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Slovenias IT market is forecast to stabilise in 2012 as the market recovers from the effects of the economic crisis. Slovenian IT spending is projected by BMI to increase from US$1.0bn in 2012 to over US$1.2bn in 2016. However, spending remains below pre-2008 levels as a result of Slovenias worst recession in 20 years, with hardware particularly affected.

In 2011 many Slovenian businesses remain reluctant to spend on IT, although other organisations such as Unicredit Banka Slovenjia announced increased IT budgets for 2011. The A modest recovery is expected in 2012 as the economy improves, but risks remain to the downside, with deleveraging still an underlying economic factor. Vendors will target public sector opportunities in areas such as eHealth and eGovernment.

The fundamentals of rising incomes in a context of below-EU average PC penetration mean this small IT market should advance at a compound annual growth rate (CAGR) of 4% over the 2012-2016 forecast period. However, IT spending growth depends on business and consumer confidence in a sustained economic recovery.

Industry Developments

In February 2011 the Slovenian government unveiled a major plan to upgrade the countrys health system by 2020. The computerisation of health services is regarded as a key component of the plan, helping to provide healthcare workers with electronic access to patient records. The e-health initiative is also expected to boost efficiency, with the Slovenian government estimating that it could save EUR5mn a year on e-prescriptions alone.

Meanwhile, in 2011 the Slovenian Tax Administration of the Ministry of Finance implemented a longawaited overhaul of the 20-year-old tax administration system. The EUR21.5mn project to build the new system was aimed at boosting control of tax collection by modernising tax procedures and improving transparency.

Slovenia is determined to consolidate its status as one of the most advanced of the 2004 EU accession states. EU funding for its Competitiveness and Innovations programme for 2007-2013 period includes substantial sums to support ICT policies. There are also additional sums for entrepreneurship and innovation, which can have IT applications.

Competitive Landscape

In 2011, many IT services vendors reported a slightly improved situation in the Slovenian market, with increased demand, but strong price sensitivity. This was exemplified by Slovenian solutions provider Adacta, which reported that it was on track for flat earnings in 2011 on a 10% increase in revenue. The Llubijana-based company reported a net profit of 1.2mn euro (US$1.6mn) on 13.2mn euro in revenue in 2010.

In Q111 regional IT leader S&T reported that Slovenia was one of three CEE markets where its revenue declined, as the effects of the economic situation continued to be felt. Overall revenue was down 9% year-on-year in Q111. In 2010, S&T launched a new verticalisation strategy designed to help the company return to profitability.

Computer Sales

Slovenian sales of computer hardware (including desktops, notebooks and accessories) are projected at US$499mn in 2012, with modest single-digit growth compared with the previous year. In H111 the PC market remained sluggish, with one factor behind the negative trend being continued business caution in the corporate and small and medium-sized enterprise (SME) segments.

Slovenian companies have continued to put IT investment plans on hold, leading to a further slump in desktop sales. There could also be a boost from previously delayed purchases as a result of the economic situation, and base effects meant that BMI expected faster growth to be reported in H211.

Software

The software market in Slovenia is forecast to be US$217mn in 2012, with a return to single-digit growth. The economic crisis led some companies to review IT budgets or look to defer systems updates, and margins pressure encouraged them to focus on reducing costs. However, solid market growth is expected through to 2016, with software revenue growing faster than hardware at a CAGR of 6%.

Slovenia is a relatively mature software market for the region and the relative saturation (79%) of the large enterprise market in terms of basic enterprise resource planning (ERP) applications should encourage vendors to look to other products to maintain growth, or else focus more on vertical specialisms. Although large and very large enterprises still account for about half of the spending on enterprise application solutions (EAS) in Slovenia, more than 64% of new installations are reported to come from SMEs.

IT Services

The Slovenian IT services market is projected to grow to US$292mn in 2012, with a return to single-digit growth as the economic situation improves. The market was expected to pick up in H211 and a 5% 2012- 2016 CAGR is forecast, with support and maintenance accounting for more than 25% of revenue. Despite the recession, vendors continued to benefit from IT projects tendered across various sectors ranging from the public sector to banks, education, retail and financial institutions. In the long term the IT services market is set to expand as Slovenian organisations upgrade IT systems to gain or maintain competitive advantage following EU accession. Telecoms service providers represent an opportunity for IT vendors due to rapidly growing demand for data-intensive mobile applications.

E-Readiness

The Statistical Office of the Republic of Slovenia (SORS) 2008 data about ICT adoption by enterprise suggests room for further market development, particularly among smaller and medium companies, but also a need for continuing education by vendors. According to the data, internet access was nearly ubiquitous at 97% among companies with 10 employees or more, up by 1% from the same period of the previous year. Broadband access reached 80% among the same group.

The large majority of companies use the internet mainly for email and information rather than ecommerce. Nearly 30% of enterprises with 10 or more people do not even have a website. Only 18% of large companies offer online ordering on their website and only 5% offer online payment. The corresponding figures for small and medium companies are even lower.