There are no hot technology service or outsourcing offerings blipping on 2004's radar, according to industry analysts and vendors.
Global events of this year, such as the SARS virus and the Iraq war, spurred enterprises to engage services companies to develop electronic links between them and their partners and customers, as well as plans for wireless, disaster recovery and business continuity services, said Gartner's Asia-Pacific principal analyst for IT services, Jacqueline Heng.
The Asia-Pacific region remains a developing region in terms of the maturity of its IT services and outsourcing offerings, with most of the region still in the "early" stages of development, Heng said.
Generally, analysts see most enterprises verging on obsessive cost-cutting drives through IT to make their business healthier and more innovative in an era of cautious IT spending.
IBM, through its on-demand strategy, aims to build clients' infrastructure so it is far more "virtualised". This involves using IBM's virtualisation technologies to set up organisations' infrastructure so they can increase the use of Big Blue's servers and storage by 10 to 20 per cent, IBM's director of systems strategy Asia-Pacific, Edward Orange, said. The other focus in this strategy is helping businesses optimise their infrastructure by leveraging Linux applications, Orange said.
"IBM is trying to get around big support issues with Linux, hoping that if [customers] embrace open source software they'll be able to have a much more flexible IT environment and produce a lot more business applications and make organisations more competitive."
"This all helps them move into a new on-demand world."
Meanwhile, some managed services firms like NCR are criticising the industry for morphing into generic consulting styles as opposed to tailoring solutions more for vertical industries.
In the face of global economic slowdown, services and outsourcing firms in Australia say businesses are keenly focused on finding new ways to drive profit up. The way to do this is by decreasing costs or increasing revenue, according to the vendors like Hewlett-Packard and IBM.
NCR Australia's regional manager for worldwide customer services, Charles Yan, sees the value in IT services and consulting being lost, arguing that services are being increasingly commoditised.
"Big players in this market like EDS, CSC and IBM are tending towards more generic offerings. Looking at the top few providers, you don't see them positioning themselves as having strong vertical expertise. CIOs will spend cautiously on services in 2004. They want more targeted expertise in their service providers. So to 'do' services, you can't just offer a generic service. For enterprise customers, services provision is a geographically demanding job."
Yan said CIOs today are also bound by the need to reduce their total cost of ownership when it comes to their IT infrastructure. And they need more data intelligence in order to justify their services spend and operating costs.
Companies like [NCR] are pushing more into verticalisation in terms of their services and consulting skills, as opposed to generic expertise around say, ERP or CRM. And this is what customers want more of, Yan said.
He claims most vendors are struggling to go down this 'vertical' path. "They're responding in a non-integrated fashion to customers; they can't pull all of the intelligence together in a united way to help them analyse what's going on with the effectiveness of their IT operations."
Verticalisation is one common trait of NCR's services capabilities, specifically through its worldwide customer services division which specialises in multivendor solutions within management services, infrastructure consulting, deployment and integration and maintenance and support for the telco, financial services, retail and travel industries.
NCR's Yan suggests organisations need to be asking their service providers about their expertise in things like benchmarking. "Do they know how to measure the effectiveness of a service through reliable metrics? Using our own business intelligence tools to analyse [client's] operational data on their IT infrastructure, we do this across their own borders if they're spacially spread out. Service-level metrics is a platform we're using to provide more value to customers and let them assess what their IT service's impact is on their business," he said.
According to research firm IDC, the key ICT buying trend next year is a shift from companies trying to gain a competitive edge through IT towards a more "distinct" alignment of IT with business needs.
IDC's chief services analyst Merv Langby said the tactical goals of end-user organisations at present are to increase organisational productivity, operational excellence and enhance their business processes.
Such short-term objectives being more tactical than strategic, shows enterprises' "perceived need to concentrate on the shorter-term goal of optimising overall business operations", Langby said. "Therefore, organisations are more interested in ROI, achieving cost-effectivness and internal efficiencies, rather than undertaking new 'market-making' initiatives, Langby said.
Moreover, IDC's senior analyst for IT services, Phillip Allen, warns that companies can only shave costs and "optimise" for so long, suggesting that eventually they will have to re-focus on growing the business.
"Tactical [initiatives] are all about survival-driven elements of efficiency and productivity to keep the business alive while the market has effectively battened down the hatches.
"The shift from tactical to strategic focus will be reflected in the application of innovation rather than simply achieving a fast ROI," Allen said.
In the next six to 12 months, IDC expects organisations' IT services investments to focus on broad areas, such as network infrastructure and application integration, combined with more discrete spending in security, storage management, information sharing and business intelligence tools.
Langby said he expects companies in the latter part of 2004 to invest in more Web-enabled solution services to enable remote management of business functions, as the "interdependent needs of customer interaction and remote mobile workplace come together".