Time is ripe for IT investments

The economic crisis affected companies across all industries, but during the first quarter of 2010 a slow but steady recovery has been noticed, at least in certain areas. Orders are increasing and though it will take a while until pre-recession levels are reached, 2010 does not look as grim as feared by many. Over the past 18 months or so, cost cutting was a top priority for many businesses, which in many cases directly impacted planned investments in IT and networking infrastructures – either by reducing their scale, or by delaying them indefinitely.

The financial and banking sectors saw a huge number of cutbacks in employee numbers, the real estate market saw a drop in prices and overall value. Both are examples of sectors which witnessed challenging times during 2009.

The drop in IT spend was expected and felt early in 2009. IDC, the US research firm for the information and communication technology sectors, said that in 2009 projected spending in the Middle East and Africa was $44 billion (Dh161.48bn), a five per cent drop from that in 2008.

There is no doubt that IT spending in 2009 was affected by the economic downturn that led to cost-cutting measures. Additionally, expansion plans of many international corporations were halted as demand slowed in regional markets.

Having said this, the IDC also revealed that while the region had a six per cent share of global ICT expenditure in 2009, it will be responsible for 17 per cent of the world's net new expenditure over the next two years.

While financial boundaries continued to grow, data volumes also continued to increase during 2009 as relying on outdated equipment posed a great business and competitive risk. For many companies, even a short outage means irreversible loss in business, which could jeopardise the delicately woven plans of recession survival and future recovery. Aware of this risk, many well-funded companies have taken the opportunity to spend strategically on infrastructure – also to raise the barriers for their competitors.

Following the 2009 challenging times, IT spending in the Middle East and Africa was predicted to experience a growth of 11 per cent during 2010 (IDC report). As for the UAE, the enterprise and consumer IT spending is expected to reach $15.9bn this year, a 9.1 per cent increase from 2009, according to Gartner. Given that the telecom infrastructure in the region is developing rapidly and businesses are receptive to new, innovative ways of doing business, the country has the potential to leapfrog to a leading position in this space.

A recent study by Gartner highlights the importance of (re-)investing in IT and networking, stating that according to 62 per cent of CEOs, IT and network-enabled changes will be a key element in their post-recession strategy. The surveyed group consisted of 190 senior business executives of companies with annual revenues of more than $1bn, excluding technology service providers.

While majority of CEOs were looking to reduce costs in 2009, 71 per cent of business leaders are now taking a more future-oriented position, which certainly is the right approach. It is, therefore, extremely important that businesses look into flexible and reliable solutions to meet the bandwidth demand problem – a solution that can support a variety of services and become an application enabler, rather than a cost centre – for years to come.

For most businesses today, to wait and watch is no longer an option. While the economy did slow down, the volumes of data never stopped growing – many companies are already exceeding their infrastructure upgrade thresholds and have no choice but to invest in their networks to maintain the momentum and capacity.

The advanced network solutions that companies are investing in need to be proven, low risk, readily available and, most importantly, provided by experienced partners, who will help them chart the most efficient route among the multitude of technologies available.

- The writer is the Regional Managing Director at Ciena Middle East. The views expressed are his own