The Global Bm Industry Market

Published Date: 02 Nov 2017

High growth of BM industry is fueled by somewhat opposing forces: increased security and the need to reduce economic friction in international commerce. Both factors are driving the spending and providing the push towards highly mobile "borderless" economies, and the need for newer, more effective security and immigration controls.

Key BM industry Drivers

Increasing Illegal Immigration

International Crime

Increasing Terrorist Threats

Pressure to consolidate system sprawl

Market Trends

The global BM industry market for IT solution providers is $5.5 BN and is expected to grow at a CAGR of 6% to be $6.6 BN by 2014.

The US is the largest single market for the BM industry however the other countries/rest of world comprises a majority (59%) of the total spending.

National security interests and current world events are helping to channel new project money into both immigration monitoring and border management efforts. Many loopholes are being shut with a combination of political and IT efforts

There is a keen international interest in pass card/smart card solutions. International standards for this are still evolving

Scope for IT Solution Providers

Border Management industry is having great growth potential .Many companies are formulating strategies to increase market share in IT solutions.

There is increasing demand in following areas of Border Management to provide innovative, high performance and high accuracy solutions

Immigration and Citizenship – Visa processing, Govt. issued ID cards etc

Travel Security – Passenger security and Baggage screening

Border Control - Border Enforcement, Border Surveillance ,Entry/Exit Processing and Pre-processing, Port Infrastructure Security etc.

Customs – Goods/Cargo Entry exit authorization, Container security, Cargo screening

New technologies including surveillance systems, biometrics, collaboration tools, business intelligence, geographic information systems, data warehousing, and information sharing and interoperability standards and protocols are being developed and deployed in response of emerging needs of Border Management Industry.

Accenture also wants to grow and increase its market share of IT solutions in Border management industry.

Accenture’s current positioning

Accenture offers Unique Identity Business Services and other related software solutions to Border Management Authorities, in a way that enhances legitimate travel & trade and benefit distribution while enhancing security and preserving the privacy of the individual.

Accenture offers solutions to border management clients where identity claims are made and must be vetted, where an individual seeks access to, or benefits from, the responsible entity. This includes Passports, Visas, Citizenship Records, Residency Certificates, Border Crossings, National IDs, and other applications.

Accenture has a very strong Border Management presence in Ireland (81.8% market share), with strong showings in the United States and Canada (14.7% & 8.9% respectively). The Border Management market share in the EU, UK, Australia and the Rest of World is currently small. Hence Accenture sees the growth potential by leveraging expertise in this industry.

Accenture’s Border Management market share in Ireland is primarily due to work on the Garda National Immigration Bureau (GNIB) system. The US market is primarily due to US-VISIT and TSA; the Canada market is due to the Global Case Management System (GCMS).

Accenture has delivered the three large Border and Identity Management systems in the world: US-VISIT, UID of India, and EU BMS.

Accenture’s Revenues are spread around the globe and are showing growth in most countries for BM industry. With close to $300M revenue and around 900 people, BM is one the key account in Accenture. Gross margin for Accenture in this industry is around 30% hence Accenture wants to grow in this space.

Porter’s 5 Forces

Porter’s 5 Force analysis is as follows to find out growth potential (that in turn will be converted in profitability by seeing current margins) for Accenture’s solutions in Border management industry

THREAT OF NEW ENTRANTS

Barriers to entry

To show case expertise new entrants will require heavy investments in infrastructure, technologies and highly skilled people.

Industry requires sharing of secure data hence country specific contractual requirements become barriers for new entrants

Countries prefer established and experienced solution providers as sensitive data and nation’s security is involved.

Accenture’s ability to overcome entry barriers

Accenture has already established itself in BM industry and having good market share in BM space. With all the required domain knowledge, expertise, reusable solutions, huge cash surplus and industry focus, it has ability to overcome barriers to enter in new geographies and to grow further in same countries. It is a global company and having support of local governments as people involved in projects can belong to same country if specified in contract.

THREAT OF SUBSTITUTES

BM industry solutions needs to be updated for changing market trends and environments, e.g. few years back biographic information had significance for Identity of a person but nowadays biometric information is playing significant role in BM solutions. Most of the current solutions are incorporating IRIS data and face data as well with figure prints for unique identity of a person.

Overall functional specifications and requirements remains the same but technology and solutions have to be updated and upgraded as per current and emerging market trends. Keeping eyes and ears open is very important. Accenture is proactive and invests in training and technologies to get innovative solutions and services.

This cannot be considered as a major threat for a company like Accenture that has significant market share, industry knowledge, and focus on emerging technologies and invests in innovations.

BARGAINING POWER OF BUYER

Buyer in this space is generally home or defense ministry of country. To keep control/power with themselves buyer’s take following steps:

Emphasize on modular solutions and assign work to multiple vendors instead of one vendor to reduce dependency.

Owns required infrastructure

Gets everything documented

Started having own IT team and setup

Keeps strict contractual agreements

However buyer does not have many options to replace current solution providers because of following

Very few reliable solution providers are available in this space

Solutions are generally solution provider dependent because of its complex storage and identification algorithms

Most of times implementing new solution with different solution provider is very costly. (Switch cost is high)

Generally contractual needs, expertise and dependency on effective solution makes buyer dependent on solution provider and this force of Porter turns out to be positive for IT solution provider like Accenture that is always ready to improve, suggest and implement cost effective solutions as required.

Hence negative impacts can be mitigated by Accenture with proper communication, collaboration, negotiation and flexibility to upgrade solution if required.

BARGAINING POWER OF SUPPLIER (Mirrors buyer power)

Because of complex algorithms and high performance requirements there can be dependency on few suppliers who provide specific algorithms/solutions or hardware.

But suppliers are also dependent as there are very few buyers of their products and most of time they have to customize their product as per requirements provided by specific clients. Also suppliers are generally small companies and they are dependent on IT solution providers that are very big IT companies. Sometimes big IT solution providers can also plan an acquisition of supplier’s competitor or invest in same domain to develop expertise.

Accenture has effective global partnerships with their suppliers and having good relationships to keep interests of vendors intact without compromising on quality and cost. Vendors also respect Accenture’s scale and presence in market and hence provide best possible rates and solutions.

INTENSITY OF RIVALRY AMONG COMPETITORS

This is most important force for IT solution provider in BM industry space as all competitors are IT giants and have proved themselves in this space. Main competitors for Accenture in this space are IBM, SIEMENS, SERCO, CSE, EDS etc. Nowadays Indian IT companies like TCS, WIPRO, INFOSYS and HCL are also joining the league very fast as they are seeing good growth opportunities and investing heavily and strategizing to get success in BM space.

With cash rich and equally competent competitors capturing market share, Accenture has focused approach, innovative solutions and services, investments in emerging technologies and show casing success stories/case studies by proper marketing of current implementations. Accenture has recognized the need of getting high accuracy, high performance and low cost reusable solutions and has started working on it. They are also optimizing their current solutions to create more value to existing customers. This is helping Accenture to reduce impact of competitors who are gaining popularity and market share.

Analysis /Conclusion

Porter five forces suggest that Accenture can work towards capturing more market in BM space.

Accenture’s expertise and scale will help them to sustain in industry and will keep new entrants away who are having no experience or small investment capacity.

Accenture invests a lot in trainings and emerging technologies and keeping themselves upgraded hence having minimal threat of substitutes.

Because of its scale, huge cash surplus and focus to grow in BM industry space, Accenture has clear edge on suppliers that are very small companies who are dependent on Accenture to provide them work on a large scale.

Bargaining power of buyers is bound by legal contracts, Accenture’s industry expertise, lack of availability of close substitutes and flexibility to accommodate required changes. Also there are very few competitors who can provide better solutions than Accenture however some companies can try to take cost advantages but in most cases country’s security cannot be compromised to get mere cost advantage.

Intensity of rivalry among competitors is a force where focus is required; Accenture should define strategy to handle low cost players and should invest more to optimize their existing solutions and keep providing innovative solutions to existing and new clients. It will keep Accenture as key differentiator in this industry.