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Improving economy, consumer demand driving tech industry growth

March 6th, 2013

BDOAmid improving expectations for revenue growth, technology CFOs point to a steadying economy and increased consumer demand as key drivers of growth in 2013.

According to a new study from BDO USA, LLP, the accounting and consulting organization, over one-third of CFOs (37 percent) polled believe that economic improvement in the United States will once again be the most important factor for industry growth this year.

Despite economic challenges abroad, more CFOs (23 percent vs. 13 percent in 2012) believe that growth in the global marketplace will “make or break” U.S. companies’ ability to reach their growth targets in 2013.

In addition, 28 percent of CFOs expect that consumer demand for innovative personal technologies will be another top driver of industry growth this year.

“In 2013, we anticipate companies will dedicate increased time and resources to improving their IT and security surveillance techniques to better prevent threats of mobile device and computer hacks.”

Industry Growth Drivers 2013 2012 2011 2010
Economic rebound in the U.S. 37% 50% 52% 68%
Consumer demand for innovative personal tech 28% 18% 19% 12%
International growth 23% 13% 11% 9%
Increase corporate IT budgets 6% 9% 8% n/a
Demand for green technologies 3% 10% 8% n/a

Fierce competition once again remains the top concern in 2013. Increasing demands for innovation are leading 45 percent of CFOs to say that competition will be their greatest obstacle this year. Eighteen percent of CFOs cited recruiting and retaining workforce talent as their biggest challenge for the coming year.

“With customer demand for innovative products and services on the rise, we expect more technology companies will face greater challenges from competitors looking to be the first to supply those demands,” said Hank Galligan, leader of BDO’s Software Practice.

These findings are from the seventh-annual BDO Technology Outlook Survey, which examined the opinions of 100 chief financial officers at leading technology companies throughout the U.S. The survey was conducted from December 2012 to January 2013.

Other major findings from the 2013 BDO Technology Outlook Survey include:

  • Rising healthcare reform costs will challenge the industry. With more healthcare reform mandates expected to be implemented this year, 40 percent of CFOs believe that rising costs and new administrative requirements associated with U.S. healthcare reform legislation will prove to be their biggest macroeconomic challenge in 2013.
  • Mobile and IT security spending is on the rise. As the use of mobile technology in the workplace increases, more than half (54 percent) of the CFOs surveyed believe that mobile devices are going to have the biggest impact on their sales channels in 2013.
  • Greater adoption of mobile technology into sales, operations and customer relations operations has seven out of ten (70 percent) CFOs expecting to increase spending on their IT and security surveillances.
  • “With mobile technology and ‘bring your own device’ polices on the rise, the risks associated with these technologies are now top of mind for many CFOs” said Galligan. “In 2013, we anticipate companies will dedicate increased time and resources to improving their IT and security surveillance techniques to better prevent threats of mobile device and computer hacks.”
  • Incentive plans structures are shifting. Nearly two-thirds (64 percent) of CFOs polled said that they will continue to use profitability-based metrics as their primary performance measure that will apply to management’s annual incentive plans in 2013. However, this represents a 15 percent decrease from last year, when 75 percent of CFOs planned on using profitability-based metrics as their primary performance measure.

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