Asia-Pacific user spending back to basics in 2002

The end-user IT market in the Asia-Pacific region next year will see a focus on fundamentals -- security, reliability, cost-effectiveness, and basic electronic business projects, according to vendors and analysts across the region.

          The end-user IT market in the Asia-Pacific region next year will see a focus on fundamentals -- security, reliability, cost-effectiveness, and basic electronic business projects, according to vendors and analysts across the region.

          Outsourcing and other services will continue to gain momentum in the region, while the commodity hardware market looks to continue its bleak run.

          Market analyst International Data Corporation (IDC) estimates that the overall IT market for Asia-Pacific (excluding Japan) will grow by 13.5% in 2002 to reach $US76 billion. That spending will be driven by the desire for improving basic IT functionality and Internet-related technologies, according to Piyush Singh, managing director of IDC Asia-Pacific.

          "The web is still very relevant to business -- around 20% of IS operational budgets in the region is on internet-based initiatives."

          Much of that spending will go into networking equipment, enterprise storage and infrastructure management, Singh says.

          With the need to improve reliability and cut costs at the same time, users are likely to upgrade to new generations of cost-effective servers and particularly the emerging breed of compact blade servers, according to Michael Muller, general manager for server and workstation operations, Hewlett-Packard Asia-Pacific.

          "We are seeing a lot of consolidation of older systems, with IT departments taking advantage of new and reliable technology," he says. "In the next six months more and more clients will be spending money on server consolidation, (with) purchasing decisions driven by the need to reduce costs, increase systems efficiency and maximize uptime."

          IBM is seeing a similar trend, according to Kakutaro Kitashiro, president of IBM Asia-Pacific.

          "More customers will be looking at consolidating their data centers and server systems as a means to save operating costs," he says. "Demand for servers and middleware will continue as customers improve their IT infrastructure."

          One cost-cutting measure being adopted by Asia-Pacific users is increased reliance on open-source software, according to Kitashiro.

          "We expect that Linux will continue to gain strength throughout Asia-Pacific and we have Linux-enabled all of our servers," he says.

          Asia-Pacific users are looking to "position IT as a key foundation for expansion into the next business cycle," according to research company Gartner.

          Apart from basic hardware infrastructure, that will mean increased spending on unglamorous core software applications, the analysts and vendors agreed.

          According to IDC's Singh, software budgets will be spent on fundamentals such as enterprise resource management (ERM), accounting, human resources (HR), supply chain automation, collaboration and knowledge management. Users will also look to integrate these applications with the web and enable information access through mobile devices.

          Gartner is seeing similar initiatives emerging, according to Rolf Jester, research area director, IT services market, Gartner Asia-Pacific.

          "E-business projects -- commerce, CRM (customer resource management), procurement, SCM (supply chain management) are also still key drivers of services demand," he says.

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