Canadian Information Services Marl^et Five-Year Outlool< Canadian Information Services IVIarl^et Five-Year Outlook June 1996 INPUT Frankfurt • London • New York • Paris • San Francisco • Tokyo • Washington, D.C. INPUT About INPUT Clients make informed decisions more quickly and economically by using INPUT'S services. Since 1974, information technology (IT) users and vendors throughout the world have relied on INPUT for data, research,objectiveanalysisandinsightfulopinionstopreparetheirplans,marketassessmentsandbusiness directions, particularly in computersoftware and services. ContactustodaytolearnhowyourcompanycanuseINPUT'Sknowledgeandexperiencetogrowandprofit in the revolutionary ITworld of the approaching millennium. Information Services Markets Software and Services Market Forecasts - Worldwide and country data Software and ServicesVendors - Vertical industry analysis U.S. Federal Government Systems Integration/Professional Services Procurement plans (PAR, APR) Client/ServerSoftware - Market Forecasts - Awards (FAIT) Outsourcing Information Services Vendor Profiles and Analysis •llUJ.|JJJ:l.iU4J.-| Internet Opportunities — ForVendors Analyze: Electronic Commerce • Marketstrategies and tactics U.S. Federal Government IT Markets • Product/service opportunities IT CustomerServices Directions (Europe) • Customersatisfaction levels Software Support (Europe) • Competitive positioning • Acquisition targets — Research-based reports on trends, etc. For Buyers Evaluate: (More than 100 in-depth reports peryear.) • Specific vendorcapabilities Frequent bulletins on events, issues, etc. • Outsourcing options 5-year market forecasts • Systems plans Competitive analysis • Peer position Access to experienced consultants Immediate answers to questions On-site presentations -• Acquisition/partneringsearches Electronic report delivery Contact INPUT at: [email protected], or http://www.input.com Frankfurt • Perchstatten 16, D-35428, Langgons, Germany, Tel. +49 10) 6403 911 420, Fax +49 (0) 6403 911 413 London • Cornwall House, 55-77 High Street, Slough, Berkshire. SL1 1DZ. England, Tel. +44 (0]1753 530444, Fax +44 01753 577311 NewYork • 400 FrankW. Burr Blvd., Teaneck, NJ 07666, USA, Tel. (201) 801-0050, Fax (201) 801-0441 Paris • 24, avenue du Recteur Poincare, 75016, Paris, France, Tel. +33 (1) 4647 65 65, Fax +33 (1) 46 47 69 50 San Francisco • 1881 Landings Drive, Mountain View, OA 94043, USA, Tel. (415) 961-3300, Fax (415) 961-3966 Tokyo • 6F#B, Mitoshiro BIdg., 1-12-12, Uchikanda Chiyoda-ku, Tokyo 101, Japan, Tel. +81 3 3219-5441, Fax +81 3 3219-5443 Washington, D.C. • 1921 Gallows Road, Suite 250, Vienna, VA 22182, USA, Tel. (703) 847-6870, Fax (703) 847-6872 CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT Abstract This edition ofthe annual Canadian report on information services by INPUT focuses on the expansion in vendor opportunities that has taken place in the last year, particularly in the use of desktop services, business outsourcing, client/server applications, and network services, including the Internet. This report provides growth estimates of the use ofinformation services in Canada between 1995 and 2000. Estimates are made for each delivery mode including processing services, outsourcing, applications and systems software products, turnkey systems, network services, and professional services. The report also analyzes expenditures for information services by industry market for a group of markets selected by INPUT after consultation with vendors; markets include manufacturing (discrete and process), finance and banking, insurance, wholesale distribution, retail distribution, utilities, telecommunications, business services, and the federal government. Economic and business conditions in each ofthese markets are reviewed in relation to the growth in information services expenditures in the market. Research indicates that the use ofinformation technology increased in 1994 and 1995 due to the growth of the economy resulting from the stimulation of NAFTA. Canadian manufacturing fell back in early 1995 as a result of rising interest rates in the U.S., but recovered somewhat in the third quarter. (Annual results for business in 1995 will not meet expectations, however.) The growth ofinformation services continued throughout the year, driven by needs for cost reduction, increased productivity, and improved customer services. The rate of growth for information services is highest in manufacturing, telecommunications, utilities, and finance and banking. Research for this report involved interviews with 145 users and 10 vendors about plans for the use ofinformation services as well as the use of secondary sources ofresearch data and contact with industry experts. The report contains 137 pages, including 106 exhibits. ©1996byINPUT, ReproductionProhibited. CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT Published by INPUT 1881 Landings Drive Mountain View, CA 94043-0848 United States ofAmerica Canadian Information Services Market, Five Year Outlook Copyright © 1996 by INPUT, All rights reserved. Printed in the United States ofAmerica. No part ofthe publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission ofthe publisher. The information provided in this report shall be used only by the employees of and within the current corporate structure of INPUT'S clients, and will not be disclosed to any other organisation or person including parent, subsidiary, or affiliated organization without prior written consent of INPUT. INPUT exercises its best efforts in preparation of the information provided in this report and believes the information contained herein to be accurate. However, INPUT shall have no liability for any loss or expense that may result from incompleteness or inaccuracy ofthe information provided. XGCM5 • 506 • 1996 CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT Table of Contents Introduction I 1 A. Purpose and Organization i 1. Vendor Research Objectives -11 Organization 9 2. B. Methodology oo 1. Data Gathering OQ Market Assumptions 2. C. Other Reports of Interest 4 II Executive Overview 5 A. Environment for Use of Information Services Vendors 5 1. Business Forces 5 2. Market-Related Factors Impacting Information Services rr t 3. Impact on Information Technology Budgets B. Information Services Markets, 1995-2000 C. Comparison of Information Services Use 14 D. Competitive Analysis lb E. Conclusions and Recommendations zl Conclusions zl 1. 2. Recommendations for Information Services Vendors ZO TT III"W Market Analysis 25 A. Forces Driving Use of Information Services 25 1. Business Forces 25 2. Trends in the Use of Information Technology 26 B. Analyzing Use of Information Services Vendors 28 1. Factors Involved in Using Information Services Vendors 28 2. Considerations in Vendor Selection 29 C. Forecasts of Expenditures for Information Services 31 Market Assumptions 31 1. 2. Forecast of Delivery Modes 31 3. Forecast by Market Sector 34 XGCM5 ©1996byINPUT ReproductionProhibited. i CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT IV Vendor Use in Market Sectors 37 A. Manufacturing Market 37 1. Factors Affecting the Manufacturing Market 37 2. Growth of Information Services in Manufacturing, 1995-2000 39 3. Rating Vendors Serving Manufacturing 41 B. Finance/Banking Market 42 1. Factors Affecting the Finance/Banking Market 42 2. Growth of Information Services in Finance/Banking, 1995-2000 44 3. Rating Vendors Serving Finance/Banking 45 C. Insurance Market 46 1. Factors Affecting the Insurance Market 46 2. Growth of Information Services in Insurance, 1995-2000 48 ^ 3. Rating Vendors Serving Insurance 49 D. Wholesale Trade Market 50 1. Factors Affecting the Wholesale Trade Market 50 2. Growth of Information Services in Wholesale Trade, 1995-2000 52 3. Rating Vendors Serving Wholesale Trade 53 E. Retail Trade Market 54 1. Factors Affecting the Retail Trade Market 54 2. Growth of Information Services in Retail Trade, 1995-2000 55 3. Rating Vendors Serving Retail Distribution 56 F. Utilities and Telecommunications Market 57 1. Factors Affecting Utilities and Telecommunications Markets 57 2. Growth of Information Services in Telecommunications/Utilities, 1995-2000 59 3. Rating Vendors Serving Telecommunications/Utilities 60 G. Business Services Market 61 1. Factors Affecting the Business Services Market 61 2. Growth of Information Services in Business Services, 1995-2000 62 3. Rating Vendors Serving Business Services 63 H. Federal Government and Other Market Sectors 64 1. Factors Affecting the Federal Government and Other Market Sectors 64 II © 1996byINPUT. ReproductionProhibited XGCM5 CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT 2. Rating Vendors Serving the Federal Government and Selected Other Market Sectors 65 V Information Services Market 67 A. Processing Services Market 67 1. Factors Encouraging Use of Processing Services Vendors 67 2. Factors Inhibiting Use of Processing Services 68 3. Processing Services Market, 1995-2000 69 4. Changes in Use of Processing Services 71 B. Turnkey Systems Markets 72 1. Factors Encouraging Use of Turnkey Systems Vendors 72 2. Factors Inhibiting Use of Turnkey Systems 73 3. Turnkey Systems Market, 1995-2000 74 4. Changes in Use ofTurnkey Systems 75 C. Applications Software Products Market 76 1. Factors Encouraging Use ofApplications Software Products Vendors 76 2. Factors Inhibiting Use ofApplications Software Products 77 3. Applications Software Products Market, 1995-2000 78 4. Changes in Use ofApplications Software Products 79 D. Outsourcing Market 80 1. Factors Encouraging Use of Outsourcing Vendors 80 2. Factors Inhibiting Use of Outsourcing 82 3. Outsourcing Market, 1995-2000 82 4. Changes in Use of Outsourcing 83 E. Systems Integration Market 84 1. Factors Encouraging Use of Systems Integration Vendors 84 2. Factors Inhibiting Use of Systems Integration 85 3. Systems Integration Market, 1995-2000 86 4. Changes in Use of Systems Integration 87 F. Professional Services Market 89 1. Factors Encouraging Use of Professional Services Vendors 89 2. Factors Inhibiting Use of Professional Services 89 3. Professional Services Market, 1995-2000 90 4. Changes in Use of Professional Services 91 XGCM5 ©1996byINPUT ReproductionProhibited CANADIAN INFORMATION SERVICES MARKET, FIVE-YEAR OUTLOOK INPUT G. Network Services Market 92 1. Factors Encouraging Use of Network Services Vendors 92 2. Factors Inhibiting Use of Network Services 93 3. Network Services Market, 1995-2000 94 4. Changes in Use of Network Services 95 H. Systems Software Products Market 96 1. Factors Encouraging Use of Systems Software Products Vendors 96 2. Factors Inhibiting Use of Systems Software Products 97 Systems Software Products Market, 1995-2000 97 3. 4. Changes in Use of Systems Software Products 99 Appendices: A. Definition of Terms 101 A. Introduction 101 ^ B. Overall Definitions and Analytical Framework 102 1. Information Services - 102 2. Market Forecasts/User Expenditures 103 3. Product/Service Categories 104 4. Market Sectors 104 Trading Communities 105 5. 6. The Internet 105 C. Product/Service Categories and Subcategories 105 Software Products 106 1. a. Systems Software Products 107 b. Applications Software Products 109 2. Turnkey Systems 109 3. Processing Services 111 4. Outsourcing 112 5. Systems Integration 115 6. Professional Services 117 7. Network Services 118 8. Equipment Services 120 D. Computer Equipment 121 E. Sector Definitions 122 1. Industry Sector Definitions 122 2. Cross-Industry Sector Definitions 126 a. Accounting 126 b. Human Resources 126 Education and Training 127 c. d. Office Systems 127 iv © 1996byINPUT ReproductionProhibited XGCM5