GCC IT focus to shift to software and services
Speaking to IT heads at the event, IDC said that in early 2008 it had predicted that global IT spend for 2009 would grow by around 5.9%.
By late 2008, the global economic slump had forced it to revise downwards its predictions for 2009 and 2010 to a growth of 2.6% and 4.5% respectively.
Now, IDC believes IT spend will have declined 8.2% by year end, recovering to a growth rate of 4.4% in 2010.
Per capita, the UAE remains the biggest IT spender in the Middle East, closely followed by Qatar. But while GCC IT spend is expected to grow around 5.8% this year and 8.3% next year, it is a very different picture for the UAE, where IT spend is expected to have slumped by 11.6% this year, recovering to a 7.6% growth in 2010.
Currently, much of that IT spend is on hardware, rather than software or services, although this is expected to change. Post financial crisis, IDC believes the IT outlook in the GCC and wider Middle East will begin to change. Attention, said Naser Sha’sha’a, a Project Manager at IDC, will shift towards software as a service, Cloud computing and managed services. Equally, there will be tighter integration between IT and the other business functions and more desire to save money through being more energy efficient.
Add to that an explosion in bandwidth requirements, growing storage needs and a desire to implement different communications technologies, and, post crisis, CIOs, IT managers and their staff will have their hands full.
‘We can no more look at IT as a separate entity to the organisation,’ said Sha’sha’a. ‘IT is an enabler and should be working hand in hand with the organisation.’
ROI and TCO
That mean priorities will shift towards return on investment and total cost of ownership, as well as the ever present concern about IT security. Anything that runs on IP, said Sha’sha’a, will ‘end up in IT’s lap’.
KS Parag, Regional Director (Middle East) at Value Added Distributor FVC, said the challenges for IT heads would be many in the coming year, as they look to ensure that with smaller budgets they provide better ROI. Tips for IT heads, he said, included making friends with the financial director, thinking longer term IT strategy, keeping explanations simple – especially when talking to the boardroom – and delivering projects on time and in budget.
Finally, he said IT heads should keep their explanations simple. In other words, ‘talk about technology and the value it adds, how it will reduce costs and improve business efficiency’, he said, and not about how a piece of technology works.
As demands on IT grow, a weak link will be in-house skills, particularly if budgets and headcount is still being squeezed. Where many organisations in other parts of the world have looked to outsource certain functions and have embraced ideas such as managed services and software as a service – both as a way to improve efficiencies and better predict and manage costs – there has been reluctance in the Middle East to follow suit. In particular, there is suspicion about allowing a third party manage a company’s data on-site or moving that data off-site and having it managed by an external supplier.
A number of IT suppliers and companies offering hosted services say that attitude is now beginning to change.
EHosting Datafort CEO Yasser Zeineldin reckoned that up to 85% of enterprises in this region manage their own data centre or services. In some circumstances, this is the correct approach, he said. But there are plenty of scenarios where a company would be better to move their systems or services off-site.
There is, said Zeineldin, no one answer to whether a company should build, manage and expand its own data centre or go to a third party. It comes down to a business understanding its needs and weighing up the pros and cons for each option.
‘This needs to be examined before you make a decision. Sometimes it is best to do the job in-house. Sometimes [it is better to go] though a managed service provider.’
Overall, IT managers attending the event were left in little doubt that while times are currently tough and budgets have been slashed, they will continue to be expected to do more with less. And as the world begins to come out of the downturn, there will be even more focus on quickly aligning business and IT for improved efficiencies and greater return on investment.
IDC’s top 10 IT predictions:
1. Business and IT will move closer together – the downturn is shifting focus from top line growth to process efficiency, cost reductions and optimisation, with innovation seen as a way of achieving these.
2. Data centre efficiency will move to the forefront – the challenge will be how to improve the use of it. IDC pointed out that some two thirds of IT budgets in the Middle East are spent on building infrastructure and one third on using it, which needs to change. Virtualisation is seen as the most important data centre issue.
3. Stronger uptake of managed services – such services will ‘change the way technology is adopted and executed going forwards’, said IDC. Managed services are expected to grow significantly in the Middle East, especially in the GCC.
4. Cloud computing – still in its infancy in this region. There is plenty of interest but not so many examples of it in use. However, CIOs are interested because of the speed of deployment and the fact that companies pay for what they use. Software as a service, storage as a service and business intelligence as a service will be of particular interest.
5. A shift towards application modernisation and consolidation – the move will happen because of the flexibility it will offer.
6. Enterprise information integration – for instance, looking at how a company gets critical information to the right people so that they can make better decisions and quicker.
7. Convergence – the roll out of integrated ICT systems with wider communication adoption. For instance, said IDC, telcos playing a more active roll in executing IT will be a ‘game changer’.
8. A data explosion will force companies to address data management and information access – the challenge will be around security and good policy adoption to protect that information.
9. Regulation and compliance – a key issue moving forwards that will need CIOs looking at what policies should be set to ensure processes and internal workings comply.
10. Security will continue to be a major concern – an ever present when CIOs are asked to list their top priorities, and as network usage grows, there will be more threats and more demand for protection.