Computer Facilities Management Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,100 computer facilities management firms in the US provide management of clients’ computer systems and data processing. Services include computer systems management, network design and development, business process management, systems integration, and IT technical support. Firms work with businesses of all types and sizes, as well as governments, and may offer services tailored to an industry.

Hiring and Retaining Technical Staff

Loss of key personnel can disrupt operations and complicate relationships with clients.

Customers Bring IT In-house

Computer facilities management services firms lose contract renewals and opportunities when clients or prospects opt to hire IT staff and manage their own systems.

Industry size & Structure

A typical computer facilities management services firm operates out of a single location, employs 15 workers, and generates about $4 million annually.

    • The computer facilities management services industry consists of about 5,100 companies which employ about 77,700 workers and generate about $20 billion annually.
    • Customer industries include businesses of all types and governments.
    • The industry is concentrated with the 20 largest firms representing 40% of revenue.
    • Large companies include DXC Technology, Century Link, Summit Information Systems, Strata Information Technology, and Asante Alliance.
                              Industry Forecast
                              Computer Facilities Management Services Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 12, 2022 - On-premise Data Centers Lose Favor
                              • Government-approved cloud services have taken the lead over on-premises data centers for critical computing workloads at federal agencies, according to a survey of federal IT officials by government technology news site FedScoop. The volume of critical computing workloads operating on government-dedicated cloud services grew faster over the past 12-18 months, according to nearly half (47%) of survey respondents, compared to workloads run in agency-owned/operated data centers (28%). And nearly twice as many respondents (56%) are looking at government-approved cloud platforms to increase hardware capacity over the next three years compared to agency-owned/operated data centers (33%). Agencies continue to view government-approved clouds as offering greater operational advantages. But advances in server performance, economy, and security control make upgrading agency data centers viable for certain computing workloads.
                              • More than half (51%) of respondents to an early 2022 survey of 1,600 IT professionals by network specialist Aryaka said that they were planning to close all of their on-premise data centers in the next 24 months, and 27% said they would eliminate at least some of their facilities – all in favor of cloud computing. The change is thought to have been caused by the rapid introduction of hybrid work models, which pushed businesses to embrace the cloud and applications delivered as a service. Nearly half of the respondents said that 25-50% of their organization’s employees were working remotely over the last 18 months, and a quarter said they closed between 25-50% of their work sites. After the pandemic-related restrictions are lifted, 43% said they anticipate that up to half of their company’s workforce will remain remote. This reduces the demand on apps and services delivered from legacy in-house data centers.
                              • The pandemic could affect demand for computer facilities management services if small businesses go out of business. Commercial bankruptcy filings decreased 4% month over month in April after increasing 26% month over month in March, according to Epiq Bankruptcy Solutions. Commercial bankruptcies decreased 5.4% month over month in February, and 11.2% month over month in January. Commercial bankruptcies were down 16% year over year in April. Small business bankruptcy filings known as subchapter V cases, a new type of filing that went into effect in February 2020 under the Small Business Reorganization Act, decreased 40% month over month in April after hitting record numbers in March.
                              • CIOs will focus more on their firms’ longer-term digital transformations in 2022 after spending time on critical, short-term projects during most of the pandemic. Global IT spending is forecast to rise 5.1% in 2022 and reach more than $4.6 trillion, according to Gartner. IT spending grew an estimated 9% in 2021 over 2020. Spending for IT services was up 10.7% in 2021 and will rise another 7.9% to nearly $1.4 trillion in 2022. Competition for top talent, wage inflation, and skills gaps among staff are expected to prompt CIOs to lean more on managed services firms and consultancies to meet their digital strategy goals. CIOs will increasingly rely on external help to implement cloud strategies that support key initiatives, including hybrid work environments. Gartner expects global IT spending by governments to increase 6.5% to $557.3 billion in 2022. Responding to and recovering from the COVID-19 pandemic will drive governments to spend more on digital transformation. Global government spending on IT services is projected to rise 8.4% in 2022 to more than $203.9 billion. Government spending on IT infrastructure and digital transformation will be enhanced by pandemic-related government stimulus packages like the US’s American Rescue Plan Act and the European Union’s NextGenEU.
                              • The pandemic changed the IT landscape in ways that are likely to be permanent, according to Adapting to remote work, rapid shifts in consumer behavior, and other challenges prompted IT leaders to learn that agility and resilience are of a more significant concern than pure cost. Many firms also learned their plans for digital transformation could be implemented at rates previously thought impossible. Leaders in IT may also have increased their risk tolerance when adopting new technologies. With the knowledge that IT projects can move more quickly, organizations will be less tolerant of long lead times and delays.
                              • Robotic process automation (RPA), or software bots, were a critical tool that helped firms automate routine tasks as they coped with office closures and shifts to remote working during the pandemic, according to The Wall Street Journal. Investments in RPA are expected to increase as IT leaders, armed with real-world success stories gleaned from earlier in the pandemic, make a case for broader adoption of RPA to their corporate boards. Global RPA revenue is forecast to have risen more than 19% in 2021 over 2020, reaching a value of nearly $1.9 billion, according to Gartner. As many as 40% of corporations increased their investments in RPA and other automation technologies during the pandemic, according to International Data Corporation (IDC). Some IT-oriented managed service providers (MSPs) offer RPA-as-a-service to clients who wish to outsource their automation tasks.
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