Asian tech heads opt for prudence in 2009
Not all businesses in Asia have implemented cost-cutting measures or IT budget cuts, but technology decision makers say they are adopting a cautious and critical approach to managing IT spend this year.
While two out of the three organizations that ZDNet Asia spoke with expressed no change to their IT budgets, all said prudence and frugality were necessary to ride out the recession.
Sunny Lee, chief information officer of the Hong Kong Jockey Club (HKJC), told ZDNet Asia in a phone interview that his organization remains committed to its IT budget and projects as HKJC views IT as a long-term investment "not affected by short-term ups and downs". Adopting "prudent and opportunistic IT management" for the year ahead, the company will carry out over 150 projects this year, some of which are ongoing projects initiated last year.
According to various industry observers, companies that experience IT belt-tightening need to prioritize IT projects. "I look at which can be monetized first, as cashflow will be important," said Ryan Chioh, executive director of FarEastFlora.com.
For cashflow management purposes, Chioh also recommended negotiating with vendors to allow payment over several months.
Patrick Chan, IDC's chief technology advisor for emerging technologies research in the Asia-Pacific region, also noted that businesses need to put their IT dollars "on high impact business areas". Quick returns will help "establish credence to IT operations".
According to David Yew, vice president for research and consulting in the Asia-Pacific region at Access Markets International (AMI) Partners, small and midsize businesses (SMBs) this year want, and need, to consider server virtualization. Improved voice-over-IP technology can also reduce costs for SMBs, he added in an e-mail.
Chip Salyards, Asia-Pacific vice president for BMC Software, noted in an e-mail interview that cost-cutting aside, businesses need to remain transparent and maintain proper documentation to comply with regulations. "By ensuring transparency in business processes, visibility to IT budgets and clearly communicating the value they deliver to the organization, business stakeholders can then have a clear understanding of how IT is meeting business expectations and goals," he said.
IDC's Chan also provided the following tips:
• Tap on Web 2.0 to reach customers.
• Consider cost-efficient alternatives such as mature open source tools and software-as-a-service.
• Use incremental refresh strategies.
Amongst other plans, HKJC will revamp its betting Web site, perform a technology refresh for betting terminals as well as its racing operations information system, and rolling out a 1,000-seat call center, he noted. The club is also looking to virtualize its servers in the production environment, and explore desktop virtualization as well.
"Luckily…there [has not been] an instance where we talked about how we're going to cut back," said Lee. "However, as good stewardship in this area, I am actively looking at ways to take advantage of this economic situation to do more with less, or do more with the same budget."
To tap on opportunities arising from the financial crisis, the IT veteran is keeping his eye on getting good talent and catching up on initiatives that may have been delayed due to lack of resources. The current "buyers' market", Lee pointed out, is also a good time to negotiate with service providers on better pricing, or at least better service level agreements.
"Another thing that I'm looking at quite proactively, or at least be mindful of, is…the state of health of our vendors--in this condition you can never say you are surprised when a vendor goes out of business, or in a bad financial situation, or pulling out of Hong Kong," he added.
Singapore-based florist FarEastFlora.com, currently also has no plans to make changes to its IT budget. Its executive director Ryan Chioh, said in an e-mail interview that the company has planned upgrades to its existing systems, and is looking at adding more features to its Web site.
"We try to take tiny bites of improvements, and during this financial crisis, we will need to be even more careful with our spending," he noted, adding that all projects have to be scrutinized for their value to customers. "At the end of the day, we don't want a white elephant."
Parkway Group Healthcare's IT department, on the other hand, has experienced some salary and human resource cuts. According to Kenneth Thean, Parkway Group Healthcare's group vice president for IT and CIO, not only has the IT budget been cut, the IT department has also been affected by company-wide staff retrenchment in mid- December.
Changes are also made on the operations side, said Thean, who is currently acting as an IT consultant for the group's Malaysian operations. "All capital purchases are being reviewed to see if it can be deferred. This year, only essential projects will be allowed," he said in an e-mail, adding that Parkway's operating expenditure is being reviewed to see where consolidation and reduction can occur. Such measures, including not renewing some office leases and downsizing office space, will save the company "quite a few million dollars", he added.
Most of the measures are affecting non-operational areas, like corporate overheads," Thean pointed out. "As IT is a business critical function, there is a limit to the cut-back that can be done before there is an impact to daily operations, so our IT department is less affected."