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Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
The Economic Crisis & What It Means for ITThe Economic Crisis & What It Means for IT
Jyoti Lalchandani
Vice President & Regional MD
IDC Middle East, Turkey & Africa
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
IDC in the Middle East, Turkey & AfricaIDC in the Middle East, Turkey & Africa
� Over 90 Analysts, Consultants & Events Associates Across the Region
� ICT Market Coverage Across 25+ Countries
� Advisory Services to the ICT Community, Governments, and Telcos
� IDC Events Reach Out to 4,500+ CIO’s and IT Managers Across 12 Countries
� Upcoming Offices in Cairo, Egypt (Regional Support Center) and Riyadh, Saudi Arabia
Expertise & CoverageExpertise & Coverage
IDC South Africa
Johannesburg
IDC East Africa
Nairobi, Kenya
IDC West Africa
Lagos, Nigeria
IDC MEA HQ
Dubai, UAE
IDC North Africa
Casablanca, Morocco
IDC Turkey
Istanbul
IDC Egypt
Cairo
IDC Saudi
Riyadh
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Research & Analysis MethodologyResearch & Analysis Methodology
Channels
• Disty’s
• Resellers/VAR’s
• SI’s
• IT Training Firms
• IT Consulting Firms
• Retailers
ICT Vendors
Supply-Side
End-User
(Customer Behavior & Technology Adoption)
Demand-Side
Industry/Population Demographics
Market Models
Analyst Insight
Standard Definitions &
Methodologies
(Research and Forecasts)
Trade Associations and
Other
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
AgendaAgenda
Memos from the CIO
The Economic Implosion
IT Budget Fallout
Accelerated Transformations
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
An Economic ShockAn Economic Shock
Worldwide GDP Forecast
Source: EIU – April 2009
3.8%
2.5%
1.8%
3.1%
3.8% 3.8%
0.2%
1.7%
3.3%
2.0%
-2.6%
1.0%
2.9%
4.0%4.1%
3.8%
2.7%
4.0%
2.9% 2.9%2.4%3.8%
2.5%
3.8%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
2007 2008 2009 2010 2011 2012
June 08 Forecast October 08 Forecast December 08 Forecast April 09 Forecast
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
The Economic UnknownThe Economic Unknown
$1-3 Trillion For�Bank Bailouts�Tax Cuts�Infrastructure�SMB Incentives�Health Care�Smart Grid�Auto Manufacturers�Green Building
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Source: IDC IT spending estimates, April 2009
IT Budget FalloutIT Budget Fallout
WW IT Spending 7.1%
5.2%
2.6%
4.5%
5.5% 5.7%
0.5%
6.2%
7.1%
4.2%
-8.2%
6.0%6.1%
6.3%5.9%
7.1%
5.5%
4.4%
5.9%
4.2%
7.1%
5.6%5.4%
2.8%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2007 2008 2009 2010 2011 2012
Aug-08 Nov-08 Jan-09 May-09 (Prelim)
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Emerging Markets in ContextEmerging Markets in Context
Source: GDP data: EIU (April 2009); IDC IT Spending Estimates (April 2009)
$983
$32 $30 $24 $6
$1,127$1,174
$509$618
$240
$101
$225
6.2%
0.8%
2.5%
2.1%
2.3%
3.8%
1.4%
1.9% 1.5%
2.8%2.5%
1.0%
0
200
400
600
800
1,000
1,200
1,400
UAE
Qat
arSau
di A
rabi
aSou
th A
frica
Turke
yN
orth
Afri
caLe
vant
Egypt
Pakis
tan
Spain
Singa
pore
Can
ada
IT S
pe
nd
ing
Pe
r C
ap
ita
US
$ '0
8
0%
1%
2%
3%
4%
5%
6%
7%
IT a
s S
ha
re o
f G
DP
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Impact in the GCCImpact in the GCC
9.6%
24.0%
28.1%
-11.6%
4.3%
-1.6%
7.7%7.4%9.4%
3.3%-1.0%3.4% 4.2%3.2%
12.2%
17.3%13.4%
23.8%
20.4%
21.8%
-5.8%
8.3%
24.0%26.2%
7.6%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2006 2007 2008 2009 F 2010 F
GDP UAE GDP Saudi Arabia GDP Qatar
IT Spending GCC IT Spending UAE
Source: GDP data: EIU and IMF (April 2009); IDC IT Spending Estimates (April 2009)
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
IT Budgets DistributionIT Budgets Distribution
Source: IDC IT Spending Estimates (April 2009)
0%
10%
20%
30%
40%
50%
60%
70%
UAE Saudi Qatar GCC Average
IT Hardware Packaged Software IT Services
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
The Next Stage of IT AdoptionThe Next Stage of IT Adoption
24%26%
28%
-12%
8%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2006 2007 2008 2009 2010
IT Spending UAE
+ Healthy Oil Prices+ Infrastructure Enhancements+ Public Sector Reform+ Liberalization/Privatization+ Consumer Sentiment+ Emergence of New Sectors+ SME Adoption Begins- Inflation- Skills Availability
+ IT Asset Utilization/Rationalization+ SaaS, Managed Services, Virtualization+ ROI/TCO Play+ Regulatory/Compliance+ Alignment of IT to Business+ SMB Adoption- Skills
Source: IDC IT spending estimates (April 2009 update)
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Memos from the CIO
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Memos from the CIO Pre-Crisis (1/3)Memos from the CIO Pre-Crisis (1/3)
N = 102Source: IDC’s Middle East CIO Summit 2008
New
initiatives
38%
Routine
Infra
Upgrades
32%
Initiatives
already
underway
30%
Breakdown of ’08 IT Spend
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Memos from the CIO Pre-Crisis (2/3)Memos from the CIO Pre-Crisis (2/3)
N = 102Source: IDC’s Middle East CIO Summit 2008
0 0.5 1 1.5 2 2.5 3 3.5 4
IT Infrastructure
Customer service/Care
IT Security
Product development/innovation
Performance tracking
HRM Solns
Mobility/w ireless solutions deployment
Regulatory compliance
Sales performance tracking
Production/Mfring Solns
Branch Automation
Virtualization
Supply chain management
Procurement/sourcing
Marketing performance solutions/tracking
Environment friendly solutions
Priority of IT Investments
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
CIO Challenges
Source: IDC’s Middle East CIO Summit 2008
Memos from the CIO Pre-Crisis (3/3)Memos from the CIO Pre-Crisis (3/3)
0 5 10 15 20 25 30 35
Staffing issues
Maintaining System Performance
Supporting Operations
Managing Internal Budgets
Managing Outsourced IT Services
Pace of Product Development
Contributing to the Bottom Line
Maintaining a Secure Infrastructure
Regulatory Compliance
Other
# of Responses
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
2009 Memo (Post-Crisis)2009 Memo (Post-Crisis)
Q: What are the most significant factors driving changes in IT expenditure (budget) allocations in 2009 post crisis?
0 5 10 15 20 25 30 35
Greater focus on ROI/TCO
Greater focus on regulatory compliance
Security of information systems
Improve applications set that better fit our
business processes
To improve the availability and/or
performance of IT systems
Degree of ImportanceN = 114Source: IDC’s MENA CIO Summit 2009
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Memos from the CIO Post-CrisisMemos from the CIO Post-Crisis
Improve Utilization of Assets
Explore New Business/Delivery
Models
Bus Continuity Priority
Remains
IT as Business Enabler
(Alignment)
1
2
3
4
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Accelerated Transformations
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Mega Trend 1: The Network Center Will ConsolidateMega Trend 1: The Network Center Will Consolidate
13%
18%
2007 2009
Servers As Virtual Machine Hosts
8.8 million virtual servers vs. 9 million physical servers ship
in 2009
�Virtualization and data center consolidation will continue
�Network and availability investments will increase
�Management overhead will increase
�IT skills and organization will need to evolve to support a service-oriented infrastructure
19
Source: IDC Q4 WW Server Tracker, 2008
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Mega Trend 2: The Network Edge Will ExpandMega Trend 2: The Network Edge Will Expand
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2008 2009 2010 2011 2012 2013 2014 2015
Millions of Communicating Devices WW*
Computers & Communications Equipment
Mobile DevicesCE & Industrial
* Excludes voice- and SMS-only phones
20Source: IDC Device Universe Model, Jan 2009
�Enterprise bandwidth demands will explode
�Device support and asset management demands will explode
�Data center architectures will have to change
�Operational systems will drive new service level requirements
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Mega Trend 3: Enterprise Information Will ExplodeMega Trend 3: Enterprise Information Will Explode
21
342
1,530
2008 2011
Enterprise-Liable ExabytesProduced a Year
User Content
1,234 EB
Enterprise Liable
Content
1,530 EB
Overlap~1,000 EB
�New storage, information management, content management will be needed
�New levels of security and privacy will be needed
�New tools for search and discovery, including video, voice will be needed
�New relationship with business units will be needed – on policy, classification, data ownership
Source: IDC Digital Universe Study, 2008
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Mega Trend 4: Web 2.0 Will Create ProblemsMega Trend 4: Web 2.0 Will Create Problems
22
Laptop PC PDA
Text or Instant Messaging
67%
Posting to Blogs, Wikis,
Forums
46%
Percent Hyper Connected Both For Business and Personal Use
79% 64%
�Enterprise-to-customer contacts will grow by an order of magnitude
�Interactivity and mobility will blur work and personal boundaries
�New client access tools will fragment customer relationships
�Web 2.0 will drive new policy needs – with IT in the middle
Source: IDC Study on Hyperconnectivity, 2008
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Mega Trend 5: The IT Domain Will GrowMega Trend 5: The IT Domain Will Grow
23
�If it runs on the IP network IT will end up managing it
�IT skill requirements will diversify – internal customers will multiply
�Real time applications will increase IT risk exposure
�Operational IT and general IT will become one and the same
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.
Embedded IT
IT Marketing
Usage-Based
Charges
Business Objectives
New Staff/ Org
Job Rotation
New Reporting Structure
Capital Spending
Visibility
Business Process Responsibility
Six Sigma Process
Management
Mixed Outsourcing
Virtual Teams
Client Contact
�IT performance will be tied to business performance
�Infrastructure money will come from consolidation
�New project money will come from business payback
�IT and business department boundaries will become porous
Mega Trend 6: IT Will Have To ReorganizeMega Trend 6: IT Will Have To Reorganize
24
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Impact on ITImpact on IT
25
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ContactContact
Jyoti Lalchandani+971 4 391 2741