CAIRO: The economic crisis is projected to result in a $1.7 trillion loss for the global IT sector between 2009 and 2013, said Margret Adams, research director of IT services for International Data Corporation (IDC).
In 2009 alone, $250 million of revenue was lost in the IT sector, she added, speaking on Aug. 2 at the IDC IT Managers Forum 2010 in Cairo during her presentation entitled, “The New Normality for Technology Buyers.”
Adams indicated that while worldwide global GDP stood at 2.7 percent in 2009, that figure was between two and three times larger in emerging markets. Given that IT spending generally represents two to three times GDP growth, the IT sector represents a huge prospect for companies in places such as Egypt.
For the Middle East and Africa, between 2009 and 2011, aggregate IT spending is estimated at $33 million. The whole sector, she added, is worth $1.88 billion, and between 2009 and 2010, the sector grew 11.6 percent.
Between 2008 and 2012 the global IT sector will expand: by 1.1 times in terms of staff, 1.3 times for services, 3 times in terms of IT users, 3.6 times for non-traditional devices and 5.1 times in terms of information exabytes (EB).
As far as “intelligent communication” is concerned, Adams highlighted, that globally “smart phones” will supersede laptops in the coming decade. According to current statistics, there are 500,000 mobile applications, alongside 630 million laptops and 7 billion communication devices in general.
This will have a major impact on the “digital universe,” she added: in 2009 there was 1 EB of data, while in 2020 there will be 25 EB. “This represents enormous potential for the data storage industry as well as those specializing in information analysis,” Adams pointed out.
By 2020 there will be 32 million employees working in IT, which will require not just hiring new staff, but also branching into new areas, which will require new types of specializations.
Looking back prior to 2008, managers in the IT sector were channeling 40 percent of spending on new initiatives, with IT infrastructure taking the top spot, followed by customer care, then IT security and rounding out the list with product development, Adams noted.
The financial crisis, however, “led to a shift in CIOs’ focuses in 2009, resulting in data center consolidation, increased virtualization, collaboration, business analytics, more IT governance, security and compliance being the main focus of attention.”
Beating the budget crunch
Despite the grim news, centering on a slowdown in the sector, Adams stressed that signs of change are on the horizon.
“The IT sector is on the point of inflection” due to the economic crisis and recent developments in technology, she explained.
To be sure, she said, 49 percent of managers told IDC that they anticipate a higher IT budget for 2010.
Even though this is relatively optimistic news in the current economic context, it does mean that another 51 percent of IT companies foresee either a decline or freeze in the size of companies IT budgets.
Matt Watts, EMEA strategic advisor for NetApps, provided a presentation, which was addressed especially toward those 51 percent on how to drive down costs when faced with budgetary dilemmas.
In his estimation, the financial crisis of 2008 was akin to the dotcom bubble burst of 2001 for the data IT sector in many ways. “In 2008, overall the crisis felt very much the same, with one notable exception, however: there wasn’t much excess capacity to bring online this time,” Watts said.
The outcome of this dynamic, he pointed out, which he had never witnessed in spite of having advocated the approach for a long time, was for companies to begin deleting data.
Freeing up data storage capacity “resulted in a delay in purchasing decisions,” he said.
For his part, there is a “staggering” amount of unused data in companies’ storage capacity, Watts underscored.
Although IT budgets are either flat or declining, he stated, 50-100 percent growth in data volume has been predicted.
“Once we were talking about terabytes, and now terms such as zetabytes and even optabytes are being used,” he noted.
He concluded by advocating cost reductions infrastructure in the short term as well as virtualizing all storage; and in the long term, creating one data management platform and, amongst others, one hared storage infrastructure is preferable.
Green IT
Green IT was a second major theme of the IDC IT Forum. Ragy Raouf, territory manager for APC, Schneider in Egypt, told Daily News Egypt in an interview that green IT has been one of the main positive outcomes of the recent financial crisis.
The financial crisis has been an opportunity for green IT, Raouf explained, because when a business needs to cut costs, it seeks to do so through increasing efficiency — which is the goal of green IT.
“In green IT, the focus is not on how power is generated, but in increasing efficiency of the machines through better cooling for example,” he explained.
In Egypt, he said, there has been a move toward green IT, however, it has been somewhat impeded by the vast tracts of land available to companies. If the availability of land is limited, then companies will be forced to create denser, more efficient machines, for example by consolidating servers, Raouf explained.
Yet, if land is widely available and cheap, which is the case in Egypt, then it is simply cheaper to expand with standard equipment rather than with more modern, efficient equipment which require less space, he stated.
Denser, more performant equipment invariably drives up the cost, and Egyptian consumers are very cost conscious, he said. Nevertheless, Raouf indicated that Egypt has been making progress towards green IT.
More companies are using the ISO 27001 standard for IT equipment, which is the highest international standard, he indicated.
“Just eight years ago, people were building unbranded servers in Egypt, now companies such as IBM are building servers in the country,” he stated.
