In assessing the carnage of the past 12 months, information technology suppliers will be hoping for a more prosperous time in 2010; but CIO spending is unlikely to increase significantly any time soon. The past year has been a bumpy ride for buyers and sellers of IT products and services alike, as the global financial crisis sent shock waves through the industry’s key vertical markets.
Financial services took the first and hardest hit, but government, resources, utilities, manufacturing and many other customers have been forced to reassess their IT spending plans in the wake of the global financial crisis.
With buyers driving harder bargains and sellers desperate to close deals, there has been an extra strain on sometimes long-standing business relationships.
However, the crisis has also convinced many chief information officers to work more closely with key suppliers, in order to ensure they get maximum value from those engagements.
As we head towards the end of 2009, analysts are revising doom and gloom predictions as confidence starts to return, albeit slowly. In September Gartner analysts dared to suggest the worst might be over for the global PC industry and raised their shipment forecasts for the second time this year, after earlier sounding the alarm bells.
Please click here for a complete list of the ICT companies that made it to the Strategic 100.
Market revision
The analyst firm expects annual PC shipments of 285 million for 2009, down 2 per cent from last year, but less worrying than the 6 per cent decline it was predicting in June and 12 per cent it estimated back in March.
As always in an economic downturn hardware felt the brunt of the spending halt, as organisations patched up old computers and extended the life of boxes beyond previously expected refresh cycles.
Of the major hardware players Dell has done it particularly tough, because it lacks the significant services business that has provided something of a buffer for market rivals like Hewlett-Packard and IBM.
So it was no real surprise when Dell, the world’s second-largest maker of PCs, announced in September that it had acquired Perot Systems for US$3.9 billion. It didn’t come cheap. The $30 per share offer was a 76 percent premium on Perot’s average share price in the month before the deal was announced.
Somewhat ironically, Electronic Data Systems (which Hewlett-Packard acquired for $13.9 billion in 2008 and recently renamed as HP Enterprise Services) was also founded by Ross Perot in 1962. Perot was a 1992 presidential candidate and the co-founder of Perot Systems.
Another major company that looks set to lose its independence, if European regulators can be convinced to give their seal of approval, is Sun Microsystems.
Oracle chief Larry Ellison announced plans to acquire the one-time darling of the tech sector for $7.4 billion back in April.
The buy-out would make Oracle a more serious, full-service competitor to IBM, while also giving it control of the Java programming language, Solaris operating system and MySQL open-source database.
But it isn’t a done deal yet. The United States Department of Justice has given it a green light, but European Union regulators launched an antitrust investigation in September over concerns that Oracle may become too powerful in the database market.
Of particular concern, EU competition commissioner Neelie Kroes says, is whether customers will be left with fewer choices or inflated prices “when the world’s biggest proprietary database company proposes to take over the world’s leading open-source database company”.
Mergers and consolidation in the ICT vendor and service provider space continue. Google is on to its most expensive acquisition since DoubleClick in 2008 — it is set to buy mobile advertising pioneer AdMob. The deal shows how serious Google is in being a top player in mobile advertising, reports Ovum. The analyst firm had poinpointed AdMob as a hot acquisition target in its 2008 report on the mobile advertising players to watch.
Closer to home, mergers included Fujitsu’s acquisition of two Australian companies, Kaz and Supply Chain Consulting. The last was one of the companies in the Rising Stars category in the 2008 Strategic 100.
Another company continuing along the acquisition trail this year has been networking giant Cisco Systems. Chief executive John Chambers has been vocal about his belief that economic downturns are a good time to make a move and he hasn’t disappointed — announcing a deal to pay $3 billion for videoconferencing specialist Tandberg in October, following the $590 million purchase in March of video-camcorder maker Pure Digital Technologies.
Both moves play to Cisco’s central strategic bet that video will be the internet’s biggest money-spinner in the years ahead. As the world’s largest digital plumber, the company is certainly well-placed to make that call.
Meanwhile, two New Zealand companies made it to the Rising Stars category. Catch Ltd and Intergrid, based respectively in Auckland and Wellington, have been expanding their customer bases across the globe.
Tech trends
From a technology perspective, business intelligence and analytics continue to be top of the CIO priority list, according to Gartner and IBM.
Big Blue recently conducted a global survey with more than 2500 CIOs, including 130 from Australia and New Zealand, which found business intelligence and analytics were front of mind. BI has been top of Gartner’s CIO technology priority list for the past four years.
In the IBM study, global and local CIOs both had virtualisation at number two on the list. Those in Australia and New Zealand were much more concerned with risk management and compliance than their global counterparts. There was also more focus on environmental issues and yet still only 16 percent cited this as a priority.
Cloud computing will continue to gather momentum in the year ahead, as a growing number of organisations look for ways to embrace a trend that promises reduced capital expenditure and more flexible ways of reacting to changes in market conditions.
But more important than any of these technological developments, will be a CIO’s ability to help the organisation make a successful transition from the defensive stance of a tough market to take advantage of opportunities for growth that will present themselves as the economy rebounds.
It is here where the star performers will accelerate their move away from being seen just as the manager of an IT department and gain greater acceptance as critical business enablers. With reporting from Divina Paredes
• Revenues in all profiles converted to US currency on 12 October 2009.
An introduction to the 30 Strategic 100 judges in New Zealand, Australia and Asia:
New Zealand
Julia Raue is CIO of Air New Zealand, where innovation and ventures are among her four portfolios, along with production, solutions and architecture. Raue was named CIO of the Year at the CIO 2009 Summit and is a valued member of CIO magazine’s editorial advisory board. She has 20 years of experience in the IT industry, involving positions in local government and telecommunications, as well as charitable organisations.
Sam Higgins is research director for Longhaus, a research publisher and advisory company specialising in technology. His research focuses on enterprise architecture including service orientation and information management, the open source market, enterprise applications and development, and ICT management practices.
Marcel van den Assum is a professional director and independent adviser. Prior to taking this role four years ago, he was CIO of Fonterra. He is a valued member of CIO magazine’s editorial advisory board.
Russell Jones is chief operations officer, ASB. His extensive career in information technology has seen him working for Sappi in both South Africa and Europe, Carter Holt Harvey in New Zealand and International Paper in the US. He is a valued member of CIO magazine’s editorial advisory board.
Ullrich Loeffler is the country manager for IDC New Zealand. Prior to this, he spent three years in IDC’s software team across Australia and New Zealand, where he provided ongoing analyses on software trends in the South Pacific Region.
Tim Sheedy is a senior analyst within Asia Pacific for Forrester’s Sourcing and Vendor Management team, providing global, regional and local insight and advice to IT buyers and vendors. Prior to this, he was research director IT solutions at IDC.
Robin Johansen is the CIO of engineering firm and consultancy Beca Group. Robin has held a number of senior management positions and he is currently a director of Beca Applied Technologies and Derceto, with both companies having strong interests in IT systems and software.
Jason MacDonald is the ICT services director, Kristin School in Albany, Auckland. Prior to working in the education sector, he was with Nortel Networks in Ottawa, Dallas and Auckland.
Garth Biggs is a professional director and provides strategic ICT consultancy through Biggs and Company. His current roles include Board appointments at Unimarket, IT Partners, AllTeams and Uncle Percy. He has also been CEO of Gen-i and CIO of Air New Zealand, Sky Television and Progressive Enterprises.
Brent Powell is an internationally experienced supply chain, multi channel retailing and IT professional. He is director and a senior management consultant at Radlett Consulting Services and currently on assignment as project manager with ING Funds Management. His previous roles included GM Supply Chain and Systems at Fletcher Distribution, IT general manager at Pacific Retail Group and IT divisional manager at Farmers Trading. He is a valued member of CIO magazine’s editorial advisory board.
Australia:
- Julie Fahey, national partner in charge of information, communication and entertainment, KPMG
- Helen Harms, general manager of IT, State Super Financial Services
- David Kennedy, CIO, New South Wales Office of State Revenue
- Kevin McIsaac, adviser, Intelligent Business Research Services
- Greg Naimo, CIO, the city of Sydney
- Tony Pollock, CIO, Angus Knight Group
- Linda Price, group vice-president, Asia-Pacific, Gartner Australia
- Henry Shiner, vice-president and CIO, McDonald’s Australia
- Stephen Tame, general manager and CIO of IT, Jetstar Airways
- Tom Worthington, independent IT consultant and adjunct lecturer, the Australian National University
Asia:
- John Brand, research director, Hydrasight
- Jens Butler, principal analyst, Ovum Research
- Chu Hong Keong, CIO, HSBC Bank Malaysia
- Martin Gilliland, VP IT research, Frost & Sullivan
- Daniel Lai, head of IT, MTR Corporation
- Michael Leung, senior vice president and CIO, China Construction Bank (Asia)
- Joe Locandro, director, group IT, CLP Holdings
- Raul Paolo Miranda, CIO, REHAU
- Tirthankar Sen, director, partnering and Asia Pacific research, Springboard Research
- Daniel Tan Tiong Hok, associate professor, Nanyang Technological University
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