When I moved to India about two years ago, I arrived with my own expectations regarding emerging markets. One of them was that the lack of legacy IT applications and infrastructure would make these markets an ideal place for new technologies and delivery models like as-a-service to thrive. In other words, organizations in emerging markets would “leapfrog” to new technologies without going through some of the prior technology investments witnessed in developed markets. Unfortunately, the reality is not that simple.
One of the key takeaways of my recent reports (Australia, China, India Set The Pace For Asian IT Services and The Changing Face Of ASEAN IT Services — to be published in January 2012) is that most of the growth in emerging countries will come from traditional IT services such as ERP implementation, infrastructure deployment, and system integration. Against common belief, emerging services — including cloud and mobility — will represent less than 20% the total annual growth in emerging markets in 2015.
I see several reasons for this:
Lack of governance and planning. An IT department’s role is merely one of provider of applications and infrastructure, whose main objective is to react to business needs.
Lack of internal skills. Client organizations do not have the adequate skills internally to take on complex transformational projects involving new technologies such as virtualization, business analytics, and mobile enterprise application integration platforms.
Lack of IT services culture. Most client organizations in emerging markets leverage external skills to help them with basic tasks such as hardware maintenance and software deployment.
Being based out of Dubai and so close to all the action, I was so anxious to start digging in and talking to tech vendors to get their reactions on what's happening in the region. In my latest report I decided to answer a question that's been on everybody's mind: "What’s happening to the IT market in the Middle East and North Africa (MENA) in the midst of the recent political unrest, the Arab Spring?" While it's not easy to answer the question as demonstrations are still happening and elections are still pending the report presents a snapshot of the current state of the IT market in MENA.
Following the Arab Spring, Forrester revised downward its IT spending forecasts by more than 2% for the MENA region in 2011. Many distributors were stuck with large PC inventories or had delivered inventory to their clients and have yet to receive payments. A lot of public sector projects were also put on hold as national governments were shaken by the recent political events. As a result, vendors in the region have reallocated some their resources currently located in heavily affected countries, e.g., Egypt, Libya, and Syria, to countries that need more attention, such as Saudi Arabia and the UAE. Many vendors are also taking a more regional approach and are expanding their presence from their base countries into the rest of MENA.
As we look back on the year 2011, eCommerce organizations continued to expand their global reach. A growing number of US and European retailers started shipping internationally. Brands enabled eCommerce on their own websites in new markets and launched online stores on marketplaces in multiple countries. Other companies with an interest in global eCommerce used the year to gain insights into new markets, determining which ones to prioritize in the years ahead. Rumors swirled about Amazon preparing to enter India. Or Brazil.
For many companies, however, the globalization process is still just beginning. Aside from a handful of companies that operate eCommerce sites around the world, few companies have a truly global online footprint. The growing number of US- and European-based companies that ship internationally will see revenues increase from these markets, but will start to hit a language ceiling: Close to two-thirds of online consumers in both France and Germany, for example, agreed with the statement, “I only shop from websites in my native language.” In the UK, the percentage is close to three-quarters.
2012 will not be the year that eCommerce organizations blanket the globe with localized offerings – they will, however, continue stepping into international waters. Next year we expect to see :