Author: hhenry

Integrating External Data & Enhancing Your Prospects

Most companies with IT account teams and account selling strategies have a database in a CRM system and the company records in that database generally have a wide range of data elements and varying degrees of completeness. Beyond the basic demographic information, some records are more complete than others with regard to providing information that can tell the account team more about the drivers of sales potential. In some cases, this additional data may have been collected by internal staff, in other cases, it may be the result of purchased data from organizations like Harte-Hanks, RainKing, HG Data or any number of custom resources/projects.

There are some other data elements that can be added to your database from freely available resources. These data elements can enhance the company records by showing which companies will provide better opportunities. One simple example we use in The Global 5000 database is the number of employees that have a LinkedIn profile. This may be an indicator that companies with a high percentage of social media users are more likely to purchase or use certain online services. That data is free to use. Obviously, that indicator does not work for every organization and each company needs to test the data correlation between customers and the attributes, environment or product usage.

Other free and interesting data can be found in government filings. For example, any firm with benefit and 401k plans must file federal funds and that filing data is available from the US government. A quick scan of the web site data.gov  shows a number of options and data sets available for download and integration into your prospect database. The National Weather Center, for example, provides a number of specific long term contracts which can be helpful for anyone selling to the agriculture market.

There are a number things that need to be considered when importing and appending or modeling external data. Some of the key aspects include:

  • A match code or record identifier whereby external records can be matched to your internal company records. Many systems use the DUNS number from D&B rather than trying to match on company names which can have too many variations to be useful.
  • The CRM record level needs to be established so that the organization is focused on companies at a local entity level or at the corporate HQ level.  For example, if your are selling multi-national network services, having lots of site recrods is probably not helpful when you most likely have to sell at the corporate level.
  • De-dupe your existing customers. When acquiring and integrating an external file — those external sources won’t know your customer set and you will likely be importing data about your existing customers. If you are going to turn around and send this new, enhanced data to your team, it makes sense to identify or remove existing clients from that effort so that your organization is not marketing to them all over again.
  • Identifying the key drivers that turn the vast sea of companies into prospects and then into clients will provide a solid list of key data attributes that can be used to append to existing records.  For example, these drivers may include elements such as revenue growth, productivity measures such as revenue per employee, credit ratings, multiple locations or selected industries.

In this era of marketing sophistication with increasing ‘tons’ of Big Data being available and sophisticated analytical tools coming to market every company has the opportunity to enhance their internal data by integrating external data and going to market armed with more insight than ever before.

Learn more about more the [yellow]Global 5000 database[/yellow]

 

Technology and IT Spending Metric Options

When planning for global market growth and sizing up the opportunities in various countries, there is often a lack of data available from various industry sources. One could look at GDP figures or population data by country – both of those have some limitations. A better gauge might be to look at those business entities that generate the most revenue in each country as they will help contribute to other businesses in the geography and in general, raise the level of B2B activity overall.

Diving into the data of the Global 5000 companies – the 5000 largest companies in the world based on revenue – we find a couple of different ways to help guide your estimates of market size and rank order.

The first list is the top 10 countries by number of firms in our Global 5000 database with HQ in the country.

  • USA – 2148
  • Japan – 334
  • China – 221
  • UK – 183
  • Canada – 124
  • Germany – 98
  • France – 84
  • Australia – 77
  • India – 76
  • Italy – 65

For each company in the database, there is an estimate for the amount spent on IT – both internal and external costs. When we take those amounts for each country and look at the average IT spending for these leading firms, we see a different order of countries which would also prove to be attractive targets.

  • France – $902 million per company
  • Germany
  • Netherlands
  • Spain
  • Venezuela
  • Italy
  • China
  • Switzerland
  • South Korea
  • New Zealand – $545 million per company

Of course, all these companies are the biggest of the big and not all companies in that country will spend at that level — but it is indicative of the relative IT spending on a country basis and again shows some of the potential for attractive markets as you eye global opportunities.

Learn more about more the [yellow]Global 5000 database[/yellow]

Private Companies and Public Companies – Sizing up IT Spending

One aspect of the Global 5000 company database is that we include all types, shapes and locations of companies including those that are publicly listed as well as private firms. For those who sell to corporations (as opposed to consumers) there is a great deal of interest in private companies. A lot of this can be attributed to the fact that public companies have to disclose so much about their size, shape and all aspects of their organizations – most everyone knows or can find out what they need to. Privates, on the other hand, are less well known and hold the allure that there is great, undiscovered opportunity in there.

To get a sense of the dynamics of the public/private we examined a number of metrics related to companies in the Global 5000 database.  It is true that more large companies are publicly traded. Of the 5000 companies, nearly 4,000 are public and just over 1,000 are private. That is the inverse of the market as a whole where most companies in any country or industry are private. Here are a few facts about each group.

  • The average revenue for a public company in the Global 5000 is $10.3 billion while the private companies averaged $10.6 billion
  • Public companies reported an average revenue per employee of $214,000 while private companies were just over $282,000
  • For both 2010 and 2011, revenue for both public and private companies grew by slightly more than 11.5%. Virtually no difference.
  • In both cases, IT spending per company is over $290 million and approximately 2.7% of revenue.
  • Total IT spending for Global 5000 public companies is approximately $1.1 trillion while private Global 5000 companies will spend about $300 billion.

The bottom line here is that big is big. It does not make much difference if the company is public or private, the big guys will spend a lot on a wide variety of products and services including IT products and services. The real difference is in the number of these large opportunities there are. Just because we find a few of these nuggets among the privates, does not mean all privates look alike.  Most are quite a bit smaller.

Learn more about more the [yellow]Global 5000 database[/yellow]

The Flip Side of IT Spending and Productivity

In our last post we explored the companies in The Global 5000 that showed the biggest gains in revenue per employee AND spent the most on IT.  The idea is that this group will continue to spend and strive for continuous improvements — making some great potential targets for those IT suppliers that can show their offerings help save money.

Now, we turn the page and explore the other end of the spectrum. Again, taking companies in the Global 5000 data base we now look at the bottom 2000 companies in terms of revenue per employee change  That is — they are not on a positive track. From this group we then took the lowest 1000 firms in terms of IT spending.

We can look at this set of companies in one of two ways – either:

  • they are ripe opportunities who will need to invest in order to grow their revenue faster or get more productivity out of the existing workforce
  • OR – they are not going any further with technology spending and their growth is not going to be via increasing spending per employee.

We should run to the first group and run away from the second.  Here is the profile of these 1,000 companies where these industries have traditionally been a challenge for the IT suppliers.

The top countries are:

  • USA
  • UK
  • Japan
  • Canada
  • France
  • Spain

And the top industries:

  • Industrial Manufacturers
  • Retailers
  • Consumer Goods Manufacturers
  • Business Services
  • Construction

For more information about The Global 5000 database [yellow]click here[/yellow]

 

IT Spending and Productivity Improvements in Global 5000 Companies

One of the simple questions that business management has to ask when considering new spending is “will this help me make money or save money?” If the answer is not clear to either of those choices, it is hard to see that investment happening. It does not matter if this pertains to IT spending, a new facility or any other kind of major outlay. There has been a great deal of research conducted  in past years showing that the investment in technology does, in fact, lead to an increase in productivity in many cases.

A convenient way to look at this is to simply calculate the revenue per employee figures for a company and compare them to your peers. We did this recently with The Global 5000 companies and took it a step further.

First we looked at companies in the Global 5000 list that have shown an increase in their revenue per employee ratios over the past two years. We selected the top 2,000 based on the largest percent increases in revenue per employee figures. Next, from this top 2000, we looked their corporate IT spending and ranked them from largest to smallest and selected the top 1,000 IT spenders out of the selection.

Therefore, the group of 1,000 we have examined are those growing revenue per employee the fastest and spend the most on IT.  A reasonable assumption would be that will continue to spend and strive for continuous improvements — making some great potential targets for those that can show their offerings help save money.

Our list of the best 1,000 for this selection are in these industry groups:

  • Financial Services
  • Large Industrials
  • Oil & Gas
  • Technology companies
  • Basic Materials
  • Business Services

And the leading countries for these key targets are:

  • USA
  • Japan
  • China
  • UK
  • Germany
  • France
  • Canada
  • Switzerland
  • Australia
  • Brazil

In our next post, we will flip this analysis and look at those that are not growing revenue per employee and do not spend a lot on IT — those may be an opportunity in waiting or places to avoid spending a lot of time on.

You can find more information about The Global 5000 database by [yellow]clicking here[/yellow]

 

Comeback Kids – IT Spending and Growth in Construction and Retail Markets

During the global economic crisis in 2008 and 2009, the financial industry had all kinds of problems as we are all aware which not surprisingly  impacted IT spending. Since then they seem to be doing just fine. But other problems have lingered. One of those challenging segments is the construction industry which has taken a lot longer to recover. In addition, particularly in the US, retail drives so much of the economy and that industry suffered as well.

Fast forward to 2012 as the economy has been on the mend and we look back at the progress over the past few years and see 2 industries that have seen solid growth in IT spending along with growing revenue.

Among the Global 5000 companies, there are 210 companies in the Construction industry and 340 companies in Retail.

Over the past few years, the Construction companies saw year over year changes as follows:

  • 2008 grew at 12.3%
  • 2009 was negative – 7.6%
  • 2010 grew again at 6%
  • 2011 surged ahead 12.2%

Revenue for Retail companies did not fall as much and did not bounce back as high either.

  • 2008 growth was 6.9%
  • 2009 was negative – 2.6%
  • 2010 grew again at 5.6%
  • 2011 showed growth at 7.7%

Looking at IT spending in those industries, the Construction companies in the Global 5000 spend approximately $11 billion annually while those in the Retail industry spend over $62 billion per year … both substantial sums.

In both cases, the IT spend in these two sectors grew more than 9% from 2010 to 2011 and for those providers in the right spot to watch these comebacks, the rewards can be attractive.

IT Spending in the Financial Industry

In a previous post, we looked at IT spending across the landscape of all major corporate industry verticals of The Global 5000 sized firms and noted that the Financial markets lead the way in terms of spending on IT products and services. Finance covers a wide swath of companies and market niches so we are drilling down a bit further here to look at countries, sub-segments of finance and some specific company examples.

The major powers in the world are naturally where we find the biggest finance spenders. In this case, among Global 5000 companies the largest firms are US, UK, Japan, France, China and Germany.  Finance organizations in these 6 countries represent approximately 60% of the finance IT spending market. While many like to rush into new markets to be present when emerging growth starts to ‘pop’ focusing on the big players can obviously pay dividends.

Withing the finance sector, there are many types of organizations that specialize in various products and services. Looking at the 2 largest – banking and insurance, those verticals represent over 70% of the financial IT services market and banking is 50% larger than the insurance market. These two areas dwarf other niches including brokerage, private equity, holding companies and other investment services firms.

Looking closer at banking, US, France, China, UK and Spain are the countries with the largest IT spending. Drilling down further, we find the top 5 banks by IT spending metrics are:

  • BNP Paribas SA
  • Banco Santander, S.A.
  • Bank of America Corporation
  • HSBC Holdings
  • Industrial & Commercial Bank of China (ICBC)

In the insurance portion of the financial markets, the major countries leading the way here are: US, Japan, France, Germany and UK. Using the same type of benchmarks applied to insurance company revenues, the Top 5 Global 5000 companies would be:

  • AXA Group
  • Allianz SE
  • Assicurazioni Generali
  • Nippon Life Insurance
  • Meiji Yasuda Life Insurance

As you look at market planning and forecasts for serving the financial sector, lining up these segments, countries and individual companies with your own internal systems will help point you in the direction of some of the big spenders.

 

IT Spending by Industry … a way to estimate market potential

Nearly every organization likes to measure its activity and spending by comparing themselves to other like firms in their peer group.  Over the years,  IT spending has been one area that companies always try to measure this way.

The vendors who supply IT products and solutions have used similar metrics to help define market segments and accounts that may spend more than others and be more attractive candidates.

We took this concept to the companies in The Global 5000 — the 5000 largest companies in the world that are both public and private, across all countries, all industries. Using available research data we find IT spending as a % of revenue that can range from less than 1% for the construction industry to 6% in the financial services industry. The next step was to apply these IT Spending percentages for each industry sector to each company in the database.

Adding up the totals across the database, we find a total of $1.4 trillion is spent on IT products and services by the 5000 largest companies in world. Looking geographically, the countries with the largest amount of IT spend are the 3 largest by GDP as we would expect — US, Japan and China. Those 3 countries represent 52% of the large company spending in the world. Taking this a step further, if you are a provider of IT products or services and participate in markets around the world, a good metric for your business would to have 50% of your revenue coming from these 3 countries.

Looking at this from an industry perspective, the largest spending industries are Financial Services, Oil and Gas companies and the Telecommunications segment. That’s where the money is.

When we look at key industries within various countries the data does show some key differences.  For example, in the US, Health Care and Retailers come up strong in the top industries. In Japan, Autos and Industrial segments rise to the top. All of these metrics are worth considering as companies look to decide what markets, industries and geographies to focus on.

We’ll look to explore more details on IT spending by industry and country in the coming posts.

For more details on The Global 5000 database — click here

 

China Eyes Canadian Energy Resources

One of the interesting news announcements this week, was about CNOOC of China buying Nexen of Canada – an energy exploration company.  CNOOC is a $38 billion company and Nexen reported revenues of $6.3 billion in 2011.

For any company looking at global markets, there are some interesting developments wrapped up in this announcement.

This is a major step for a Chinese company, a major step in the energy industry and a major step for Canada.  Consider a few facts compiled from our Global 5000 database.

  • Canada’s energy assets are substantial. Looking at Global 5000 companies in Canada, right behind Financial Services, Oil & Gas and Mining are the next 2 largest industries representing 27% of the largest companies in Canada. So, as the world thirst for natural resources and energy continues to climb … Canada will get more attention.
  • Looking at growth rates over the past few years, China has grown faster than the rest of the market. So has the Oil & Gas industry as well as the Mining industry. The total Global 5000 grew 11.4% in 2010 and 12% in 2011. China based Global 5000 companies grew 33.5% and 30% in 2011. Oil & Gas firms reported growth of 22% and 24% for those same years while mining companies grew even more at 40% in 2010 and 30% this past year. So, this deal hits right at the heart of a number of growth segments.
  • This is a second big deal by a Chinese company in the North American market — see our article earlier this year on the Chinese bank ICBC entering the US market via an acquisition.

The bottom line here is that China’s economy is huge, its growth — even at lower rates — is still a huge differential and it has a continually increasing need for energy resources. Canadian companies have those resources so we can expect more deals and activity.

For more information about The Global 5000 and companies like these that are included, visit the database page.

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