Top five limiting factors for technology sector businesses:
- Fierce competition
- Financial management issues
- Growth and talent management problems
- Taxation
- Consolidation
New research, commissioned by Vantis, the AIM listed accounting, tax and business advisory firm, has identified the top five issues and challenges facing mid-tier companies in the technology sector.
Vantis conducted interviews with owners and directors of software development companies, consultancies and solutions providers, ISPs, networking and hosting suppliers, vendors and resellers, turning over from £1 million to £50m across the UK. The aim of the 2007 Vantis research was to identify the primary issues and challenges that these mid-tier businesses must face up to in this sector.
The Vantis research results ranked business ‘pain points’ common to most of the mid-tier companies in the technology sector, as follows:
- Competition in the marketplace is increasingly fierce from new entrants to the market, many of them not traditional suppliers to the sector
- Financial issues - cash flow was cited as the key business limiter in this environment and debt/credit control is a fundamental issue
- Growth and talent management - these issues are of key importance and there is a need for detailed advice
- A challenging tax environment - the complex array of tax issues create considerable additional expense and liabilities
- Consolidation – there have been strong signs of integration in the sector, where small businesses are being bought out by larger players at prices attractive to the seller.
Nick Winters, Head of Technology & Telecoms at Vantis comments, “This research has identified some interesting areas of concern within the sector. Although most of our predictions were validated, it was interesting to find that an increasing number of companies are putting more focus on Enterprise Risk Management issues and that operational efficiency is a key priority. Understanding the pain points of these companies is integral to Vantis providing the best advice to its clients.”
In addition to the above issues, Vantis’ research also revealed that competition is an increasing concern to technology businesses. In the face of globalisation, drops in products and services prices and the arrival of new entrants in the market, ICT mid-tier companies are particularly vulnerable to the competitive landscape. Furthermore, technology companies are operating in a fast-moving industry, with very short go-to-market timescales, which forces them to try and be constantly ahead of the game.
Winters continues, “These factors which conspire to keep owners and managing directors awake at night are part of the increasing pressure on this sector of the market. Commoditisation of products and services in the IT arena continues at great pace and the ability for the players to differentiate themselves and their offerings becomes ever more difficult.”
For further information please contact Nick Winters. Alternatively, please complete and submit the contact form below.