IDC Predicts that Rising Needs of the e-Empowered Employee Will Shape 2006 ICT Landscape in Asia/Pacific (excluding Japan)

12 December, 2005

Singapore and Hong Kong, December 12, 2005 – In its annual look at the year ahead, IDC predicts that the Information and Communications Technology (ICT) spending and growth for the region will be fuelled largely by the surge of the e-Empowered Employee (EEE).

“The e-empowered employee is increasingly able to harness technology to be more productive and responsive. Work takes place anywhere, anytime, anyplace. It's moving out of the traditional workstation into homes, hotels, airport lounges and taxis. Workspace boundaries are diminishing as the employee is no longer tied to an office location. 9 to 5 work hours make way for 24/7 operations,” said Eva Au, Managing Director, IDC Asia/Pacific. “Technology roadmaps will not only be determined by how it can be applied to enhance productivity, but also how it can support an always-connected, knowledge-driven and rapidly shrinking global economic society.

Successful companies will be those which can rise to the challenge and capitalize on the technology opportunities further enable by the e-empowered employee – coming up with innovative strategies and delivery models that are adapted to market dynamics and optimizing the employee’s contribution to the organization’s value chain. It has direct impact on organizational efficiency, access to real-time information, quicker time-to-market and the ability of businesses to react to dynamic market conditions.”

IDC believes there will be three core pillars around which industry defining developments will occur, in the Enterprise space where the e-Empowered Employee works, the Vendor community servicing the Enterprise, and finally the ICT Industry:

• Continued adoption of hardware, software, connectivity and content by consumers will move beyond the home and into the workplace. As consumers migrate their home experiences into the Enterprise and demand the same, if not higher, level of knowledge-based services in their work environment, CIOs and line of business managers will need to adapt to the organization’s competitive needs and employee demands by becoming more discriminating in their investments. The race for scalability is back on corporate agendas.

• The Vendor community will need to innovate on the business models front to evolve their mode of delivery, spectrum of functionality and customer services to keep up with Enterprise demands, and purchasing styles.

Defined by consumer-led experiences, e-empowerment will become the basis by which employees, customers, suppliers, partners and citizens view what they expect from ICT at the workplace.

The e-Empowered Employee will Fuel ICT Spending

1. Wireless content packages keep consumer spending on the boil

ICT Spending in APeJ is expected to grow by 30% in 2006 from US$9 billion to US$12 billion. The combined wireless content industry, which encompasses games, music, ring tones, video and TV, will be fuelled by the proliferation of content and feature rich applications that service providers can offer in the entertainment space, together with cost-saving services bundled with broadband access.

2. The Skype factor and consumer VoIP

The consumer VoIP market continues to demonstrate healthy growth, with non-traditional operators moving into this space like the eBay purchase of Skype, and Yahoo and Microsoft purchasing VoIP service providers and Google launching its own VoIP software Google Talk. VoIP adoption in the enterprise space will grow as service operators look into replicating the consumer experience from the home to the office, by making available low-cost, integrated voice, data and video conferencing solutions at work.

3. Increased convergence leads to overwhelming consumer choice

Users are becoming more tech-savvy, and mobile devices are becoming “smarter”. IDC predicts that 15 million converged devices will be shipped in 2006 across APEJ, reflecting a growth of 24% over 2005 shipments.

The Enterprise will Strive to Meet its Corporate and Employee Needs

4. IT consolidation will drive new patterns of infrastructure acquisition and management

Businesses will be challenged to deliver higher IT service-level performance to meet diverse business needs, while lowering the costs of infrastructure. IT Consolidation is the discipline that will help simplify the existing complexity and also help pave the way for implementing a Service Oriented Architecture (SOA) in future. Increasingly, enterprises will take on a long-term, holistic planning approach towards their IT, in order to better manage cost and allow for greater scalability, dynamic provisioning and utilization.

5. Business Intelligence (BI) graduates to prime time

BI tools will mature in the region and is expected to grow at 10% in 2006 to US$315 million in APEJ. BI capabilities are expected to improve and applications more tightly integrated, allowing for easy but controlled access by employees. Users will demand for faster and more user-friendly search engines and the pressure will be on software vendors to fill the gaps.

6. Identity and access management takes center stage, driven by compliance

Underpinning this growth will be increased concerns on the possibility of large-scale identity thefts, data control issues and the business and legal consequences that may ensue following unauthorized access to data. Compliance is the primary driver triggering IAM investment decisions. Offerings will be based around scalable solutions, compliance and standardization. Local players with established presence in their markets and strong channel and partner networks will provide formidable competition to even the strongest global vendors.

7. Dynamic resilience becomes the ultimate goal

As enterprises become more dependent on their IT infrastructures and as security awareness continues to grow, IDC views Dynamic Resilience as a holistic strategy of how enterprises conduct business; their proactive approach towards business continuity, addressing the need for continuous operation of the enterprise critical business processes.

Business Models will Change

8. New kind of partnering required to keep up with industry software demands

IDC predicts that in 2006, most established system vendors as well as horizontal enterprise application vendors who have not begun to target consulting firms and Independent Software Vendors (ISVs) that provide specialized vertical line of business applications will do so. Vendors face the pressure of integrating their discrete offerings by partnering or face marginalization.

9. Open source gains traction in specific markets, particularly in China and India, and with the governments

In 2006, IDC believes that building more open innovation communities will be a big focus for much of the industry. Generating revenue through traditional methods such as sale of the use of individual copies and patent royalty payments become more challenging with open source software. Vendors are giving their software for free and charging for installation. By making the software available as open source, customers are more likely to purchase related products or services. Open source development costs can also be shared across the industry.

10. Service delivery models continue to morph

The service delivery model is in a state of constant evolution due to a combination of both enterprise and vendor driven activities. Offshore outsourcing and utility-based services are gathering momentum. The industry is seeing an overlap between IT services and BPO delivery, as observed in IBM’s acquisition of Daksh and network-based service providers like NCS of Singapore offering BPO services. Service providers will no longer find it profitable to own and control the entire service and delivery spectrum. Instead, they will be broadening their capabilities through globalization, localization and partnering.

IDC Predictions 2006 for the ICT markets in APEJ draws upon latest IDC research and a worldwide brainstorming exercise among IDC's more than 700 analysts . This was followed by an extensive regional review to weigh in on key industry events, user trends, and vendor strategies that promise to uniquely define the ICT market in APEJ in 2006.

Webcast on IDC Asia/Pacific Predictions 2006

To find out more about IDC's Asia/Pacific Predictions for 2006, please register to listen to the Webcast presented by Eva Au, Managing Directions, IDC Asia/Pacific at http://www.idc.com.sg/webcast/WCASIN-051212_press.asp

For the industry vendors, Li-May suggests operational tactics such as channeling substantial capital and resources into securing new clients as IM systems are long-term, large ticket commitments; and deciding on the client segments to target before expanding the depth of functionalities accordingly. Sustaining profitability in this low product turnover, increasingly competitive environment will witness vendors acclimatize by consolidation.

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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