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19 April 2024

IT projects worth $10bn scrapped due to downturn

Private, public and consumer sectors have reduced new IT projects in 2009. (AFP)

By Nancy Sudheer

Information technology projects worth $10 billion (Dh36.7bn) planned for this year have been cancelled in the Middle East and Africa because of the global financial downturn, a research chief has said.

"In 2009 new IT projects have been slashed by the private, public and consumer sectors," said Jyoti Lalchandani, Vice-President and Regional Managing Director of International Data Corporation (IDC) for the Middle East, Turkey and Africa.

"This is a reflection of market factors, especially in the real estate sector where projects worth billions have been put on hold. All the support industries will suffer as a result and this is reflected in the IT sector."

In the region, 40 per cent of the budget goes towards new projects and 60 per cent is spent on existing infrastructure, while in Europe it is the other way around.

"It's the 40 per cent that is affected by the cutting down of IT budgets," Lalchandani told Emirates Business at the IDC Mena CIO Summit.

"These are all the projects that are 'nice to have' within an organisation. There will be an emphasis now on the existing infrastructure and therefore CIOs will look at discretionary and non-discretionary projects."

Discretionary projects are focused on green and mega-infrastructure implementations, while non-discretionary ones involve replacing PCs or printers.

"Non-discretionary projects can be postponed by a quarter but not beyond that, therefore it's the discretionary ones that are put on hold," she said.

Lalachandani said the summit was a platform for CIOs and technology companies to share ideas and view new business models to aid their decision-making.

"Compared with previous years, when there was hyper-growth of 20 per cent, there are new issues and challenges regarding IT spending. In a hyper-growth situation it was about building skills and addressing issues like staff availability. Today it is about aligning IT and business to utilise infrastructure rationally.

"Organisations are now looking at software as a service, cloud computing and performance management applications. IT budgets will expand in the region but at single-digit levels. Public sector investment will be put into infrastructure in line with the recent announcements in UAE and Saudi Arabia. There will be a focus on building and construction but healthcare and education will generate IT dollars." He said in the economic crisis governments around the world would spur investment in the private sector directly or indirectly, creating demand for IT and consequently new jobs.

"This investment will lead to small- and medium-sized businesses mushrooming in the region. IT penetration is essential to cut costs and increase productivity."

Recent research by IDC into the mood of CIOs revealed a shift from IT being used in back office operations to it adding value to a business by providing access to critical information.

"IT is now a business enabler, making sure systems are up and lights are on."

Internet services disrupted

Internet services were affected in the UAE yesterday due to a maintenance problem caused by an etisalat proxy server.

The problem from the proxy server caused data outage affecting internet services in the UAE, said an etisalat sources.

In computer networks, a proxy server is one (a computer system or an application programme) that services the requests of its clients by forwarding requests to other servers. Data outage creates a problem accessing data and services on the internet. Dubai-based businesses were sent mails by the Government of Information Resources Planning informing them of the issue. On contacting etisalat, the telecom company said that internet services were down but had been restored by the end of the day.

"We are worried if it is another cable problem, which caused internet problems few months back, etisalat has not yet informed us about this," said one of etisalat customers in Dubai.

Customers faced problems earlier when an underwater cable between Sicily and Cairo broke, affecting internet, data and voice communications in several countries in the Middle East, Asia, Africa and Europe.