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IT spending outlook 2013

o Sheila Lam
19.02.2013 kl 20:58 | Computerworld Hong Kong

Hong Kong enterprises are more optimistic than their regional counterparts on the business outlook for 2013, but available IT resources may not fully support such growth.


Hong Kong enterprises are more optimistic than their regional counterparts on the business outlook for 2013, but available IT resources may not fully support such growth.

This is the major finding from the latest IT Spending and Priorities 2013 Study conducted by Computerworld Hong Kong and Enterprise Innovation.

The online study surveyed more than 120 IT practitioners, including IT managers, executives and business leaders from various industries. The survey covers major Asia markets including Hong Kong, Indonesia, India, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Despite global economic uncertainty, Hong Kong enterprises continue to anticipate business growth. The survey shows 37% of Hong Kong IT leaders expect their business to expand in 2013. They are more confident on growth compared to their regional peers, of which only 33% are expecting growth. (Figure 1)

Regional IT leaders are more conservative on upcoming business growth, with 26% of them expecting businesses to focus on cost control with limited growth. In Hong Kong only 21% felt the same.

HK lags in IT resources

Although local enterprises are more confident about business expansion in 2013, the survey indicates a significant gap in IT budget expectations between Hong Kong enterprises and those in the region.

Only 29% of local IT leaders expect an increased IT budget to support the anticipated business growth. Among regional IT executives, 38% expect more IT resources in the upcoming year. (Figure 2)

The majority of Hong Kong IT leaders (60%) expect their IT budgets to stay the same or decrease from last year, but only 54% from the region stated the same.

The survey finding dovetails with Gartner's latest IT spending forecast. The research firm said in a statement that IT spending in Asia Pacific is forecast to reach US$733 billion in 2013, a 7.1% increase from the previous year. This forecast growth is slightly higher than 2012, when regional IT spending grew by 6.7%.

A vertical view

From a vertical perspective, banking and finance as well as logistics and transportation appear to suffer the most from shrinking IT resources.

With the recent volatility in the financial industry, it's not surprising to see 36% of IT leaders from this sector expect a budget cut in 2013. Also expecting a decline in IT spending is the logistics and transportation industry, with 43% indicating a decrease in their IT budgets. (Figure 3)

Meanwhile, growth in the regional IT market is expected in retail and manufacturing industries as well as the IT and technology sector, with 32% and 45%, respectively, expecting an increase in IT budgets.

The rising number of Chinese travelers and shoppers are expected to fuel the growth of IT spending in the retail industry. The competitive telecom industry and maturing cloud computing markets are expected to be the driving force for firms in these industries to increase their IT budgets.

A dimming hiring outlook

In addition to shrinking IT resources, IT staffing is another major challenge for Hong Kong's IT leaders in 2013. The enthusiastic hiring atmosphere seen in 2012 has changed considerably this year.

Only 29% of Hong Kong enterprises expect to hire more IT staff, a drop of more than half from 2012. The CWHK study last year showed 47% of the respondents were planning to hire immediately, with 18% of them expecting to hire within six to 12 months, meaning 65% of local IT managers indicated plans to hire more staff. (Figure 4)

This year, a majority of IT executives (59%) expect to maintain their current level of staff. The percentage is more than double from last year, when only 20% IT leaders expected a static headcount. Expectation of staff cuts also slightly increased from 3% last year to 4% in 2013.

Cloud becomes a viable option

With limited IT budgets and staff to support anticipated growth, spending priorities among Hong Kong enterprise are expected to focus on technologies that enable optimization.

The demand to do more with less is one of the major factors driving technology investment among local enterprises.

Cloud computing, which operates under a shared infrastructure to provide dynamic offerings and scalable pricing, matches the need for flexibility among many local enterprises. Unsurprisingly, cloud is the top investment priority.

Interestingly 39% of Hong Kong respondents in the CWHK study named cloud computing as one of their top three technology investment areas. The regional IT leaders also shared a similar view towards cloud computing investment, with 44% of them rating it as one of the top investment priorities. (Figure 5)

Cloud computing, in the past few years, has matured from being a market discussion topic into a viable technology option. According to Asia Cloud Forum's The Asian State of the Cloud 2012 online survey, 33% of respondents have adopted cloud computing. The survey indicates the momentum for cloud adoption is expected to continue in 2013.

Apart from cloud computing, other technology investment priorities remain different between Hong Kong and regional enterprises.

Hong Kong has a high mobile subscriber penetration rate--225% according to the Office of the Communication Authority (OFCA)--but investment plans in mobile technologies among local enterprises (29%) are not rated as high as those in the regional average (36%).

Another technology area where local enterprises lag behind is business intelligence and analytics. Only 22% of Hong Kong IT leaders rated these as top investment priorities, while 36% in the region prioritized BI and analytics.

Datacenters drive investments

Driven by the government's encouragement to turn Hong Kong into a regional datacenter hub, investment in datacenter infrastructure is rated at a much higher priority among Hong Kong enterprises (31%), as compared to those in the region (27%).

Limited land supply is a constant challenge in developing a datacenter industry in Hong Kong. However, the datacenter industry has been vibrant in the past six months.

In July, Equinix acquired Hong Kong-based Asia Tone to expand its market presence in greater China. On the same week, New York-based Digital Realty announced its partnership with Savvis to rebuild a datacenter at Tseung Kwan O (TKO).

UK-based Global Switch also entered the market in November with plans to invest HK$2.8 billion to build a datacenter at TKO. In addition, Apple was reported to be building its first datacenter in Hong Kong.

Other technology areas where Hong Kong enterprises plan to outspend their peers in the region are virtualization (20%) and networks (16%). With more enterprises and service providers building their datacenters in Hong Kong, spending on infrastructure-related technologies are expected to be a higher priority.

Do more with less

The survey data reveals a serious challenge for local IT leaders, who are pressured to do more with less. With limited IT budgets and staff to support anticipated growth, Hong Kong IT leaders must maximize their resources and spend intelligently in 2013.

Keywords: Business Issues  
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