Getting more bang for IT's buck

The Asia-Pacific region is still seen by analysts as more resilient than other locations, although corporate IT spending will be put under the microscope even more.
Written by Sol E. Solomon, Contributor

CIOs will have to operate with reduced IT budgets amidst heightened expectations to deliver more, while new purchases and investments will be scrutinized rigorously due to the troubling global economy, according to industry observers.

Despite the slowdown, IDC believes that in 2009, the Asia-Pacific excluding Japan (APEJ) region still presents opportunities as both emerging economies and emerging technologies continue to chart advancements.

Compared to the rest of the world, APEJ is still viewed as the bright spot with IT spending expected to reach US$196 billion by year-end, the analyst firm said last month. It predicts that in 2009, the APEJ IT market growth will slow from its previous forecast of 9.5 percent to a "post-crisis" forecast of 5.8 percent.

Springboard Research, in its Asia Pacific IT Market Predictions 2009 report, concurred that the region's IT spend will outshine its western counterparts'. It expects, however, incremental dollars spent on IT in APEJ to slow to 7.1 percent this year, from 10.2 percent in 2008.

"We expect that most organizations in the region will be modifying their IT strategy from a focus on supporting revenue generation to an approach aimed at improving efficiencies," Ravi Shekhar Pandey, manager of syndicated research at Springboard, said in the document. "There will be a continued focus on reducing operational expenditure, both from business and IT perspectives."

Pandey added: "On the positive side, while technology spending will definitely be affected by this crisis, it will be more resilient than other areas that are often easier and quicker to cut."

XMG, in a separate announcement last week, also noted the Asia-Pacific region will outspend other regions. The analyst firm said the region's market will grow an estimated 6.3 percent--XMG's lowest growth estimate for the region seen since the Asian financial crisis of the late 1990s. The global average, on the other hand, is expected to be 2.4 percent.

Scott Whyman, vice president and general manager of Unisys Asia South, said in a company statement in December, a key focus for CIOs and IT managers in 2009 will be eliminating wastage of technology resources--from hardware to systems and people.

Nancy Gofus, senior vice president of global business products for Verizon Business, pointed out that the current challenging times present IT leaders with an opportunity to make technology work harder and smarter to get the job done.

"We're at a crossroads, where cost-cutting and technological innovation can actually unite to create new business capabilities in spite of the economic climate," she said in a statement last month.

Various IT research firms and vendors also cast predictions on the top technology trends for 2009. Here are some of those commonly cited:

1. Cloud computing
Gartner noted that companies, especially smaller ones, can benefit from cloud computing because of the technology's built-in elasticity and scalability. Applications and services delivered via the Web can help businesses grow quickly, while also reducing barriers to entry.

According to IDC, the current economic meltdown coincides with the availability of rapidly maturing cloud-based services. This new mode of acquiring and delivering services promises low up-front costs, making it a viable alternative to traditional delivery models. As a result, IDC forecasts that the use of cloud-based services will increase in 2009 despite, and because of, the economic conditions.

2. Corporate governance compliance
Compliance and regulatory oversight are here to stay, Verizon said, adding that in 2009, tech departments will be in the hot seat to ensure IT systems are fully compliant and all the right controls are in place.

Professional services and Web-based dashboards that help monitor state of compliance as well as establish controls for compliance, will help an organization to quickly review whether its partners, customers and suppliers are complying with relevant standards and regulations, added Verizon.

3. Green technology
Lionel Lim, Asia-Pacific president of Sun Microsystems, said energy reduction will continue to be a priority in 2009. "Power management will be used to throttle down servers and other IT equipment when not in use," Lim said in a company statement.

Springboard, in its report, said it expects most green measures to be driven in 2009 more by pure business necessities and objectives than environmental considerations. "Instead of executing on projects to be 'green', organizations will execute on these projects to save on costs and increase efficiencies and any green benefit will a value-add on top of the project," the report noted.

According to Verizon, however, companies will evaluate eco-responsibility along with their technology investments as part of an overall business strategy. "What's good for the environment also happens to make good business sense. If companies can reduce their energy consumption, they can also reduce their energy costs to gain a competitive advantage."

4. Infrastructure consolidation
Cost concerns will drive IT infrastructure consolidation across the Asia-Pacific region, said Springboard in its report. This consolidation will happen at different levels--from servers and storage to applications and networks.

IDC noted that enterprises will revisit the managed data center model that can dramatically bring down operating costs. Engaging managed data center service providers also give organizations access to many cutting-edge data center technologies, such as new forms of server and storage architectures, virtualization, WAN optimization, cloud computing and disaster recovery.

5. Open source
With the global economy in a recession, the use of open source software will become a standard part of several enterprises in the Asia-Pacific region, said XMG. Open source versions of standard application server software will continue to gain credibility and market share as viable alternatives to traditional vendor offerings in enterprise implementations--a trend XMG expects to continue well into 2010. However, the analyst noted that organizations must establish specific policies to control how open source is utilized.

6. Outsourcing
According to Springboard, the importance of enterprise-wide outsourcing will grow significantly in 2009 as companies cut costs and reduce manpower due to the economy. Outsourcing will also help lessen the risks associated with buying new technologies in uncertain times, and businesses are likely to rely more on established providers such as IBM and Accenture, it noted. Both developing countries like India, China, Thailand and the Philippines, and developed economies like Singapore, Hong Kong and Korea, will contribute significantly towards the growth of outsourcing.

XMG added that offshoring will continue to be in play in 2009 with an expected 24.2 percent growth forecast through 2010, dominated by major offshoring countries in the Asia-Pacific region--India, China, the Philippines, Malaysia and Vietnam. Driving this growth will be technical support, back-end processing, collections and customer care, as well as application management, enterprise application configuration, testing, business process outsourcing and customer care.

7. Software-as-a-service
The flexibility provided by software-as-a-service (SaaS) will boost the popularity of the on-demand technology delivery model that lets companies pay only for what they use, said Unisys.

Verizon noted that buying computing resources ala carte will help companies control costs while attaining the security, performance, scalability and reliability required for the enterprise.

8. Unified communications
Springboard believes unified communications (UC) will be one of the hottest technology trends in 2009 across the Asia-Pacific region. UC will be key in helping organizations facilitate real-time collaboration, control communication costs and serve customers more effectively by leveraging expertise from across the organization, it noted.

Asian companies however, will need more education and awareness of the technology before they adopt unified communications across the enterprise, said Springboard.

9. Virtualization
Gartner expects 2009 to be a good year not just for server virtualization but for virtualized storage and client devices too. It said virtualization can significantly decrease the cost of holding information by eliminating duplicate copies of data on real storage devices.

According to IDC, as the market matures, and better vendor collaboration results in software standards merging, virtualization will extend from the server in data centers to virtualizing the desktop. Optimistic that thin-client deployments on the back of desktop virtualization will gain traction in 2009, IDC expects full-year 2009 thin-client shipments to grow 12 percent to 15 percent over 2008, to about 765,000 units.

Web 2.0/Enterprise 2.0
Web 2.0 is quickly evolving into Enterprise 2.0 as these rich capabilities are creating new business models for some companies and empowering new strategies for others, Verizon pointed out. The removal of traditional barriers--walls, wires, time and distance--in favor of new social networking tools will let workers connect to their extended network of customers, suppliers, vendors and employees in new and exciting ways.

IDC predicts a further acceleration of the use of Web 2.0 technologies in the enterprise in 2009 as businesses look for efficient ways to connect with customers. Next-generation customer contact tools will provide organizations with the ability to reach out to Gen Y users, the new spending generation that has grown up in the Internet age. Such new technologies will dramatically transform contact centers and create the next generation of customer contact in 2009, it said.

Editorial standards