The Rising Stars of 2002
Lee Ting Ting
Computerworld Malaysia -21/12/01
We live in a continuously shifting state of realities, in which the only predictable constant is the inevitability of change. Hence predicting the future is really no easy task. In fact no one can, or could get it perfectly right—not even Nostradamus. The same applies to predicting a list of local IT businesses that will have a good, eventful 2002.
Main Excerpts from Article:
THE region’s overall business climate is affected by an economic slump in the West, where belt-tightening has put most IT investment plans on indefinite hold.
The ongoing US and Allied military campaign in Afghanistan increases the uncertainty for even the most promising of businesses, with major IT vendors opting to keep mum about any expectations over the next six months.
But however difficult it is, it is not impossible to pinpoint successful (or potentially successful) IT businesses. We based our selection on some key indicators: their timeliness in seizing, developing and offering products, solutions and services that are closely tied to up-and-coming technology trends in 2002; their market potential; company track record; sound financials; and management strength.
The segments of IT outsourcing, security, customer relationship management (CRM) and vertical portals, in particular, look strong for 2002, so companies in that space should do well. Aside from listening to the recommendations of several industry watchers, we went with the usual ounce of gut feel in spotting the winners. Remember, the list is neither exhaustive nor definitive.
A sure ride in IT outsourcing.
Most IT businesses that provide outsourcing can expect to do a roaring trade in 2002. Despite the gloomy outlook in the general economy, the opposite rings true for the IT outsourcing sector as more organisations are looking for alternatives that can reduce their IT spending.
In fact, opportunities in the Asia-Pacific (excluding Japan) IT outsourcing services market are exploding. IDC expects the market to skyrocket from USD4.8 billion in 1999 to USD10.3 billion by 2004 as more companies turn to outside help to control their network and desktop systems so they can focus on core competencies. Although IT outsourcing has become very popular in the US and Europe, it has had problems taking off in Asia. The main reason is the barrier imposed by the Asian business culture, which is essentially conservative in nature. The notion of IT outsourcing has long been wrongly associated with a loss of control, degraded security, and a threat to privacy. The failure of the first generation application service provider (ASP) model in 2000 worsened sentiments about IT outsourcing in Malaysia even more.
Not only did many pure enterprise software providers fail to support clients’ mission critical applications, but so did many infrastructure (co-location/hosting/telecommunications) providers which lacked the co-operation of their application operators and thus failed to meet their pledge of end-to-end support for their end clients. This picture is obtained from speaking to the heads of several local organisations which are currently outsourcing their IT needs, as well as the staff of some locally based hosting companies.
However with greater awareness about what real IT outsourcing encompasses, especially in the more technologically-advanced regional markets such as Taiwan, Hong Kong and Singapore, IT outsourcing is quickly returning to popularity. Nonetheless in Malaysia, pricing is still very much the key factor in many IT decisions. Therefore, the IT outsourcing providers that will win many initial contracts (especially from the most budget-strapped SMEs) in 2002 should be those which can provide an attractive cost package.
Niche providers such as Cordoda (which provides for the management of an Enterprise Broadband Network) will come out with aggressively priced outsourcing packages targeted at SMEs next year. Cordoda’s COO Shane Hodge said, "Among some of Cordoda’s existing clients are KLCS Securities, TA Securities, MBA Assurance, Triumphal, Genting San Yan Industrial Paper and Cold Storage." Higher up the rung will be local MNCs and large conglomerates looking to consolidate the outsourcing of their IT requirements to a single, reliable IT outsourcer. Unfortunately by themselves, few locally-bred IT outsourcers would qualify to provide services to this category of clients. Large foreign IT outsourcers such as Atos Origin which have the invaluable experience of providing their services to large international organisations in Europe such as Philips, and Thailand’s foremost cable TV operator UBC, are seen to be better equipped with the necessary expertise for their local offices to provide the IT services support to local MNCs. They are anticipated to be favoured as the viable, long-term IT outsourcing partner by larger organisations. At the same time, local players with businesses related to IT outsourcing will also have an opportunity to turn 2002 into a productive year. They include those with expert knowledge in the vertical industries like finance and manufacturing, and infrastructure owners such as Internet data centres and local telecommunication companies—Telekom, Time Telekom, Maxis and Digi. Other than data centres, network services, application maintenance, application development, distributed services, IT planning and IT management will be hot areas in demand for outsourcing. The IT outsourcing space is not an individualistic business, hence success in 2002 will be awarded to field players who understand the need to create synergy and to be comprehensive in their support. This can be achieved by striking smart, strategic partnerships with one another.
Cordoda Corporation Sdn. Bhd.
Headquarters: Technology Park Malaysia, Kuala Lumpur
Business: Managed service provider, providing multi-service access, managed network services, and ebusiness solutions.
Web site: www.cordoda.com.
Factors for company success:
o Offers obvious cost savings for clients; and can move quickly to meet changing needs.
o Has a well-planned initiative package to woo local SME players.
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