Technology as an aide in cost cutting environment
Businesses in the Middle East will continue to invest in new technology in 2009 – though they will become more selective about what they buy, said leading industry figures.
Companies need technology to increase production and streamline operations, said four top industry leaders interviewed by Emirates Business.
Businesses in the UAE have an opportunity to leapfrog other countries in terms of innovation because they have not built up the same complex, fragmented and disparate infrastructures that other IT communities have to grapple with. This means they can implement new technology more rapidly.
Emirates Business spoke to John Hoonhout, Managing Director, HP Middle East; Jesper Friedriksen, Head of Enterprise Emea, Google; Sam Alkharrat, Managing Director, Cisco Middle East; and Ihab Foudeh, Director, Enterprise Product Group, Microsoft Gulf.
Is there a gap between the implementation of new technology by businesses in the Middle East and the level of use in the West? And if so, is it because of a lack of awareness at the end-user level or unavailability of equipment in the region?
Hoonhout: Many companies are successful because they implement the best technology solutions to achieve the strongest results. Simply stated, it's technology for better business outcomes.
I don't believe there is a lack of awareness in our region. ICT has been widely implemented and adopted in many sectors, from education and financial services to telecommunications and healthcare.
Yes, we can still do more as a region compared to the developed countries, but we are on the right track.
Alkharrat: There are certain areas where enterprises in the Middle East are early adopters of technology whereas in other areas they lag behind. In the Gulf, for example, there is a fertile environment for leapfrogging legacy technologies.
We find companies embracing innovative business models and technologies to achieve their business goals. Therefore, we find that enterprises in some cases have adopted technologies much sooner than those in the United States or Europe.
In general, though, we find that companies in the West are quicker to embrace technologies and quicker to respond and adopt Web 2.0 tools as they seek to cash in on the next generation internet productivity boom, which is fuelled by the consumer-driven internet revolution.
The gap exists mostly due to the maturity cycle of the technology adoption as well as the clear lack of IT skills in the region.
Friedriksen: If there is a gap it may be as a result of internet penetration gathering momentum only fairly recently. Many of the exciting innovations in IT over recent years have involved the world wide web and as internet penetration has been historically lower here than in other regions this may have had an impact on the speed and nature of new technology deployment.
The good news is that it looks like this is changing fast. This region has experienced one of the fastest levels of growth of internet usage in the world and online content in Arabic is on the rise, so this bodes well.
The businesses that we are in touch with across the Middle East are very open to the potential that the internet can offer them to bring efficiencies and new ways of working.
As for whether there is a gap in implementations compared to other countries, the interest we have had not only from enterprises but also partners interested in supplying our search products and applications to businesses in the region, suggests that demand for technology implementations is high.
Foudeh: The Middle East has shown impressive growth in terms of technology usage and adoption. We are seeing a strong trend towards the utilisation of specific technologies that help to increase workforce productivity and decision-making. However, there is room for improvement when it comes to using technology as a strategic asset within organisations in the region.
Are new technologies made available to the Middle East end-users at the same time as in the rest of the world? And is there optimum utilisation of technologies in businesses today?
Hoonhout: Typically we make our products available in our local markets at the same time that they're launched in the US. Our strategy is to make technology products and solutions available in every country at the same time. The key is delivering the right products to the right businesses at the right time – when there is a need.
Alkharrat: It depends on regulatory and other factors. For example, high definition technology is available in the US and certain areas of Europe, whereas we are still lagging behind in the region due to a lack of content over satellite. However, the UAE is more advanced than other countries in this regard and the gap is getting narrower. There is a good level of deployment but not an optimal level of usage. There is still room for additional technology utilisation.
Friedriksen: One of our goals is to give everyone access to the information they want, wherever they are, in whatever language they speak, and through whatever device they are using. A huge part of that goal is making our products and services available in as many languages as possible.
This is rarely as simple as translating a few lines of text but our 40 languages initiative aims to take on this challenge as rapidly as possible. Of course the other area to consider is whether the resources allocated internally to IT are being optimised. In this area we believe that there are some improvements that can be made. Research has shown that the majority of a budget allocated to IT is spent on 'keeping the lights on'. This means maintenance, firefighting, upgrades and solving user issues.
In times of recession, what kinds of technology are most relevant to an enterprise based in the Middle East? What technologies will you focus on this year?
Hoonhout: It's obvious that customers will continue to invest in ICT technologies no matter what. However, customers are increasingly asking to do more with less so cost reduction and improving efficiencies are key. Customers will continue to invest and spend on technologies that help them to achieve that. Topics like automation and maximising the use of IT assets are very relevant. Virtualisation and the use of blade technology and advanced software solutions can greatly improve efficiency and reduce the total cost of ownership.
Alkharrat: During these tough economic times it is very important for businesses to stay close to their employees and customers. Companies that reduce costs intelligently and invest wisely can secure an offensive position, whereas those that adopt a more defensive position will be at the mercy of the more dynamic, forward-thinking companies.
It is important to cut costs with intelligence and the IT infrastructure can function as a significant tool in keeping costs down.
Two kinds of technologies will help drive this collaboration of technologies and virtualisation. By implementing data centre virtualisation and automating, resource provisioning companies can increase the ability to grow their business and anticipate and manage changes to critical resource needs. Virtualisation starts in the data centre.
Networking infrastructure and IP/optical deployments will continue to be the main focus for us in 2009. In collaboration tools, Web 2.0, unified communications, video and WebEx will gain relevance. There will also be focus on a green technology approach.
Friedriksen: We are seeing strong signs that interest in our hosted applications, Google Apps, where e-mail, collaboration and personal productivity tools are delivered via web browser on a subscription basis, is increasing as a result of the current economic climate. Google Apps offers increased levels of functionality, frees up internal IT resources and offers significant cost savings. We offer Apps at a cost of $50 (Dh183) per user, per year. The benefits of this model, which include giving employees online access to their e-mail, documents and other information from whatever device they are using, appeals to enterprises regardless of their economic situation.
However, in the current climate cost reductions become a compelling reason to move to the cloud computing model when budgets are under the pressure. It simply makes sense.
Foudeh: There is no doubt that the current economic situation presents difficult challenges for businesses of all kinds. But we continue to be optimistic about longer-term global economic prospects. Many of the trends that have made this an era of dynamic business expansion have not changed.
Technology continues to advance. Productivity continues to rise. New innovations continue to create business opportunities. At the same time, it is clear that this is a time when thoughtful business leaders must carefully assess how to best utilise their resources to weather the uncertainty that lies ahead.
Do you think a CIO or CTO would consider investing in new technologies in today's conditions? If so, what kind of technology would be in demand?
Hoonhout: The responsibility of CIOs and CTOs is to help their enterprises achieve effective business outcomes through the use of advanced technology. That is why it is always important to invest in IT, especially during these times, in order to drive the business and be able to maintain its position and stability in the market.
Alkharrat: CIOs and CTOs are partnering with CFOs to ensure the right ICT investments are made to make employees more productive. Customers will have to be more selective than before and therefore, they will have to place certain bets on key technologies. We have seen this happen elsewhere in the world and the Gulf is following quickly in this regard. The main investments are being made in collaborative technologies and virtualisation of data centres.
Friedriksen: In many ways it's more important than ever for CIOs and CTOs to continue to invest in new technologies. Cost cutting is of course important when times are tough the CIOs should be wary of taking a short-term view on economic difficulties. It could well be that introducing a new model of IT or service, particularly one which represents a fundamental shift in the way people work, could make the company more efficient and more productive in the long term.
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