Should the Science and Art of Forecasting in the IT market change?


As you may recall from previous blogs, one of the key issues I am focussed on at the moment is forecasting the services opportunity in key Asia Pacific and emerging markets. I am focusing first on Australia and New Zealand for obvious location reasons. However, it has to be reinforced that I am taking an emerging market focus. By the middle of the year, I expect to have most markets completed. I am doing this from a granular perspective so it is a time consuming but process and quality focused task.
As an economist by profession (if that is not an oxy-moron) one of the key issues that I have had in the past with IT forecasting is that it tends lack a clear connection to GDP other suitable measures in an economy. GDP and income growth is critical when forecasting key facets of the economy. I learnt this when I started my professional career forecasting for the real estate market. In that interest rate sensitive market, you needed to be aware of economic growth, income growth and inflation in order to accurately predict rental growth and valuations.
Part of the rigour that I am putting into the forecast process is to more accurately use general economic metrics such as inflation, GDP, currency values, unemployment etc as part of the process. This is often hidden or not regarded as too many analysts have considered the information technology sector to be somehow better or treated completely differently to the rest of the economy. Well, newsflash, it isn’t. We must take into account macro and micro economic analysis if we are able to more accurately forecast the market. The trick, art or science is to balance economic information with buyer sentiment, vendor capabilities and frankly the black magic component that every good forecaster must be able to call on.
I have several sources I use, some government, some independent and some global such as OECD or World Bank data. This all helps to ensure that I can justify forecasts in a broader economic context, and so that I can provide more science than IT markets grow at 2X the economy which has seemed to pervade the market for a long time.

About capioIT - Phil Hassey

capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets. CEO Phil Hassey established the company in 2010
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