Malaysia ICT Top 10: Hyper-Compete for Growth, Speed and Economics - a Confluence of Factors, says IDC

Kuala Lumpur, December 6, 2012 – IDC sees the theme of Hyper-Competing for Growth, Speed and Economics, to be pivotal in encapsulating the trends that are and will continue to affect organizations for years to come while Malaysia is expected to have a US$10 billion IT economy.

Hyper-Competing or the dynamics of strategic maneuvering amongst competitors especially in new markets where the status quo has yet to be defined is no longer just a buzzword but a reality, according to a 2013 forecast by IT market intelligence company, IDC.

"Hyper-competing is not a buzzword but the current reality for organizations looking to capitalize on a confluence of factors that are shaping industries and nation,” according to Roger Ling, Research Manager - ASEAN Services Research Group, IDC Asia/Pacific.

“While the perfect storm is brewing, there are opportunities available as there are shifting fundamentals shaping the success and growth that will also function as pivots for the IT industry," adds Ling.

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 2013 for Malaysia.

The predictions are split across 3 different key segments.  Part 1: Malaysia ICT spending a response to Hyper-Competing for Growth, Speed and Economics, Part 2: Banking on the 3rd wave of IT in new normal of Hyper-Compete, and Part 3: Underlying Fundamentals

Part 1: Malaysia ICT spending a response to Hyper-Competing for Growth, Speed and Economics

1. IT Spending: the temporal slowdown creeps in, but hyper-competition intensifies in a 10 billion IT economy
IDC predicts that in 2013, Malaysia's IT spending will cross the US$10 billion mark.  While this is a step in the right direction, IDC notes that spending slowed down to 7.6% year on year as compared to a more robust double digit growth the previous year. What makes a clear case for this prediction in the context of hyper-competing are the following factors that appear to create a deadlock:
o In the context of ASEAN, Malaysia's IT share of spending seems to have declined compared to other ASEAN countries. In 2007 Malaysia made up 18% of the ASEAN IT market. By 2013, this is expected to reduce to 17.2% and by 2016 anticipate Malaysia making up a mere 16.1% of the ASEAN IT Spend.
o While Malaysia's IT spending is expected to decline in the context of ASEAN, sentiments on competitiveness and ease of doing business – which directly or indirectly lead to IT related FDI – are improving. For the 2013 report, Malaysia is ranked 12th for ease of doing business beating out India, China, Philippines and Indonesia; climbing from 18th in 2012. For competitiveness the nation did the same, garnering a stronger perception of competitiveness.

With growing credentials among a host of ASEAN countries, the decline in IT spending seems to contradict the positive light the country is in. IDC believes that in an era of hyper-compete there will be changes, which will create stronger IT spending for Malaysia.

2. Telecommunications Spending: From rebound to growth
IDC expects the telecom services market to experience a year on year decline of 1.6% by the close of 2012, but predicts a gradual rebound reaching 3.7% growth in 2013.

Voice revenues are expected to continue on its steady decline with fixed voice at -4.3% and Wireless voice at -11.3% the rebound comes with the growth in both fixed data and wireless data at 13.1% and 14.9% respectively.

On the flip side, telecom equipment is set for high year on year growth hitting 19.7% in 2013. Enterprise networks will reach 18.6%, Service provider equipment 9.3% and Smartphone's a whopping 34.6% in terms of year on year growth.


Part 2: Banking on the 3rd wave of IT in new normal of Hyper-Compete

3. Cloud uptake will remain lethargic, but market perception of the new normal will provide building blocks for enterprise cloud adoption
In 2012 IDC predicted that cloud as a buzzword in Malaysia will finally come to an end. A confluence of factors led to that prediction and in 2013, the theme rides on manifesting the current reality.  Cloud is no longer a buzzword, but the journey towards the delivery shift is far from hitting peak maturity. This prediction states 3 bold claims:
o The local cloud market is yet to thrive, it is at a state where there is still much work to be done and is an uphill battle
o The local market is entering/in the new normal where there are other shifting fundamentals impacting
o Being in the new normal creates the opportunity for cloud to prevail

4. Big Data, it's about building business use cases
With the growth of information creation, comes the business case to make informed decisions linking to the growth in adoption for Analytics. Referring to IDC's latest Software tracker, the Business Analytics market in Malaysia is estimated to reach US 96.83 Million in 2012 and expected to grow by over 10% in 2013 to hit US 107.16 Million. With data flowing in volume, variety, value and velocity, IDC sees a shift in how organizations are capitalizing on information creation.

Based on IDC's annual Software Study for year 2012, 50% of the respondents are not aware of Big Data, which is the highest among Southeast Asia countries. And another 50% respondents have a different perception on Big Data. In Malaysia, the current business use cases for Big Data that address the issues arising from all 4Vs are far and few in between

The journey to uncover business use cases will create an inflection point for organizations looking to adopt Big Data.

5. Social Business: A fragmented Reality
With reference to the “success” of using social media in the political space, it is clear that Malaysians are ready to leverage on social media as a means to progress. From a political front the business case is clear – use social media to push political wave of change.

IDC predicts that in 2013 that same notion will resurface but will highlight a fragmented reality for upcoming social businesses. On a micro level, companies are treating social media within the confines of individual and unconnected marketing campaigns; resulting in a fragmented view of customers. Each campaign produces data and insight, but these are not necessarily carried over to the next campaign or shared across departments.

6. Mobility: The Journey from Striving to Thriving continues
IDC sees consumerization of IT and Bring Your Own Device (BYOD) as a phenomenon not of the future but the very evolving present. It is interesting to note that while spending appears to favor the growth of enterprise mobility, underutilization is creating a deadlock to achieve the intended potential of the phenomenon.

With reference to IDC's C-suite Barometer Survey for 2012, the top two imperatives for the hyper-growth case is cutting cost and efficiency gains. Coupling these imperatives with the current state of underutilized devices leads IDC to predict that in 2013, the journey from “surviving” with enterprise mobility will move towards “thriving” as the hyper- compete case becomes essential.

Part 3: Underlying Fundamentals

7. Bigger cracks will emerge between supply and demand for skilled local ICT workers constricting ongoing
While the concept of leveraging technology as a strategic initiative is clear, therein lays the fundamental problem.  Talent shortage is affecting both the supply and demand side and it's becoming quite apparent as organizations look towards implementing solutions to hyper-compete. The shortage of skilled workers has become a blaring caveat.

IDC’s C-suite barometer survey highlights talent at the core of the problem in leveraging technology for strategic advantage. Over 55% indicate issues from lack of required skill sets/expertise to effectively execute, to lack of thought leadership in ICT strategy and roadmap as a key hindrance to leverage IT.

8. Innovation hunger will drive M2M (Machine-to-machine) deeper into the market
The obstacles for M2M in the past were never related to connectivity but to analytics - specifically the tools that allow companies to extract, create relevancy and monetize the data. But these capabilities are available now and with everything in place, enterprises are now able to utilize M2M to optimize their operations.

With that, IDC predicts that in 2013, innovation hunger will drive M2M deeper into the market with Telco Service Providers (SPs) playing a pivotal role. IDC predicts that the growing trend of M2M will be more significant in the coming years with market revenue of up to US$30 billion up 30% in 2013 for Asia Pacific (excluding Japan). In terms of M2M device connections, IDC estimates that there will be more than 36 million devices in 2013, growing to 65 million by 2015 for Asia Pacific (excluding Japan).

9. 7-inch tablet set to conquer in 2013, but enterprise adoption of tablets remains obscure
Back in 2010 when tablets exploded into Malaysia’s personal computing arena, 7-inch tablets were already in existence. But Apple’s sheer dominance and influence lead the market to believe that a market only truly existed for 10-inch tablets, and from the way iPads were being snapped up, few would argue.

Since then, Samsung’s Galaxy Tab has met with success in the 7-inch segment which has proven to be more popular than expected. 7-inch tablets currently enjoy about 27% share of the total tablet market as of Q3 2012, according to IDC’s Malaysia Quarterly Tablet Tracker. Despite all the success among home users over the past 2 years however, tablets have yet to gain noticeable traction in the enterprise space. Even as more powerful hardware is incorporated into 7-inch tablets, enterprise users still encounter constraints due to the lack of a physical keyboard and enterprise-centric apps. The tablet is still regarded as a status item among executives but not yet as an effective tool for content creation.

10. Governance issues take center stage
Several of the super trends that have been and are continuing to transform the ICT landscape over the next several years have significant implications with regards to governance, compliance and the risk involved.

Big Data has implications with regards to the data that is being processed; Cloud brings with it multiple issues with regards to data location, procurement patterns etc.; Mobility and BYOD create problems with regards to data management, identity control and access; Social creates issues concerning overall control, data and content sharing etc.

As these four pillars of technology continue to impact companies around the region, IDC expects these governance issues to become an increasingly important area in 2013 as the pillar are transformational in nature – even to the point that it may delay the uptake of new, value generating technologies and services.