Polish IT spending is expected to grow at a compound annual growth rate (CAGR) of 9% between 2011 and 2015, with IT services driving growth for the sector as a whole. The size of the IT market is estimated to increase to around US$12.8bn in 2015. Polish consumer spending bounced back in 2010, with electronics goods such as notebooks among the biggest drivers of growth.
Poland still looks well positioned to be one of the best regional IT market prospects. In H111, demand was strong across several key IT spending segments including telecoms, manufacturing and utilities. Some public sector projects are expected to be on hold ahead of national elections in October 2011, meaning that vendors are likely to focus on recovering private demand.
Enterprise IT spending should pick up in 2011. It is estimated that the average product replacement lengthened by around half a year during the economic slowdown, creating a latent demand for upgrades. Business and consumer investment will remain vulnerable, however, to any sign of weakness in the eurozone or global economic recovery.
Industry Developments
The introduction of new VAT rates, effective from January 1 2011, was reported by vendors to be providing a boost to sales of financial and accounting software. Vendors were adjusting their software to the tax change as they anticipated brisk sales. The new tax rates were announced in a bill on September 9 2010.
Poland's National IT Infrastructure Plan for 2007-2013 was formally adopted by the government in 2008, following a public sector IT spending slowdown in preceding years. In 2009, EU funding drove a series of projects, with the IT component worth nearly EUR1bn. According to the National IT Infrastructure Plan, some 75% of funds spent on government IT projects over the next five years is expected to come from the EU.
Competitive Landscape
Thanks to a programme of modernisation and privatisation, the utilities sector is a particular vendor focus. In H111, European leader S&T Services Poland signed an enterprise resource planning (ERP) system development contract with gas transmission operator GAZ-System after prevailing in a public tender. Meanwhile, ABG, a company in the Asseco Group, announced that it was to focus on providing IT services and solutions for the power sector.
Local companies reported a revival in demand in 2010 for ERP implementations, which had dropped off during the global economic crisis. Polish IT leader Asseco Business Solutions said that demand from this segment in 2010 had far exceeded that of previous years. SAP dominates the Polish ERP software segment, with revenues at twice the level of nearest competitor Asseco and nearly three times that of its global rival Oracle.
A potential demand driver will be organisations looking for help to utilise efficiencies from cloud computing such as software-as-a-service (SaaS) and infrastructure-as-a-service. In July 2010, IBM announced that it would establish a university cloud computing centre in Wroclaw. IBM will cooperate with the Wroclaw University of Technology to make cloud-focused courses available to students.
Computer Sales
Poland's computer hardware sales are projected at US$3.5bn in 2011 and are forecast to reach US$4.8bn by 2015. In the medium term, a quick look at Poland's forecast growth trajectory reveals how quickly Poland could close the PC ownership gap with Western Europe as incomes (driven by the effects of EU membership) increase.
PC penetration reached around 50% in 2008 and BMI projects that it could reach 75% by 2015. Falling prices of both desktops and notebooks have been a major growth driver for the hardware market, along with EU aid and economic recovery. Research has revealed that Poles are starting to purchase more highend computers.
Software
The Polish software market is projected to be worth US$2.1bn in 2011 and is likely to grow to US$2.9bn by 2015, with a CAGR of 8%. Migrations to Microsoft's Windows 7 operating system have the potential to impact positively on sales in 2011 as many businesses are still using Windows XP. Rising computer penetration in the enterprise sector has driven continued growth of software demand, despite software piracy issues.
The procurement of basic software packages such as ERP still accounts for about half of enterprise software spending, particularly in the manufacturing sector. However, vendors are increasingly focused on more specialised applications, such as customer relationship management (CRM) and business intelligence, where faster growth is possible.
IT Services
IT services spending, projected at US$3.4bn in 2011, is the fastest-growing sector of the IT market and is expected to rise to US$5.0bn by 2015. Spending on IT services is projected to grow robustly in 2011, boosted by projects delayed as a result of the economic slowdown as businesses remained cautious.
With a larger installed IT base, acceptance of the need for IT services is spreading through many organisations. While systems integration as well as hardware and software support and installation still collectively account for more than half of total IT spending, outsourcing has become the fastest-growing segment.
E-Readiness
The internet market continues to be constrained by high telephone charges and relatively low levels of computer penetration. Moreover, there are wide regional disparities, with internet penetration about twice as high in urban as in rural areas.
A recent Forrester survey revealed that, while overall online banking uptake and PC availability remained low, Polish internet consumers already matched Southern Europeans in online shopping. Poland even outperformed Spain, with 30% of online consumers having previously purchased something online, compared with just 29% in Spain.
How broadband will develop in the longer term will greatly depend on the Polish regulator's success at forcing Telekomunikacja Polska into a functional split as well as its continued liberalisation of the market. The regulator believes that the split will happen in 2011, but there are high risks that it could be delayed longer than this. How wireless technologies are deployed in the rural regions will also be a major factor in the proliferation of broadband.
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