Firms eye IT cost, efficiency in 2010

Enterprises still in cost-cutting mode this year, but set to explore investments that give rise to operational efficiencies or new business, say observers.
Written by Vivian Yeo, Contributor

Cost containment will still be a key issue this year, but enterprises will also increasingly explore technology options that can lead to greater operational efficiencies or create new business, according to industry observers.

Stephen Prentice, vice president and Gartner Fellow, noted that 2010 IT budgets "are likely to be flat" and controlling costs will still be a "significant focus" for organizations.

Keeping competitive will also be key for enterprises going forward, Prentice added in an e-mail interview. In particular, he noted that organizations that have not completed or initiated projects in data center consolidation, server virtualization and application portfolio rationalization, will seek to do so this year in order to catch up with their competitors.

Lawrence Goh, technology consulting lead for Southeast Asia at Accenture, also told ZDNet Asia that CIOs' focus on cost management when evaluating IT investments is set to continue into 2010.

However, IT heads this year will also start looking into strategic IT investments to deploy new technologies that not only reduce operating costs but also "add value in key business areas where IT can be a lever for business innovation and for broader operating efficiencies", Goh noted in an e-mail.

"Virtual collaboration technologies are typical of the [type of] tech investments that can bring dramatic and immediate savings--and a wealth of intangible benefits, ranging from rapid multiplication of customer contacts and richer stakeholder networks to higher productivity and greater employee engagement," he explained.

Cloud computing, when deployed "properly", also has significant potential to reduce IT operating costs related to infrastructure as well as applications, he said. Removing the need for future equipment upgrades, Goh added, offers organizations the flexibility to reallocate the expenditure to other areas.

While a December 2009 report from Springboard Research pointed to an increase in IT spend in Asia this year, Gartner's Prentice pointed out that investments need not always be monetary.

"For customer-facing companies, a deep understanding of the impact of social software, social networks and other consumer communities will be essential," he said. "Here, investments may not so much be measured in the amount of money spent on technology but the attention and resources focused on tapping the power of the 'collective' to discover the early signals of change and trends in the marketplace."

For instance, he explained that location-based technologies are expected to become increasingly important over the next three years. As a result, early investments to "understand how capturing time and location information" can help drive efficiencies or open new market opportunities and business models, Prentice said. This, he pointed out, was especially important in the Asia Pacific region, which has a high mobile penetration rate.

"Mobile commerce, especially involving micro payments and location-based or time-sensitive services, is likely to grow strongly," he added. "Linking location and time with previous understanding of buying behavior, patterns and intentions, will enable enterprises to better understand the context of the prospect and offer services accordingly."

He added that contextual computing will be another "major opportunity".

Invest to protect
According to Prentice, volatility and uncertainty are present in two areas: the economy and environmental regulations. As a result, he advised CIOs to be cautious about long-term investments that might restrict their options as the uncertainty unfolds.

On top of that, enterprises ought to evaluate existing IT projects that have yet to deliver results, said Prentice.

Accenture's Goh added that IT chiefs can help alleviate escalating costs in data centers by adopting "green computing" techniques.

Two organizations told ZDNet Asia that much of their IT focus for 2010 will revolve around efforts to allow their customers to transact with them more easily.

The Hong Kong Jockey Club (HKJC), for instance, will be looking to strengthen its information dissemination and transactional services for customers in the new year, according to its executive director for IT, Sunny Lee.

Another major area of focus is in improving systems integration efficiency, which the HKJC will pursue via a service-oriented architecture (SOA) project, Lee said in an e-mail.

"Going forward, the club maintains a cautiously optimistic view on the economic recovery," he noted. "We believe that by continuing to invest in high-quality IT projects during the downturn, we will be more ready to respond to future opportunities."

When contacted, Singapore Airlines' vice president of public affairs Nicholas Ionides did not single out a particular technology or project. He did inform ZDNet Asia, however, that the airliner is continuously upgrading its systems to improve operational and work processes, as well as better cater to customers.

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