Published on the 23/12/2009 | Written by Newsdesk

2010 will be a year of modest recovery for the IT and telecommunications sectors, but recovery will not mean a return to pre-recession conditions, says IDC New Zealand.

The industry research firm has released its ‘ICT Top Ten predictions’ for the coming year, saying it believes New Zealand will begin to see deep industry transformation, driven by growth in ultra-fast broadband, a business and consumer shift to online services, new government and regulatory initiatives and an explosion in mobile devices.

While 2009 proved a tough year with tightened budgets and a focus on survival, IDC says 2010 will see some of the pressure released, although market volatility will remain a concern.

“Technology investments will continue to be one of strict cost control, with an emphasis on reducing complexity, and optimising or ‘sweating’ existing assets. Cashflow and liquidity will also continue to be constraining factors for growth, particularly in the small to medium business market,” said IDC New Zealand country manager Ullrich Loeffler.

The firms New Zealand ICT Top 10 Predictions for 2010 are:

• From an understood recession to an unknown future: 
continued prudence amongst increased opportunities for 2010 – Economic recession has bought into focus a long term underlying trends: the need to get better value from IT and telecommunications investment. On the downside it means that pricing pressures in traditional ‘commoditised’ areas such as calling will continue to grow as tight cost control remains top priority. On the upside it will focus attention on new solutions, delivery methods and product/services packaging.

• Consolidated buying to become the new Government savings plan – Government actions will significantly shape the ICT industry this year. The Government’s savings plan will lead to centralised procurement: that means greater risk and opportunity for the vendor community. The Government will further remain in the spotlight for its leadership in the national Ultra-fast-Broadband plan.

• We will see deconstruction and reconstruction of the ICT industry for growth – As the fundamental transformation of the ICT industry continues, IDC predicts continued market consolidation throughout 2010. Infrastructure sharing – to improve cost/risk ratio of Capex investments – the emergence of open ICT alliances and strategic collaboration between technology providers under a ‘best-of-breed’ aggregator approach, will reshape the competitive landscape in the NZ ICT community.

• Use of ICT will become critical to CO2 reduction strategies: As the targets for greenhouse gas reductions are set, the rhetoric will shift to the reality of how those targets can be achieved. IDC believes ICT has a critical role in supporting CO2 reductions with productivity gains, as outlined in IDC’s ICT Sustainability study presented to the UN at the Climate Change Summit in Copenhagen. In New Zealand, emission targets can be a catalyst to bring together currently disparate initiatives in rural broadband, datacentre investments, agri-business, and cloud computing, amongst others.

• The Government’s ultra-fast broadband initiative will need to be restructured – IDC predicts that the government’s plan for delivering a national UFB network to 80% of New Zealanders will be amended, although its core fibre objectives will be retained. IDC believes the current approach falls short in addressing: 

> The need to achieve economies of scale 
> The complexity of managing and integrating 33 disparate networks and network owners
> A plan for managing migration from copper services to fibre 
> Prevention of network overbuild by utilising existing networks and civil works – specifically those of Chorus
> Encouraging industry co-operation to ensure the dark fibre is widely used, rather than competed with by parallel network competition

• Fibre for schools policy will put the use of ICT in education under the spotlight – The Government’s 2009 broadband strategy to connect fibre networks to 97% of New Zealand schools over six years will shift the focus to how ICT is currently managed in education. The debate will see a move away from the connectivity discussion to the consideration on how the cultural, training and school funding barriers can be overcome to ensure fibre becomes a powerful education enabler rather than an under-utilised pipe.

• Technologies facilitating customer care and retention strategies will receive VIP treatment – A key learning for companies during the economic turmoil is the importance of retaining its current customer base. IDC predicts customer care services increasingly being ‘homeshored’ on a unified, cloud-based CRM platform. Reduced cost of customer service as well as fast and agile scalability of services are some of the benefits fuelling this online CRM adoption in 2010.

• Mobility will enter a new growth curve – IDC sees 2010 as marking the beginning of a fundamental shift in the way New Zealanders interact with mobility and ‘ubiquitous networking’. As companies indicate increased spending on mobile broadband and data in 2010, IDC expects to see the emergence of new mobile applications, devices and pricing plans allowing greater flexibility and ‘prosumer’ use.

• The adoption of Cloud Computing will take baby steps amongst trophy wins – IDC expects 2010 to be the year when customers start to take a hybrid approach to cloud adoption. Although, IDC expects to see some ‘trophy wins’ in 2010 it will still be baby steps in the bigger scheme towards the full cloud potential. Vendors will be challenged to position themselves as cloud contenders while not losing sight of the short and mid-term market opportunities which remain to be predominantly on-premises based.

• 2010 will see an increasing number of ‘Managed Business Outcomes’ contracts – With increased business-alignment in IT spending, IDC expects that risk-reward contract terms become more business outcome-focused. The change in engagement structure will force vendors to take on more business outcome risks, transforming the relationship to strategic partnering rather than technology supply.