The growth of the IT industry is nowhere close to peaking. We can anticipate the IT industry will continue growing at a rapid pace over the next decade, and this technology industry growth will be accompanied by risks.
The following are a few of the risks associated with common technology:
- Software failure
- Malicious attacks
- Hardware failure
- Human error
- Natural disasters
Because the tech industry, specifically IT, is growing so rapidly, businesses should become aware of and prepare for these risks. Buying insurance from an insurance agent can help you secure risk management for IT and protect your business.
Why Is Information Technology Growing?
The IT field is growing rapidly. The industry is becoming so huge because of a number of trends, such as jobs, economies and personal lives becoming increasingly digital, automated and connected.
The U.S. is the world’s biggest tech market at 32%. The technology industry’s economic impact is greater than the impact made by many other industries, including transportation, retail and construction. Though the U.S. may be the largest market, the majority of spending in the tech sector occurs beyond the country’s borders.
Government and corporate entities comprise the majority of technology spending. A smaller portion is household spending, such as for home-based businesses. Defining technology purchases as consumer or business purchases can be difficult as the lines blur between work life and personal life.
The categories for the IT industry market include:
- IT services
- Emerging tech
- Telecom services
- Devices and infrastructure
Spending in each category varies depending on the country. While half of the U.S. technology market’s spending goes toward software and tech services, for example, other countries may allocate spending more toward telecom services and traditional hardware.
IT professionals are optimistic about the outlook of their field due to the high demand for technology skills. Technology has also become essential to business objectives, which means technology and IT professionals play an integral part in the operations and direction of a business.
So, what triggers new growth in the IT industry? The following are a few reasons why information technology is growing:
1. Internet of Things
One of the reasons information technology is growing is because of the Internet of Things. Though still mostly in a developmental stage, the Internet of Things will continue growing and become a bigger part of consumers’ everyday lives. The Internet of Things will be heavily invested in over the upcoming years and widely installed worldwide.
Data also contributes to the growth in the information technology industry. As businesses grow and gather more data, they will need more staff and technology to search, analyze, store and utilize data to create quality services and products for customers.
3. Wireless Networks
Wireless networks also contribute to growth in information technology. Building out wireless networks may lead to more innovation in communications, self-driving vehicles and the Internet of Things. Wireless carriers like AT&T and Verizon will offer 5G mobile broadband networks, and mesh networks will connect nearby devices, allowing for more wireless innovation in densely populated communities.
4. Smart Technology
Another contributor to information technology growth is smart technology. Smart technology is being implemented in cities and vehicles. For example, wireless cameras and sensors are being added to light poles, placed outside of buildings and embedded in street pavement. These tools are important for city management, urban planning and self-driving vehicles.
During the next decade, forms of self-driving cars will likely become more widespread in the automotive industry. This means cities will incorporate cameras and sensors around the community to communicate with these vehicles to enhance crash avoidance technologies and navigation.
Healthcare also drives growth in the information technology industry. From hospital-grade technology to health-related devices for consumers, technology has become a key part of every level of healthcare. Technology helps healthcare professionals manage patient records, make diagnoses and prevent disease.
As technology becomes more widespread, so do threats to security. Hackers look to steal identities, influence elections and access corporate secrets. As such, technology for IT security is increasingly in demand, along with a demand for experts in security.
How Fast Is the Information Technology Field Growing?
What is the industry’s rate of growth? Between 2006 and 2016, the digital economy in the U.S. grew at an average rate of 5.6% annually. The IT industry is growing in the services-producing sector — growth that is driven largely by the thriving technology sector.
How fast is the information technology field growing? In 2020, the IT industry is predicted to grow at a rate of 3.7%. Of course, a trend does not occur in a vacuum, and other factors may impact the growth of the information technology field, such as workforce and market sizing. The various elements of technology, such as software, infrastructure, services and data, are all interrelated and can impact the nature of technology and the field’s growth.
How does the field grow, and what stimulates new growth? Factors that can drive growth in the IT industry include:
- Spending on emerging tech
- Product mix
- Positive government action
- Improvements to marketing efforts
- New products launched successfully
- Improvements to internal operations
- Successfully reaching segments of new customers
Alternatively, factors that can inhibit growth in the IT industry include:
- Customers postponing their purchases
- Costs for labor
- Trade policies
- Reduced margins
- Currency fluctuations
- Negative government action
- Unexpected disasters or a financial crisis
- Availability of skilled, qualified IT workers
- Increased competition from new IT firms entering the industry
Spending on emerging technology may drive or accelerate additional spending. Pricing can influence the growth of revenue in the industry, as prices generally fall over time. Additionally, fluctuations in currency may negatively impact the field, as companies may choose to limit their discretionary spending on IT purchases.
In 2020, the optimistic forecast for growth in the IT industry is 5.4%, while the conservative estimate is 1.9%. Because the U.S. is the biggest tech market in the world, growth projections for the U.S. are in line with global forecasts. The CAGR could change due to natural disasters, such as a pandemic.
If this forecast seems like a narrower range than previous years, this is because industry executives are beginning to exercise more caution in their projections to account for an unpredictable environment.
IT Industry Growth and Emerging Tech Trends
We know that the IT industry is growing. With that growth comes trends that will influence how technology is purchased and implemented for years to come. What tech trends have there been in most recent years, and what is emerging? Technology trends in 2019 included:
- Blockchain: One of the emerging trends in technology is blockchain technology. Blockchain technology can be used in smart contracts, insurance claims processing, storing of healthcare records and encoding.
- Augmented reality and virtual reality: Virtual reality and augmented reality are growing rapidly. Virtual reality immerses a user in a computer-generated, three-dimensional world. VR and AR have applications in video gaming, allowing consumers to experience vacations before making reservations, giving trainee fighter pilots the chance to test-drive aircraft safely and helping prisoners prepare for transitioning back into society.
- Drone delivery: Drone deliveries are becoming more widely used by a number of companies, such as Amazon, Apple and Uber Eats. Companies are still working to develop drone technology due to concerns that surround drone delivery, including noise pollution, range, security and the impact of weather.
- Electric vehicles: Electric vehicles have grown increasingly popular in recent years, especially as batteries have been becoming more affordable.
- Cloud computing: Though cloud computing is nothing new, its usage has been booming recently. Many companies use a type of cloud service, which means cloud computing is going to continue to evolve.
- Artificial intelligence: Artificial intelligence is also an emerging tech trend. Though AI cannot empathize or think like a human being yet, companies are working to enhance AI capabilities. AI systems are learning to respond to how consumers react to marketing campaigns, monitor patient behavior and identify and interpret facial expressions.
- Semi-autonomous vehicles: Though fully autonomous vehicles may still be a long way off, we are seeing an increasing number of vehicles that offer aspects of self-driving, such as hands-free steering, adaptive cruise control and lane-centering steering.
- The Internet of Things: Internet of Things includes smart home technology, smart cities and smart agriculture. Healthcare and manufacturing are two of the largest current IoT applications. Many companies in industrial manufacturing use or intend to use IoT devices that can improve innovation, drive efficiency and deliver better quality products.
Emerging tech categories can drive revenue growth in the IT industry. Key drivers of growth in emerging tech include the following:
- IoT connectivity
- IoT software
- IoT hardware
- Virtual reality
- Drones or robotics
- Augmented reality
- Big data and analytics
- Next generation security
- Enterprise social software
- AI applications and platforms
Emerging tech is expected to drive almost half of the growth of the IT industry’s new revenue. With tech trends and IT industry growth, businesses can face risks as a result of information technology.
Mitigating Information Technology Risks
As a business owner, you need to know how to manage risk in business. While there are significant benefits associated with information technology for businesses and society as a whole, there are also major risks surrounding privacy, safety and sustainability. How can you mitigate IT risks despite the growing risks of the industry? What do companies typically need to prepare for risks when the IT industry is growing?
Your business can prevent cybersecurity threats by:
1. Understanding How Cybersecurity Applies to Your Business
To protect your business, you first need to acknowledge and understand that the threat to your cybersecurity is real. Many business owners also tend to believe that they are less of a target to attackers if they have a small business. However, this creates a false sense of security. Any business is vulnerable to a cyber attack. As technology becomes more integrated into businesses, the risk will continue to increase for companies of all sizes.
2. Updating Software
One step you can take to mitigate information technology risks for your business is by updating your software. Ensure that you have the latest web browser, operating system and security software to protect your business against malware, viruses and other online threats. You should install key software updates whenever they are available, and your antivirus software should perform a scan after every update.
3. Training Your Employees in Security Practices
Another step your business can take to mitigate information technology risks is by training your employees in security policies and practices. Require that your employees use strong passwords and establish guidelines for appropriate Internet use with penalties for violations of cybersecurity policies. Your business should also establish policies for handling and protecting vital data and customer information.
4. Seeking Quality Advice
You may want to seek quality advice from someone who can analyze your cybersecurity for the technology and data in your business. Because technology is frequently evolving and changing, your team may be more focused on code rather than security, which can lead to vulnerability in your business’s cybersecurity.
This means working with a cybersecurity professional can help improve the security of your business’s operations. Additionally, if a cyber attack does happen, you will have a contact who can vouch for your adequate security measures.
5. Protecting Your Business With Cyber Liability Insurance
Cybercriminals attempt to steal research, ideas, formulas, negotiation plans, source code, blueprints and designs. This is where professional services insurance can help.
Our cyber liability insurance at Gunn Mowery can help mitigate a cyber attack by protecting business owners with data restoration, identity theft recovery and first-party and third-party coverage. For many businesses, cyber insurance is becoming a necessity, as any business can be vulnerable to a data breach.
The following are ways cyber insurance can protect business owners:
- Data restoration
- Credit card liability
- Unencrypted devices
- Identity theft recovery
- First-party and third-party coverage
You can also be protected by your policy’s errors and omissions clause. Your cyber insurance can mitigate losses you incur as a result of a data breach, network damage or business interruption.
Contact Gunn-Mowery to Discuss Your Insurance Options
Risk mitigation and management are important with a growing IT sector for businesses. At Gunn-Mowery, we offer our customers the best of both worlds as an insurance broker and an insurance agency. We represent certain insurance providers, but we also sell products for which we do not have any contractual obligations to carriers. This allows us to put our clients first.
As an insurance agency and broker, we can offer you favorable coverage terms and provide personalized service. If you have questions about your insurance options, contact us at Gunn-Mowery today to learn more.