As Many as 50 Per Cent of Technology Suppliers Will be Eliminated From Competitive Landscape by End of 2005
Australia's ICT market will increase by 4 per cent from 2003 to 2004
SYDNEY DEC 3, 2003 — THE IT INDUSTRY has entered a period of global accelerated job losses and vendor consolidation which will last through 2005. As many as 50 per cent of technology suppliers will be eliminated from the competitive landscape, warned leading research and analyst firm Gartner Inc, in its Top Trends for Asia Pacific in 2004.
Gartner today said that the days of "the customer is king" will shortly end as market forces crush the weaker players. What is today a buyers market for IT products is likely to turn into a sellers market within the next year. Most IT sectors will be dominated by a few, large vendors that will not be governed by cut-throat pricing.
"As many as 50 per cent of technology suppliers will be eliminated from the competitive landscape," said Bob Hayward, Senior Vice President at Gartner Asia Pacific. "For example there are currently more than 2,300 publicly traded software companies in the world, that's about 50 to 60 per cent too many. For those companies that survive, this means that they can focus over the next several years on providing quality and not be price driven."
Gartner advocates that the long-term outlook for IT is brighter. It is predicted that Australia's ICT market will increase by 4 per cent from 2003 to 2004. Enterprise spending on ICT in Australia is the second highest in the region. Combining Australia and New Zealand together would see a larger enterprise ICT market than all of ASEAN combined.
Hayward said that companies will loosen their purse strings next year with CEOs, CIOs and IT chiefs investing in technology to make their business stronger and more innovative as IT assets, acquired pre-Y2K, reach the end of their lifecycle and must be refreshed.
"The combination of business transformation with key technology advances, architectural changes, market forces and best practices will lead to a strong recovery for IT in the near future. We are on the cusp of the most fundamental changes to business processes driven by technology advancements since the Internet. However, the resulting huge impact will be both positive and negative," said Hayward.
"Massive productivity improvements, significant increases in demand and enormous infusions of innovation will occur but on the negative side, hundreds of thousands of workers in developed economies will be displaced, many of them currently holding high-paying, white-collar positions."
Gartner predicts that outsourcing will continue to accelerate and that by 2005 the number of enterprises entering new outsourcing relationships will increase 30 per cent. "This trend will be driven by organisations' desire to focus on three key areas: core competencies, the need to access 'best-in-breed' capabilities and the ongoing requirement to remove costs from their existing operations," said Hayward.
In the software industry, Linux and alternatives to Microsoft will continue to make headway, but mainly at the cost of UNIX. In 2004 90 per cent of large organisations in Australia will be using some form of open source software of which Linux will be some part of. There will be a greater shift of users from Unix to Linux than from Windows to Linux.
In 2004, IT security organisations will focus on vulnerability shielding, mitigation and practices that improve the overall resiliency of IT resources and business processes. Enterprises that implement a vulnerability management process will experience 90 per cent fewer successful attacks than those that make an equal investment only in intrusion detection systems.
"Intrusion prevention rather than detection will be key as IT security projects and spending will be driven by the need to improve resiliency in the face of rapidly spreading external threats, support emerging Web-services-based applications and provide more-efficient, functional identity and access management capabilities," said Hayward. "Intrusion detection technology adoption has peaked and will be eclipsed by intrusion prevention technologies that are based on deep packet inspection. These technologies are now mature enough for initial production deployments in 2004.
Gartner also predicts that standards and regulations including the Sarbanes-Oxley act in the USA, BASEL II in the global financial industry and the adoption of International Accounting Standards in Australia will start to have global knock-on effects. Compliance is an underestimated issue for many companies, and as they start to play on a global stage, many of the factors and metrics that need to be put in place have not even been considered by local companies.
About Gartner Dataquest
Gartner Dataquest is the recognised leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
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