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Middle East to lead global IT spend growth

January 25, 2010 1:48 pm

Within the Middle East, Saudi Arabia and Qatar are expected to be the main areas of that growth, mainly because their IT sectors were less developed than countries such as the UAE prior to the downturn, and therefore still need to complete infrastructure build-up phases.

However, while the Middle East is likely to see good growth levels, this is only expected to bring IT budgets back to levels similar to those last seen in 2008, and globally, IDC does not expect to see ‘real recovery’ until 2011 at the earliest.

Pointing in particular to the UAE, Jyoti Lalchandani, VP & Regional MD META, IDC, said: ‘The market last year tanked about 15% in terms of IT spending, and this year we expect to see about 12%-13% growth in the UAE, which means that in terms of IT spend we are still at a lower level than what was recorded in 2008.’

Shifting capital expenditure

During the event, cloud computing and virtualisation dominated discussions. As budgets are tighter, the move to the cloud is seen as taking on renewed importance. In part, this is because companies are looking for ways to shift their capital expenditure to operational expenditure, allowing them to spread their IT budgets further, or reinvest that money elsewhere in the business. By virtualising environments and introducing more pay per use applications, companies can effectively move to a more leased environment, with lower up-front costs.

But, while companies globally are beginning to embrace cloud products and services, doubt continues in the Middle East, particularly around the public cloud. Private cloud initiatives are expected to take off though, especially as more companies move to offer increased products and services for this sector.

Frank Gens, Senior Vice President & Chief Analyst, IDC, told AMEinfo.com: ‘The Middle East are sceptics on public cloud. I sense that there is some concern, some scepticism…CIOs in this region have been focused on getting to a more efficient, more dynamic data centre and the private cloud is really a way to accelerate that transformation, and it really doesn’t carry those same risks that CIOs perceive in a public cloud.’

Changing approach to internal systems

Despite this scepticism around the public cloud, speakers – including Dell CEO Michael Dell, who spoke to a packed room – pushed the benefits of the private cloud and virtualisation. Sanjay Mirchandani, global CIO at EMC, told delegates that through a private cloud approach and aggressive virtualization, his company was changing its approach to internal IT services and creating opportunities for massive future cost savings.

EMC has taken an approach of spending to save, and while that has meant investing during tough times and making some trade offs, Mirchandani expects the decision to produce significant future savings. Examples included EMC consolidating 1,600 servers into 40-50 virtual servers, from which he expects to save the company about $10m over five years.

In the data centre, EMC’s ambitious virtualization targets are expected to produce $74m ‘cost avoidance’ in storage equipment and servers, a $12+m saving data centre power, cooling and space savings and a 34% increase in data centre efficiency.

As well its goal of total storage virtualisation by 2011 (also saving an estimated 1.5petabytes in storage growth over five years), EMC is also pushing for a virtual desktop environment, where it no longer matters what device an employee is using, they get the same user experience when accessing internal software and applications used by EMC. ‘We want to get to the point where users bring there own device, but have the same user experience,’ he told delegates.

His advice? ‘Virtualise everything. You’ll hit bumps on the way, but virtualise everything. Put in your own targets and value propositions [to measure progress and success].’

Overall, there were signs of renewed optimism within the IT industry. Where a year ago at the CIO Summit, It heads and analysts alike were struggling to see where the budget cuts would end, now they expect to see those budgets beginning to return. While 2010 is likely to continue to be a difficult trading environment, the consensus was that project spend is returning, but more than ever, there was a focus on how IT will improve a company’s business.