Whether you subscribe to Chinese astrological beliefs or not, there are some interesting parallels between the views of Asia’s senior IT executives about 2009, and the traditional zodiac description of the Ox personality. It is said that the Ox is the sign of prosperity through fortitude and hard work and that security is their main preoccupation in life. Ox people are wary of new trends, although occasionally they can be encouraged to try something new. Oxen have very logical minds and are extremely systematic in what they do, if lacking in a little imagination. Ox people are extremely intelligent and speak little but are articulate and eloquent when they do.
Newly inaugurated US President, Barack Obama, is a person born in the Year of the Ox and he will need plenty of those attributes to meet the challenges ahead, as will the Asia Pacific IT industry, according to the IT decision makers canvassed by CIO Asia.
Jens Butler, principal analyst for IT Services with research house Ovum believes a key challenge will be for IT shops to get the capital funding necessary to take advantage of such opportunities as cloud computing, virtualisation and business process outsourcing.
Critical changes only
“We talk about increasing the proportion of transformational investment to keeping the lights on above the 30:70 split,” Butler said, “but 2009 will certainly be a risk-averse, critical-changes-only type environment.”
The challenge is to use technology to optimise people and processes to deliver the high performance workplace, says John Roberts, research vice president and distinguished analyst, Gartner. He said that CIOs in 2009 should “tackle information overload by simplifying and unifying message chains, so that every person in the enterprise gets the right information in the right format, at the right time, to make the best decisions.”
While IDC forecasts tech spending for most of 2009 to be flat in the US and Europe, they expect spending in emerging Asian markets to continue growing.
Patrick Chan, chief technology advisor, Asia Pacific emerging technologies research, IDC, has this advice for IT executives going into 2009.
“Leverage IT for a competitive edge and get that differentiation,” said Chan. “This is ever more prominent as IT becomes an integral part of the DNA for businesses today. Consolidate and streamline business services and focus on evolving a good IT enterprise blueprint that can accommodate newer technological refreshment.”
Chan said that senior IT executives have learnt that operational costs can be trimmed much further with technological advances like virtualisation, SaaS, cloud computing, and Service-Oriented Architecture (SOA).
Groping in the dark
Many Asia Pacific organisations are still in the middle ground of IT efficiency, says Chan. “While we see AP organisations are beginning to optimise their competence in business technology governance, a substantial percentage still needs holistic guidance from vendors and analysts. It is imperative for CIOs to start looking into governance with an automation approach to managing IT and business assets.”
IDC says that, in streamlining infrastructure, organisations are looking to SOA (15.47 per cent are currently deploying) and 27.7 per cent will do so within 24 months. In aligning and constantly improving IT services effort, organisations are turning to ITIL V3 (21.59 per cent will deploy within 24 months).
The Year of the Ox will focus enterprises on ‘dealing with the financial crisis, and helping customers manage the turmoil’, according to Andrew Milroy, research director of information and communications technology practice, Frost & Sullivan, Australia.
Embrace Web 2.0
“The principles behind the use of Web 2.0 technology should be embraced,” Milroy said. “Organisations should reach out to customers and prospects to understand their needs and to interact with them more frequently. With the financial crisis, projects funded by debt will most likely be scrapped.”
Asia Pacific companies will focus more on making most of their existing investments in IT than going for any new capital expenditure, says Ravi Shekhar Pandey, manager, syndicated research, at Springboard Research.
“Instead, there will more focus on reducing operational expenditure and they are likely to go slow on big, new IT projects unless they promise to address challenges resulting from the current economic situation,” said Pandey.
“Till now Asia Pacific companies have focused on business transformation or invested in IT to become globally competitive and manage unprecedented growth that many of them have witnessed in the past few years.
However, faced with new challenges arising out of the current global economic slowdown, many of them will need new survival strategies.”
Senior IT executives should focus on projects and spend budgets more effectively to weather the market downturn, according to Kyung Yang, senior manager with Deloitte Consulting in Singapore.
Smaller project priority
“Smaller projects, with faster turnaround time and more direct impact to cost reduction and revenue growth, will be chosen over the longer term capital intensive projects,” Kyung said.
“This also means IT projects need to be clearly tied to business objectives and strategy. Current project durations might also be extended to minimise the immediate impact to IT budgets and to stretch the expenditure over a longer timeframe.”
Kyung said that consolidation, in the financial and banking industry, could mean fewer purchases of hardware in the future. “This might lead to more spending on new technologies to support cost reduction, system upgrades, and support the merger of companies. Spending on computer servers, PCs and business software is entering a period of slower growth that will last into the coming years.”
From Microsoft’s perspective, the upward trend towards smartphone purchases will be “a boon to enterprises” as people discover that mobility helps improve their productivity at work.
Sandra Goh, director of business segment marketing, Asia Pacific, Greater China & Japan, Microsoft said this should be a key consideration for IT managers, because many users in Asia buy their own phones for both personal and business use.
Updating mobile devices
“The implication of this is that IT departments will need to be able to support smartphones that are being brought into the corporate environment by employees,” Goh said. “It will be essential to provide administrators with the tools to easily update mobile devices with the latest software and applications, and at the same time, provide users easy access to a wealth of information stored on corporate networks, for example, checking inventory, accessing client information, and so on.”
Microsoft expects an increase in software-plus-services that consists of a broad blend of applications and services available over the Internet.
Microsoft’s Goh also believes that 2009 will see the convergence of video screens.
“We believe that the three most important screens in our lives – the mobile phone, the PC and the TV –will come together in 2009 to serve a common purpose; connecting people to each other in unprecedented ways via the World Wide Web,” she said. “People want to stay in touch with each other, access information and share content from just about anywhere, no matter what screen they’re using, and importantly, whether it’s for work or pleasure.
Goh said the vision was to provide software and services that flow seamlessly from one screen to another.
“In fact, Microsoft is enabling service providers to be successful in the world of software plus services by providing the next-generation hosting platform. For example, Live Mesh is a software-plus-service platform from Microsoft that enables PCs and other devices to “come alive” by making them aware of each other through the Internet.”
Sun Microsystems believes 2009 will see the continuing impact of cloud computing, with security, open standards and data portability becoming increasingly important as enterprises and developers weed through the hype.
Lionel Lim, president Sun Microsystems Asia Pacific, said that 2009 will also be the year when rich internet applications (RIA) technology really takes off, with the demand for RI in the mobile market set to grow massively.
High performance computer (HPC) is tipped to be another highlight, with data-intensive industries outside academia, like oil & gas, plus manufacturing, entering the commercial HPC market.
Open storage boom
Lim said that open Storage would also continue to grow as one of the most innovative and relevant topics affecting the storage community in 2009.
“Storage, currently a $40 billion dollar industry, is today going through a shift similar to that of the server market that occurred in the mid 90's,” he said. “Customer demand for state-of-the-art storage systems with open architectures and easy deployment will dramatically increase.”
Sun estimates that organisations can save half of their current expenditure on manual processes through the automation of identity and access management.
“Despite the current economic crisis, Sun expects companies to continue spending on identity and access management technologies in an effort to keep themselves protected against internal and external threats,” Lim said.
At the centre of the current financial crisis, many in the financial services industry are predicting that 2009 IT spending and innovation in this market will slow down.
Ambreesh Khanna, global head of financial services for Sun Microsystems, has a different prediction—not only will IT spending continue to grow, but those in the financial services sector will turn to innovation as a way to boost morale and capital in a sector that has faced a troubling time.
Six key trends
Juniper Networks’ APAC CTO, Matt Kolon sees six broad trends that are likely to gather momentum through 2009.
Kolon said that network and data centre consolidation has already reached fever pitch. “Organisations have been focusing on this as a key way to reduce operating expenditure but many networks are still far too complex,” he said. “This year will see a shift in focus to look across the entire organisation and really address complexity.”
This Juniper networks CTO maintains that 2009 will be the year that the network will be ‘the next to get the virtualization treatment’.
“There is a perception that server virtualisation is ahead in this regard, but we’re already seeing a number of customers look at the cost and space savings available with this technology,” Kolon said. “The challenge is getting the server teams and network teams together to break down some of the communication and education barriers to help businesses really streamline their data centres.”
He said that while ‘green networking’ has been on the agenda for some time, 2009 is likely to see quantifiable metrics for efficiency and power consumption become a core element to RFPs.
“To date it’s been a nice to have with vague, unquantifiable goals,” Kolon said, “but there are now testing standards that allow more rigorous demands to be placed around the green credentials for networking equipment.”
And he believes that, as the number of available IPv4 addresses rapidly dwindles, 2009 may just be the year that the industry really starts to embrace IPv6. “It’s not going to suddenly replace IPv4, but we’ll certainly see an increase in deployments as operators and companies look to future proof their networks.”
Kolon said that maximising network and server resources depended on using them more effectively and this needed proper management. “The network operating system is a key way to achieve this and, as such, is likely to emerge as a more important part of the buying decision in 2009. This will see new battles emerging among the main network vendors to differentiate and help customers reduce operating costs.”
Network intelligence and policy control will also be a focus in 2009, says Kolon.
“Companies are looking to leverage a lot more multiplay applications which will lead to an increasing mix of video, voice and data flowing over networks,” he said. “Dealing with these multiple traffic types is certainly achievable with only modest networks - as long as they have enough intelligence built in. In 2009, the mechanism to achieve this level of intelligence, through advanced application aware networking, is likely to emerge as a key focus area for businesses.”
Risk management focus
Risk management will be a key focus for 2009, particularly for the financial sector, according to SAS’s managing director, Singapore & emerging markets, Bill Lee, who says the “slowdown is definitely a time to cut-down, but also a time to reprioritise”.
“The ability to manage and deliver business outcomes to customers will acquire a much more serious connotation this year,” said Lee. “Even though there will be cuts in other areas, investment in solutions that allow customer intelligence is likely to increase, especially for banks and telcos.
“For manufacturing companies the focus is likely to be on taking out the costs and improving quality. It will be the right time to take out the inefficiencies in the system so that they don’t erode profitability. We anticipate transactional investments to reduce and the focus will be on building better predictive capabilities.”
Jim Lenox, the general manager Asia South, for VMware, believes that the Asia Pacific’s small-to-medium business (SMBs) will start to feel the pain as larger companies at the top of the supply chain start to pull back due to the market slowdown.
“This will affect SMB IT budgets and spending patterns,” Lenox said. “Across the board, companies will be restructuring to achieve cost benefits. But, on the bright side, he believes APAC still continues to offer strong growth and new opportunities, relative to the rest of world.
“From an industry perspective, it’s hard to ignore the immediate cost and flexibility benefits of virtualisation. We believe that software will continue to lead business innovation in the future as more organisations look to extend hardware lifecycles or simply move towards a SaaS model.”
Lenox said the emergence of ultra-mobile PCs and next-generation smart phones offered new levels of ultra-portability and efficiencies to further drive ‘IT on demand’ and social networking behaviour to support business needs.
“VMware believes that these events underpin the increasing relevance of cloud computing,” he said. “Users are increasingly stepping towards leveraging thin clients to remotely access data and applications on central servers, businesses are looking for flexibility to leverage different resources, technologies and services to gain the greatest business advantage.”
“As the global economy tightens, organisations will want their IT departments to help adapt quickly to changing market conditions by stabilising internal processes, delivering greater efficiency and enhancing cost management,” said Scott Whyman, vice president and general manager, Unisys Asia South.
“A key focus for all CIOs and IT managers in 2009 will be eliminating wastage of technology resources—from hardware to systems and people,” Whyman said. “A renewed focus on increasing competitiveness will drive ICT managers to adopt market-ready IT solutions that had previously been considered too leading edge to embrace.
“Real-time infrastructure solutions, such as automation solutions and software, will instill confidence in IT processes and their ability to adapt to business demands quickly and seamlessly.”
Par Botes, CTO, EMC Asia Pacific and Japan, said he was seeing customers fund IT spending with faster ROI's, and a greater focus on having technology aligned with business objectives.
“In other words, the customer approval cycle is going through more senior management layers,” Botes said. “In some cases, this means that the approval cycle takes longer, but fairly often we see that the focus on ROI and business alignment has shortened the approval cycle in some cases, since many corporations are operating under a strong sense of urgency to get ahead of their competitors.”
He said the challenge that every CIO faces in this kind of economic environment was ‘how to balance what is important with what is urgent’.
“CIOs need to classify all of their projects into what is mission critical and what is business critical,” Botes said. “Mission critical is important, while business critical is urgent! For some companies, investing for greater productivity and efficiency can pay off in lower operational costs in the short term. For others, the ROI of investing for greater productivity and efficiency may take too long to be realised, which makes it business critical rather than mission critical.”
Efficiency and insight
Bryan Tan, vice president (sales), Asia, for EPICOR, said companies in 2009 will be in “desperate need for solutions that build in efficiency, cut costs and help provide valuable insights.”
“Gartner, in its latest recommendations, says ‘scrap best of breed, go for best of need’,” said Tan. “We can’t agree more. For manufacturing companies the focus is likely to be on taking out the costs and improving quality. It will be the right time to take out the inefficiencies in the system so that they don’t erode profitability.”
Tan said that major shifts in architecture happen only once in 10-15 years. “We feel the needle moved in 2008 on the ERP segment with some fundamental changes in the architecture. This will redefine the way the industry uses ERP solutions.”
Corporate governance suddenly looms large on CEO and CIO radar screens, says Gavin Selkirk, Corporate senior vice president and general manager, CA Asia Pacific & Japan.
“Asia and the rest of the world will encounter increased regulation, so transparency and efficiency will be the key to effective decision-making,” Selkirk said.
The “Year 2008 will likely go down in history as the year when the concept of governance shifted into sharper focus. The collapse of Wall Street institutions and the grim immediate future facing giants such as GM and Ford, have driven home the point that governance and risk management is paramount, with IT as the enabler.”
According to Greg Russell, senior vice president, Telstra International, Asia, in a downturn economy, communication over electronic mediums often increases, so the IT-telecom industry should have an opportunity for sustained growth.
Russell said that, increasingly, managed services, hosted infrastructure and virtualised environments are being acknowledged as pragmatic ways to liberate value without exhausting limited capital resources. “This can also lead to a far more fluid environment, allowing tighter alignment of spending with objectives and achievements,” he said.
Businesses are also reviewing how to optimise existing technology more effectively by consolidating data centre services into key hubs to reduce energy consumption, carbon emissions and costs to harnessing new working practices such as remote working, telepresence and web collaboration.
Russell believes this shift in IT investment strategy will inspire a new wave of innovation. “As a result, managed services will grow in sophistication, reliability and popularity and demand will continue to increase allowing businesses to focus on core competencies and capital utilisation.”
Gartner’s top 10 2009 strategic technology areas*
2. Business intelligence
3. Cloud computing
4. Green IT
5. Unified communications
6. Social software and social networking
7. Web-oriented architecture
8. Enterprise mashups
9. Specialised systems
10. Servers–beyond blades
*According to Phillip R. Sargeant, Gartner’s managing vice president, global storage markets.
Springboard Research’s Top 10 2009 Predictions*
(1) Cost concerns will drive a focus on IT infrastructure consolidation.
(2) Virtualisation will emerge as the key to data centre transformations.
(3) Cost savings will help ‘green IT’ projects go mainstream.
(4) Managed services will be a bright spot.
(5) ‘Cloud computing’ will gain momentum in Asia.
(6) The slowdown will create opportunities for upgrading and acquiring skill sets.
(7) Unified communication will gain steam as companies cut travel costs, strive to improve productivity.
(8) The crisis will lead small to medium businesses to focus on outsourcing, managed services and software-as-a-service (SaaS) to transform their enterprises.
(9) Increased financial challenges will lead to a tightening of regulations, compliance and IT governance.
(10) Government spending, to boost the economy will benefit IT companies that know the public sector.
*According to Dane Anderson, CEO and executive vice president of research at Springboard Research.
IDC’s 2009 Predictions*
1. Asia Pacific IT spending growth will slow in 2009: Te APEJ IT market growth will slow from the previous forecast of 9.5 per cent to 5.8 per cent.
2. Government spending will drive IT value optimisation and infrastructure development:
Governments will develop various stimulus packages. Their net effect is likely to strongly impact on the ICT industry within the respective economies.
3. The cloud will grow despite, and because, of the economy: There will be rationalisation and consolidation, with struggling vendors having strong vertical offerings, being acquired by larger, more diversified players.
4. Economic pressures to keep customers will accelerate the emergence of next-generation customer care: There will be further acceleration in the use of web 2.0 technologies in the enterprise segment as businesses seek more efficient ways to connect with customers. Next generation customer contact tools will enable smart organisations to access the new spending generation that has grown up in the Internet age.
5. Major Players will seek Asia Pacific acquisitions as the enterprise search market accelerates: Controlling the costs of information search within organisations is vital and the enterprise search market has grown in strategic importance. This will drive further consolidation among enterprise search vendors in 2009, opening the way for companies such as Google and Yahoo! to enter the market traditionally dominated by companies like Autonomy, Microsoft and IBM.
6. Green will become sustainable in line with greater cost reduction: Greater cost pressures mean the adoption of sustainable IT technologies will expand from a focus on the tactical reduction of energy consumption in the data centre and the distributed environment, to a broader leverage of Green IT to achieve business process optimisation.
7. Telecoms operators will be forced to rethink strategies: Telecom incumbents with healthy balance sheets will continue to focus capex on enhancing core and backhaul networks, while consumer, or enterprise tier 2 operators, will delay new and large capex projects to focus on faster ROI investments. Broadband growth in developing Asia Pacific economies will still provide the quickest ROI as subscriber access growth continues in these markets.
8. New inters in the managed data centre model: While IT spending has taken a hit, the downturn in the economy will spur interest in data centre initiatives and solutions that can dramatically bring down operating costs. Organisations will revisit the managed data centre model and embrace it, starting with data centre consolidation.
9. Thin clients will ride the wave of cost cutting and desktop virtualisation: As the market matures, and better vendor collaboration results in software standards merging, virtualisation to cut costs will extend beyond server virtualisation in data centres to virtualising the desktop. Thin-client deployments, on the back of desktop virtualisation, will gain traction in 2009 and into 2010, as PC replacement cycles peak across the region. Full year 2009 thin-client shipments are expected to grow from 12-15 per cent above 2008, to about 765,000 units.
10. Mini-Notebooks will challenge how computers are used and sold in Asia Pacific: This new product category created due to demand for devices that support mobility, will increase from around 5 per cent of total notebooks shipped in the APEJ region in 2008, to more than 10 per cent in 2009. Mini-notebooks will change the way traditional notebooks are used and sold.
*According to Graeme Muller, head of IDC’s Asia Pacific predictions committee
BMC Software Asia Pacific’s 2009 Tips
(1) ROI Will Be King: While the days of buying IT for shelfware are long gone, any money allocated to IT must have a very short path to producing tangible ROI for the business and aligning to broader business objectives.
(2) IT That Reduces TCO Will Be Queen: Don’t assume a streamlined IT staff will result in reduced performance expectations. IT managers will look to technology investments that allow them bear attrition and/or layoffs while maintaining a high level of service. IT investment that increases automation and reduces total cost of ownership will be queen.
(3) Mainframe Becomes IT Security Blanket: Ever the gentle giants, mainframes are poised to become the default security blanket for IT as organizations squeeze even more value from this long ago amortized investment. Management tools that encompass mainframe, distributed, virtual and cloud environments will add more value than those solely focused on the new virtual kids on the block.
(4) Management Becomes Virtualization’s Achilles Heel: While virtual server environments promise lower internal resource requirements, unchecked virtual server sprawl quickly can create hornet’s nest from a management perspective. Proper controls and management processes will need to be in place before going virtual, and management tools that give visibility into the virtual network will be critical.
The Cloud will Move Beyond Hype: With the volatile economic backdrop, organizations will be more hesitant to be first movers to the cloud as any negative consequences could have career ending consequences. Management tools also will evolve to encompass the entire network environment from the mainframe to the cloud.
Conservatives Will Win in Business: Maintaining tight controls and being fiscally conservative will be a requirement for businesses to make it through the economic tunnel. More corporate jets will be grounded, sales conferences will be on a shoestring if not cancelled and executive compensation will remain flat at best. It will be a time to tighten the belt and go on a diet.
According to Chip Salyards, Vice President, BMC Software Asia Pacific
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