MARKET | Dec 20, 2018

ICT: how are investments growing?

Assintel Report 2019: investments in IT on the rise in Italy. Comment by Orazio Viele, Director of Technology, Innovation and Research at Engineering.

Digital Transformation is no longer a term that has been used and abused but is gradually becoming a real need perceived by medium-sized companies as well. According to Assintel Report 2019, in fact, the push towards a technological evolution is also strengthening in Italy, with investments aimed at implementing solutions such as Cloud Computing, Mobility, Social Business, Big Data and Analytics.

An acceleration in terms of awareness of the importance of ICT as a tool now necessary to improve the level of competitiveness, in other words remain competitive on the market. “The adoption of digital technologies,” says the report, “is no longer the prerogative of a few visionary companies, but has become incorporated into the investment plans of many Italian companies and institutions that are now looking with growing interest at solutions such as Virtual Reality and Augmented Reality (VR/AR), Robotics, 3D Printing and the Internet of Things (IoT), classified by IDC as Accelerators of Innovation”.

How much is being invested in ICT and how?

Investments are seeing the focus shift from maintaining existing infrastructure to solutions that make it possible to expand the market by innovating products and services.

According to Assintel Report, the overall Italian ICT market amounted to 30 billion euro in 2018, a rise of +0,7% compared with 2017 which, looking forward to the period 2017-2021, will lead to an annual average growth (CAGR) of +1,3%. Looking at the details of the investments, it can be seen how the market for fixed and mobile telecommunications services (with spending in 2018 of slightly under 7.2 billion euro) is in gradual decline, although this is expected to be more contained in the coming years (CAGR 2017-2021 of -0.6%).

While there is a continuous and constant decline in business investment in traditional ICT, there is a lively and growing market in the most innovative technologies such as Cloud, IoT, robotics, drones and also Virtual and Augmented Reality. A positive trend is recorded by the Public Cloud, for which the spending of Italian companies will exceed 1.8 billion euro in 2019 – an increase of *25% compared with 2018 – especially with regard to cloud infrastructural (IaaS) and platform (PaaS) services.

The report shows that the most important areas of spending include Mobile Broadband, Phablet and Notebook Ultraslim connectivity, probably oriented towards the adoption of Smart Working and creation of a flexible and agile working environment.

On the rise are also spending on Digital Signage technologies, which could exceed 150 million euro in 2019 with a growth of +21% compared with 2018, and on Cognitive/AI technologies, which will reach 25 million euro with a growth of +44% compared with 2018.

Companies intending to control costs

Investments not only growing, but aimed at rationalizing and optimizing: the 45% of respondents say they want to control IT costs quickly, i.e. spend better to achieve flexibility and scalability of systems. The reduction in business costs, according to the report, emerges as the second business priority for Italian companies for 2019: the macro-economic scenario of recent years has in fact led the realities of all sectors to focus on strategies aimed at the rationalization of expenses and operating costs.

“In my opinion,” says Orazio Viele, Director of Technology, Innovation and Research at Engineering, “we need to ‘interpret’ what meaning was given by those interviewed to ‘reduction of IT costs’. If with this statement they wanted to indicate a path to reduce the use of technologies in business processes, then I consider it extremely dangerous and a harbinger of serious problems for those who argued it with this meaning. If, instead, as I believe, ‘reduction of IT costs’ was taken to imply “efficient use of technologies”, then I believe that we can give it a qualitatively positive connotation.

Faced with different ‘points of discontinuity’ that have occurred in the course of the history of IT (often called in a dramatic way ‘revolutions’), the instinctive attitude of the market can be summed up in an aphorism that I read in a Gartner report a few years ago: ‘buy and pray’. In other words, customers who are afraid of falling behind the emergence of ‘revolutionary’ technological innovations buy technologies but then ‘pray’ that they are really useful for their business processes.

If we want to look at cost reduction, the efficient use of technologies implies, on the other hand, a conscious approach to their acquisition and therefore reduction of waste. A conscious approach means choosing and applying technologies to achieve real improvements in business processes: improvements that are measurable quantitatively because technologies are not assets that bring value in themselves, but ‘generators’ of induced value, for example by reducing the times of a production process, allowing widening of the customer base and improving the quality of a product.

If ‘cost reduction’ is interpreted in this way, then it is not to be considered an oxymoron, as might appear at first glance, to state that it is ‘innovation reducing IT costs’. I wish and hope that those who responded with this statement wanted to imply what I have just illustrated”.