Forecasting the ICT Industry Trend
Introduction:
There is no doubt that the Information and Communication Technology (ICT) industry has been and still is changing through time. The ICT industry is going at a fast pace as the products and services of the industry continue to be upgraded or replaced frequently. For ICT businesses to succeed they need to keep up and be up to date with what is going on in the industry, they also ought to be able to predict the future trend of their business relative to the future of the industry. This forecasting prediction helps to define organizational goals, missions, objectives, and future contingencies (Shaw, 2001, p. 117).
ICT Serves National Economy:
Good businesses in general create a strategic plan which includes industry trend forecasting. ICT businesses in particular know that their industry has a great effect on the economy as a whole. The ICT industry serves all of the other industries whether it be the agriculture, manufacturer, or health and medical industry. The ICT industry is in a strong advantage since the national economy is dependent on it. It is necessary to take into consideration the effect of the ICT industry on the national economy when forecasting the ICT industry trend (Shaw, 2001, p. 176).
Five Scenario Forecasting Model:
According to the James K. Shaw, the author of the book Telecommunications Deregulation and the Information Economy, forecasting industry trend should be at least for the next upcoming 10 years. However, some might argue that the ICT industry is changing so fast that a 5 year forecast rather than a 10 year is necessary to predict industry tend. Nonetheless, Shaw has created a 5 scenario theory to help forecast the industry which includes:
1. Service Explosion Model: a scenario that entails that the “raising demand for telecommunications products and services is met with an ever-increasing number of providers able to deliver state of-the-art services” (Shaw, 2001, p. 182).
2. Corporate Consolidation Model: “a scenario greatly feared by proponents of the TRA, in which initial deregulation inevitably promotes oligopolical restructuring” (Shaw, 2001, p. 182)
3. Consumer Customization Model: a scenario which entails that the consumers will “eventually determine the emerging shape of innovation to come: (Shaw, 2001, p. 182).
4. Price Implosion Model: a scenario that is concerned with the “decreasing prices for telecommunications goods and services” (Shaw, 2001, p. 190).
5. Short-Run/Long-Run Stability: this scenario predicts that turmoil in the beginning of the decade will be followed by long term stability (Shaw, 2001. 1982).
Shaw has applied these five forecasting scenario models to the telecommunication industry between the years 2001-2010. Since we are now in the year 2007, looking at Shaw’s forecasting predictions in general it has proven that his five forecasting scenario model is relatively true for our century.
Forecasting using the S-Curve:
Forecasting new trends and the end of old trends is a necessity for any company in the ICT industry in order to continue to survive. There are several tools that can help a company forecast the ICT industry trend. One tool that is well known in business is the S-Curve analysis. The S-Curve asserts that “product innovation and improvement should become the prime concern of market participants as they move from growth to mature markets” (Shaw, 2001, p. 127).
The S-Curves analysis helps in determining prospective market trends, it is done by “taking a rigorous approach to determining the limits of current technologies and the optimal time to “jump” to a new technology” (Blenkhorn & Fleisher, 2005, p. 257-258). The leading companies, the ones who succeed in the ICT industry, are able to apply the S-Curve analysis and be able to determine the right time to “jump”, to switch, to change from an old to a new technology.
It is not easy for a company to determine whether it is the best time for the customer as well as the company to switch to a new technology. Many companies in the past have hesitated to make the “jump” and eventually lost the opportunity to enter the new market. This hesitation could have been causes for several reasons according to Shaw:
• A misinterpretation of market data;
• Reticence in taking on new business risk;
• Overlooking rising competition from alternative technologies;
• Failure to satisfy consumers during periods of expanding numbers of alternative suppliers (Shaw, 2001, p. 132).
Conclusion:
An ICT company nowadays must have a strategic plan that involves industry trend forecasting. The ICT industry is a competitive one, in a sense that companies within the industry need to keep up with its fast growing pace as new innovations and companies enter the market. To keep up, a company must use the proper tools that can help them predict future industry trends, which will eventually help the company to survive in this world of increasing competitiveness.
References
Blenkhorn, D. L., & Fleisher, C. S., (2005). Competitive intelligence and global business. Westport, CT: Praeger.
Shaw, J. K., (2001) Telecommunication deregulation and the information economy (2nd ed.). Norwood, MA: Artech House Inc.