The computer integration and data processing industry covers a wide range of computer-based services. The industry includes companies that provide computer processing and data preparation services, which range from simple data entry to the complete processing of reports from data provided by clients. The industry also includes companies that provide computer-assisted engineering and design services such as product modeling, as well as providers of network systems integration and office automation.

Corporate spending on information technology projects dropped considerably during the recent recession. While demand has improved since then, corporate spending dipped again in mid-2004 due to a number of factors including a slump in the stock market, a decline in consumer confidence, and high fuel prices. Business outlays of equipment and software picked up in the later half of the year, however, indicating that demand for further computer services is likely to increase.

Seeking to pare down their size and control costs, businesses are also outsourcing a number of services, including data processing and information technology services. This trend can be expected to create demand for firms that provide such services. The danger, however, is that a number of services, ranging from technology consulting to systems integration, are being outsourced overseas, lowering the demand for such services in the United States.

Data Processing and Information Services

The data processing segment of the industry covers a range of technology practices including data entry, information backup, and data processing.

The demand for information backup, storage, and recovery services has gained attention from recent disasters. Last year's sequence of east coast hurricanes, along with increased awareness of the possibility of terrorism in a post-9/11 world, have drawn focus to the need for data recovery provisions. A Gartner Group survey conducted in 2003 reported that one-third of US businesses were not well prepared for disaster recovery. Companies are moving from tape and disk backup systems to networked storage systems that allow faster restoration of data and systems.

Systems Integration

Systems integration involves the design and development of complex computer-driven systems in which many operations must be integrated to work together seamlessly. A number of industries, from healthcare to defense, support the systems integration sector. Because it relies on a broad base of industries, demand for the sector is difficult to predict.

Lockheed Martin's recent $15.6 million contract from the US Navy provides an example of a complex systems integration project. Lockheed Martin has been contracted to integrate the Armed Helicopter mission kit for the MH-60S helicopter. The mission kit includes sensors, avionics, weapons, and integrated self-defense systems. All of these components are controlled from the cockpit, which contains the navigation system, data storage memory, and an integrated mission computer.

Computer Assisted Design and Engineering

Computer Assisted Design (CAD) and Computer Assisted Engineering (CAE) systems are used to model products electronically before they are constructed. Vehicle manufacturer Taylor/Dunn, for example, used computer design when converting a three-wheeled vehicle to four wheels. Computer modeling allowed them to account for additional clearance between the wheels and the sheet metal in the front of the vehicle needed to accommodate a tighter turning radius.

Providers of CAD services must contend against firms that have their own engineers and increasingly sophisticated computer design software applications. IBM, for example, recently released a CAE platform for the automotive industry. IBM's offering includes software, computing systems, and storage technologies - basically a CAE toolkit for automotive firms. The offering, called Automotive Engineering Innovation Framework, does not completely remove outside providers from the equation, however. IBM's package also includes consulting services and an open-standards based platform, maintaining an opportunity for service providers to participate in design systems.

The open standards of IBM's offering also illustrate another trend in the CAD industry segment - the need for interoperability between systems. CAD translator programs are being developed to allow engineers to transfer 3D modeling data accurately between systems. Analysts anticipate that it will become commonplace to store design and construction data in a consistent 3D model, which could be transferred freely from engineers and designers to builders and contractors without needing to be recreated.

Outlook

As the economy continues to improve, corporate demand for computer services can be expected to continue. The computer integration and data processing industry overall remains vulnerable to dips in corporate spending patterns, since the sector provides services to such a broad range of other industries. Future technological developments will likely provide more demand, as technology systems becoming increasingly integrated and complex, but computer services providers must contend with both international outsourcing and with companies that develop their own internal computer engineering departments.

Sources: Building Design, Credit Union Journal, Design News, Knight-Ridder Tribune Business News, Machine Design, Telecomworldwire, Value Line, Wireless News