The power sector has large influence on the energy transition as utilities and power companies continue to build out additional renewable and distributed energy resources energy resources and environmentally clean paths to electrification. Utilities and independent power producers are making significant investments to diversify their energy portfolios, and consequently these investments will force the energy industry as a whole to vastly improve its digital capabilities.

Related Reading: IDC Perspective: Utilities and Oil and Gas Sectors’ Initiatives and Strategies to Thrive in the Energy Transition

The utilities and power sector produce some of the highest CO2 emissions across the globe. The energy transition: the movement away from fossil fuels and the investment in renewable and cleaner forms of energy, has put utility and power companies under scrutiny, but it has also put these companies in a position to lead in efforts to reduce global CO2 emissions and establish a cleaner future for the energy sector.

Distributed energy resources will play a huge role in the efforts towards net zero emission for the utility sector. The proliferation of distributed energy resources (DERs) globally has spurred investment and research and development (R&D) efforts in creating innovative technologies that can enable utility distribution networks to manage dispersed and cleaner forms of energy in the most optimal and economical manner. Distributed energy resource management systems (DERMSs) are becoming essential software offerings to help manage the power grid.

Related Reading: IDC MarketScape: Worldwide Distributed Energy Resource Management Systems 2022 Vendor Assessment

In addition to the continued growth of utility connected renewable energy resources such as wind and solar farms, utility distribution operators are now being challenged with growing number of customer-owned DERs that can impact their utility footprint such as rooftop solar, battery storage, and electric vehicles. The expansion of DERs along with the environmentally conscious choices electric customers pursue in the ways they consume, produce and, in some cases, sell excess energy back to their utilities to participate in wholesale and distribution-level power markets is changing the traditional centralized utility system model to one that is more complex, customer driven, and decentralized.

Electricity end users and utility customers will be key in advancing the energy transition and further developing the DERMS market. Currently, one of the fastest-growing DERs is rooftop solar. Rooftop solar plus the ability to effectively manage energy storage will be a cornerstone for any DERMS.

Related Reading: IDC Survey Spotlight: Utility Industry Insights from the IDC Worldwide Energy Transition Survey, 2022

Electricity customers’ participation in the energy transition can be driven by being incentivized to own DERs and participate in clean energy utility programs which can increase the impact on demand response and the increased adoption of electric vehicles which in turn will drive growth and contribute to the inevitable need for DERMSs.

Keep in mind a DERMS is not a one-size-fits-all product. Every utility, distribution system operator, DER owner, operator, and market participant will have their own unique set of needs and circumstances as it relates to distributed energy resource management. Many utilities may be at vastly distinct stages of maturity from a technology and distributed energy resource market penetration standpoint. Utilities will need to understand immediate needs and also be able to forecast and have a vision for future obstacles and challenges in managing DERs. Most DERMS offerings are built to be flexible and can be bought in modules, providing buyers the option to purchase what is needed now and for the near future while having the opportunity to purchase additional modules that may become more important down the line. The trends and evolution of the energy transition, growth in DERs and DERMs will be interesting to track and analyze with the utility and power sector as focal point in the world’s progress toward a cleaner energy future.

For more content that dives into the technologies that are responsible for progressing the world toward a cleaner tomorrow, watch the video, “Energy Insights: Utilities”. Click the button below to watch the video.

Digital is the new normal

Today’s world is digital. In our personal lives, we buy digital products, and we consume services through digital channels. Popular entertainment, like movies, television, music, and other media are delivered via online streaming platforms which we seamlessly consume across phones, laptops, and televisions. Physical goods, like groceries, books, toys, computers, and more—things which formerly required us to visit a store to acquire—are now delivered right to our door at the click-of-a-button, or more impressively at the vocal command of a digital assistant.

In our work lives, we produce our value in digital environments, and we manage ourselves with digital tools. Paperless offices are more common than ever, and the market for SaaS and cloud software is forecast for double-digit growth into the foreseeable future, with companies like Microsoft and Salesforce leading the charge. Even in-person and/or analog services (such as training and enablement, consulting, and other professional services) have transformed to offer digital alternatives.

Gain the insight to go-to-market confidently with data

Technology suppliers need accurate market data to help them size and analyze markets, identify and capitalize on sales opportunities, evaluate partnerships and alliances, and hone operational best practices. 

As author and futurist, Geoffrey Moore, puts it: “Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.”

Or, to put it another way, without data, tech companies are left to go on gut instinct and intuition to direct critical business decisions; an unenvious position for any technology executive to be in.

Critical applications for data in a tech marketing strategy

While the use cases for data extend well beyond marketing and sales, it’s value can most readily be seen in support of commercial activities. Here are four key areas where data is crucial for business success:

1.       Confident Decision Making

Minimize executive doubt by integrating data into decision-making processes. Prioritize product roadmaps, identify sales targets, generate leads, retain customers, and more with the right data.

Data is logical and intuitive.  When companies have proven facts, they can be confident in the decisions being made for the organization. Data gives the ability to understand the market and pinpoint areas of weakness for the business and helps identify how to adjust as needed.

For instance, when analyzing the best approach for a new entry or further penetration of a market, a tech company must consider how leveraging channel partners can expand their own reach to meet the needs of both the short-head and long-tail. This vast and complex ecosystem may require many partnerships and alliances to effectively serve the market in question and meet growth objectives. Reliable data can help you decide which channel partners to engage, or if merger and acquisition activity makes more sense.

2.       Highly Targeted Marketing

Clients are inundated with marketing coming in all different formats and from many different brands.  Every business is fighting for mindshare. Keep abreast of market trends and stand out from the competition with resonant, data-informed branding and messaging.

It is imperative for a company to be able to market itself as a solution to niche problems and connect with customers on an emotional level using data. The right analytics provides an organization with the information to be a thought leader and helps inspire content that is meaningful to its audience.

When a technology supplier can effectively segment their market into similarly characterized groups of customer targets, they can easily understand the pain points of the customer and how their solution addresses them. This powerful insight translates into impactful value propositions and strong go-to-market messages.

3.       Intelligent Partnerships

Companies today have many underperforming partners that generate significant expenses.  Reveal partnership opportunities not immediately apparent with detailed market data and optimize your strategy with data.

Understand buyer personas and journeys on a new level and address the long-tail market needs with the best possible partners. Quickly find answers to critical questions like what can partners do, where, and with whom?

A common challenge for technology marketers is finding unattached partners before their competitors do. Too many companies spend months going after prospects that in the end provide no value. The right market intelligence can rapidly provide partnership opportunities, revealing insights in minutes that companies would otherwise spend months developing in-house.

4.       Optimized Operations

Become a leaner, more competitive organization with spend and performance benchmarking insights. Invest the right amounts in the right areas to maintain and grow market share while cutting costs to become more profitable.

Data gives tech companies the insights needed to improve efficiency and get more done with less time and resources.  Eliminate and reduce unnecessary processes with data-driven decisions. This not only applies to the product and services offered, but to human resourcing decisions as well.

The use cases for operational efficiencies abound across technology organizations. To just name a few:

Sales reps can save time in pursuing partnerships that do not make sense. 
Ops managers use data to analyze supply chain issues.
Product teams can find the bottlenecks in production to run smoother operations.

Analytics also provides the business models needed to implement intelligently conceived pricing strategies. By using data effectively, tech executives can also understand how a change in cost and services affects customer demand to protect the bottom line.

IDC’s foundation of data and insights covers a breadth of technologies, geographies, and industries to provide clients with the key IT data that is critical for their business. Get the insight to drive success with IDC’s Data & Analytics Solutions.

Related Reading:

IDC’s Data and Analytics Solutions
The Digital-First Era Demands a New Marketing and Sales Model: Introducing Adaptive Customer Engagement

Agriculture has always had a data problem. After the invention of writing around 3500BCE, Nisaba, the Sumerian goddess of grain, became the goddess of grain, writing, accounting, and surveying. Like farmers of today, even a goddess of grain had to tackle the problem of on-farm data. The oldest examples of ledgers from around the same period record the inventories and distribution of wheat, barley, and other crops on clay tablets. The invention of writing and accounting was a technological solution to an agricultural problem, one of the first examples of AgTech that has drastically changed the world. Today AgTech has the potential to change our world once again.

Throughout history, most of the food produced was consumed on farm or processed and sold locally in limited quantities. Until the 1930s, the average farmer produced enough food to provide for ten people. In the last century, however, yield per acre has increased exponentially. Today, the average farmer produces enough food to feed over 150 people and is doing so more and more efficiently. Mechanization, advances in agronomy and understanding of genetics have bore fruit (pardon the pun) and much of the progress has come from robust research and development by universities, agribusinesses, and farmers. This massive increase has been known as the green revolution. Ultimately, this progress has been achieved through the harvesting of raw data around crop yield, quality, and economics to inform best practices on the farm.

Economically, this increase in production has not translated to an increase in value for raw food. The main increase in value from agriculture production from the Green Revolution has been by the value-added supply system. Most food enters a complicated global supply chain. Raw foods are gathered, cleaned, stored, sorted, shipped, blended, processed, combined with other ingredients to produce a bevy of products that are transported to waiting consumers adding magnitudes more commercial value than the raw food had in its local market. Wheat left to spoil in a field has no value compared to raw wheat stored in a silo, but bread is ten to one hundred times more valuable than siloed wheat. Furthermore, wheat left uncleaned in bins will inevitably loose value over time or it may spoil and become useless. We are seeing similar trends with on farm data.

Over the last several decades we have entered the next agriculture revolution, Agriculture 4.0. Farmers have increased the amount of data being harvested from the fields along with their crops and many understand that this data has value. The average farmer generates 500,000 data points every day but not all of this is valuable. Data collected ranges from satellite data to equipment sensors readings to handwritten notes. By 2036, the amount of data collected daily is expected to increase by 800 percent, a growth driven largely by the proliferation of sensors and other connected technologies. Just as there are different qualities of crops harvested, there are different qualities of data collected and data quality determines value. Often, the process of analyzing this information is too cumbersome for the average farm, meaning most data is either not collected, goes unused sitting in data silos losing value, ultimately spoiling or is simply wasted. Similar to wheat unharvested in a field, data that is not recorded has no value whereas siloed data will only depreciate in value compared to data connected to a supply network. Dissimilar to wheat, raw data coming from the farm does not have a robust market to enter, but this is beginning to change.

Traditionally, information gathered on farm was either used to improve processes leading to greater yield or to bolster certification claims (e.g. Certified Organic), adding value to the physical product itself. As more information is associated with the physical product, the value of those products increases, allowing farmers to distinguish their product and target premium markets. For those higher up the value-added chain, more data can allow processors to match variability in crop quality caused by genetics and growing conditions to their facilities processes, thereby optimizing their returns. We can see this process continuing the length of the value chain, with AgTech firms collecting data and passing it from the farm gate to the end consumer. This allows retailers to back marketing claims (helping to avoid or defend against lawsuits), matching products to customers needs (or values), and building consumer loyalty. More vertically integrated industries such as pigs and poultry are realizing that circular sharing of this information can rapidly increase efficiency, productivity, and value. Information collected throughout the production system in pigs can help products enter specialty markets, reduce the size of recalls, match feeding practices to quality outcomes. At an extreme information collected at the retail level around customer preference can be used to inform genetic selection.

Increasing data collection and data sharing will benefit every stage of the supply chain. It will increase efficiency, lower costs, and reduce waste. In less vertically integrated supply chains, the challenge with data is to incentivise the primary producer to take the effort to gather the information in the first place. Promise of premiums has been the customary incentive in programs such as organics markets but this has had limited success and by their very nature premiums are not scalable. To increase data collection at scale, data must be shown to have intrinsic, real world, economic value. For data to have value it must be shared, processed, packaged, and have a market. To have a robust market an industry ecosystem approach is key.

The carbon offset market may be a tipping point for data in agriculture. While there is much debate around what data should be collected, how it should be collected and even if carbon offsets should exist, this market is building a framework which decouples farm data from crops and gives it intrinsic value. While much of this market is still in flux, the basics of harvesting and processing data, regulating its quality, validating, and marketing are being set in place. Farmers who can bring this data to market are directly rewarded and often find themselves able to use this data for other financial incentives including clean water or biodiversity incentives. Partners with carbon offset programs find themselves able to make money from adding a service to both farmers and carbon offset hungry clients. Furthermore, several of these industry partners can themselves use these programs to market climate friendly products to farmers or increase their social license in an increasingly value oriented consumer market. As more primary producers realize the economic benefits of collecting and sharing data those industry partners that understand the potential of data will be the next winners in the agriculture 4.0 revolution.

At its core, market intelligence helps organizations understand their customers, competitors, and markets better, and allows them to capitalize on changing conditions. As the interplay between these elements becomes more complex, organizations are investing more in aligning the innovation process with market demands. Leveraging market intelligence data, companies can better understand market size and growth opportunities, accelerate innovation, and identify key adjacencies.

Key assets for best-in-class market intelligence organizations are total addressable market (TAM) forecasts and market share data. These tools provide a clear picture of the current state of the markets a company participates including, who key competitors are and their market shares, the expected growth rates of those markets, as well as key adjacent markets that a company considers complementary, competitive, or otherwise ripe for expansion.  This forecast and share data is typically customized to:

• Align to the taxonomic lens through which the company chooses to view the market (this may be on a number of axes from technology to geography to vertical and business size segments to unique sales territories and structures)
• Provide the necessary resolution of data (e.g. at the geographic groupings that the company manages to or at the technology market detail that effectively informs product teams and individual product analysis)
• Be delivered with the latest insight at the right time, so it can be fed into yearly or regular strategic planning cycles, sales operations decisions, capital allocation analysis, product management decisions, and other critical data-driven decision processes

Related Resource: IDC’s Custom Data & Research Capabilities

The goal of all of this is to create a single version of market truth that all internal parties including marketing, sales operations, finance, strategy, and senior management can use to inform critical business decisions about investment, product development, sales team focus and allocation, partnering, M&A, and more.

Building, regularly delivering, and continually evolving such a data set is challenging work. However, the payoff is significant:

Market intelligence tools allow you to:

1. Focus on a single, credible data set  so you can reduce or eliminate internal debate over things like opportunity sizes and expected growth rates
2. Build internal consensus and agreement on highest priority target markets for core business and growth opportunities
3. Eliminate duplicate work that may be going on in regions/countries or teams evaluating similar opportunities
4. Free internal resources to focus on making strategic decisions with the data not assembling it

Without regularly developed, consistent market data, mapped to your business, planning decisions can take longer or be based on ad hoc data or opinion. Market intelligence data provides quantitative analytic support to aid in business and investment management, product and market feasibility and competitive strategy.

Free Download: IDC’s Guide to Market Sizing

IDC has found the best organizations build this single version of market truth, build consensus that it should be used by all relevant teams, distribute it widely so it is well utilized, and rigorously and regularly revise and update its taxonomies, definitions, and data so it evolves with the company. If this is done, it enables C-Suite executives to identify markets where they can obtain and retain a competitive advantage. (i.e., how to do better in markets they’re currently in and how to identify new market adjacencies they should move into). Sales Operations can use market intelligence tools to incentivize their sales team and resolve conflicting views between, typically, anecdotal sales feedback and central estimates. Marketers benefit from identifying trends early, validating the market for their products and services and crafting messages that are fresh and relevant.

What Goals Can Market Intelligence Achieve?

• Identify business growth opportunities
• Provide quantitative analytic support to aid in business and investment management, product and market feasibility
• Identify performance in existing markets
• Identify compelling market adjacencies that can be entered via organic, acquisitive, or partnering actions
• Confirm market for existing product, how to expand addressable market for current offers, and how to develop new products for existing and new markets
• Target key geographies, verticals, and other segments
• Identify key competitors in existing and planned market, their offers, market share, recent performance

Selecting the Right Market Intelligence Tool

You need to be sure that the tool you use maps the technology world, and creates extensive, insightful data, customizing it to support your critical decision making. To do that, you will want to understand the approach used to develop these custom data sets. What are the sources of data? How is the data validated and rationalized?

IDC maps the world of technology through extensive, well documented taxonomies in technology domains (hardware, software, services) as well as vertical, business size, and use cases. Through this rich set of regularly updated data and taxonomies, methodologies, and tools, as well as a worldwide network of analysts, we deliver these customized market views to the largest, most advanced, and innovative technology driven companies in the world helping them   better manage their business.

The right market intelligence data can help you overcome product and market complexities, more accurately forecast revenues and outpace competitive forces by providing current insights that feeds into your strategic planning as well as day-to-day operation of your organization.

IDC’s Custom Analytics practice and how it can help you with reliable market intelligence data.

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