Depressed mood in IT sector

Improving business figures don't seem to be translating into the IT sector.

Improving business figures don't seem to be translating into the IT sector.

Most vendors spoken to by Computerworld in the past month see little happening in the way of new business, though there is activity in installed bases.

"There are very few RFPs out there," says a vendor.

According to IDC country manager Dinesh Kumar, the common view of senior executives is that IT business won't pick up till after June. "It's all rather depressing," he says. "There are no major tenders, through there are sales initiatives in the pipeline."

Indicative IDC figures for PC unit sales in Q1 suggest the market was down 1.4% on the corresponding quarter in 1999. But where PC sales to the home and small business sector made up 28% of the total in Q1 1999, they're likely to be around 40% in Q1 this year. That means local assemblers will probably have had a strong start to the year.

Services remain the strongest sector. Kumar says they were worth $1.26 billion last year, before maintenance, and are projected at $1.4 billion this year, largely boosted by Telecom's outsourcing to EDS.

IDC measures Internet commerce in US dollars, to get comparisons across the world. New Zealand spent $8.8 million in 1997, is expected to spend $275.7 million this year, and $2.7 billion by 2004.

"There's a very strong investment in terms of internal re-engineering and outsourcing," says researcher Pat Pilcher. "The e-business equation is having an impact on the traditional market, but the million dollar question is how the CIOs are investing. The flat market tends to suggest many are in planning phase and adopting a conservative approach to re-engineering.

"The flood gates haven't opened yet."

There is general agreement among vendors that the government is sitting on its hands when it comes to giving direction on e-government. Government departments simply aren't making buying decisions of any size, seemingly scared of Ministerial reaction. Everybody is waiting on direction from Trevor Mallard, rather than Commerce Minister Paul Swain, whose planned e-government conference in July may slip some months, if rumour is correct.

The government SEE security project is a case in point. The State Services Commission has produced a list of vendors to whom an RFP will be sent. But nothing is happening. Talk is that the SSC now can't get fiscal buy-in from the government departments.

The SSC is in an invidious position. It's a policy body and it's difficult to see how it can maintain the necessary distance when it has to mandate the directions of e-government. SSC direct involvement makes it difficult for government departments to retain ownership of IT projects.

In the meantime, New Zealand slips further behind the world. The Hong Kong government is already doing its procurement via the Web, as will Australia this year.

According to the respected World Competitiveness Yearbook, New Zealand has slipped from 13th in 1998 to 21st this year in terms of overall competitiveness.

Randal Jackson is a Computerworld journalist. Contact him at Randal Jackson. Send letters for publication to Computerworld letters.

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