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Frost & Sullivan: Economic Uncertainty Has An IT Silver Lining

ICT solutions that shift costs from a capital to variable component, focus on productivity increases and cost reduction, and support organisational restructuring and acquisitions are likely to see growing demand.
  • 28 October, 2008 10:00

<p>SYDNEY, 28 October 2008 – Although the present financial crisis will adversely affect capital investment in new information and communication technologies (ICT) equipment and software, the uncertainties are also creating opportunities for certain ICT offerings. “In particular, ICT solutions that shift costs from a capital to variable component, focus on productivity increases and cost reduction, and support organisational restructuring and acquisitions are likely to see growing demand,” says Andrew Milroy, ICT director at Frost &amp; Sullivan.</p>
<p>The findings are contained in ICT Opportunities in an Economic Downturn, the latest Market Insight from consulting company Frost &amp; Sullivan. While the document acknowledges that some ICT projects will be shelved for the time being, it identifies four areas of ICT that are likely to experience heightened demand: sustainable IT; outsourcing services, managed and hosted services; information management tools; and services that support mergers and acquisitions.</p>
<p>A recent survey by Frost &amp; Sullivan indicates that 90 percent of Australian organisations have or are introducing sustainability initiatives within their ICT infrastructure. Initiatives range from server or storage virtualisation and purchase of low-energy consumption hardware, through to the use of collaboration and videoconferencing tools, thin client technologies and power consumption modelling. As most of these activities have the dual aim of reducing costs as well as lowering carbon emissions, Frost &amp; Sullivan suggests that investments in these areas will continue to grow.</p>
<p>Reduction in business travel, for example, will deliver a corresponding increase in demand for conferencing tools. The rise in conferencing technologies will allow a greater proportion of employees to work remotely from home, further cutting travel costs and emissions. Another flow-on effect will be the rise of new opportunities for providers of secure remote access solutions.</p>
<p>Self-service systems such as branchless banking solutions or HR systems that encourage paperless transactions will also become more prevalent, along with electronic billing services and transactions via mobile phones.</p>
<p>Tighter cost controls and a desire to minimise risks will place greater focus on variable costs, leading to an increase in the popularity of software-as-a-service (SaaS) and hosted service models. Frost &amp; Sullivan suggests that the hosted model will be adapted to suit a wider range of services including storage and unified communications.</p>
<p>Demand for IT outsourcing will increase with offshore outsourcing organisations likely to reap the greatest benefit due to their ability to provide the most significant cost advantage. However, the study cautions that contract terms can be expected to fall significantly.</p>
<p>New opportunities are expected in both traditional and non-traditional areas of managed services, such as managed handsets, network services and leasing services.</p>
<p>Knowledge management, customer relationship management and business intelligence solutions all present opportunities for software vendors as organisations look for ways of increasing productivity through better information management.</p>
<p>The document notes that the economic slowdown may trigger an increase in mergers and acquisitions, creating significant ICT opportunities for IT consulting and systems integration organisations. The major beneficiaries will be those services organisations offering due diligence of existing systems, identifying cost reduction opportunities, consolidation and integration of IT strategies, streamlining and standardising processes and operations, and systems integration.</p>
<p>Milroy adds, “Right now, ICT firms tend to assume the worst and are anticipating slower – if not falling – demand. We believe that there are opportunities for solutions and services that can help organisations to cut costs, change cost structures, or increase productivity. The challenge is for suppliers to recognise this and to package their offerings accordingly.”</p>
<p>Frost &amp; Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting and Growth Team Membership empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies. Frost &amp; Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information about Frost &amp;
Sullivan’s Growth Partnerships, visit</p>

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