Prices of disaster recovery services will be stable over the next three years.
Los Angeles, CA (PRWEB) August 25, 2014
Disaster recovery services have a buyer power score of 3.9 out of 5. This score reflects favorable negotiating strength for buyers. Steady prices, low price volatility, low supply chain risk and low market share concentration aid buyer power score in the market. Nevertheless, the high level of specialization and low number of substitutes restrict buyer power to an extent. During the three years to 2014, buyers have benefited strongly from stable prices, further encouraged by low price volatility. According to IBISWorld procurement analyst Cameron Roark, “Prices for disaster recovery service have been steady over the three years to 2014 due to rising demand offset by the significantly growing number of firms in the market.” While most input costs, except for slightly rising wages, have been stable, demand for disaster recovery services has risen as more companies recognize the value of protecting internal data and operability during and after natural disasters. Growth in demand mostly comes from the healthcare and government sectors. Buyers benefit from stable demand over the past three years, which has led to low price volatility.
“On the other hand, the high level of specialization and low number of substitutes restricts buyer power,” says Roark. Disaster recovery service providers typically cater specific services and features, making the service highly customizable. The high level of specialization narrows a buyer's ability to find multiple suppliers that might be equally effective in fulfilling the buyer's needs. The limited number of substitutes in the market restricts crossproduct or cross-service competition from placing downward pressure on prices, hurting buyers.
Furthermore, switching costs can vary, depending on the buyer's use of the service. Buyers locked into an annual subscription may find it difficult or expensive to terminate the subscription in favor of joining a different subscription. Buyers do not need to enter into long-term contracts to lock in prices due to the limited price growth expected over the next three years. Additionally, low price volatility restricts the risk of price shocks, further reducing the need to enter into a contract. The two largest vendors in the market are IBM and Hewlett-Packard.
For more information, visit IBISWorld’s Disaster Recovery Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of disaster recovery services, which focuses on preparing for the recovery or continuation of technology infrastructure that is vital to an organization during or after a disaster. Companies have become more dependent on technology for smooth operation, which can be jeopardized if natural disasters damage the company’s technology infrastructure. Preparation includes spreading out risk via methods such as electronic redundancies and using recovery services, including mail, remittance, and hot-site and mobile recovery facilities. This report excludes the physical services required after a disaster, such as debris removal, water damage recovery and decontamination services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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