Spending on IT by Western European utilities will reach $12.7 billion a year by 2017, according to a new forecast report published by IDC Energy Insights.
The report also says that total year-end IT spending by Western European utilities is expected to be $10.4 billion in 2013, with the majority (62.9%) of IT spending being dedicated to IT services.
The report, 'Western Europe Utilities Industry IT Spending 2012–2017', predicts that software spending will see the most significant boom, growing at a 2012–2017 Compound Annual Growth Rate (CAGR) of 7.4%, reaching $3.2 billion by 2017. IT services also has a positive outlook, expected to grow at average, 4.9%, while the hardware sector will barely grow, 0.7%, significantly below average over the period between 2012 and 2017.
"In 2013, total year-end IT spending by Western European utilities is expected to be $10.4 billion, with the majority (62.9%) of IT spending being dedicated to IT services," said Gaia Gallotti, research manager, IDC Energy Insights.
"The prolonged economic downturn continues to take its toll on Western European utilities IT spending potential. More than ever utilities are striving to make the most of every dollar spent to achieve operational excellence, and reduce inefficiencies. However, the need to comply with energy policies and regulation will continue to drive utilities ICT investments, translating into an estimated total Western European utilities' 2012–2017 CAGR of 4.9%."
The report shows that:
- Electricity companies take the most significant share of IT spending in 2013 with 67% ($7 billion).
- The gas and water segments are considerably smaller, but still relevant, especially in specific geographies, at 15.8% and 13.1%, respectively.
- IT services make up 62.9% of total IT spending for utilities, making it the largest share with over $6.6 billion in 2013. Following IT services are packaged software and hardware, which make up 23% and 14.1% of IT spending, respectively.
Amongst the IT Spending on IT Services sub technologies by utilities, implementation and operations make up the largest share with 34.2% and 25.5% respectively.
IDC also anticipates 4.8% growth in IT spending for the UK water sector in 2012-2017 as it invests in systems to enable better engagement with customers and improved monitoring of chemicals and energy.
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