Asian tech customers still spending

Businesses in the region are not cutting back on technology purchases even though they are reassessing their priorities, say tech vendors.
Written by Sol E. Solomon, Contributor

Current global economic conditions remain uncertain, but major tech vendors say their corporate customers are not cutting back on IT spending.

Bob Kelly, corporate vice president of servers and tools business at Microsoft, said: "The reality is we have not seen what I would call, a global slowdown in IT spend."

Bob Kelly, Microsoft
The reality is we have not seen what I would call, a global slowdown in IT spend.

"We have not heard from customers saying they are stopping [their] spending," Kelly said in an interview. "They may change where they spend and say, 'I'm not going to do that project, but I'm going to do that one instead'."

Tony Parkinson, Hewlett-Packard's Asia-Pacific and Japan vice president of enterprise storage and servers, said while CEOs may be tempted to reduce technology spending and put key projects on hold, the right kinds of projects can generate significant savings "surprisingly fast" for businesses.

"Furthermore, history has shown that companies that invest for growth in weak [economic] times flourish when conditions improve," Parkinson told ZDNet Asia in an e-mail interview.

"Today, that means companies should continue to invest in their technology infrastructure to drive long-term growth, and in data center transformation to substantively reduce operating costs while laying the groundwork for growth," he explained.

"A sluggish economy should not mandate technology spending cuts," he added.

According to Kelly, companies are focusing too much of their time and money on maintaining existing systems.

"If they had a dollar, nearly 70 cents of that is spent on maintaining existing systems. Only 30 cents is spent on driving new capabilities and new business," he said.

Given the current economic conditions, corporate IT spending should concentrate on increasing value, he noted.

Kelly said: "When it comes time to write that next maintenance check, you're not getting any value out of that." Companies should instead take advantage of innovation with technologies such as virtualization and high performance computing, to "transform IT", he added.

By holding back on tech spending, Parkinson said, aging infrastructure can evolve into a "complex patchwork of interconnected systems" impeding information access, lowering profit margins and introducing business and financial risks.

Citing the Data Center Institute's report Predictions About Data Centers (2006), he said, more than 50 percent of large enterprises will face a shortage of data center floor space in the next five years. In addition, within the same period, power failures and limits on power availability will halt data center operations at more than 90 percent of companies.

In response to these pressures, CIOs need to rethink the role of the data center and how best to manage it, he added.

Financial players also optimistic
Despite the recent credit meltdown n the West, Tumbleweed's Asia-Pacific and Japan regional vice president Stree Naidu, said the financial sector remains optimistic about the Asian market, where companies in this market segment continue to look at capitalizing growth opportunities.

Over the next six to 12 months, IT leaders in the financial industry will have to rise to the challenge of maintaining strong leadership teams to ride out any rough waves in the sector, Naidu said in an e-mail interview.

"The current economic situation will demand a lot of flexibility and willingness from the CEOs and CIOs to rapidly [and] creatively adapt to emerging problems." said the executive at Tumbleweed, a tech vendor providing products that manage file transfers, e-mail security and identity validation.

"A positive side effect of the credit crunch is that banks are spurred on to re-examine their internal policies, and assess the deployment of their resources and technologies for greater operational efficiency and results," he said.

According to Kelly, Microsoft is also seeing lots of opportunities from the financial industry in markets such as the Asia-Pacific region, where companies are looking to transform their IT from a cost center into a strategic asset.

HP's Parkinson said the region's CEOs and CFOs now view IT expenditures as investments that must be aligned with business goals to produce positive business outcomes, such as increasing the companies' competitive advantage.

"The new reality is that technology no longer just supports the business--technology powers the business," he said. "IT risks are now business risks and IT opportunities are now business opportunities."

Naidu believes that for audit and compliance processes, CEOs and CIOs will spare no effort to ensure transparency and avoid mistakes. "IT will now be seen as a tool to provide further assurance to customers," he said. "IT best practices will help to generate more revenue for the organization based on the value it brings to consumers."

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