Worldwide IT Market To Rebound By Mid-2002;
KM, Web services, m-business, China market to be major growth areas
Madanmohan Rao reports from the Asia-Pacific IT Forum 2002 in Singapore
Leading infotech market research firm IDC (www.idc.com) predicts that the IT market worldwide will rebound by mid-2002, perhaps sooner - with spending increasing 4-6 per cent in the US, 6-7 per cent in Western Europe, and the Asia-Pacific leading with 10-12 per cent.
"Key worldwide thresholds that will be crossed in 2002 include over a billion cellphone users, 600 million Internet users, US$1 trillion in IT spending, and US$1 trillion in e-commerce. Corresponding figures for the Asia-Pacific - excluding Japan - will be 300 million cellphone users, 120 million Internet users, US$75 billion in IT spending, and US$75 billion in e-commerce revenues," said Kirk Campbell, CEO of IDC, at the recent Asia-Pacific IT Forum 2002 in Singapore.
Other predictions by IDC include:
- The solidification of m-business strategies at the enterprise level
- Serious activity in the areas of knowledge management, streaming media and Internet security, and lots of hype in areas like Web services
- A steady 25 per cent growth per year in China's IT market throughout the next decade, making it the world's third largest IT market in 2010 after the US and Japan (in fact, the Chinese IT market has already surpassed that of Canada and Italy, and will soon overtake Germany and the UK)
- The growth of Asian countries like India as major destinations for outsourcing
- The rise of the e-learning market to eventually reach US$100 million this year in the Asia-Pacific (excluding Japan).
"E-business has become the core of economic activity, not just the enabler. CEOs must harness the gains of driving the Web to every corner of their business," said Steve Lowe, Asia-Pacific director for AT&T Business Solutions, whose clients in Asia include Lawson Japan and Bangkok Airways.
"The network is your competitive advantage, and networking is the key to unlocking value in all aspects of business," he said. This applies to a wide range of activities including mergers, acquisitions, alliances, knowledge sharing, and outsourcing.
Emerging paradigms like Web services - applications that interact dynamically with each other using standard Internet technologies - are expected to bring benefits like integration across enterprises, operational efficiency, efficient distribution of software, and clever re-use of existing applications.
"Enterprise Web services will be the first to emerge, and early adopters already emerged in 2001. Enterprise Web services will become mainstream by 2003, and B2C Web services will become mainstream by 2005," said Tom Burns, director of Intel Internet solutions for the Asia-Pacific, citing research by Giga.
Initiatives like RosettaNet for smooth online payment are already operational in Singapore, with participation by IBM, BEA, and Microsoft. Sectors like finance and telecom are perfectly suited for Web services, leveraging applications for finding, advertising and interconnecting utilities.
"We have moved rapidly across the four phases of e-business: connect with TCP/IP, browse the Web, transact with RosettaNet, and collaborate with SOAP (Simple Object Access Protocol) and UDDI (Universal Description, Discovery and Integration), and are now entering macroprocessing," Burns said.
Standardisation challenges have moved from the email client and Web browser to the application level, and the situation today is comparable to where the PC industry was about ten years ago.
"Web services will ultimately change the way applications are built, deployed and consumed, and will impact the entire business ecosystem. There is good potential for this trend in the Asia-Pacific since there is not as much legacy infrastructure as in the US," said Burns, advising Asian companies to start with XML initiatives and pay attention to tagging information in their activity streams.
Other key trends - especially in the aftermath of the September 11 terror attacks - are heightened concern over security, increasing reliance on email as mission-critical communication, and the importance of streaming media not just on news sites but for enterprise videoconferencing and content delivery.
"One of the stars of September 11 was the Internet - which just kept on working, and connected thousands of people who were working from home. Ensuring business continuity via telecom and storage redundancy, disaster recovery, and facilities management are now as important as employee productivity and management of complexity," said Steve Faris, marketing VP for EMC Asia-Pacific.
Solutions like biometric security are quickly maturing, said Vernon Turner, enterprise solutions VP at IDC. Companies now need "Five 9" security solutions (with 99.999 per cent uptime) rather than just "Four 9" (99.99 per cent uptime), said Tham Wai Hoong, technical marketing director at Alcatel Singapore.
Perhaps the most promising trend - especially in the Asia-Pacific - is the growth of mobile communication. "We are now seeing the emergence of the continuous economy - across space and time, across organisational and personal boundaries," said Gigi Wang, IDC senior VP for communications and Internet research.
The continuous economy is characterized by ubiquity and mobility, according to Wang. New opportunities are opening up in the consumer, corporate and carrier markets; the mass market (eg. interactive advertising) and enterprise markets (eg. WLANs) are different in services, applications, and market potential.
There will be over a million mobile subscribers by 2003, and half of these mobile phones will be accessed from the workplace, according to John Lipp, mobile Internet services director for Alcatel Asia-Pacific. But difficulties will have to be worked out in complex areas like MVPNS (mobile virtual private networks), he said.
2002 will be the year that most companies will develop - if not fully implement - a wireless strategy; m-business will be a key focus of CIOs this decade, as with PCs in the 1980s and LANs/Internet in the 1990s. In fact, many companies are already appointing "CWOs" (chief wireless officers) in this regard.
The number of Asia-Pacific Internet users (excluding Japan) will increase from 64 million in 2000 to about 240 million in 2005 - and out of these, the number of users accessing the Net via wireless channels will increase from 4 million in 2000 to 174 million in 2005, said Noel Hon, managing director for NEC Singapore.
As companies adopt Internet and mobile technologies, they will need to mature progressively across three phases: business process innovation, business model innovation, and ultimately business model creation, Hon observed.
The pace of competition and the complexity of IT solutions is leading many companies to embrace business process and technology outsourcing. The IT sourcing market for the Asia-Pacific (excluding Japan) will be worth US$6.7 billion this year, reaching US$12.7 billion in 2005, according to IDC.
"Key verticals who are outsourcing include finance, telecom, government and manufacturing - but there are some cultural factors over loss of control that come into play in parts of Asia," observed Andrew Milroy, director of software services at IDC.
The largest IT vendors in the Asia-Pacific outsourcing arena are IBM, EDS, Samsung, Unisys, Accenture and Telstra; some of these companies outsource to third party vendors in countries like India.
In 1998, over 57 per cent of US businesses and about 40 per cent of European businesses outsourced their Web sites, according to Mike Melenovsky, IDC senior VP for services research.
A new breed of IT solutions providers is emerging, such as Monster.com, Zeborg, Watson Wyatt, Banta, and Logistics.com, in areas like human resource management and logistics. FedEx and Nistevo are major players in logistics solutions and marketplaces.
Large companies will tend to outsource to large vendors, and SMEs to smaller vendors, Melenovsky observed.
Asian CIOs are rapidly embracing e-business strategies in novel ways: this year's CIO awards of IDG's "CIO Asia-Pacific" magazine went to Eastman Chemicals Asia-Pacific (for B2B systems), Hongkong's Towngas company (which spun off an ISP and ecommerce portal), Reuters Asia (for an innovative news portal solution based on data clustering), Singapore Airlines (for most customer-effective Web site), and the InfoComm Development Authority of Singapore (for developing a public service infrastructure to deliver e-government services).
"Companies have spent lots of time and resources on data gathering, but there is a crisis of experience in being able to manage all this data well. A major growth area in the coming years is in the tools, standards and skillsets to be able to manage, find and gather relevant information," said Philip Beagent, information production director at Reuters Asia in Singapore.
Companies like Novell have also devised an Intranet which has helped in drastically reducing the amount of paperwork and labour in HR processes, cut telecom costs, and reduce data entry - accounting for savings of US$6.5 million a year on an Intranet cost of US$300,000, according to Cliff Smith, managing director for Novell Asia.
While KM has been around for several years, e-learning is a more recent phenomenon, riding the Internet wave. E-learning companies have four kinds of offerings: course management systems (such as Lotus, Oracle), learning management systems (Docent, Saba), online course libraries (SmartForce, NetG, Skillsoft, WideLearning), and content integration (DigitalThink, ICUS).
"Huge markets for e-learning are emerging in Australia, Singapore, Korea and Taiwan, especially in verticals like telecom, finance and government - followed by manufacturing and retail," said Jean Louis Michelet, managing director of ICUS. Unfortunately, elearning has not received as much attention at the "C level" (CEOs, CIOs) as KM.
ICUS has developed an elearning solution for Singapore Telecom's 2,000 call centre officers, which has helped reduce disruption of work and downturn during normal classroom instructions; the solution interleaves a knowledge portal with elearning course material.
The increasing shift towards a knowledge economy has led companies to acknowledge knowledge capital along with brand capital and market capital as key requisites for wealth creation in a time of competitive volatility.
"Knowledge management is now addressing not just internal B2E processes but also B2C and B2B; it is embedded in other solutions like CRM, and not just a standalone system," said Dane Anderson, IDC VP for Internet and computing systems research.
KM objectives can include retention of expertise, increase in customer satisfaction, more profits, and e-business support. Challenges arise in actually getting buy-in and participation for KM initiatives, inadequate measurement of KM performance, and lack of process support.
Notable examples of KM success include Frito Lay (sharing of best practices by sales teams), 3M (improvement of call centre capacity), Dell (better return on capital), Ryder (transformation of fleet services into logistics support), Ketchum PR (retention of expertise), and Novartis (creation of healthcare knowledge repositories).
"Though KM is no longer on top of the hype sheet as it was a few years ago, it is more important than ever in shaping business. KM implementations are quietly increasing as well," said Anderson.
KM needs top leadership support, should start off with pilot projects, and may take years to yield measurable results, according to Anderson; it needs cross-functional support, especially from managers who are confronting key business challenges.
"In retrospect, the Y2K glow is over and the year 2001 was the worst ever for the IT industry due to the global recession, dotcom crash, and the events of September 11," said Dennis Philbin, senior VP at IDC.
2002 will be the year when digital identity (DI) services - such as Microsoft's Passport, and PayPal - will become real. There will be a groundswell among consumers and merchants to subscribe to DI services, Philbin predicted.
Staffing shortages will recommence in 2003 - and demand will exceed supply again. CIOs should already be thinking about staff retention, Philbin recommended.
Digging beneath the frenzy of the dotcom boom and bust and other such IT waves, business leaders should be focusing on deeper and more profound changes in the ocean below, advised Thomas Malone, professor at MIT's Sloan School of Management.
The rising capabilities and decreasing costs of IT and telecom technologies over the decades have led to a dramatic increase in the speed of business activity and the decentralized nature of organisational structure.
Business organizations have transformed from the small companies of the early 1900s to the massive multinationals of the 1950s and now the networked organization. "We are entering the e-lance economy where freelance or project-based work is being increasingly outsourced to external entities or to restructured internal groups or intrapraneurs," Malone observed, citing as examples the startup exchanges eLance.com and Asynchrony.com as well as HP's VC cafés.
Increasing centralization will simultaneously be accompanied by the growth of temporary networks of independent workers. These twin trends will change organisational structures and dynamics for decades to come.
"The Net is the ideal platform and accelerator for this trend, through its unique combination of rigidity - as in the domain name system - and the flexibility of its publishing mechanisms," Malone said. Similar parallels are observed in the phenomenal growth of the Linux operating system, which is a formidable challenge to the dominance of Microsoft.
Ultimately, this emergence of centralization along with "lifestyle work" is a modern-day reflection of the balance that human beings need to strike between group membership and individual opportunities, Mallone concluded.
The writer can be reached at email@example.com
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