XMG predicts that Asia Pacific CIO concerns related to demonstrating the value of IT will be one of the top factors affecting the regional ICT industry during 2006. XMGs top ten predictions for the Asia Pacific ICT market also includes Outsourcing, mobile services, online games, VoIP regulatory progress, BI and SOA.
1. Top Concerns of Asia Pacific CIOs: Demonstrated IT Value Tops the List
According to XMG, the top concerns of IT executives heading into 2006 are:
- Measuring the efficiency and effectiveness of IT investments.
- Instituting corporate governance effectively.
- Reducing total IT spend on RTB (running the business) to increase technology and services support for new business models.
- Deploying enterprise information integration projects, primarily customer data integration.
- Enhancing business continuity and optimizing disaster recovery.
- Investing in human capital management retention programs.
- Upgrading ERPs mainly driven by enabling web-services in support of inter-enterprise integration.
- Server consolidation.
- Improving service levels and overall value from outsourcing partners or managed services providers.
- Facilitating agreement and direction from end-clients and IT stakeholders to evolve a Service-Oriented Architecture.
2. Peer Advisory Will Continue to Dominate in IT Decision Making
Peer advisory will continue to be the basis for decision making of Asia Pacific IT executives with a slight increase in the focus and adoption of best practices with a bottom-line focus. Vendors will continually try to influence investment decisions through proof of concepts, internally developed value calculators, events and the media with lack of noticeable returns.
3. Outsourcing Will Lose Shine; Internally Managed Offshore Captives Will Glow
As a number of multi-year deals are up for renewal globally, outsourcing will lose its luster as organizations take back certain IT functions, selectively outsource, or setup their own remote operations. With heightened awareness of the capabilities of Asia Pacific countries and the increasing internal tolerance for risks in operating offshore, several organizations that have previously outsourced multi-year contracts with an offshore component will setup its own remote operations offshore to support its internal business process and IT requirements.
4. Mobile Subscriber Base Will Increase as the Mobile Phone Becomes More Than Just a Telecommunication Device
More Asia Pacific consumers, who would otherwise not subscribe to mobile telecommunication services, will increasingly spend money on mobile phones and mobile subscription services. Innovations in mobile applications development, integration with other electronic media and data distribution systems (such as with broadcast and banking services) and vast improvements in data security, particularly with the new Advanced Encryption Standard (called Rijndael), will be driving the entry into these new markets. Applications that will ensure a smooth flow of streaming media content, or that will shorten the download time of broadcasted materials, will soon find their way in the next generation of handsets.
5. Online Games Will Overtake Revenues of Movies
Online gaming revenues (including revenues from internet games, online console games, online PC games, and online mobile games) have been increasing between 35% and 50% for the last two years and is expected to grow well into 2009. Much of this growth is driven by the emerging convergence of interactivity, mobility and connectivity in the online gaming realm - an experience that is limiting from the viewpoint of purely PC- and console-based gaming. As the lifestyle of the modern wired consumer increasingly becomes mobile and thirsty for more involving entertainment experiences, the online gaming environment will slowly overtake all other forms of electronic entertainment.
6. US Is Still Primary Market for Medical Transcription Services in Asia Pacific
The unique regulatory regime for healthcare in the US (HIPAA) makes it the dominant source of global demand for outsourced medical transcription services. Majority of the demand will increasingly be outsourced to offshore destinations in Asia such as India and the Philippines, but to an increasingly smaller group of high-quality service providers. With healthcare increasingly becoming a concern for the aging population of the continental US, the demand for transcribing patient care records into electronic format for greater record integrity and accessibility will drive continuous growth in 2006 and in the coming years. Global revenues on outsourced medical transcription services in 2005 is already estimated to be at $2.2 Billion with the US market accounting for more than 85% of global demand. Concerns over data security will keep sourcing to few countries with business operations that are certified by ISO 17799.
7. Regulatory Setting for VoIP Will Continually Evolve
VoIP will continually make astonishing traction in both the consumer and enterprise space in 2006. Consequently, the regulatory setting in each Asia Pacific country will evolve and several carrier models for VoIP will emerge. Although most Asia Pacific countries will consider VoIP as an information service and/or value-add service over the Internet, organizations adopting enterprise VoIP spanning multiple countries should conduct a legal review on a per country basis of the laws affecting their VoIP implementation.
8. Integration of Service Delivery as Business Strategic Outsourcing Unfolds
As strategic outsourcing clients seek more value and innovation, service providers will continually streamline service delivery models to integrate and manage business processes across client organizations such as the integration of the customer call center and back-office BPO enhanced with IT application capabilities and support. As this trend continues, the line between domestic and offshore delivery will gradually disappear as well. In Asia Pacific, service providers such as Accenture and IBM will compete for the top spots and will be in a position to offer gain sharing pricing methods. HP will see some success. EDS will be the laggard.
9. Business Intelligence (BI) Resurgence but Proceed with Caution
Interests in business intelligence will see resurgence in Asia Pacific by 25%, despite a staggering 12% of BI tools purchased are either not deployed or underutilized. BI has consistently been one of the top five priorities in the mind of every IT executive for the last four years and therefore the ongoing interest is of no surprise. Continuing interests will be driven by the allure of intuitive reporting features, streamlined navigation, better search features and vendor bundling. Savvy IT leaders will look beyond these technology improvements and focus on BI standards first to increase consistency, encourage usability and reduce cost in enterprise reporting, ad hoc reporting, OLAP and business performance management.
10. Rising Technology-enabled Commerce and Service Oriented Architecture
Service oriented architecture (SOA) will become the operative term amongst forward thinking IT executives entrusted by their business colleagues to implement technology-enabled commerce. The uptake for technology-enabled commerce in Asia Pacific will continually see growth upwards to 25% heading into 2006. Data integration technologies such as ETL and EAI will converge as intermediaries to SOA and must be architected as such.