Adoption levels blamed for lower software spend

Lower adoption levels could be one reason for spending on software solutions hovering around 40 per cent of the UAE's total spend on information technology, a senior official of IDC has said.

Jyoti Lalchandani, VP and regional MD, IDC Middle East, Turkey and Africa, told Emirates Business yesterday the figure is low compared to that of developed markets. He was, however, confident that the change in the attitude of CIOs would contribute to enhancing the share of software solutions in the country's ICT market.

Small and medium businesses have contributed to the progressive growth in adopting software and services, he said at the two-day IDC Middle East CIO Summit 2010 that ended in Dubai yesterday.

According to IDC estimates, the UAE IT market is expected to grow 12.4 per cent to touch $5 billion (Dh18.36bn) in 2010 and register about $1,000 per capita. The Middle East and Africa (MEA) market is forecast to be $49.77bn this year, with the Gulf contributing 25 per cent of the total.

IDC analysts and experts also opined that CIOs in UAE have realised the importance of reducing Capex (capital expenditure) and focusing on Opex (operating expenditure). "It's called de-capitalisation and this is where concepts such as cloud and virtualisation step in. Though these technologies are just taking off and being adopted by CIOs it has huge potential in the region. CIOs have realised that they cannot continue to spend on capital," said Steven Frantzen, Senior VP, Research (Emea) and Managing Director (Cema) at IDC.

Though spending in software solutions needs to increase, a proper balance has to be maintained without ignoring the hardware sector, said GV Rao, General Manager-ICT of Qatar-based United Development. "Hardware costs have also come down over a period of time but in the long run utilising solutions such as virtualisation can cut down IT costs. This realisation will take some time in the region and therefore CIOs will continue to spend on hardware for some time. Spending on software solutions such as ERP and CRM are not low but it has be spent wisely."

EMC, IT storage company and a major in virtualisation solutions, has also noticed a change in the past 12 months among CIOs based in the Middle East. "CIOs are at least ready to have an open discussion on concepts such as cloud as now it's no more about acquiring and deploying solutions but helping to solve business issues and increase the bottom lines. Business conversations are happening to understand benefits of technology," said Mohammed Amin, General Manager (Middle East, Turkey and African countries) at EMC.

According to Amin, the top three areas of interest are virtualisation, security and storage. "Though solutions have not implemented to a large extent there are a lot of firsts in the region," said Amin.

Younis Mohammed Othman, IT Director at Dubai Customs, said: "With limited resources now we are looking at low cost and stable solutions. Virtualisation is one technology which will give our department this capability. We have to make sure that the business grows and this can be done by adding such solutions."

He added: "Software solutions and services are areas being looked into by the department as this is relevant in today's business environment. Outsourcing is another area which is being looked into seriously."

Marco Gerazounis, Senior Vice-President, Eastern Europe and Mena, Software AG, said striking a good balance between hardware and software spend would help CIOs focus on strategic projects and drive investments in the right direction. The shift from hardware to software will happen in 2010 as CIOs will virtualise a large part of their infrastructure to reduce hardware spending, he said.

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