Bullish outlook, competition to boost software take-up in Philippines
Summary: Software makers are anticipating a huge adoption of enterprise software among local companies, partly boosted by the Asean masterplan to integrate regional economies which will create a more competitive market.
MANILA--With the Philippines riding on the crest of an economic resurgence--the local stock market has been hitting record highs recently following the award of the country's first investment-grade rating in March--software makers are anticipating a huge adoption of enterprise software among local companies.
The optimistic growth outlook is fueling investments and expansions, which in turn, is prompting companies to seriously consider acquiring enterprise software.
"With many of our customers doubling down on their growth and expansion plans, investing in tools such as enterprise software… will help them achieve their growth targets for the coming years," said James Dantow, general manager of cloud provider NetSuite Philippines.
Dantow said a "stronger currency, relatively mild inflation, and surging stock market" have given local companies "more access to, and more mileage from, their investable capital".
The executive also noted that while some Philippine firms were investing in order to become competitive, others have taken the offensive on spending in new systems with an eye towards providing them with new capabilities for international expansion.
"On the radar for many local companies is the realization of an integrated Asean Economic Community by 2015--which promises a more integrated but at the same time more competitive market for local players," Dantow said.
The pressure of competition was also one of the reasons cited by Calen Legaspi, co-founder and CEO of Orange & Bronze Software Labs, who said that traditional businesses want to come up with similar products that are being offered online or through mobile by their rivals.
"As businesses become larger and more complex, managers seek more visibility and timeliness of information," said Legaspi, also a board member of the Philippine Software Industry Association (PSIA).
Consolidation is a major reason for buying enterprise software, he added. "They want to consolidate many disparate systems into one system, or at least have the disparate systems talk to each other and present one view."
Consolidation and expansion
German business software maker SAP shared the views of both Legaspi and NetSuite's Dantow that there were two main drivers for enterprise software adoption: the need to consolidate and the desire to expand beyond domestic market.
Adaire Fox-Martin, senior vice president for industry business solutions at SAP Asia-Pacific and Japan, observed that both public and private sectors in the Philippines have developed custom applications to support processes such as human capital management, financial management and procurement.
"A consolidated enterprise software environment is the platform required to support growth, either organically or through acquisition," Fox-Martin said. "As companies seek to move beyond the domestic market, this consolidated platform becomes even more important."
As for the role of the cloud, all software vendors interviewed by ZDNet--with a little nod from SAP--said this new technology model has radically transformed how companies buy and deploy enterprise software.
"For one, it eliminates IT complexity and dramatically reduces IT," said NetSuite's Dantow. "Another is, it allows companies to be able to dynamically scale up or scale down their application and infrastructure demands when needed."
PSIA's Legaspi shared that, indeed, an increasing number of large enterprises are choosing or at least exploring the option of consuming cloud applications as software-as-a-service (SaaS).
While acknowledging the significance of the cloud in driving the adoption of business software, SAP's Fox-Martin asserted that many organizations have still a mixture of deployment models.
"For example, there may be particular business processes that an organization wishes to maintain in an on-premise environment and there may be other business processes that are less mission-critical to an organization that they are happy to have run in a cloud environment," she pointed out.
Fox-Martin stressed that "what is important is the ability to orchestrate the processes of the business in a holistic manner regardless of the option chosen for deployment. [T]his is especially true in a mixed deployment model."
According to IBM, there should be no hesitation for local firms to jump on the cloud.
"Cloud computing offers immense growth opportunity as it is poised for greater adoption. The players are going to change and just like with any other major shift in this industry, today's winners may be tomorrow's losers," said Aileen Rodriguez, country manager for software group at IBM Philippines.
The rise of mobile and social media is also prompting Filipino enterprises to look at installing a"smarter" software environment, according to Big Blue.
"Big Data is a key trend that is rising to the top of the business agenda," said Rodriguez. "Since the emergence of social media, we have entered into a mobile generation. Mobile computing has been experiencing significant growth since then."
Rodriguez, however, said that while mobile computing has been dominated by discussions of new smartphones, operating systems, games and apps, local enterprises have yet to tap into the true potential of mobile business.
Legaspi agrees with Rodriquez, noting that the vast majority of Philippine corporations see social media as simply a marketing channel. "Most ban its use internally," he said.
NetSuite Philippines, on the other hand, said local organizations should consider acquiring software--preferably on the cloud--that integrates mobile and social media.
"Within an organization, mobile devices provide employees with a vastly more convenient and often times richer and more personalized experience for accessing business information; it also promises to provide businesses with a new channel in which to reach out to customers and conduct business with them as well," Dantow said.
While promising, SAP's Fox-Martin cautioned that it is crucial that when deploying mobile applications in a business environment, they should deployed in the context of an enterprise platform that supports mobile applications.
"Without this platform, the integration of data and business processes driven by mobility becomes an unwieldy burden for most businesses," she said.