What does 2019 look like for the technology industry? LBMC conducted a national survey covering business unit leaders in eight industries, including technology. The survey is considered a pulse survey, which is opinion based and not scientific in nature. The survey collected responses to determine a baseline of optimism and strategy preferences over the past 12 months and the coming 12 months.

According to the survey, optimism is high overall. One-third of technology leaders emphasized extremely high revenue growth, while others disclosed mediocre returns over the past 12 months.

Revenue Picture

Although optimism is a bit down, about 30 percent of technology leaders reported sustained revenue growth of greater than 20 percent in 2018. Two years of consistent growth are likely due to the demand for new technologies that improve efficiency and productivity as well as new tools for business intelligence and security. Still, almost half of companies had 2018 growth of 3-9 percent, taking the industry’s reported growth ratio down from 12 months ago when 13 percent of technology leaders reported growth of 3-9 percent. Only 11 percent of companies posted revenue growth of 10-20 percent in the past 12 months, compared to 22 percent of respondents in 2017. The diminished growth correlates with less optimism in the global economy and pressure to develop new products.

Like in other industries, technology leaders are looking at leveraging business analytics and increasing their marketing and R&D spending. Getting into the minds of their target clients will be important in anticipating the next wave of growth — with 21 percent of leaders needing to satisfy investors for publicly held entities.

Similarly, 30 percent of leaders are projecting growth of 3-9 percent, with about 43 percent of leaders planning revenue growth of 10-20 percent. About 17 percent of leaders are projecting flat growth in 2019.

2019 Expectations

Inflationary factors including labor costs and global disruptions mean that technology leaders in this region plan to maintain capital spending and slow hiring. About half of these leaders experienced higher than expected increases in hiring and capital spending in the last 12 months, but believe they have adequate resources now for growth in 2019.

Retention of talent will be a primary focus through a variety of incentives, such as increased compensation, training and flexible work arrangements. They do not plan to increase or add benefits.

“Our business will increase spending to focus on IT, employee training and an additional location.” -COO, Technology

For the second year in a row, technology leaders emphasize improving the performance of existing systems, but they are specifically interested in business intelligence tools and maintaining information and data security. They will seek new technology, staffing and financial solutions to help them increase margins and make the best use of existing assets even as they seek new product development and potential acquisitions.

About one-third of technology leaders were open to acquisition opportunities, while almost 24 percent will consider selling in the coming 12 months.

Do your 2019 expectations align with other industry leaders who provided insight? What are your thoughts on technology in the new year?

Contact Stacy Schuettler at sschuettler@lbmc.com or 865-862-3037.

About the Survey:

The 2018 survey collected responses from 303 leaders, 291 of those through online electronic survey and another 12 responses by third-party phone survey to gather additional detail. Approximately 65 percent of survey respondents were C-suite level leaders ranging from CEO to SVP/VP. About 9 percent were CFOs. Size of company by revenue was split between small and large companies, with about 47 percent listing revenues of less than $5 million, 18 percent at $5-$25 million, 16 percent at $25-$100 million and about 19 percent at more than $100 million. About 59 percent of respondents listed 50 or fewer employees, and 13 percent of companies listed 50 to 99 employees. About 18 percent have between 100 and 999 employees, while 10 percent list 1,000 or more employees. The majority of companies (69 percent) are regional, meaning that they have more than one office or geographic area served. About 20 percent of respondents are national, and 11 percent are international. Almost 24 percent of respondents have more than five locations, and 23 percent have two to four locations. Competitor locations were listed as mainly regional or national, with 12 percent listing international competition.