Year of getting more from less: SYSTEM BUILDERS

Print

PrintPrint
Trade

Read More:

1 April 2005 | 0

Last year witnessed a significant downturn in economies, both global and national, including our own. This year promised little and remained true to its word. Such trading conditions, though harsh, invariably remove the weak and fortify the strong. High profile IT acquisitions have been both expected and witnessed. Those who have continued to provide value during these lean times will surly be well placed to reap the benefits once economic recovery returns.

One year on from our last major IT industry overview, TechCentral.ie is taking a fresh look at the IT industry, reflecting upon market, economic and political performance variables. We polled key opinion leaders of some of the country’s leading IT companies on the status quo 2002 and outlook for 2003.

System Builders

 

advertisement



 

That 2001 was a bad year for the IT industry is undisputed; do you consider the industry to be in a better or worse state facing into 2003 than it was this time last year, and why?

Aidan Furlong, Sun Microsystems:

“The year 2003 will, at best, remain flat for the IT economy. The capital expenditure scenario in corporate Ireland remains really tough right now, and I can honestly say it is impossible to predict when we will see an easing in this regard.

John Scully, IBM:

“During 2001 the IT business environment changed dramatically. The increased IT demand since ’99 from Y2K, the euro and the excesses of the dot.com venture capital spend-fest all evaporated. Since then there has been a new status quo and I don’t see any change to that for 2003. This means a continuing tough competitive environment next year and IT companies, such as ourselves, that understand these market conditions and the impact on our customers are best positioned to add value and therefore win business. Consolidation within the industry will continue through mergers and acquisitions. For example our successful PWCC acquisition and the subsequent integration into IBM forming Business Consulting Services has uniquely positioned IBM in the market.

Martin Murphy, HP:

“A better state now compared to last year, albeit, the past twelve months has forced consolidation at all levels and this has impacted on those who did not have a real value proposition for their customers. Consolidation will continue at all levels and there will be a reduction in the number of companies who can offer true value to customers across the full spectrum of service and product provision. In Irish terms, the industry has not bottomed yet and is behind the recovery curve when compared to global developments.

For HP, we are looking forward positively: Integration of the two companies has moved on significantly and we are seeing major wins across our portfolio. This is proof that our customers trust us and will invest in a partner who can offer a one-stop solution with real added value.

Tim McCarthy, Dell:

“Ireland is in a better state because the market bottomed out in 2002. There are certain drivers that should kick in next year. The three-year cycle of PC replacement that should have occurred in 2002 to replace those machines bought in anticipation of Y2K hasn’t happened yet. Capital spending was cut. That should now take place this year.

 

Last year, respondents to this survey were unanimous that cost reduction and speedy return on investment were the key factors driving IT purchases. Is this still the case, or are there signs of optimism in the local market driving investments in IT to fuel expansion?

Aidan Furlong, Sun Microsystems:

“‘Doing more with less’ is the continuous theme I hear coming from the marketplace. A requirement to drive efficiencies and cost reductions throughout the IT organisation is every CIO’s mandate. ‘Help me to get more from what I have’ is the key return on investment theme proliferating throughout the market. Customers will only talk about spending again when these efficiencies and investment returns are realised.

John Scully, IBM:

“Fast return on investment and short payback periods are still perquisites for any project but the real business drive is for flexibility, efficiency and cost effectiveness. This is best achieved through turning your business into an e-business (as opposed to just e-enabling it for e-commerce). An enterprise whose business processes are integrated end-to-end across the company and with key partners, suppliers and customers can respond with speed to any customer demand, market opportunity or external threat. That’s an e-business. This requires investment in a cost effective and flexible IT infrastructure.

Martin Murphy, HP:

“There are still the same overriding factors for IT investment as customers are increasingly careful about how and where they invest their fewer resources and are, therefore, looking to partner with a company that can deliver total solutions and show demonstrable savings. HP is in a position to profit from the current market because we offer affordable, realistic and relevant solutions to all customers and our real value, therefore, is heightened in tough times.

Michael Galvin, Cisco Systems:

“Its fair to say that technology for technology’s sakes is on the back burner for most customers. Where you tie innovation to productivity and you have a short term payback customers will almost without exception spend money on it. Where the payback is longer, some customers are saying ‘I want to do that’ but I will wait till my own business or the economy turns around.

Tim McCarthy, Dell:

“Cost and return on investment is the key concern of people. I still think that is going to be the case next year.

 

What business and technology drivers do you see impacting the market through 2003?

Aidan Furlong, Sun Microsystems:

“Everything is going on the Internet and it remains the single biggest opportunity for businesses in terms of driving efficiencies, improving customer service and opening new channels to market for a company’s products and services. Companies want everyone to be able to do business with them at low cost and high service levels by using the Web. Network computing is here to stay and that’s what Sun does.

John Scully, IBM:

“With revenues under pressure, getting fixed overheads under control is a top priority. I believe that businesses must increase the variability in their IT costs. Having to sustain an IT infrastructure that is geared up to cope with infrequent peaks in demand means there is, most of the time, idle, wasted capacity costing a lot of money. Likewise, the expense of installing and maintaining applications that are infrequently or very selectively used is an unaffordable overhead in today’s tough climate.

Martin Murphy, HP:

“We see utility computing and mobility being key market drivers. From a technology perspective, we will see acceptance of Tablet PCs growing throughout the year. We believe the handheld market will increase as we bring more exciting products to market. These technological innovations in themselves will drive little – the fact that they make customers’ lives easier and give them competitive advantages in their chosen field will drive acceptance of new technology. As such, companies who invest in R&D and who consistently innovate, for customer sake rather than for innovation sake, will be best positioned to flourish. Similarly, companies who can package technological innovation within an overall solution will win out as customers increasingly seek the one-stop shop.

Michael Galvin, Cisco Systems:

“In today’s environment, it’s all about getting back to the basics in terms of focusing on the areas that a company can influence and control: Cash generation, available market share gains, productivity increases, profitability, and technology innovation. Technologies and solutions that support these critical business areas will continue to drive customers’ buying decisions including mobility solutions, converged voice/data networks, storage networking and next generation optical solutions for the carrier market.

Tim McCarthy, Dell:

“Consolidation: A move to industry standards, especially in the server environment. We expect to see a move to Linux and Windows and to Intel hardware in that space as people consolidate around industry standards.

There will be a continued focus on server and storage consolidation as well as on security and manageability – as with laptop computing, wireless GPRS, Microsoft’s announcement on .Net server – there’s a lot of users out there still on Windows NT server.

 

Is there a ‘Next Big Thing’ to follow the previous booms in PC and Internet growth? What do you think it is and when do you think we will see it?

Aidan Furlong, Sun Microsystems:

“We are now entering the third era of network computing, an era that will see everything with a digital heartbeat connect to a dramatically more efficient and responsive business infrastructure that delivers increasingly personalised and relevant services at a considerably lower cost than experienced today – and it’s happening now.

John Scully, IBM:

“The next ‘big thing’ is ‘on demand computing’ which will address the problem above by improving the variability and flexibility of IT costs. It allows companies to use critical resources, hardware, software and applications, no matter where they reside in the quantity required, when required at a price that is competitive. GRID computing is an excellent example of this in the academic world which is now moving to the commercial arena. Obviously, this all has to be based on Open Standards which ensures that that different equipment, operating systems and applications and even processes can all talk together and provide a transparent service to the user. Thus, companies get the best computing capability in the most cost effective manner. This is extremely attractive to executives.

Martin Murphy, HP:

“Again, we do not envisage there being just one ‘thing’: The Internet will continue to flourish as customers get more comfortable with the security aspects of it. Various technologies such as the tablet will drive sectors of the market, but the next big step will be around higher acceptance of wireless technology. In a sense, this is nothing new, but simply a wider acceptance of existing capabilities – and confidence in the ability of companies to deliver on this new infrastructure. Other areas for growth circle around HCI (Human Computer Interface) and increasing capabilities to communicate across various comms devices seamlessly. Again, those companies who can deliver on this type of implementation will flourish.

Michael Galvin, Cisco Systems:

“The next big thing will be waves of productivity applications tied to the network. If this goes to the logical extreme, the network virtual organisations, with common systems, common data architectures and common network infrastructures will provide a unique competitive advantage to those companies that choose this architecture.

Tim McCarthy, Dell:

“Bandwidth. Technologies like DSL in the home. At the end of the data pipes you are going to need more processing technology. When the business cycle returns, PC spend will return.

 

The government’s strategies on e-government, broadband access provision and the appointment of a Minister for the Information Society have received widespread publicity. What else could or should the government do to support the IT industry?

Aidan Furlong, Sun Microsystems:

“Assume a leadership position in terms of realising the potential of the Internet in the provision of government services to businesses and citizens alike. There is too much deliberation and insufficient action in adopting the use of Internet technology to drive efficiencies, service levels and cost savings in the provision of key public services. The adoption of these core web based technologies by government departments and agencies can only stimulate the rest of corporate Ireland to further adopt the use of Internet based technology, and get Ireland on the technology ramp that it so badly needs.

John Scully, IBM:

“Continuing investment in Broadband is basic to the future prosperity of the Irish Economy. The current cost of home broadband access is far too high and this needs to be rectified.

Martin Murphy, HP:

“The strategy is good, but speed of execution will be key. We should also drive our policy by ensuring every school is e-enabled and equipped. A PC in every home is a realistic target!

Michael Galvin, Cisco Systems:

“The government needs to lead from the front with clear vision, strategy and political will. In a challenging economic environment the benefits of aggressively driving Internet applications and culture in productivity terms is unquestionable.

Broadband in itself is not a goal, ubiquitous IP connectivity is, as this is when the economy will see super normal returns, when every business and/or citizen has access to relevant applications.

The government should look to other economic communities such as the Province of Alberta in Canada where aggregation of spending has allowed the province to deploy fixed rate Internet solutions with little capital investment.

Tim McCarthy, Dell:

“Ireland aspires to be a leader in ICT technologies, but our PC and Internet penetration is low compared to Scandinavian countries. We should be driving improvements here. These countries have introduced measures, such as tax incentives, to include PC purchases in the home. We also have to get widespread DSL penetration at reasonable cost.

 

What grounds for optimism do you see locally and internationally for 2003?

Aidan Furlong, Sun Microsystems:

“One thing for sure is that the technology market will rebound. As it is, Sun is continuing to take market share from our key competitors in all our target markets, and Sun has never been so well positioned to respond to a rebound when it comes. The real cause for optimism though is that, slowly but surely, everything is getting connected to the Internet. There is a lot of upside in this business and it’s business in which Sun is winning market share.

John Scully, IBM:

“Some of the US economic indicators are improving and if war in the Middle East can be avoided then business confidence could improve through 2003. Also, the fundamentals of our industry are in better shape with a lot of excess capacity having worked its way through the system. Our customers realise that they now need to work harder, faster and slicker to remain competitive and IT remains the best tool to drive this efficiency. As IT skills – the traditional bottleneck – are not in short supply, the challenge for the IT industry is to be proactive in devising cost effective ways to make IT investment attractive again.

Martin Murphy, HP:

“Internationally, it is difficult to say as the threat of war, for example, is an indefinable factor which could stall everything. From an HP perspective, we are confident that our building blocks are now in place to really push on next year across the world and locally. If you look at all the factors affecting customers, we are well positioned to address all of these and, as a result, will flourish whatever the market conditions. Locally, we see a continued need for new technology and skills delivered by a single provider, which gives us confidence for the year ahead.

Tim McCarthy, Dell:

“I don’t think anyone is saying the world economy is going to grow in 2003, but I do think it’s bottomed out. At least it’s not getting any worse.

Read More:



Comments are closed.

Back to Top ↑