Photo - Jim Sailor, MD, ASEAN, IDC Asia Pacific.
According to analyst firm IDC, the coming year will be a challenging one as Malaysia deals with the impact of depressed oil prices, the introduction of GST [Goods & Services Tax] and finding its role in the Asean community framework.
IDC Asia Pacific Asean managing director, Jim Sailor, recently unveiled the company's top 10 ICT predictions for Malaysia that will impact and drive the future of the ICT industry.
Sailor said IDC has noted that innovation in technology will accelerate, while growing adoption of 3rd platform technologies - cloud, big data/analytics, social, mobile - was increasingly disrupting the ICT landscape.
Malaysian organisations are faced with the need to transform while steering past heightening economic pressures in 2015, he said. "2015 in Malaysia is shaping up to be a challenging year as the country deals with the global and local economic impact of depressed oil prices at the same time dealing with the introduction of GST and understanding the country's place within the Asean Economic Community framework."
"With so many distractions, it will be even more important for the ICT industry to take advantage of the opportunities that will come from transitioning to the 3rd Platform of Technology in order to stay competitive in disruptive times," said Sailor.
Using the latest IDC research and discussion among country analysts, the following have been identified as the key predictions for the Malaysian market in 2015.
Future Outlook: Top 10 Predictions
1/4 of CIO's focusing on the 3rd Platform will take a step back and focus on infrastructure transformation as a platform to grow
The 3rd Platform brings massive structural changes that represent an inflexion point for the CIO and the IT organisation, said Sailor.
"Although IDC views the 3rd platform to be founded on four key pillar technologies, IDC sees the long view as the continuous transformation of every single industry on the planet. Because of the vastness of this view, IDC is of the opinion that the requirements of the 3rd Platform essentially calls for an expansion of the CIO role in three key dimensions, as described below."
- Technical - Chief of Infrastructure, Chief of Integration
- Business - Chief of Innovation, Chief of Intelligence
- Leadership - Chief of Influence, Chief of inspiration
"Based on IDC's 2014 C-Suite Barometer survey, an emerging theme among CEOs across the region is now replacing the 'Cost is King' mentality to 'Saving to Innovate' as the new dominating theme," said Sailor. "IDC is of the opinion that this new mandate will be the platform that the Next-Gen CIOs will be focusing on. These Next-Gen CIOs are characterized by seeing the role of the CIO and IT organisation as being able to change the business, disrupt the industry, and to create new opportunities. IDC believes the Next-Gen CIOs will thrive as they focus on infrastructure transformation in hopes to save money for investment into innovation on the 3rd platform."
Beginning of the End: Legacy payments business models will lose Up to 15 percent of revenue from 2015 to 2020
"2015 represents a major turning point in the Asian financial industry, when traditional payments models will experience first signs of an ecosystem-driven critical decline in overall revenue contribution. Within the next five years, banks are expected to lose 8 percent to 15 percent of their revenues from existing payments businesses," he said.
"This change is driven by two factors - first, the disintermediation of formal FSIs by retail (particularly eCommerce players), as well as technology service providers (notably carriers and device manufacturers). As such, the most relevant payments solutions in the post-2015 era would stem from strategic partnerships that leverage on the comparative advantages of all three domains to create altogether new consumer incentives," said Sailor.
"Second, innovation within the regional payments space itself is providing an impetus for Malaysian FSIs to revise their pan-ASEAN engagement strategies," he said. "Combined with the solidification of the AEC charter, locally bred super-regional banks will be driven to diversify their payments propositions and align them with the economic context of each country they operate in. As business lines begin to decentralise, IDC expects the current generation of CIOs to assume the mantle of decision-maker to a greater degree. Strong technological leadership would prove to be pivotal in creating and preserving organizational synergies as new frontiers are being traversed."
More than 30 percent of CMOs will take a more proactive approach on technology to meet KPIs that are increasingly measured by customer outcomes
"While organisations are still spending heavily on traditional media for marketing and customer engagement, the use of online platforms and social media have been garnering increased attention and adoption," said Sailor. "With this shift from traditional to digital channels, organizations will have new avenues to connect to a buyer's digital universe."
"Although many traditional marketers are still dependent on manual processes and have not yet embarked on automation, IDC is of the opinion that the Next-Gen CMOs are already leveraging technologies powered by the 3rd Platform. Based on IDC's Asia/Pacific CMO Research Barometer, more than 30 percent of CMOs are only starting the journey to identify new and disruptive technologies that will aid in creating a competitive edge. With that, IDC predicts that these will be the CMOs who will be proactively looking for technologies to meet KPIs that are increasingly measured by customer outcomes," he said.
Fixed Telecom - MYR8 [US$2.23] billion, the new battlefield for strategic Telcos
Sailor said: "Fixed line telecom is expected to continue its steady growth in 2015 to MYR 9.8 billion with a year-on-year increase of 7 percent. This growth will be mainly driven by cloud adoption among enterprise users which leads to an increase in bandwidth demand, and an increase in subscribers especially in new geographical areas.
"IDC predicts there will be an additional MYR 8 billion of IT-centric addressable market for fixed line telecom providers in 2015. 2015 will also be the year where telecom service providers with the right transformation strategy will succeed in their journey to become ICT providers."
Big Data, little steps - The transformation journey begins
"IDC expects the Big Data Analytics (BDA) market in Malaysia to reach US$36 million in 2015, a 28 percent increase from the previous year with a five year CAGR of around 30 percent," he said. "By 2018, BDA spending will reach US$80 million. In terms of growth rates from 2013 to 2018, Big Data spending is growing at a much faster rate than the overall IT spending growth rate in Malaysia. This shows that the Big Data journey is gaining momentum and is expected to accelerate and contribute more to the overall Malaysia IT spending in the coming years.
"2015 will see organisations embracing the 3rd platform to help achieve their Big Data goals. Solutions/ platforms such as cloud, IoT, mobility and XaaS will be enablers for the transformation journey. IDC believes Big Data is a fundamental pillar to the 3rd platform and the potential that can be reaped from this technology will continue to transform industries.
2015 will see baby steps for Internet of Things (IoT) adoption as industries continue exploring
"According to IDC's Asia/Pacific C-Suite Barometer 2014, only 7.4 percent of enterprises in Malaysia are expected to build successful business cases for IoT and begin implementation," said Sailor. "IDC does not expect a spike in demand for IoT solutions in 2015 as it is likely that organisations across industries will only be taking baby steps as they evaluate the offerings and assess the potential returns on investment.
"These implementations likely will be tactical and focus on improving operational efficiency rather than driving competitive differentiation. Given that the Malaysian government is driving various initiatives to increase IoT awareness and adoption, and working to bring together IoT solution providers and industry players, IDC expects the government will focus primarily on IoT solutions for healthcare, education, and smart cities in 2015."
Flagship smartphone war switches battlegrounds
"According to IDC's Asia/Pacific Mobile Phone Tracker, Chinese and Taiwanese vendors held a 46 percent share of the Malaysian smartphone market across the first three quarters of 2014, compared to only 19 percent across the whole of 2013," he said. "IDC predicts that the Chinese and Taiwanese-branded phones will grow 33 percent next year, and hold a market share of 65 percent in 2015.
"While there are still plenty of Malaysians that prefer to own a premium brand-name flagship phone, many consumers are feeling the pinch after experiencing diminished returns on their smartphone investments. With living costs expected to spike this year due to GST implementation and the removal of subsidies, IDC predicts an even greater push towards marketing driven-differentiation and price competitiveness in 2015, and this will be led by Chinese and Taiwanese vendors."
Containerisation takes centre stage in Enterprise Mobility
"IDC expects Malaysia's enterprise mobility market to continue to mature in 2015," Sailor said. "Customers' mentality will gradually shift from a device-centric style of management - deployment of Mobile Device Management (MDM) solutions focused on the number of devices they could manage, to a content and application-centric style of management - look at managing different types of applications or content environments.
"IDC's 2014 Enterprise Mobility MaturityScape shows Malaysia still in the early stages of mobility deployments, but with the maturing customer mindset, IDC expects to see Malaysia maturing significantly in 2015. While the Mobile Enterprise Management (MEM) market will start to gain traction, IDC cautions that security issues will remain one of the largest barriers to this evolution. The emerging solution to this is containerisation, which is commonly built into MEM solutions, but not always into the MDM solutions, which are largely present in the market today."
Increasing attacks will drive the demand in Managed Security Services, but talent issues need to be resolved for growth
"The importance of security has vastly increased with the rise of the 3rd Platform," he said. "As enterprises move to the 3rd Platform, the network paths for attackers to breach an organization are also expanding. With cyberattacks on the rise in the country, organisations see the increasing sophistication of attacks as a top security challenge. IDC believes it will be more viable to outsource the security operations to managed security services providers (MSSPs) instead of building a team of IT security as in-house capabilities. While organizations experience different security maturity levels, leveraging on MSSPs can be part of the progress toward a more encompassing security posture. IDC also sees the upcoming AEC as an avenue for further growth expansion as MSSPs will be able to leverage on a regional talent pool of security expertise to address the talent shortage issue in the country."
ASEAN Economic Community (AEC) Implementation will move up on the priority list for enterprises and government
"Implementation of an integrated ASEAN Economic Community (AEC) is scheduled to happen in December 2015," said Sailor. "While there are many that doubt whether full integration can happen in that timeframe, businesses and governments will need to start making adjustments to take advantage of opportunities created by the AEC. Whether or not ASEAN is able to cross all of the necessary hurdles required for establishing a truly free market, there are many elements of integration in place already and more that will come into effect in 2015.
"With Malaysia chairing the ASEAN group, 2015 will see Malaysia working to solidify its role as a regional leader in ICT infrastructure development and government-to-enterprise cooperation, and government will also exert influence in pushing ASEAN's ICT objectives to the forefront. Organisations that embrace the change and look for advantage in the new reality will gain a competitive edge over those that choose to keep their heads in the sand."
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