Indonesia ICT Top 10: An Inflection Point Hit with the Deluge of Technology
03 Feb 2014
Jakarta, January 16, 2014 – In spite of Indonesia achieving below 6% GDP growth for the third straight quarter, the country remains a star on the horizon of a tumultuous global recovery. In 2013, ICT played a critical role for many industries looking at being more transformative, and as a manner to heighten its competitive streak domestically and to expand regionally. In 2014, International Data Corporation (IDC) Indonesia expects ICT to play an even larger role, the convergence between 3rd Platform technologies begin to infuse itself within enterprises across the country.
This infusion will be more apparent, and IDC predicts that IT spending will continue to record a double digit year-on-year growth, achieving US$16.5 billion by the end of 2014.
"The pillars of 3rd Platform technologies of Cloud, Social Media, Mobility and Big Data are apparent across many enterprises. IDC expects that the infusion of these four building blocks will be the focus of many enterprises in 2014, as the deluge of technology causes Indonesia to hit an inflection point of IT adoption," says Sudev Bangah, Associate Director and Head of Operations, IDC Indonesia.
In spite of these building blocks being present, the concern at present is accidental over-complication, in an ironic twist where simplification should have been the goal. Therefore, in moving ahead in 2014, IDC expects many enterprises to begin looking outwards towards service providers to help them in managing the influx of technology, and to converge that with the growing demands of the business.
Drawing from the latest IDC research and internal brainstorming sessions amongst IDC's regional and country analysts, the following are the top 10 ICT predictions in 2014 for Indonesia.
1. Business Led Outcomes Will Drive IT Projects in 2014
In 2013, IDC began witnessing a paradigm shift in the thinking of CEOs in Indonesia. Majority of CEOs interviewed viewed IT as a critical component for them to achieve efficiency and productivity, against rising competition and costs in the coming years. Cost savings still dominates the discussion, however, IDC predicts that CEOs will be placing more pressure on its IT departments to ensure projects implemented are designed with a business led outcome in mind. IDC does not anticipate for IT budgets to balloon, however, more will be asked for from an existing finite budget.
2. Enterprises Will Seek Outsourcing Services as a Manner to Manage IT
IDC anticipated for the IT Services market to achieve US$1.4 billion by the end of 2014, a 25% year-on year growth rate. Within this market, IDC anticipates that IT Outsourcing will take up close to 40% of the market, with more CIOs turning towards vendors to aid them in the implementation and execution of IT based projects, to achieve stipulated KPIs and business objectives put forward by Line of Business executives. Rising cost of operations and manpower, will motivate these CIOs to dramatically explore options, which will help them manage their IT efficiently.
3. Enterprises Will Seek for "One-Stop Providers" as Future Partners
Over the years, the locust of control between buyer and supplier has shifted dramatically. 5 years ago, it was a common scenario to see a single buyer, and myriad suppliers spanning from hardware, software, services and telecommunications providers. In 2014, IDC expects the demand from end-users for a "single-point of contact" to grow even stronger, as the locust of control between buyer and supplier shifts squarely to the court of the buyer. At present, enterprises remain unconvinced that any single entity will be able to adequately provide for their organization - however, this will not stop the demand from occurring in 2014.
4. Cloud Adoption Will Be Business-as-Usual
Moving ahead into 2014, IDC feels that the enterprise Cloud market will continue to be lackluster. The lethargic adoption of public cloud services underpins a larger infrastructure issue which envelopes a country, which is limiting its own potential. It is easy to perceive Indonesia to be relatively nascent in its cloud adoption, being more opportunistic in its adoption, more so than strategic and planned. 2014 will see more private cloud deployments at hand, and the emergence of virtual private cloud (VPC) will cause a slight shift towards the public sphere. Performance, reliability and security will remain key issues of cloud adoption in 2014.
5. 2014 Will See "BYOD" Adequately Defined Within Enterprises
The term "BYOD" or "Bring-your-own-device", has been in the lexicon of Indonesian enterprises for many years. The true essence of BYOD, however, is still lost upon many enterprises. With more than 55 million devices shipped in 2013, and the emergence of tablets challenging the primacy of PCs as a premier business device, IDC expects many enterprises to begin defining this phenomenon, and to put in place measures and policies in integrating the BYOD phenomenon into their workplace.
6. Customer Acquisition, Optimization and Retention Needs Will Push Enterprises towards Big Data Analytics
Indonesia has continued to be a darling of foreign direct investment for many years, and this trend is anticipated to continue in 2014. With that, many local enterprises are now faced with rising regional and domestic competition that they will have to stave off in order to remain relevant into the future. Exploration of Big Data Analytics has been done in pockets throughout 2013 - however, IDC holds the opinion that the true essence and understanding of Big Data within Indonesian enterprises is still not apparent. In spite of this limited understanding, IDC has found that more than 60% of businesses surveyed are looking towards Big Data as a tool to help them to remain competitive and relevant moving into the future. Therefore, in 2014, IDC anticipates the need for customer acquisition, retention and optimization of the business to be the key pivot points for further exploration and understanding of Big Data Analytics.
7. Reliable Telecommunications Services Will Be a "Maslow-ian" Need
Proliferation of Telecommunications services will be a critical pre-cursor towards the adoption of any other form of ICT product/services for majority of enterprises in the country. Without stable, reliable and fast internet, IDC anticipates that majority of enterprises will lose interest in looking at expanding their portfolio of adoption. This extends towards utilizing the same telecommunications provider to link up branch offices across the Archipelago, as well as one that provides adequate reliable and fast connectivity in order to minimize disruptions in adoption of adjacent services. With that, IDC does anticipate that Telecoms providers will be in pole position to address enterprise needs as that "one-stop" provider, however, via strategic partnerships that will need to be forged.
8. The SMB Segment Will Continue to Flounder
In 2014, IDC does not expect the buying behavior and attitude of SMBs to change much towards ICT. While some SMBs are cornered into the need for adopting ICT services by strategic overseas partners or large conglomerates, IDC anticipates for majority of this sector to remain unchanged. At present, IDC sees vendor strategies penetrating into this segment to be highly flawed, as particular Indonesian SMB nuances and attitudes are not acknowledged. Instead a copy and paste strategy has been implemented in majority of cases, and if this continues, IDC does not expect SMB buying behavior to change as they remain cost conscious and are unconvinced by the ROI ICT can bring to their organization.
9. Enterprise Will Develop a 3rd Platform Strategy to Maximize on its ICT Investments
IDC anticipates that enterprises in 2014 will make a concerted effort to develop a wholly integrated ICT strategy, to culminate its current investments in 3rd platform technologies. It will dawn upon enterprises that they have been spending on these technologies on one way or another, and these businesses will begin reviewing best practices to culminate these investments into a singularized 3rd platform strategy. This will first be executed by more "IT mature" verticals, and followed suit by other sectors and segments as IT complexity begins growing within their respective organizations.
10. Patience Tested as Projects Will Fail
Enterprises looking towards projects based on four pillar technologies to provide instantaneous return-of-investment (ROI) will see their patience tested. Majority of enterprises will fail to understand the rules of engagement in integrating their IT within the four pillar concept. The heightened adoption of these technologies within silos, has opened itself up to a perfect storm of potential project failure; where the essence of managing IT, managing vendors, managing budgets, managing management and managing outcomes all converge within a single platform that will cause the enterprise to re-think the way they manage business. In 2014, enterprises will look towards vendors once again as their scapegoats when implementing these projects, especially when addressing budgetary and ROI based outcomes with Lines-of-Business (LoB) - however, increasing pressure on IT's need to perform, will drive many projects to be accidentally slipshod, causing massive pressure for IT vendors to deliver its grand suite of solutions in a higher impact manner.
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