Region must review outlook towards IT

As business top lines and bottom lines melted away across countries over the past 15 months due to financial overheating in the US economy, it became amply clear that no one will be spared the downside risks in a fast-globalising world of business. Businesses and companies went back to basics and started reviewing their business strategy not just to tide over the present crisis but also to look at how this could fundamentally change the way business is conducted in the future.

If boardroom discussions are anything to go by, competitiveness will not only be defined by the customer-focus and financial robustness of a company, it will also be necessary to reflect it in how the company leverages IT to seamlessly deliver the customer promise at a price point that is far below competition and yet focuses on delivering an appropriate solution for the customer need in a timely manner.

Developed economies where business and industry are at an advanced stage of adoption of IT at the enterprise level will face a challenge of unlearning and learning as the circumstances have changed. However, countries and corporate entities that are yet to adapt to a world that cannot breathe without IT, this is likely to pose a different challenge – one that does not need unlearning but is as daunting – a transformation of the businesses in particular and society in general to adapt to a world where low in IT is perhaps directly comparable to low on business returns. For businesses and countries in the Middle-East and Gulf, this appositely defines the nature of task at hand.

Previously, bolstered by high oil prices and a good investor response to various large-scale projects, the Middle East and Gulf grew by over 5.5 per cent between 2005 and 2008. Most of the countries here aggressively pursued economic diversification by launching large-scale projects as well as through human capital development in non-oil sectors like petrochemicals, construction, retail, tourism, banking and financial services and education.

They also implemented IT applications to traditional sectors like oil and gas to create efficiencies. However, even there the role of IT has not been completely strategic. This has left companies in the Middle East a few steps behind in the race for greater competitiveness that allows companies to introduce new products, set up more efficient distribution channels, improve service levels and enhance productivity.

Unfortunately, the recent recession has played havoc with the plans and projects for the region. Not only has it forced a fund crunch on expansion plans that these countries and businesses had before September 2008, but also put a serious strain on available resources for existing projects. Notwithstanding the fact that there was very little direct exposure of the sub-prime crisis on the Middle-East and Gulf economies, the inevitable domino effect did not spare the region – especially those countries where the financial systems are more integrated with global markets. In the region, thus, IT also suffered due to the recession at an early stage of adoption.

It may be more useful to highlight some of the key areas where businesses and economies of the region may focus upon in 2010. Investments made in R&D in information technology for instance, need a substantial boost bucking the existing trend. At a societal level, most of the ICT infrastructure are still focused on information rather than transformation and this is true for businesses too. Thirdly, such a comparatively late development of IT focus has meant that the growth of the pool of skilled staff to deliver IT services too has been disproportionately stunted.

?Naturally, performance measurement of IT systems has not evolved in any significant manner. Often, IT-focused investments are directed towards communication and telecom solutions for the business. These need to change more fundamentally, in the process making the organisation more e-nabled. A 2001 Gartner estimate puts the IT investment in Middle-East at less than one per cent of GDP as compared to almost 11 per cent in the US and Canada and close to four per cent even in a relatively poor region like Asia-Pacific.

Although this kind of apathy towards IT has changed significantly in a few countries that pursued its adoption over the past five to seven years, it needs more concerted effort at the level of governments and businesses alike. The increased propensity towards adoption of enterprise-level IT solutions in the past few years is also encouraged by a clutch of key decision-makers attempting to bring in a societal change in their outlook towards IT.

In every business and business function in every part of the globe, today, IT is inseparable from the core business activities. Some of the customer-focused processes have evolved so far ahead with deployment of information technology that the traditional methods of retaining and enhancing existing customer bases as well as those for acquiring new customers are neither efficient nor scalable. In a recently conducted Gartner survey of CEOs from the US and the UK, 62 per cent of the respondents consider IT-enabled changes to be a key element of their post-recession business strategy. While no comparable figures were readily available for Middle East, the outcome undoubtedly underlines the thrust of the post-recession world in 2010.

Now is the time, therefore, for organisations in Middle East also to take a leap of faith in IT. Look at the brighter side of the ME context – even though some enterprises here may be a few steps behind their global counterparts, a late beginning in the technology game offers a great opportunity to leapfrog a few generations of developing technologies at a fraction of a cost. The choice is really ours.

 

The writer is Senior Vice-President & Head of APAC-MEA markets, HCL Technologies. The views expressed are his own

 

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