The next big thing

ACN’s search for ‘The Next Big Thing’ within the Middle East may seem rather conservative. But, with the focus revolving around cost control, efficiency, capitalising on existing IT resources and smarter spending for the next 12 months, what else can the industry expect?

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By  Maddy Reddy Published  January 6, 2004

The Year Of 'Do More With Less'|~||~||~|The days of relentless end user IT spending are gone. Buying the biggest, most expensive and fastest machines to run the most advanced applications over the latest networks is no longer the goal. Instead, 2003 saw more enterprises than ever rethinking their IT investments and making the most of what they have. In fact, ‘do more with less’ could well have been the motto for 2003 and it is unlikely that this will change as the industry moves into 2004. Some are calling it the year of rationalisation and talking of the only two phrases that appear to matter most — total cost of ownership (TCO) and return on investment (ROI). “During the next 12 months people will focus more on aligning business with IT and there will be a greater need to quantify and qualify IT investments,” says Luis Leamus, senior vice president of Meta Group, Europe, Middle East & Africa (EMEA). “In the Middle East market particularly, IT has grown independently as a separate entity or accessory from the main core business. We expect this to merge, with IT becoming a closer partner and a part and parcel of businesses all through 2004,” he explains. This shift in strategy by end users has been reflected in vendor attitudes. If 2002 was all about ‘e-something,’ then 2003 was all about being expansive as vendors touted a range of broader, business-based computing models, from autonomic and pervasive through to trustworthy, seamless and predictive. This greater business bent will continue through 2004 and the ‘e’ will no longer stand for e-business, but for enterprise and organisations will be sold solutions based on cost-effectiveness, open standards and interoperability. “Last year was a great year in terms of recovery and 2004 will be more challenging, with customers getting smarter in using and buying technology. IT will be more service driven from now on. We expect customers want to get more done with less and leverage on existing investments and focus on managing, productivity, security and streamlining processes in 2004,” says Zaid Abunawar, enterprise group director, Microsoft South Gulf. The next big things being touted in the US or Europe, such as nanocomputing, RFIDs, sensory networks, biotechnology and other bleeding edge R&D that could persuade end users to forgo their cautious approach to IT spending are unlikely to hit the Middle East soon. Not only does the region, outside of the energy sector, tend to go with tried and tested solutions, but there is also the longstanding technology time lag. Although this is being overcome and software, for instance, is often launched here in parallel with global events, the big stuff still takes time to make its way to the Middle East. With this in mind, the results ACN’s search for ‘The Next Big Thing’ within the Middle East may seem rather conservative. But, with the focus revolving around cost control, efficiency, capitalising on existing IT resources and smarter spending for the next 12 months, what else can the industry expect? ||**||Linux|~||~||~|Tux, the cheeky Linux penguin, could well be the IT manager’s mascot for 2004. With cost cutting topping the agenda for many CIO’s, Linux’s entrance to the Middle East market could not have come at a better time. With the promise of a free operating system and a raft of open source enterprise applications, Linux is making organisations rethink their investments and platforms, forcing and encouraging all IT vendors, bar the obvious exception, to adapt to Linux or get left behind. “With IT pricing under pressure, solutions like Linux will have an advantage in the year to come as customers will no longer be locked to one vendor on the desktop or server side. There will be more choice in applications, office suites and hardware. Linux will be the next big thing in creating open standards-based infrastructure,” says Bashir Kilani, head of software, IBM Middle East. With support from major software and hardware vendors like IBM, Oracle, HP, Dell, Intel, Sun and AMD in terms of kit, applications and support, customers throughout the Middle East are showing increasing confidence in Linux, as evidenced by the smattering of big announcements last year from Al Ghurair Group and Standard & Chartered. “Unlike the US and Europe, where open source is strong, it’s been quieter in 2003 for Middle East. But, in 2004, views about deploying open source and Linux will change from never to maybe,” says Meta Group’s Leamus. Besides giving customers more choice, vendors expect to see equal returns from opening up to Linux and embracing open standards. While Microsoft believes Windows 2003 server is safe and Unix flavours like Solaris, Aix, HP-UX and Irix will fall to Linux first, others take a different view. “We see Linux preventing Windows Server 2003’s 64-bit version from taking off [in the region], unless Microsoft can prove otherwise,” says Samer Karawi, marketing manager for business critical systems, HP Gulf & Levant. With more vendors Arabising Linux and developing applications for the open source platform, the governments in Bahrain, the UAE and Saudi Arabia are doing their bit too, by investigating in the operating system and, in the case Bahrain Government, actually rolling it out. On the desktop side, Microsoft remains invincible, with more than 95% of worldwide desktops still its various operating systems. The other 5% running either Macintosh or Linux. “To me, building local expertise, applications, support and services on Linux will be the next big thing as it has a big future. By next year you can expect to see several major success stories on Linux,” says Kilani. Despite vendor optimism and the existing local case studies, the open source operating system does have some hurdles to overcome in terms of support and skill sets. End users also have to do their sums on what Linux costs in terms of hardware upgrades and the impact it will have on their infrastructure. “Support and training continue to plague Linux in terms of mass deployment,” says Heini Booysen, senior analyst, IDC Middle East & North Africa. “Linux seems to promise huge cost savings initially because it’s free, but the big costs come from other things, ” he adds. ||**||Outsourcing|~||~||~|What started out as just another buzzword is now turning into tidal wave of a trend affecting not just technology, but governments, employment and economies. At the end of 2003, the worldwide business process outsourcing (BPO) market was pegged at US$122 billion — up from US$110 billion in 2002. According to Gartner and Aberdeen Group, the BPO market is expected to grow at a compound annual growth rate (CAGR) of 13% until 2005 when the market will reach US$248 billion. Locally, companies are also beginning to buy into the outsourcing model and look likely to up the ante during 2004. “Service Level Agreements (SLA) and contracts will be falling in place in 2004, and we expect to seem sort of hybrid outsourcing model of BPO in the region here, with multinationals outsourcing components like accounting functions or IT security through managed security services, for instance. But we expect to see growth in outsourcing for 2004, after local support in Arabic takes off,” says Vineet Chhatwal, senior manager, PricewaterhouseCoopers (PwC). According to Logica Middle East, only around 1% of Middle East organisations have opted for the BPO model, but this will change in 2004. IDC estimates that outsourcing services, which currently services in the UAE and Saudi Arabia, will grow at a CAGR of 22% and 21% over the next five years, respectively. Elsewhere, PwC believes the benefit realisation of outsourcing is also bound to take off in 2004, with the small-to-medium sized business (SMB) market benefiting the most due to its smaller scale operations and inability to run IT inhouse. However, one possible fly in the ointment is the nationalisation policies of some local governments. Should this policy be ramped up yet further and IT departments forced to recruit from their home country, the conundrum may come down to one of talent and expense versus critical mass and cost efficiency. “In 2003 the majority of the local IT jobs were being filled by non-nationals, in 2004 there will be a more of a nationality criteria encouraging the locals to join IT,” says Leamus. “Local companies will have to make tough choices between employing local staff and getting the best from outside,” he adds. ||**||Wireless|~||~||~|Last year witnessed a host of wireless technology launches, maturing standards, a huge increase WiFi-enabled notebooks sales and serious growth in the PDA and smart phone markets. Concurrently, thousands of hotspots appeared across the world, inhabiting locations as diverse as coffee shops to airports. Enterprises also began to buy into the technology and sales of wireless local area networks (WLANs) soared. With the infrastructure now in place, this year could finally see the advent of the truly mobile enterprise. “In 2004, mobility will see a breakthrough with rapid growth. If you look across the region, with Centrino, longer battery life and WiFi connectivity, the mobility infrastructure will fall into place,” says Rod O’Shea, regional manager Intel. “There will be strong growth of hotspots across the region, from hundreds in 2003 to thousands in 2004,” he adds. IDC supports this belief, with the analyst house predicting that the number of hotspots worldwide will grow from 50,000 in 2003 to more than 85,000 in 2004 before touching 300,000 in 2006. This might spell bad news for traditional desktops, or the wired computer, but Intel is optimistic that this sector will continue to grow as well. The chip manufacturer estimates more than 15million PCs will be sold between 2004 and 2009 in the region. IDC’s 3Q03 figures back this up, with PC shipments in the Arab Middle East growing 24.5% from the same period last year and the number of units sold hitting 380,438. The growth of hotspots and increase in wireless devices could open up a Pandora’s box in terms of security issues, however. As such, many are predicting that 2004 will not only be the year of wireless, but also that of wireless security. “Wireless security will be a major discussion point as wireless becomes prolific and pervasive. It’s hard to manage the security of wireless because anyone can tap into the frequency and it’s still got a long way to go before it truly secure,” says Kevin Issac, regional manager, Symantec. Despite the potential problems this growth in wireless attacks will cause for end users, security threats to enterprises could translate to good growth for IT vendors, at least indirectly. Over the next five years, IDC expects the Gulf States security software market to expand at a CAGR of 29.5% to reach US$162 million by 2007. Enterprises are expected to carry out major spending on secure content management systems, antivirus, intrusion detection and vulnerability assessment software. ||**||Utility Computing|~||~||~|Throughout 2003, IT vendors were touting the concept of ‘pay as you go’ computing and promising solutions that would be cheaper, more cost effective, interoperable and leverage existing legacy systems and computing power. Although technologies like virtualisation, clustering, grids, open source and consolidation or their derivatives have existed for sometime, last year three vendors in particular discovered that by merging them together under one umbrella they had something ‘new’ to take to market. Sun with its N1 strategy, IBM with On Demand Computing and HP with its Adaptive Enterprise led the way, while others such as Oracle and Veritas rode their coattails. “Adaptive enterprise, N1 and On Demand computing are tools to meet the needs of enterprises and they help measure the quantity and quality of IT resources. All the vendors are working in one direction to address customer needs, so the utility computing ball will continue roll in 2004 and gather momentum,” says Samer Karawi, marketing manager, business critical systems, HP Gulf & Levant. “We expect to see enterprises adopting unified management and virtualisation to reduce complexity and create a centralised model, which in the long term will make IT more efficient and cost effective,” he adds. While utility computing promises substantial rethinking of IT investments and changes in system architecture, management, IT product/service packaging and pricing through various technologies, confusion still exists within the market. As such, IDC believes customers will not buy the concept immediately in 2004, but will adopt it slowly in the long term. Others disagree, with Meta Group suggesting that while the marketing initiatives of IBM, Sun and HP may be confusing, the model itself is reasonably sound. “Grid for instance, is a very good idea and not just a marketing word. It is based on a solid technical history,” says Meta Group’s Leamus. Unsurprisingly, the vendors concur. Tarek Shahwi, technology solutions manager at Oracle Middle East, says “Grid computing will be a big thing in 2004 and by putting new architectures into a grid, enterprises will reap high performance and affordability from IT.” ||**||

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