IT companies expect good, but challenging, 2009

All Thai industries suffered in 2008 from local political unrest and the international financial crisis, which had its origins in the United States. The information technology industry has not escaped that suffering.

However, Thailand's IT companies may be more resilient than other industries. Executives have revealed their outlooks for both the IT industry and the IT market in the coming year, with attendant consequences for the overall economy.

Global market research and analysis firm International Data Corporation (IDC) expects overall IT spending in Thailand to reach US$6.5 billion (Bt226.12 billion) in 2009, with market growth of about 6.7 per cent. If spending is divided in the same proportions as that in 2008, about 73 per cent of this will be spent on hardware and 27 per cent on software.

"Even while overall IT spending slows, IDC believes that the negative economic forces will actually intensify the focus on emerging markets and emerging technologies as businesses look to cut costs, improve business models and reach their customers more effectively," said the head of IDC's Asia-Pacific Predictions Committee, Graeme Muller.

"IT companies looking for growth in 2009 will need to accelerate their pace of change and align their offerings with the pockets of opportunity that these new marketplaces provide."

He said the Asia-Pacific region, except Japan, was still viewed as a bright spot with IT spending expected to reach $196 billion by the end of this year.

IDC believes that in 2009, the growth of the Asia-Pacific-except-Japan IT market will slow from its previous forecast of 9.5 per cent to a post-crisis forecast of 5.8 per cent. While it expects a decline in IT spending, with some areas of spending pulled back further than others, it believes that pockets of opportunity will remain as economic pressures accelerate growth in emerging technologies and in emerging markets.

Moreover, IDC also predicts that a slowing economy and the increasing strategic importance of search capacity will drive further consolidation among enterprise search vendors in 2009, opening the way for Internet search companies such as Google and Yahoo! to enter the market traditionally dominated by companies such as Autonomy, Microsoft and IBM. The attraction of Asian-developed search algorithms and non-English-based search engines will result in Asian companies and developers being targeted by global-enterprise search vendors as they try to maintain growth in 2009.

IDC expects shipments of personal computers in the Asia-Pacific region, excluding Japan, to increase by 7 per cent in 2009 and by 18 to 20 per cent in subsequent years.

In a recent report, US-based research firm Gartner said that despite the dismal economic climate, a recession in the IT industry was unlikely and at worst, it would still grow by 2.3 per cent in 2009, down from a previous forecast of 5.8 per cent.

Gartner sees Asia's emerging broadband market, IT replacement cycles and a growing interest in software as factors buffering an overall slowdown in IT spending.

Association of Thai Software Industry (ATSI) president Somkiat Ungaree believes growth of the Thai software industry in 2009 will be driven by the government sector, with various government organisations applying information technology to create new processes and achieve greater efficiency. Moreover, businesses will increasingly use IT to enhance their productivity and competitiveness.

ATSI plans to focus on three components in its drive to boost the local software industry this year: it will propose that government agencies purchase or hire locally made software to improve their processes and lift the efficiency of their services to the public; pursue means of developing human resources for the industry; and promote the development of software for Thailand's 2 million small- and medium-sized enterprises (SMEs).

"I think that if we can drive these three components, the software market this year will grow to a value of about Bt150 billion, or more than three times its Bt50-billion value in 2008. Twenty-five per cent of this value came from local software and 75 per cent from international software," Somkiat said.

"Moreover, new technology such as 3G, business intelligence, customer-relations management and broadband will offer key solutions in 2009, enabling companies to use new innovations to drive their business."

Microsoft (Thailand) managing director Patama Chantaruck said that although the global economic crisis had affected many countries, it had not yet had much impact on Thailand's IT industry, which had public-sector assistance led by Software Park Thailand and the Association of Thai Software Industry.

However, the continuously expanding crisis will soon affect Thailand, she said, and companies will inevitably have to focus on protecting themselves as well as driving business growth.

Microsoft Thailand recently launched a campaign called "Crisis Turning Point", which urges companies to use existing investments to better advantage, to use information technology to help reduce costs and to consolidate.

"IT is regularly viewed as a luxury on which business should cut back in times of economic downturn, but in fact technology will play a critical role in helping businesses and the national economy to overcome these difficulties," Patama said, adding that the three components of the campaign were basic guidelines that all businesses could adapt to suit their particular needs.

She said businesses should first consider their existing resources and how these could be used most efficiently. Secondly, they should look for ways in which IT and technology can help reduce costs and thirdly, they should then consolidate their staff capabilities, business processes and IT usage within the organisation to ensure maximum productivity.

By working together with both private and public sector partners, Microsoft is confident that these factors can ultimately help businesses in Thailand to consolidate their people, policies and processes in order to achieve greater productivity and steer the country towards economic recovery.

Patama said that in 2009, consumers should continue buying new IT gadgets at lower prices - an opposite trend to that in the public and private sectors, which should slow down their spending. As seen at Commart Comtech Thailand 20, consumers still have high purchasing power. However, they are also preparing for the coming financial crisis and will carefully spend a lower budget on IT items. Their purchases may also be delayed for big IT events, she said.

3Com Thailand's country manager Chingchai Maketipphachai said there was no doubt that 2009 would be a challenging year for enterprises of all sizes. However, the good news is that there are technologies that can help to create unprecedented efficiencies without creating a significant dent in operational budgets. This will help organisations to achieve market differentiation and tide them over until the global economy recovers.

He said that as recession reared its ugly head, Asian enterprises were likely to rethink their 2009 IT budgets. Fortunately, most of them are still sold on the value of technology, and will continue to invest in it to boost their businesses.

In 2009, 3Com plans to devote much effort to the development of networking solutions. The firm is also working with partners to integrate services such as utility billing and location and asset tracking of life-critical medical devices and drugs, high-value or security-sensitive equipment, logistics pallets and shipments, and even people, using radio-frequency identification (RFID) technology.

Chingchai said the economic slowdown would provide an unprecedented impetus to the demand for Unified Communications and Collaboration (UCC) solutions, which consolidate voice and other services on to standard data networks. He also believes high-bandwidth multi-media services will surge as the Asia-Pacific region continues to develop and we will also see the start of broad-based adoption of the 802.11n protocol to deploy novel wireless applications. Moreover, mobile devices will become more pervasive, with more applications, and RFID asset tracking will become important for businesses and consumers.

Alan Sedghi, managing director and general manager of Hewlett Packard (Thailand)'s Technology Solutions Group said that in order to deal with the economic situation as well as maintaining the industry's position, HP will continue to focus on the concept of business technology as the key driver towards tangible business outcomes.

The company will introduce new products and services to help customers transform their technology environments to optimise business outcomes, with a firm commitment to addressing the business requirements of corporate Thailand.

"HP will work closely in 2009 with alliance partners to develop business synergies. The firm will continue to use green technologies to create sustainable IT environments. As a priority, it will also continue its long-term commitment to community support through its good corporate citizenship programmes," Sedghi said.

He cited IDC research as indicating a double-digit compound average growth rate for all industries in Thailand in the years from 2008 to 2011, including banking, financial and insurance, communication, media and entertainment, manufacturing and distribution, and the public sector.

IBM's country manager Thanwa Laohasiriwong said that even in 2008, external factors brought uncertain conditions affecting businesses both in Thailand and overseas.

IBM believes that if it works closely with customers and understands their challenges and problems, it can use both new technologies and human resources to deliver solutions. It will help its customers to overcome economic challenges and prepare for business growth in the near future, he said.

Acer Computer's senior marketing manager Nitipat Praweenwongwuthi said the uncertain political situation and the global economic slowdown would affect the IT market in 2009, and although there would still be strong growth, it would probably be less than 15 per cent. The overall IT market grew by about 30 per cent in 2008, much of this from the notebook market, he said.

Acer's revenue in 2008 grew by about 35 per cent, with a significant contribution from 50-per-cent growth in notebook sales. The main impact of the economic slowdown and political turmoil was in customers delaying their decisions to buy new IT equipment.

SAP Thailand's managing director Patara Yongvanich said 2008 had been a positive year with strong growth for SAP in many industry segments such as consumer products and retail.

2009 will be challenging, but SAP will maintain its strategy of focusing on achieving success for its customers. This philosophy, together with the world's best enterprise applications and technology platforms, will allow the firm to expand its customer base in Thailand.

Patara said the economic slowdown and political unrest had resulted in customers down-scaling the size of projects and the level of investment, so that it met only immediate needs.

There will be a general slowdown in the IT market in 2009.

Historically, periods of slower economic growth represent an ideal time for companies to re-evaluate their business processes and get their back-office systems up to date, he said.

"SAP feels that this represents an excellent opportunity to expand our customer base and win back customers who have previously invested in competitive solutions. Companies are looking for systems that can help them reduce costs and maintain strong corporate governance, and that have a proven track record. SAP is the only company in the market that meets all these requirements," Patara said.

Cisco Systems (Thailand) managing director Tatchapol Poshyanonda said that in 2009 his company would remain focused on helping customers to understand how intelligent networks could help them to meet their business objectives. The evolution of the industry is being driven by the increasing role of intelligent networks.

"I think the biggest challenges and the biggest opportunities for the industry in 2008 came from the evolution of the Internet to its second phase - what we know as Web 2.0. This has totally changed the way we conduct business and engage with one another on many different levels - in our immediate social and working lives, but also across geographic boundaries and time zones. Cisco will continue to focus on collaborative technologies and new business models in both our product architecture and our own internal implementation of IT," Tatchapol said.

Hitachi Data Systems (Thailand)'s country manager Taveesak Saengthong said the global financial crisis affected most organisations in 2008. His company has helped organisations of all sizes to reduce the cost and complexity of their IT systems, mitigating risks and increasing operational efficiencies by delivering service-oriented storage solutions that closely align IT-storage resources with constantly changing business requirements, he said.

Hitachi Data Systems is also committed to helping customers implement more environmentally friendly solutions and reducing the power, cooling and facilities costs of their data centres.

Taveesak said that in 2009, Hitachi would continue to invest in storage innovation, enabling customers to attain competitive business advantages, and would focus on delivering ecofriendly storage solutions.

Nakrop Niamnamtham, managing director of nForce Security Systems AP said 2008 brought many problems for Thai companies, including internal political conflict and the global financial crisis. Many companies are striving to do business despite those crises by using information technology for communication and operational tools. IT has thus become a main driver in Thai companies as well as those in other parts of the world.

Nakrop said IT crime was also increasing because of the economic crisis, access to advanced technology, and the high value placed on information. Various applications of IT have become a "honey pots", attracting criminals. Crimes such as credit card theft and unauthorised access to other networks, especially those of financial organisations, are "prime steaks" that criminal would like to share, he said.

To protect information, IT security tools and state-imposed laws, such as Thailand's Computer-Related Crimes Act, are needed.

Nakrop said that in 2009, the new trend of application technology would enter Thailand's IT-security scene, securing Web-based, database and in-house software applications. The year will see wide use of Web-application firewalls and database security because most business transactions use database and Web applications, especially businesses that require online transactions. Most online businesses will require security at application level because applications written in such as Java or .Net might have vulnerabilities that need to be blocked, he said.

SAS Software (Thailand)'s managing director Kwanchai Lertchurushan said that the economic crisis would encourage both government and private-sectors organisations to look for new business solutions to create advantages and competitiveness by enhancing efficiency.

"I think that 2009 will be a challenging year for our business to provide new solutions to support customers' demand, so that they can invest in improved efficiency," Kwanchai said.

Sun Microsystems (Thailand) managing director Rampa Manoonsin said the economic slowdown was affecting all industries, especially those involved in exporting or tourism.

He expects businesses to implement IT as a competitive weapon and to achieve cost savings. They will also be looking for new technologies, such as open-source software solutions, to manage their businesses and enhance productivity.

Sun Microsystems' Asia South director of software practice, Roman Tuma cited research firm Gartner in estimating that 90 per cent of the world's companies would be using open-source software by 2012.

Rampa said Sun's direction in 2009 would be to help businesses to save costs for investment-related IT infrastructure and to improve their business processes. Government agencies, telecom and financial companies are important potential markets for IT spending to drive the IT industry generally, despite economic and political conditions, he said.

"We will use new technology and cost-effective products and solutions to offer our customers lower investment costs. This will help them to use IT to upgrade their business processes and to enhance both their efficiency and productivity," Rampa said.