DESPITE a recent downward adjustment in forecast for 2009, the Asia Pacific remains a bright spot in the global marketplace as businesses look towards leveraging IT to drive business process optimisation and competitive share of wallet growth, says research firm IDC.
In its latest report, IDC lowered the 2008 IT spending growth forecast for the region (excluding Japan) from 9.5 per cent to 5.8 per cent. However, it noted that the robust growth that Asia enjoyed over the last decade had led to strong financial positioning for many businesses and consumers. "This has put Asia in a relatively favourable position to invest in IT to ride the current storm as well as to emerge competitively stronger when the economies turn around," it said, in a "post-crisis" poll of nearly 400 enterprises in the region.
Singapore is positioning itself to capitalise on these opportunities. For the Infocomm Development Authority of Singapore (IDA), there will be no let-up in efforts to strengthen the local infocomm industry as the country prepares for the next wave of economic growth.
Laying the groundwork
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| Google's Mr Tan Chade Meng spoke at the inaugural Infocomm LIVE! event. |
FOUNDATION-BUILDING programmes are expected to gain momentum in the coming months. In October 2008, IDA partnered SPRING Singapore to extend the scope of the Technology Enterprise Commercialisation Scheme (TECS) to include information and communication technology. Under the S$50 million TECS, which was launched by SPRING in April 2008, technology startups and enterprising public sector researchers can apply for the Proof-of-Concept grant to develop technology ideas from the conceptualisation stage, or the Proof-of-Value grant to further R&D and develop the first working prototype.
Beyond funding, IDA's multi-faceted approach to nurturing the infocomm industry also involves the creation of a vibrant environment for the exchange of ideas. In July this year, it introduced a new speaker series called Infocomm LIVE! to engage entrepreneurs, industry professionals, researchers and students, and inspire them to explore the potential of emerging technologies. The inaugural Infocomm LIVE! event featured Mr Tan Chade Meng, the first Singaporean to be hired by Google.
Creating role models
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| The National Infocomm Awards helps create role models for infocomm innovation and adoption. |
TO PROVIDE role models for infocomm innovation and adoption, IDA partners the Singapore Infocomm Technology Federation to organise the biennial National Infocomm Awards, which are Singapore's highest accolade for infocomm innovation. The 2008 NIA saw the Award for the Most Innovative Infocomm Product/Service going to Advanced Network Technology Laboratories, which develops network appliances for business applications, and BuzzCity, which operates the world's largest wireless community - mygamma.com.
Amongst the infocomm adopters, organisations which received the award for Innovative Use of Infocomm Technology in 2008 were the YCH Group, the Land Transport Authority (LTA) and digital imaging company Pictureworks, which won in the inaugural SME category.
Gearing up for bigger things
INITIATIVES like the NIA, the speaker programmes and early-stage funding schemes set the stage for infocomm local enterprises (iLEs) to move on to a wider platform. For example, to build up local capabilities in deploying large-scale, sector-wide projects, IDA introduced the Infocomm Enterprise Programme (iEP) in 2007 to involve the iLES in various national level programmes. The first project under the iEP, which was awarded to HeuLab, will see the implementation of a "virtual classroom" tool for schools and tertiary institutions by February 2009. The tool will enhance community-building, collaboration, and contactability for students and teachers.
The iEP complements other partnership programmes such as the infocomm Local Industry Upgrading Programme (iLIUP) and the Overseas Development Programme (ODP), which provide a platform for multinational corporations (MNCs) to partner local infocomm players to develop solutions and build up new capabilities in emerging technologies. The programmes also allow iLEs to access the MNCs?global marketing and distribution networks, and help iLEs to generate their own intellectual property which they can then bring to the global market.
With the support of these initiatives, iLEs have recorded a compound annual growth rate of 33.8 per cent in export revenue over the past three years, mainly in the software and IT services industry segments.
Preparing for the international stage
IDA helps pave the way for iLEs to enter overseas markets by establishing government-level agreements which open the door for infocomm players in the respective countries to explore opportunities for collaboration.
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| Under the latest MOU between the two agencies, IDA will partner CAIT to accelerate the implementation of e-Government in Kuwait. |
Last month, IDA signed its first Memorandum of Understanding (MOU) with Trinidad and Tobago's Ministry of Public Administration to foster co-operation and facilitate the exchange of knowledge in the area of ICT development. The MOU will also accelerate the implementation and rollout of e-Government systems and services in Trinidad and Tobago over the next five years, in support of Trinidad and Tobago's National ICT Strategy fast forward.
IDA has also inked its third MOU with Kuwait's Central Agency for Information Technology (CAIT) in November to facilitate co-operation in e-Government. IDA will partner CAIT to accelerate the implementation of e-Government in Kuwait and will also serve as an advisor to CAIT on matters pertaining to information technology and e-Government.
The first MOU signed in 2004 saw Singapore providing support to establish CAIT and develop an e-Government Blueprint for the State of Kuwait. The second MOU signed in 2005 kick-started two high priority e-Government projects, the Kuwait Information Network and the Kuwait Government Online.
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| IDA led Singapore's first-ever delegation to the RSA Conference which was held in San Francisco in April 2008. |
IDA has also been active in leading delegations to overseas trade shows under a unified Infocomm Singapore brand. At GITEX Technology Week 2008, which took place in Dubai in October, Infocomm Singapore was represented by companies such as Clearhub, CrimsonLogic, e-Cop, Genovate, Infologic, MicroUsability, SecureAge Technology, SQL View, ST Electronics (Training & Simulation Systems), Teliwave and Transfer To. IDA also led the first-ever Singapore delegation to the recent RSA Conference which was held in San Francisco in April 2008.
The push into international markets is important to the long-term growth prospects of Singapore's infocomm industry. The local infocomm sector has been expanding steadily over the years, and chalked up a healthy revenue growth of 13.8 per cent to S$51.68 billion in 2007. Significantly, exports accounted for 65 per cent of the total revenue in 2007, growing by 15.8 per cent to S$33.56 billion.
Exploring new opportunities
INFOCOMM opportunities will continue to open up in the Asia Pacific region as strategic investments in IT remain critical to achieving further efficiency and productivity gains, and in driving longer-term growth of businesses, said Mr Gary Koch, Associate Vice President of IDC's Asia Pacific IT Spending Research.
"FSI (financial services industry), government, and telco will remain the three largest tech spenders in 2009, while manufacturing, retail and logistics/shipping with their intensifying focus on cost management agenda, will mean a major shift from capital expenditure (capex) to operating expenditure (opex) as well as the heightened need to streamline business processes," said Mr Koch.
"Despite the new realities of IT budgeting that Asia Pacific organisations face in light of the current economic backdrop, IDC has noted historically that when a turnaround begins, these organisations traditionally are quick to ramp up IT expenditure to alleviate pent up technology requirements," said Mr Koch. When that happens, Singapore's infocomm industry will be ready.
Lessons from the past
Having survived previous crises such as the dotcom crash, the Asian financial debacle, SARS and the 9/11 terrorist attacks, many infocomm players in Singapore remain optimistic in the face of the current gloomy economic data.
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| Mr Chua: Good marketing strategies coupled with trusted products are key. |
"Despite the tough market conditions, we are still hopeful about ramping up sales and venturing into new markets. Good marketing strategies coupled with trusted products are the key determinants to overcoming this challenging environment. We are confident that we will be able to cope," said Mr Chua Teck Hiong, Vice President of Business Development at Progeniq, a company that develops hardware accelerator cards used on high-performance computing platforms.
Some have observed that the economic impact will vary depending on the market segment. "The current financial meltdown is impacting every business large or small worldwide and we have yet to see the bottom of it. However it's not evenly impacted," said Mr Greg Hauw, President and Chief Executive Officer (CEO) of online security software provider Ohanae. "The market segments that are not subject to the financial crisis are the government, education and military industries."
Certain types of services also remain recession-proof, according to Mr Daniel Ang, CEO and founder of LGA Telecom. "In both good and bad times, communication goes on," said Mr Ang. "And as an alternative service provider, LGA Telecom is in a good position to offer savings and value as companies would prefer not to buy services from incumbents in times like this."
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| Dr Lai: We will continue to expand but exercise restraint against over investment. |
Caution, however, remains the watchword. "We will continue to expand in promising markets, but exercise restraint against over investment," said Dr Lai Kok Fung, co-founder and CEO of BuzzCity, a developer of global wireless communities and consumer services.
Mr Leonard Lin, Managing Partner of TYLER Projects, a company which does web-based applications for social networking sites like Facebook, agrees. "The challenge for all of us is to expand market share while keeping costs under control," he said. "Costs will be paramount to customers and also to us."
Mr Steven Lim, managing director of knowledge management specialist RSTN Consulting, believes that flexible pricing strategies will help customers who are counting costs. "For example, a rental/leasing scheme or a pay-as-you-use scheme can help customers continue to do business with us," he said.
Staff and company morale are another important area, said Mr Lim, who has a strategy in place to avoid retrenchments. "We will implement a flexible working schedule if the crisis becomes really bad: whereby staff would work on alternate days. That way, we do not need to retrench any staff."
Mr Lin of TYLER Projects also sees the positive side to the crisis. "We actually find it much easier to recruit talent for our US and South African operations now," he said.
The experience of going through previous downturns has made many Singapore infocomm players philosophical. "From past experience, everything has a cycle," said Mr Lim. "When things have turned really bad, good times will come soon."
Learning to ride these cyclical shifts is important as change will always be part of the business landscape. "I reckon this current economic downturn is first of its kind in decades," said Mr Chua. "However, it is just temporary, and we are upbeat about the long term prospects. There are definitely valuable lessons to be learnt and I'm sure everyone learns something along the way. Prudence and commitment towards growing the business further will stand us in good stead."
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| Mr Lim: When things have reached the bottom, it will only be a while before things become better again. |
The consensus is that weak companies will fall by the wayside, but those that take the opportunity to restructure, strengthen and build resilience will make it to the next up cycle.
"I am a firm believer in the Chinese saying that if you are down, you need to change your course and your strategy, and make sure that channels remain open. Only then can the changes be sustained," said Mr Lim. "When things have reached the bottom, it will only be a while before things become better again. Hence, we must all have faith."
Buoyed by this conviction, some companies are already looking towards the end of the recession. "As a startup company, our strategy is to keep improving our technology advantage and deliver value to our strategic partners whilst keeping our burn rate low, in anticipation of the return of good times," said Mr Hauw.