Click here for a report on the companies that made it to the Strategic 100 list. The recession just past came at a time when the information and technology industry was experiencing a range of transition of sorts — from the way technology is delivered, the development of new devices, along with rise in user demands and expectations.
The companies that have ably managed this confluence of events, expectedly, dominate this year’s Strategic 100, our annual report on premium ICT vendors. Thus, this report is also a chronicle of an industry that is taking on opportunities in a softly recovering economy.
Major themes that emerge from the activities of the companies are the continuous rise of new technology platforms such as cloud computing, an increasingly mobile user base that has prompted the development of new form factors for a range of devices, and the merger and acquisition activities that are the hallmarks in the vendor space.
Transformation or redefinition of business models were the order of the day for a number of companies.
Companies ramped up their on premise offerings to include delivery of their services through the cloud, or moved to new business lines like smartphones. New management structures emerged, as seen at SAP, where two CEOs were appointed Bill McDermott and Jim Hagemann Snabe, following the departure of Léo Apotheker.
Apotheker is now chief executive of Hewlett-Packard, and his case is just one of the succession of high profile executive changes in the industry. The shuffling of top executive posts, sometimes accompanied by lawsuits, made headlines in the business press. The sector became the source of mainstream news, from tussles over copyright and IP, corporate reputation (Accenture pulling the plug on sponsorship of Tiger Woods) and former tech chief executives foraying into politics (ex-CEOs Carly Fiorina of HP and Meg Whitman of eBay ran for public office and lost).
Consolidation in the ICT vendor space continues. Mergers were across categories. In New Zealand, for instance, Axon, which has consistently been in the local list of strategic ICT vendors, was bought by Integral to form Integral Axon. The latter was acquired by Datacraft, which is owned by Dimension Data, which is in the global list. Dimension Data has in turn, been acquired by Japanese telecommunications operator NTT Communications.
Companies from outside the Western sphere continue to shine across the global and Rising Star categories. These include outsourcing giants like HCL, Infosys, Mahindra Satyam, Tata and Wipro; and equipment providers like Huawei; and Aculearn of Singapore.
Interestingly, some of the companies in the Rising Stars from previous years are now firmly entrenched in the global list, and these include Salesforce, Huawei, Skype and VMware. Two local companies — Pingar, based in Tauranga and Catalyst IT — make it to the Rising Stars category, chosen by the judges from a pool of candidates from across the globe.
Datacom, meanwhile, is included in both the New Zealand and Australian list of strategically important local companies. Sam Higgins, research director of Longhaus, says there is only one reason for this: Efficiency.
“It is often claimed that companies that can survive in the tough times often go on to greater success. The tough economic environment faced by New Zealand companies over the past two years during which the country fell into an official recession makes the claim a maxim or truism. In the face of adversity, many New Zealand ICT firms have had to become extremely proficient at managing cost, margin and staff. Compare this with their trans-Tasman rivals who have had the luxury of building their base in an economy which grew consecutively for 17 years and only suffered one quarter of negative growth in 2009,” says Higgins, a member of the New Zealand judging panel.
He says as Australia’s economy continues to strengthen and its purchasing power increases, there is ample opportunity for local firms to offer a real “near-shore” alternative for high-quality ICT services at a much lower price point than their Australian counterparts.
This opportunity is increased by the propensity for Australian organisations, particularly governments, to use offshore models in less mature or secure markets such as Brazil, India, Russia and China. New Zealand, in contrast, is a trusted ally and free trade partner making it a much more appealing destination for offshoring, he says.
Higgins, however, says the danger for smaller New Zealand firms who manage to gain a successful foothold across the Tasman is finding themselves the target of acquisition from their larger Australian counterparts.
Clouds and mobiles
Cloud computing as well as mobile operating systems and devices are the main theme for vendors this year. Indeed, for the rest of the year, vendors are successively rolling out cloud offerings and new systems for mobile devices.
In their first appearance at the Sapphire conference, SAP’s co-CEOs pushed two central messages: They are working hard to earn customers’ trust and to build out a technology strategy encompassing on-premises, on-demand and mobile applications. SAP showcased an on-demand CRM application called Sales On Demand with social collaboration tools, as well as StreamWork, a collaboration platform.
At Google’s I/O technical conference for developers, the company bolstered its enterprise offerings by rolling out the Google Wave collaboration and communication tool as part of the hosted Google Apps tool suite. The application is designed to offer a variety of software, such as email, instant messaging, blogging, wikis, multimedia management and document sharing in a social networking-like system.
Microsoft is pushing for what it calls “cloud power” – IT as a service by leveraging the power of cloud computing”. Microsoft aims to offer cloud options for everyone through a public cloud environment hosted by Redmond itself, or by one of its partners, as well as private cloud technology that sits behind an organisation’s own firewall.
Oracle also made a play towards cloud computing at its showcase event Openworld. CEO Larry Ellison unveiled the Exalogic Elastic Cloud, a combination of hardware and software that, much like Amazon’s EC2, provides a virtualised pool of infrastructure that can shift resources to applications in response to demand. Instead of a public cloud computing model, Oracle intends Exalogic to be run behind customers’ firewalls.
HP showcased its US$3 billion 3Com acquisition and its own IT transformation as evidence that it has the right stuff to inject more innovation into enterprise IT. Its strategy is fronted by the phrase “converged infrastructure” and focused on driving innovation at the application layer, rather than maintaining the networking, storage and server infrastructure.
With iPhone and Android OS-based mobile devices steadily gaining market share, RIM debuted BlackBerry OS 6, seeking to revamp its operating system and web browsing experience.
In search of competitive advantage
Higgins says the companies in this year’s Rising Stars category reflect a trend Longhaus has been watching for the last couple of years, involving the “style” of applications organisations are seeking to employ.
He notes that for much of the past 20 to 30 years, organisations have employed “transactional systems supporting back-office functions, and what we are seeing now is an increasing desire for organisations to evolve their application portfolios to business solutions that address the front office and capture interactions”.
For example, it is no longer sufficient to know what the customer ordered, but rather it is more important to know what content they reviewed before ordering, which reviews they might have read, which friends on Facebook they asked for advice all the while trying to track whether they did it via a PC or their iPhone.
“It is this shift in the type of information that business wish to manage which has seen increasing interest in the offerings of firms such as RightNow and Sword Ciboodle,” says Higgins. Once companies have this mountain of data, they want to be able to analyse and act on that information.
“So into the breach, we see organisations like MyDIALS and InsideView providing lower cost, tailored solutions to drive value from these new sources of data. Arguably, specialised solutions such as the Pingar search platform also highlight the need for different approaches to address the changing nature of the content being created both within and outside enterprises.”
He says the inclusion of cloud integrator HubOne in the Rising Stars is important as it emphasises that despite popular belief, there is a need for service providers and cloud-integrators to help make the most of these offerings.
“Lets face it, despite offering a highly attractive cloud-based Exchange service, Microsoft aren’t going to give you the arms and legs to help migrate your existing mailboxes to the cloud,” says Higgins, who expects to see more cloud integrators emerge in the next five years.
“If there is any doubt that the cloud has not yet arrived, then the fact that half of this year’s Rising Stars are cloud-oriented should put at least some of these fears to rest. Indeed, for CIOs in the coming 12 months, the challenge will be to pick the winners in an increasing crowded, but rapidly maturing cloud computing market.”
Ingres and Catalyst IT represent proof that open-source has forever turned the corner from movement to fully fledged market, says Higgins. “Despite the continued acquisition and absorption of major open source brands into the much larger, and traditionally proprietary vendors, there remains a solid set of commercial open source providers, whether it is enterprise-ready and proven alternatives to MySQL in the form of Ingres, or service providers who are taking best of breed solutions and integrating them on behalf of clients like Catalyst IT.”
So what is in store for both the vendors and industry users? “It is going to be business as unusual,” says Dr James Canton, CEO and chairman of Global Futures. “How ready are you for that disruptive future?”
Companies — both vendors and end users — that respond to this beyond theory, will already have that competitive advantage in this age of disruptive change. With reporting from Jack Loo of MIS Asia
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