The IT professionals guide to researching a new industry get to know your industry for a happy and successful career

The IT Professional's
Guide to Researching
a New Industry

Get to know your industry for a happy and successful career

Tom Taulli


The IT Professional's Guide
to Researching a New Industry
Copyright © 2014 Impackt Publishing

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First published: March 2014

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Credits
Author
Tom Taulli

Reviewers
Claudio Fernandes

Cover Work
Melwyn D'sa

Paul Nahay, D.M.A.

Copy Editors
Tanvi Bhatt

Project Coordinator
Priyanka Goel

Ameesha Green
Production Coordinator
Melwyn D'sa

Commissioning Editors
Richard Gall
Stephanie Moss

Acquisition Editor
Danielle Rosen

Proofreaders
Simran Bhogal
Paul Hindle


About the Author
Tom Taulli is the author of numerous books, including All About Short Selling, All

About Commodities, How to Create the Next Facebook: Seeing Your Startup Through,
from Idea to IPO, and High-Profit IPO Strategies: Finding Breakout IPOs for Investors and
Traders. He also writes for publications such as Forbes.com and BusinessWeek.com. You
can reach him at his blog Taulli.com.


About the Reviewer
Paul Nahay received the Doctor of Musical Arts degree in musical composition from

Stanford University. He taught on the faculties of Stanford University, the University
of Maryland at College Park, University of Maryland University College (as Assistant
Professor), the Graduate School of the United States Department of Agriculture, and for
UMBC (University of Maryland at Baltimore County) Training Centers, where he taught
computer programming languages and related technologies for over a decade. Paul was

a freelance corporate trainer and Microsoft Certified Trainer for 15 years, and instructed
hundreds of programmers from over two hundred different companies, federal and state
government agencies, and military branches. He was a Technical Editor for the John Wiley
and Sons/Sybex book Java SE 7 Programming Essentials, by Michael Ernest, published
November 2012. He currently designs and teaches programming courses in Java, C#,
JavaScript, and Android programming. Paul designed and programmed a number of
unique music software systems, including ScoreInput, published by Passport Designs.
Paul's current live keyboard performance software, Keyboard Wizard, has enhanced live
performances featuring David Benoit, Tony D'Anza, Linda Eder, Michael Feinstein, Brad
Garrett, Kathy Lee Gifford, The 5th Dimension's Marilyn McCoo and Billy Davis, Jr., and
Ray Romano. It was used on tour with recording artist Melissa Manchester, in the scoring
of the USA Network's The Starter Wifeseries, as well as in the Disney/Pixar motion picture
The Princess and the Frog, under the baton of Randy Newman. In both 2011 and 2012, it
enhanced the Kodak Cinematography Awards Ceremonies, one of the official off-screen
Academy Awards events for the Oscar-nominated cinematographers. Information about
Keyboard Wizardis at broadway-performance-systems.com. Paul currently works for the
U.S. Department of Defense, Washington, D.C., as Computer Scientist.



> >Contents
Preface1
Chapter 1: Researching an Industry
Defining an industry
Helpful Internet tools
Summary

5
6
8

8

Chapter 2: Questions to Ask About an Industry

9

What is the growth rate?
Is there a major catalyst for the industry?
Is there much government support or regulation?
What is the competition in the industry?
Is the industry a fad?
What is the industry's reputation?
Is the industry threatened by disruptive change?
Summary

10
11
11
12
12
12
13
13

Chapter 3: Finding the Right Information
Evaluating information
Free data sites
Google tools
EDGAR
Social media

Summary

15
16
17
18
18
19
19

Appendix21
Research tools
Industry databases
Glossary

21
21
22



> >Preface
While much of the US economy has languished since the financial crisis of 2008, the
Information Technology (IT) community has thrived. This is especially true for those
people who have skills in areas such as mobile, the cloud, social networking, robotics,
and 3D printing, all of which are exciting and expanding parts of the IT world.
According to research from the Bureau of Labor Statistics, the forecasted growth rate in
employment from 2010 to 2020 for software developers is 30 percent (the average salary
is over 90,000 dollars). Roles such as database administrators, computer systems analysts,
and computer research scientists are estimated to see growth rates of over 20 percent.

IT companies realize that technology is about more than just making core functions more
efficient, such as enterprise resource planning, customer relationship management,
marketing automation, and human capital management. They understand that there needs
to be technology embedded in products as well. Yes, your refrigerator will probably be
connected to the Internet one day, if it isn't already. Or consider that your car will have
3G too.
This is why the famed Internet entrepreneur and venture capitalist Marc Andreessen
believes that "software is eating the world". According to him, "More and more
major businesses and industries are being run on software and delivered as online
services—from movies to agriculture to national defense. Many of the winners are Silicon
Valley-style entrepreneurial technology companies that are invading and overturning
established industry structures."
Great, right? Absolutely. But if you want to maximize your career in the IT industry,
you need to go beyond just having the right skill set. It is vitally important that you
pick the right segment of the market to focus on.
Hey, what if you had a job as an IT developer at Borders or Kodak? Well, it may have
been an interesting experience, but now you might be without a job and benefits.
Instead, what if you had worked at companies such as Under Armour, Starbucks,
or LinkedIn? No doubt, you would have experienced the exhilaration of high growth
and innovation. Besides, your equity options will have been worth much more.
Understanding an industry will help an IT developer with their job. With the rise in cloud
computing, companies are effectively offloading processes. This means less demand
for employees that handle routine tasks, infrastructure, servers, and hardware. Instead,
the focus is on looking for business uses for technologies. So again, an IT developer's
understanding of an industry will certainly be a huge help.


Preface

The good news is that there is an enormous amount of information available. Of course,

this is one of the many benefits of the Internet. But there's a problem: information overload.
You'll quickly realize that you could spend weeks and weeks reading the latest information
about an industry. It's overwhelming.
To be successful, you really need to focus on the important parts. What are the key
drivers? What are the challenges? Is the industry growing? What are the danger signs?
When you have a good feel for the goals of your research, then things will get much
easier, which is the main goal of this book.

What this book covers
Chapter 1, Researching an Industry, will give you information on how industries are
classified and defined, giving you the first steps in the process of your research.
Chapter 2, Questions to Ask About an Industry, will show you how to critically assess
different industries and draw out the issues that will be important to you both professionally
and personally.
Chapter 3, Finding the Right Information, gives you guidance on how and where to look
for the information you need.

Who this book is for
If you are an IT Professional and want to find out more about the best industries to work
in today, this book will give you the basics on what questions to ask and how to research
your job market. As the world of IT becomes an essential part of any business, today an
IT professional could find themselves working in a range of industries and sectors. The
question is—which one makes sense for you?

Conventions
In this book, you will find a number of styles of text that distinguish between different
kinds of information. Here are some examples of these styles, and an explanation of
their meaning.
New terms and important words are shown in bold.
Make a note

Warnings or important notes appear in a box like this.

Tip
Tips and tricks appear like this.

2<


Preface

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>1

Researching an Industry
As an IT professional looking to enter a new industry, there is much
to think about. Which industries are growing? Which ones are facing
headwinds? Which provide the best long-term prospects? Which
industry is the best for your skill set?
All these questions can seem daunting. But, in this chapter, we'll
take a look at some approaches to help make the process smoother
and much more effective. The first section will talk about how to
define an industry, which might sound simple, but in fact can be
very tricky. We'll look at how using an industry code (a number that
describes a particular industry) can be a helpful way to make your
research much easier.
After this, we'll take a look at some of the innovative online
and mobile tools that can help you with your efforts (for an IT
professional, this should be familiar ground). These will help you
to keep track of your links and provide a great way to organize
your research, for example, by taking notes or putting together
lists of bookmarks.


Researching an Industry

Defining an industry
Before doing any research, you need to have a good sense of your target market. This
may sound elementary, but it can be tough to do. It is actually quite common for people
to focus on the wrong industry segment, which could certainly stunt your career path.
If you look at the Merriam-Webster dictionary, you'll see that the definition of "industry"

is a bit fuzzy:

A group of productive organizations that produce or supply goods, services,
or sources of income.
Not very helpful, huh?
So, to help things along, the U.S. Government has done a lot of work to create a standard
classification of industries called the North American Industry Classification System
(NAICS, pronounced "nakes"), which is used at the core of Federal statistics. This was
created to create uniformity in the measurement of economic statistics, making it easier
to calculate things such as the growth rates of certain industries. In the messiness of
macroeconomics, NAICS make it a little easier to see exactly what is going on.
NAICS is the result of extensive study and analysis by the Office of Management and
Budget (OMB), the Economic Classification Policy Committee (ECPC), Statistics Canada,
and Mexico's Instituto Nacional de Estadistica y Geografia. Its origins go back to 1997,
but NAICS actually replaced an older system called Standard Industrial Classification (SIC).
A NAICS code may sound intimidating, but it is actually a really efficient way to define an
industry. It will also be extremely helpful when conducting your research because many
databases use NAICS codes.
Keep in mind that all of these codes have six digits, which go from general to specific
(you can find a comprehensive list of every NAICS code online at sus.
gov/eos/www/naics/). The first two digits are the broadest industry sectors, which include:

6<


Researching an Industry
Make a note
■■ 11: Agriculture, Forestry, Fishing, and Hunting
■■ 21: Mining, Quarrying, and Oil and Gas Extraction
■■ 22: Utilities

■■ 23: Construction
■■ 31-33: Manufacturing
■■ 42: Wholesale Trade
■■ 44-45: Retail Trade
■■ 48-49: Transportation and Warehousing
■■ 51: Information
■■ 52: Finance and Insurance
■■ 53: Real Estate and Rental and Leasing
■■ 54: Professional, Scientific, and Technical Services
■■ 55: Management of Companies and Enterprises
■■ 56: Administrative and Support and Waste Management and Remediation
Services
■■ 61: Educational Services
■■ 62: Health Care and Social Assistance
■■ 71: Arts, Entertainment, and Recreation
■■ 72: Accommodation and Food Services
■■ 81: Other Services (except Public Administration)
■■ 92: Public Administration

To give a sense of some of the NAICS codes, here are examples from some
well-known companies:
Make a note
Nike:
316211, Rubber and Plastics Footwear Manufacturing
Lulu lemon:
448190, Other Clothing Stores
Coca-Cola:
312111, Soft Drink Manufacturing

To look up the NAICS codes (of which there are 1,065, by the way), you will need to use

a private data provider. One good resource is Manta.com. Think of this site as a search
engine for information on companies. In fact, the database has over 87 profiles. While
some of the information requires a subscription, the free portion still has a large amount
of helpful information. Some of the items include: employee count, years in business, list
of products and services, similar businesses, and revenues.
However, some companies engage in different types of businesses. So, to deal with this,
the NAICS code is based on the primary business activity of a company.
In other words, if you plan to work for a company that has many types of business, you
should not look at its designated NAICS code. Instead, you should find the NAICS code
for the industry of the division you plan to work for.
7<


Researching an Industry

To do this, you can go to and then input
several phrases that describe the industry. You'll get a list of suggested NAICS and you
can then select the most relevant one.

Helpful Internet tools
Once you have the right industry target, you will then need to find efficient ways to
track your research. The good news is that there are many free services to help you out.
Of course, Google offers an extensive set of online features that allow the easy creation
of documents. With these, you can copy and paste web links and articles.
If you use Word, then you can set up a service such as Dropbox. With this, you can
sync all your files in the cloud. This means that any changes you make to a document
will be instantly updated across your systems, be that a desktop, laptop, tablet,
or smartphone. This is especially useful if you are likely to be doing research on
a number of different devices.
A more developed research tool is Evernote. It essentially makes it easy to save just

about anything, including blog posts and even audio recordings. So, what if you like to
use old-fashioned pen and paper to write your notes? Well, you can do this with Evernote
as well, that is, by using a smart pen, like you can buy from Livescribe.com. Your notes
will be wirelessly transferred to your Evernote account. This type of device can cost
anywhere from 150 to 300 dollars.
Then there is OneNote, owned by Microsoft. With it, all of your content is connected to
the Office apps. For example, if you insert an Excel spreadsheet in your notes, you will
see preview charts and diagrams at the side of the page.
OneNote is also optimized for mobile devices. That is, you can easily draw, erase,
and edit information by swiping your finger across the screen.
Keep in mind that there are hundreds of note-taking apps on the market, so it is
impossible to review all of them in this eBook. The good news is that top companies such
as Microsoft and Google have top-notch offerings that integrate with their other apps.
But it is also worth taking a look at apps from smaller companies such as Dropbox or
Evernote. In other words, before deciding on a note-taking app, it's a good idea to try
a variety of them out.

Summary
In this chapter, we covered the essential starting points for your research. We learned that
all industries have standard codes that can be extremely useful for searching databases.
I'm sure you'll agree it is critical that you are researching the right industry!
We have also had a look at the rich online and mobile tools available, many of which are
free. They will be very useful as you plow through lots of information.
You are now ready for the next step, that is, to get a sense of the topics you need to focus
on. That's what we'll do in the next chapter.

8<


>2

Questions to Ask About
an Industry
Even industry leaders such as Facebook's Mark Zuckerberg and
Amazon's Jeff Bezos realize that they do not have all the answers.
That's why they focus on hiring standout people and asking them
tough questions. With this process, it is much easier to get the right
solutions.
No doubt a process of rigorous questioning and assessment is
useful for just about any effort or project, including the research of
an industry. Yet, there are some pitfalls. With the huge amount of
information available, it's common to get stuck in the weeds.
In this chapter, we'll take a look at the key questions that will help
you to get a handle on the main drivers of an industry and provide
a solid foundation for your research.


Questions to Ask About an Industry

What is the growth rate?
This could be the most important question. When looking at a career in a new industry, you
are likely to have more opportunities if there is sustainable long-term growth. A company
like this will have more resources to invest in new products or services. There will also be
more opportunities for advancement and compensation.
However, there is no definitive standard of industry growth rates. Instead, you'll generally
see the following diverse sources:
hh Trade Associations: Each industry will have one, and they will have a website that
provides lots of helpful information, usually for free. Yahoo has a comprehensive
list of trade associations here: />organizations/trade_associations/.
hh Private Data Providers: Their research is often extensive, but the price tag can

be high. It is not uncommon for a research report to cost thousands of dollars.
Thus, for someone who is researching an industry for career purposes, this is
really overkill.
hh U.S. Government: The data is nonbiased and free. Some of the key sources
include the Census Bureau () and the Bureau of Labor
Statistics (BLS) ().
Of all these, the BLS has the best information on growth statistics. It publishes the
Occupational Outlook Handbook (OOH), which is a treasure trove of information on
industries and occupations ( These profiles include details on
things such as working conditions, what workers do in the industry, and qualifications.
Of course, there is also important information on the job growth outlook, which covers
the years 2010 to 2020. According to the latest report, the top ten categories include
(the growth rate is on an annual basis):
hh Home health care services: 6.1 percent
hh Individual and family services: 5.5 percent
hh Management, scientific, and technical consulting services: 4.7 percent
hh Veneer, plywood, and engineered wood product manufacturing: 3.9 percent
hh Computer systems design and related services: 3.9 percent
hh Cement and concrete product manufacturing: 3.2 percent
hh Outpatient, lab, and other ambulatory care services: 3.2 percent
hh Offices of health practitioners: 3.1 percent
hh Software publishers: 3.2 percent
hh Construction: 3.1 percent
Keep in mind that this information is on a national basis, that is, for the United States as a
whole. However, the economic situation may be different for a particular state. To this end,
you can look at the website for a specific state and get data on the growth of its industries.

10<

Questions to Ask About an Industry

Is there a major catalyst for the industry?
OK, this may not be the first question that comes to mind, but it is crucial when evaluating
an industry.
Growth is often the result of some megatrend. There wouldn't be much demand for mobile
developers if the smartphone sector was small and growing slowly, right? In other words,
see if there is a huge driving force that should result in long-term growth. You should
come across this information as you research an industry, as you should start to see certain
themes emerge.
Consider that many industries do not have any major catalysts, and this is likely to mean
that the growth will be muted.
If you take another look at our top-ten list mentioned previously, you will notice that all
of them are benefiting from major catalysts. It should be no surprise that three are in the
tech industry, which is currently undergoing tremendous change.
Four of the categories listed are in the healthcare industry. This makes sense. The "baby
boomers" are now entering their retirement years, with 10,000 people reaching age 65
every day. This means they will need more and more healthcare services.
Now what about the other categories in the top-ten list? Three are in the construction
industry. While this may seem a bit strange, there is a major catalyst here too. In the
U.S., the infrastructure of bridges and roads is getting old and needs to be repaired.
Because of this, there has been growth in construction services. More importantly,
this is a megatrend that could last for several decades, propelling growth in the industry.
With such strong growth potential, these industries are also likely to see strong demand
for IT professionals. After all, industries like healthcare and even construction rely heavily
on technology.

Is there much government support or
regulation?
Some of the biggest industries in the world got their initial support from governments.

Examples include aerospace, semiconductors, and even the Internet (which started as a
project from the U.S. Department of Defense).
However, there are risks with this support. This is especially the case when there are large
government budget deficits, which result in lots of pressure to cut back on programs, for
example, Cleantech industries. Consider that a variety of companies in the sector such
as Better Place, Fisker, and Solyndra have gone bankrupt. Without subsidies, they were
unable to sell their products at a profit.
In other cases, there are industries that are under heavy regulations such as healthcare and
banking. This can sometimes stunt growth as it is tough for companies to move quickly.

11<


Questions to Ask About an Industry

What is the competition in the industry?
All industries have competition. Whenever there is an opportunity for profit,
entrepreneurs will create new businesses to capitalize on it. However, over time,
this could drive down profits and growth. This is especially the case with commodity
businesses such as those that produce products that have little differentiation.
Examples include: beef, natural gas, gold, grains, oil, and so on.
This is why you want to look for an industry that has barriers for entry and is not easy for
new entrants to enter the market. For example, in an existing market, companies may
benefit from substantial investments, as is the case with railroads. Simply put, it would be
too expensive for a new player to enter the market. Other entry barriers include patents
and well-known brands.

Is the industry a fad?
Fads are a common part of the business world. Out of nowhere, a certain product will
bring about a mania, creating lots of millionaires in the process.

The problem is that fads disappear, sometimes as quickly as they emerge, which means
that the industry could see a huge decline and even bankruptcies. So, if you are looking
to work in a red-hot industry, be careful. The trend may only last a few years. You may end
up needing to look for another job.
There are certain industries that are prone to fads. They include:
hh Restaurants
hh Fashion
hh Consumer technology
It's not always easy to identify a fad. Keep in mind that back in the 1960s, the fast food
industry was considered a fad. Then, companies such as McDonald's proved that quick
and easy food on the go could be very big business indeed.
However, when it comes to a new industry, especially one that gets lots of buzz, there's
always a risk that it really is a fad. You simply need to be aware of the risk and ask yourself
how strong and sustainable a particular sector is, and how much you are willing to take
that risk.

What is the industry's reputation?
Every industry has a reputation. It's not easy to define since it includes lots of qualitative
factors such as customer service, product innovation, transparency, regulatory
compliance, and even corporate citizenship.
There is an annual report called the Global Corporate Reputation Index that ranks the
main industries. The oil and banking industries are at the bottom of the list, whereas
technology is at the top (perhaps the main reason is that the industry launches innovative
products that can greatly enhance people's lives).
12<


Questions to Ask About an Industry

Then there are some surprises. For example, the auto industry has an overall strong

reputation as there have been strong improvements in reliability and quality.
Now, this does not mean you should avoid an industry that has an average reputation.
Keep in mind that companies in the oil and gas industries have grown substantially over
the years. This trend will probably continue.
Rather, reputation is likely to be more of a personal consideration when looking at a career
choice. If you are staunchly against animal testing, then you should probably avoid the
pharmaceutical industry, regardless of the growth rates and the opportunity for career
advancement. It is your career, so you want to be happy in the organization you are working
for. Maintaining your personal sense of integrity is a key part of job—and life—satisfaction.

Is the industry threatened by disruptive
change?
In today's world, an industry can quickly come under tremendous pressure from new
technologies. Some of these megatrends include social networking, e-commerce, big
data, mobile, and cloud computing. Companies such as Borders, Circuit City, Tower
Records, and Kodak have crumbled because they were not able to remain innovative.
Then take a look at what happened to the newspaper and travel agent industries, which
have seen rapid deterioration.
The fact is that just about all industries will feel pressure from disruptive technologies.
This is why when you look at working for a company, it is important to see whether it is
focusing on innovation (no doubt, this is really good news for IT professionals). Does it
have a digital strategy? Is it using mobile technology? How does the company compare
to its competition?
If a company is not investing in new technologies and innovations, there's a good
chance it will not grow. There's even a chance it will not survive at all. From a personal
perspective, being part of an organization that is forward thinking and innovative is
certainly more satisfying than being part of an organization that is past its sell-by-date.

Summary
In this chapter, we took an in-depth look at seven important questions to ask about an

industry. True, these are far from being the only questions you should ask. You should
feel confident enough to ask the ones that are important to you.
However, do not go overboard. It's easy to get too focused on questions that really do
not help with your research. Be sure that your research is focused on the questions that
are important to you.
Once you have the main questions, it's time to answer them. This is what we'll look at in
the next chapter.

13<



>3

Finding the Right
Information
As an IT professional, you certainly understand that there is no
shortage of information about industries.
Of course, the real challenge is finding the sources that will help
answer your questions so you can make a sound career decision.
This is what we'll do in this chapter.
To provide some background, we'll first look at how to get a
sense of the types of information available and how to evaluate
this information.


Finding the Right Information

Evaluating information
In your search for information, you'll come across many types of sources. Here are some

of the main ones:
hh Traditional publications: Magazine circulation may be rapidly deteriorating, but
many have successfully transitioned to the Web. All of the industries usually have
several publications that cover the news and trends.
hh Blogs: There are literally millions of these that cover industry topics. Yet many are
operated by one person, and the content may be fairly subjective, if not incorrect.
hh Research reports: These come from companies that focus on certain industries.
Generally, the reports require payment or sometimes an e-mail registration.
hh Government sites: As mentioned before, the U.S. and state governments have
many useful data sources.
When going through these sources, it's a good idea to be skeptical and try to focus on
those sources that are reliable. There are some other things to consider, such as:
hh Date: When was the information published? Let's face it, in today's fast-paced
world, research can quickly get outdated. So, try to look for research that has
been published within the past year or so. This is especially important when
you're job-searching in a fast changing economic environment. It is even more
important for the IT field, which seems to change on a daily basis!
hh Sources: While websites such as Wikipedia may have inaccurate information,
they can still be useful resources. This is especially the case if the information has
links to back up the statements. In fact, it's worth visiting them to get much more
information on a topic, particularly early on in your research.
In today's world, it is easy for anyone to post information. The result is that there is lots of
hype and false information. So, in your research, pay attention to the preceding factors.
As the Internet will most likely be your main tool for research, it is critical that you get the
right information, especially since it could have a big impact on your career.
Of course, the Internet is likely to be your main source of information, maybe even your
only source, when conducting your research. However, it is always important to have
some healthy skepticism. With the growth in social media and blogs, it is not always easy
to get a sense of the accuracy of information. So again, it is a good idea to focus on
trusted sources when conducting your research.

16<