Changing gears

The state of play in the economy has caused many CIOs to shift into a different gear when it comes to infrastructure projects

Tags: Economic crisisIDC Middle East and AfricaInfrastructureUnited Arab Emirates
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Changing gears MEYER: CIOs who are canceling their planned refreshes of technology will have a big impact on the market in the future.
By  Nathan Statz Published  July 18, 2009 Arabian Computer News Logo

Nathan Statz caught up with Tom Meyer, VP of Systems and Infrastructure Solutions at IDC EMEA, to see if the regional server market is still in neutral.

For those CIOs who are counting pennies like never before, what motivation is there to consider new investments in infrastructure right now?
My experience from the CIO summit is that the conversation has changed from what we had previously to a cost-sensitive focus. There were some CIOs that were still saying ‘I've built my first datacentre, I'm going to build my second now and then I'll build my third one somewhere else.' There is still some investment going on, but I think that brings us to the point that the value proposition for these type of things need to be very favourable compared to the other offers that those CIOs have been working with.

There is still some investment going on, but I think that brings us to the point that the value proposition for these type of things need to be very favourable compared to the other offers

Price, performance, management, all of these things will suddenly come to bear there. They may change, the second step for this type of product if they're saying ‘OK, I've got 1,000 users or 10,000 and I need to migrate environments, I want to move from a twisted environment, I want to go to standard technologies, they are cheaper and I need to migrate now,' for whatever the reason might be.

Building this up could be the other alternative, and in doing that you know you could give me a solution that gives me best performance, more flexibility and decent price points - what is your offer? That kind of approach might come to bear there, but it is a tall order.

When we talk with vendors they are saying there is still data growth and demand is still present, but a lot of CIOs are canceling their planned refreshes of technology - what impact is that going to have on the market?
It's going to have a massive impact on the one hand, right now we are seeing this, and we are seeing this for the first time if you are looking at Central Europe and if you're looking at Eastern European markets. If you're looking at the Middle East and Africa and you're looking at the established, more mature markets, you're seeing the numbers go down quite quickly, and you're seeing it go down further in some of the emerging countries because the spikes have been so high and they have dropped now, which is quite incredible.

Are you seeing a changed approach from vendors?
In many ways, one is the presentation has changed very dramatically because you focus on the value proposition more. You're not necessarily focused on higher, better, more, you're focused on less cost, less risk, all those less things and I think that's a big change in the current attitude.

At the same time, products are coming out at an accelerated level now, looking more to monetise and optimise the virtualisation piece. In the surveys that we run it's, ‘how do I invest when it is down?' All these wonderful things, but the investment in virtualisation keeps going up and I know if you're looking at the Emirates, for example, you might be at an 8%-10% virtualisation level, which is so very, very low.

But if you're looking at what those people don't buy now, they buy in six months or 12 months. Maybe they are willing to buy different things and maybe they are going to buy more virtualised solutions at that point, simply because they are going to be more mainstream.

Vendors are clearly pushing the virtualisation piece in particular and saying look we can save you money here and you have direct storage connected to your SAN there. They are becoming more flexible on the one hand. You can also see that vendors are becoming a little bit more protective around the businesses they offer. Anything they can offer and do themselves they are looking to personally treat it.

Is this going to affect the research and development cycle - now that things are unclear about how much CIOs will spend in the next six to 12 months?
I think there are two sides to that - the vendors in my experience have been very careful to point out that their research and development spending has remained the same. They are certainly publicly stating that it will be the same. I think the type of things they are spending the money on will be different, so even assuming that they are carrying on, the question is will you be focusing on maybe five to 12 years out or will you be focusing on the next 12-24 months and how many products can you get to market in the quickest possible time.

It's effectively the same as the business managers and the CIOs, their pressures are cost reduction and time to market, so I think the vendors are in that same boat. They have to do the same things because they are under the same monetary and revenue pressures that currently exist elsewhere.

I think on the whole we will probably see fewer projects, fewer research and development projects, from what I hear. I can't say which company, but it does sound like some of the money being spent on research and development is being held back at the moment, so it doesn't necessarily mean its being stopped but it might be end total for the financial year, to see how we end up.

Are you noticing different reactions from end users in the different markets you cover in EMEA?
I think the most extreme at the moment is actually the Middle East. When I was there in February, there was quite a change, overall it was on cost control but it wasn't dramatic. If I look at, for example, Russia, which is one of those markets where 56% of clients are Americans it was absolutely traumatic.

In the Middle East we are looking at less investment, you're still looking at some sort of growth, so less than we predicted but still certainly on a growth path. Certainly in some areas around the services etc, so there is still a good story to tell.

Then you have some of the African markets that are obviously very small but they are still buying, that's actually not bad. Some of the companies, perhaps where they have never done business before, are now doing some business.

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