Bees in the bonnets of Asia CIOs

In June and July 1998, Dataquest

Inc surveyed 683 end-user organizations across the Asia-Pacific region by phone regarding

their intentions for the uptake of various technologies and IT services over the coming

years. Companies were selected from Dataquest's Asia-Pacific MIS Database of over 14,000

CIOs and IT managers across the region and from the MAEL Economic Newspaper Report listing

of the top 1,000 companies in South Korea by revenue for 1998. The majority of respondents

(80%) were CIOs, IT managers, or the equivalent. In some cases, the respondent was the

Chief Financial Officer (CFO) or Chief Executive Officer (CEO). All respondents were

responsible for making information technology and telecommunications (IT&T) budget and

IT strategy decisions.






This article focuses on the results of the request made to respondents to rate various
problems that they face. They were also asked to state the level of seriousness of the

problems for the organization surveyed. The article also includes Dataquest's analysis of

the areas of greatest opportunity for IT service providers.






Although the Asia-Pacific sample of 683 end-user organizations is quite large, once the
results are divided into subregions and individual countries, the statistical validity of

the results decreases. In a survey of this type, the responses should be used to indicate

trends and factors in the market rather than absolute figures and sizing.






What is bugging Asia-Pacific CIOs in general?


Across the region, the number one problem was budget constraints. Almost 83% of
respondents ranked it as either 'very serious' or 'somewhat serious'. This is not

surprising given the extent of the economic crises still raging across most of the Asian

region, and now even affecting Australia and New Zealand, which have much of their trade

tied up with Asian markets.






The next most prevalent problems were system performance (81%); on-time project completion
(80%); cost-effectiveness (almost 80%), which is closely related to budget issues; and

software upgrades (almost 79%).






Although these were the top five problems in terms of the overall number of respondents
ranking them with any level of seriousness, it should be noted that the most serious

problems (those ranked as 'very serious') were system security (51.2%); system performance

(48.9%); disaster recovery (46.3%); system availability (45.8%); Year 2000 issue (43.2%).






Three out of the five most serious issues were related to systems management. These,
coupled with the general concerns about cost-effectiveness, budget constraints, project

management deadlines, security, and software upgrades represent problems that may be

successfully targeted by most larger integrators and systems and network management

specialists across the region. The year 2000 issue is also a prime driver of applications

and integration services across the region. The seriousness of the disaster recovery

problem is also not surprising as organizations start to take stock of the real potential

for businesses as partial or total destruction because of the loss of key systems or data.





Although these are the most serious problems faced, readers should note that with the
exception of outsourcing (48%), at least 50% or more respondents rated all other issues at

some level of seriousness. Basically all these areas are problems for Asia-Pacific CIOs,

waiting to be solved.






What is bugging CIOs in Southeast Asia?


Southeast Asian CIOs-Southeast Asia as a subregion includes Indonesia, Malaysia,
Singapore, and Thailand-also ranked budget constraints as their number one problem; almost

88% respondents ranked it as either 'very serious' or 'somewhat serious'.






The next most prevalent problems were system performance (87%), on-time project completion
(86%), cost-effectiveness (86%), and year 2000 issues (almost 85%).






Although these ranked as the top five problems in terms of the overall number of
respondents ranking them with any level of seriousness, it should be noted that the most

serious problems (those ranked as "very serious") were system security (60.3%);

system performance (60.3%); disaster recovery (59.5%); system availability (58.5%);

cost-effectiveness (53.5%); year 2000 issue (53.0%).



These results are almost identical in ranking to the overall Asia-Pacific responses but
are all at greater levels of seriousness in terms of the number of respondents. This

indicates that Southeast Asian nations may provide an even greater level of potential for

service providers with innovative and cost-effective solutions.






What is bugging CIOs in India?


Indian CIOs ranked system performance as their number one problem. Almost 89% of
respondents ranked this as either 'very serious' or 'somewhat serious'.



The next most prevalent problems were on-time project completion (87%); budget constraints
(almost 85%); and timely data retrieval, cost-effectiveness, disaster recovery, system

availability, and hardware upgrades (ranked equally at almost 83%).






Although these ranked as top problems in terms of the overall number of respondents
ranking them with any level of seriousness, it should be noted that the most serious

problems (those ranked as 'very serious') were on-time project completion (61.5%); system

security and timely data retrieval (57.7%); system performance and disaster recovery

(55.8%); lack of networking expertise (53.8%); system availability (48.1%).






As in most other parts of the Asia-Pacific region, CIOs in India have serious problems
with systems management, availability, disaster recovery, and security issues, all of

which represent a potential untapped market for integrators with strong systems management

capabilities in this part of the world.






The lack of networking expertise in India among these respondents is also a potential area
of opportunity for network integrators. Timely data retrieval has not appeared at this

level of seriousness for any other part of the Asia-Pacific region, indicating a

potentially unique market for IT services providers with strengths in document management,

data warehousing, and other retrieval mechanisms and systems.






Economic issues


The majority of IT-using organizations across the region have been affected significantly
by the Asian economic downturn. In the 'IT budget' part of the survey, the majority of

users indicated that their IT budgets had stayed the same or even increased. Nevertheless,

budget-related issues and constraints, alongwith cost-effectiveness, were ranked as 'very

serious' or 'somewhat serious' issues by CIOs in all subregions. The budgets are clearly

not enough to meet the growing requirements for increasing productivity, competitiveness,

revenue and profit, decreasing distribution times and time to market, and they often have

less staff than they actually need.






Service providers that can create and market IT solutions that not only address other
major issues but can also do it cost-effectively or at least creatively enough to mitigate

against tightened budgets will find success in this market. The key recommendations

relating to budget/cost issues are as follows:






* Vendors may choose to offer local currency pricing, fixed for a defined period and based
on currency hedging.






* They could partner actively with local niche providers in exchange for processes and
skills transfer or form joint ventures. They could employ their workers at their local pay

rates, which may assist in reducing fees for clients.






* Large service providers may be too expensive for local businesses and governments to
afford. This opens opportunities for local services providers. Organizations should bid

for deals that they are technically competent to perform but that would not normally be

considered.





* They could partner with larger firms that may need assistance to balance the blend of

expatriate and local staff and, thus, the price of the deal. This may also act as an entry
to larger deals.





* They could provide financial packages (such as IT project finance) or extended payment
terms, such as post-dated checks and transaction-based revenue sharing.









Systems management issues


Across the region, on an average, three out of the five 'very serious' issues were related
to systems management: systems security, systems availability, and systems performance.






Most CIOs across the region are extremely concerned about their ability to keep their
systems up and running, providing acceptable response times and processing throughput, and

keeping them safe from external (or internal) unauthorized interference or access.






These problems represent the single largest set of opportunities across the Asia-Pacific
region as a whole. This represents a significant opportunity for service providers with

strong systems integration and systems and network management skills in at least three

types of solution provision:






* Traditional systems and network management outsourcing, to relieve the CIO of these
problems.






* Point solutions provided on-site in the form of network management systems, product
sales, consulting, implementation, integration, education, and training, which may also

include capacity planning, system monitoring, tuning tools and services, and

benchmarking/best-practice activities.






* Helpdesk call center solutions, to take the bulk of the 'urgent' problems away from the
IT staff and to streamline the fault reporting, correction, and change management

processes.






The survey recommends service providers to consider the following actions in order to take
advantage of the potential opportunities.






* Commence a 'market education' or 'softening' process aimed at specific countries and
industries with the highest incidence of systems management problems. One of the key

problems in the region is the reluctance to farm out work to other people. A campaign

aimed at identifying the problem and providing a solid solution will begin to break down

these attitudes:






* Form an alliance/partnership with appropriate systems/network management software
providers to create an 'end-to-end' systems/network management packaged solution,

consisting of consulting, implementation, education, and ongoing tuning.






* Target systems and network management issues as potential candidates for 'selective' or
'tactical' outsourcing solutions. This is often more acceptable than the 'total' or

'strategic' levels of outsourcing, of which most CIOs in the region are wary.






Network-related issues


Networking-related issues also surfaced as 'very serious' or 'somewhat serious' in
specific subregions. The extreme lack of networking expertise among respondents in India

and Greater China shows a potential area of opportunity for network integrators of all

sizes.






Network management in South Korea, with its extremely large average-user base, is also a
major problem. South Korea is also dominated by a much larger proportion of large systems

than most other parts of the Asia-Pacific region and is gradually migrating to

implementing enterprisewide client/server solutions. This will only serve to exacerbate

the current levels of network management problems.






Australia and New Zealand ranked end-user support as their number one issue. This ranking
is heavily influenced by Australian respondents and is a reflection of the sheer size (in

terms of distances covered) of Australian networks and the remoteness of many end-user

locations in both Australia and New Zealand.



The survey recommands to service providers attempting to target these networking-related
markets and take into account the following:






* Although India and especially China are attractive in terms of their populations,
economic growth rates, and rapid take-up of technology, there is lack of infrastructure

and local support mechanisms and technologies. Therefore, the establishment of any level

of network integration, network management and end-user support will require significant

investment in infrastructure.






* In Australia and New Zealand, the network integration and network management market is
more than adequately served by the plethora of small, medium-size, and large network

integrators and service providers. Competition is extremely intense and market

consolidation has already commenced. Also, some aspects of network integration and

management have already been 'commoditized.' The problems of end-user support are

compounded further by the sparse population and the rugged terrain. This indicates a

strong level of potential for service providers with a strong network integration and

support and desktop management offering, especially in relation to direct help desk/call

center support of end users.



n In South Korea, the bulk of the opportunities appear to lie in the integration and
management of enterprisewide client/servers and also in the consolidation of multiple

large-scale data centers.






Maintenance issues


Software and hardware upgrades were ranked as "very serious" by a surprising
number of respondents in Greater China, South Korea, and India. In Greater China and South

Korea, the typical upgrade problems may be exacerbated by the requirement for double-byte

support to handle the character sets specific to the countries in these subregions. This

may also affect hardware upgrades, but to a lesser extent. The problems caused by lack of

qualified staff and local skills to perform these upgrades may also contribute to these

being ranked as 'very serious' problems.






Hardware and software service providers with appropriate skills and experience may find
that these markets offer a renewed lease on life for traditional hardware and software

services skills, which may be adapted for and packaged specifically to target these

country markets. Systems integrators and consultants may also find some niche

opportunities for specialist upgrade services, change management consulting, and

methodology implementation.





Data-related issues



Data-related issues remain a concern, especially in the areas of backup, retrieval, and

disaster recovery. Timely data retrieval is a very serious issue for both India and South
Korea, and data backup is a very serious issue for South Korea.





Disaster recovery is a very serious issue for all subregions except Greater China, where
it does not rank in the 'very serious' or 'serious' categories. There are three possible

reasons for this: lack of knowledge about the potential pitfalls, completely adequate

precautions already in place-which the survey believes to be extremely unlikely,

especially in China-or other issues being more critical in importance.






The survey recommands the follows:





* In South Korea and India, the areas of data backup and timely data retrieval indicate a
potentially unique market for IT services providers. With strengths in document

management, data warehousing, and other retrieval mechanisms and systems. Service

providers that can successfully raise the awareness of these issues and create appropriate

solutions may be able to tap into this area. Document management problems have a lack of

efficient workflow processes and discipline in initiating these processes. This

potentially opens opportunities for service providers with collaborative

computing/groupware solutions.






* The seriousness of the disaster recovery problem is also not surprising as organizations
start to take stock of the real potential of the problem. This issue continually

resurfaces as a potential lucrative market across the region but is fraught with

difficulty. The costs of entry to this market are extremely high and are generally limited

to providers with significant spare capacity in their outsourcing or systems management

infrastructures. Although users consistently state that disaster recovery is a top

priority, when it comes to actually signing up for a comprehensive disaster recovery

contract, many users balk at the cost and continue to delay the decision for purchase. It

will take a major IT disaster to galvanize users into putting their money where their

'disaster recovery' mouths are. The survey advises service providers contemplating

entering this market to do so with extreme caution.






Year 2000 Issues


The year 2000 issue is already a prime driver of applications and integration services
across the region, and this demand will not only continue but will increase as the

deadline draw nearer.






The survey recommends that service providers exercise extreme caution in conducting any
projects relating to the year 2000 issue. Gartner Group's Year 2000 program has identified

1998 as the year in which we will see the first major litigation (among other phenomena)

related to year 2000 project damages. As such, service providers should ensure that they

do the following:






* Are extremely skilled in the areas of year 2000 work that they undertake.





* Have clearly defined project goals and measurable outcomes.





* Seek appropriate legal advice when creating contracts and service-level agreements and
when packaging and marketing year 2000-related services.






* Set very clear levels of expectations with their clients.





Meeting Deadlines


Project management-related issues, including the lack of on-time project completion, which
also heavily affects budgets have always been an issue for IT departments. 3GLs, 4GLs,

case tools, software engineering methodologies, prototyping, project management tools,

rapid application development, and the plethora of new-generation development environments

have all had limited success in solving the problem of managing projects and achieving

deadlines.



One of the problems associated with these new technologies and processes is that they
often take time to learn and require a certain level of skilled staff that may not be

available in certain countries. Also, the rate at which business problems multiply

outstrides the rate at which new applications can be developed.






The Asia-Pacific region is also suffering from an extreme skills shortage, which is
exacerbated by the 'brain drain' of talented individuals. At the same time, the economies

of Asia are desperately in need of advanced technology solutions to enable them to

continue to compete effectively in global markets.






Service providers are generally in the unique position of being able to attract skilled
people because of more attractive projects, working environments, salary packaging, and

other benefits. Also, many service providers can leverage their worldwide resources and

methodologies to provide 'repeatable solutions' developed for similar situations in other

countries. However, service providers need to continuously educate potential clients.






Buck up, service providers!


Cost is a primary issue everywhere but more so in the Asia-Pacific region. Now that the
Asian crisis has started to bite into Australia and New Zealand as well.



Nevertheless, the majority of CIOs across the region are swamped with problems relating to
the basic operations and management of day-to-day systems and networks. Security, data

backup, disaster recovery, data retrieval, software and hardware upgrades, and year 2000

problems all surfaced as relatively common concerns across the Asia-Pacific region.






Dataquest's view is that as the crisis worsens and budgets tighten, CIOs increasingly will
be required to do more with less. This may well exacerbate these already endemic problems.

Many CIOs will then be forced to "bite the bullet" and reduce their resistance

to the use of IT services. Service providers that have staked a claim in the provision of

solutions in the areas of greatest need may soon see their investments and patience pay

off.






Extracted from the report "What's bugging Asia/Pacific CIOs?


Potential for IT services solutions"


by Dataquest Inc.


Courtesy:


GartnerGroup.