Solution services market in Malaysia to grow at a five-year CAGR of 10.6% to reach US$928 million in 2007

27 July, 2004

Kuala Lumpur, July 27, 2004 – IDC's latest study on the solution services market in Malaysia revealed that the local solutions market is expected to grow at a five-year CAGR of 10.6% to reach US$928 million in 2007. Today, security, with a 36% adoption rate in the local market, represents one of the largest solutions markets; it is followed by ERM, with a 25% adoption rate, and storage, with a 15% adoption rate. Organizations find it more cost-effective to procure IT solutions that are explicitly designed and packaged to address particular business and technology issues. In response, ISVs should be prudent about appointing their SIs (systems integrators) and VARs (value-added resellers).

"One of the drivers for the increasing solution adoption rates is the desire for productivity and efficiency gains. This growth will continue as organizations continue to find ways to automate internal processes, boost customer retention, extend supply chains, and expand business online,” said Katherine Chan, Analyst, Services Research, IDC Malaysia. “As solutions are increasingly integrated, borders between solutions areas become blurred, which creates opportunities for service providers to span the whole solution area to tailor solutions specifically to customers' needs.”
In this study, IDC examines the common characteristics of the top 5 local SIs. For services firms to be successful in the solution services market, they must be able to show quick ROI on new projects, have strong industry sector capabilities, and be able to provide a mix of business and technical skills to ensure that solutions address customers' real business challenges.

In the IT solutions investments, customers need and expect selected SIs to show deep understanding of their business issues and to be able to supply technology solutions that address these issues. It is a strategic advantage for SIs to acquire and invest in this particular skill set to position them as "quality end-to-end" solutions integrators in the market.

Compared with the global players, the local SIs have a strong foothold in the local market, particularly in the government sector, which contributes to a large degree toward many of these SIs' revenue. Moreover, these SIs have higher market reach in the small and medium-sized enterprise (SME) market than the global players do.

"So, vendors should devise attractive partnership programs and introduce innovative and flexible pricing models to attract the right SIs. Branding is undoubtedly one of the most crucial factors that will help attract big local SIs to engage in a partnership program. To establish a long-term relationship with the appointed partners, vendors should be prepared to align their product offerings to suit the SIs target markets and, at the same time, to provide training and support to the partners" added Katherine Chan, Analyst, Services Research, IDC Malaysia.

For more information about purchasing this research, please contact Hazmi Yusof at +603-2169-7526 or hyusof@idc.com. For press enquiries, please contact Stephen Chong at +603-2169-7521 or ckchong@idc.com.

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