At last week’s India analyst briefing, IBM outlined urbanization as a key factor driving “Smarter Cities” initiatives in India.
IBM expects India to invest about $1.2 trillion over the next 20 years in areas like transportation, energy, and public security. The second phase of the Jawaharlal Nehru National Urban Renewal Mission (JnNURM), which covers $40 billion in infrastructure-related projects, will play a key role in improving the country’s infrastructure capacity to support urbanization over the next five years. IBM is currently working on approximately 3,000 smart city projects globally; of those, about 30 pilot projects are from India.
About a year ago, I published a report on how cities are undergoing rapid transformation and creating massive opportunities for ICT vendors across Asia Pacific. Although the urbanization rate still stands at about 30% in India, it is growing fast. Also, an increasingly Internet-savvy population is demanding better citizen services. Indian state and city governments will make investments to build infrastructure on a large scale to meet the needs of their surging urban populations, creating opportunities for vendors. —
Despite the promise and opportunities that India provides for Smarter City initiatives, IBM has to deal with key challenges:
Infosys recently won a financial services systems integration deal from the Department of Post in the Ministry of Communications and IT of India worth INR 700 crore (US$126 million). In 2010, India’s Cabinet Committee on Economic Affairs approved India Post’s “IT modernization” project, which was divided into eight separate contracts worth a total of $337 million. With this deal, Infosys has won one of these eight contracts.
According to the terms of the contract, Infosys will commission both hardware and software – Intellectual Property (Finacle Core Banking and McCamish Insurance products) over India Post’s approximately 25,000 departmental offices over a period of 24 months. The contract, which is valid for seven years, includes managed services, application support, and infrastructure operations. More details about the deal can be found here.
Let’s look at what this deal means to Infosys and to India Post:
Indian CIOs are at the risk of losing business credibility if they do not improve their understanding of business technology (BT). This is the key finding from thelatest report that John Brand and I just published. For this report, we surveyed 130 companies in India, using Forrester’s BT Leadership Maturity Model as a baseline for gauging the BT maturity and readiness of Indian organizations. Our survey revealed a surprising level of consistency and positivity about BT among Indian firms, regardless of organization size, type or industry.
This was especially surprising given that BT is a relatively new concept in emerging markets. When we asked CIOs at Indian organizations to define BT in their own words, the responses displayed an overwhelmingly enthusiastic and optimistic view of BT; the most common theme centered on the value of BT as a general principle. However, many topics that were widely cited in self-assessments from CIOs in more mature markets like North America, Europe, and Australia/New Zealand were all but ignored by Indian CIOs, including time-to-value, market differentiation, communication, and governance. As Indian CIOs have not long been exposed to the general concepts of BT, Forrester believes that inflated self-rankings are mainly attributed to a lack of understanding of just how comprehensive BT is.
The report helps answer key questions such as:
· Why are Indian CIOs remarkably consistent in their BT views and attitudes? And is this really just due to a common tendency to inflate their own BT maturity?
The most critical factor driving the Indian public sector over the next five years will be India’s 12th national five-year plan, which covers the period from 2012 to 2017. I have just published a report on the plan that provides a comprehensive review of India’s new government spending framework and what it means for ICT vendors looking to successfully position for success.
Forrester estimates that India’s public sector IT purchases will grow at a CAGR of 14% between 2012 and 2017, reaching $108.5 billion in 2017. In 2014, we anticipate a decrease in government spending due to parliamentary elections — but spending will pick up after the election, as maintaining GDP growth will be on the agenda of any new government. We believe that massive infrastructure investments and increasing citizen expectations will fuel public sector IT in spite of the 2014 parliamentary elections. Citizens are pressuring federal, state, and local government to become more proactive and interactive and to provide services in a more organized and user-friendly manner. A recent Forrester survey of government IT buyers in India spotlighted this heightened focus on citizen services:
Huawei hosted about 160 industry and financial analysts at its ninth annual analyst summit in Shenzhen, China in April 2012. The main takeaway for its consumer devices business was that consumer devices complete the end-to-end pitch for Huawei. Huawei showcased its growing capabilities across the wireless industry value chain. Most notably, Huawei made a foray into the smart devices domain with its own brand of smartphones and tablets. In 2011, Huawei shipped 20 million smartphones and 60 million mobile broadband devices like dongles. The smartphone market is already overcrowded with heavyweights such as Apple, Samsung, Nokia, and Motorola; thus, it might seem that Huawei may not be able to make a very profitable business from selling these devices. However, we believe that this move will bring indirect benefits to Huawei’s core Carrier Network division in the following two ways:
It spurs the uptake of smart mobile devices. Among all companies, Huawei is best suited to leverage manufacturing capabilities in its homeland, China, to mass-produce smart devices. Moreover, as it can manufacture processors in-house through its HiSilicon subsidiary, it can control and reduce the overall price of these devices. As price is a major buying criterion for consumers in regions like China, India, and the Southeast Asian countries, Huawei will be able to expedite the uptake of devices in these countries. Subsequently, the demand for data will increase and telecom operators in these countries will need to upgrade or roll out new technologies and networks (HSPA+, TD-LTE, FDD-LTE, dual-mode networks, etc.). This is where Huawei will benefit, as it will be able to position itself as an end-to-end supplier for telecom operators including hardware, professional and managed services, security solutions, servers, and storage.
I have recently published a report on enterprise mobility in India. Improving mobility infrastructure, including networks and devices, and business and workforce demand are fueling the growth of mobility within organizations. Mobility is being used not only to connect with customers, but also to connect with suppliers, partners, and employees. A few key takeaways from the report are that:
Interest in advanced mobile-enabled applications is increasing. There is a great impetus among enterprises in India to move beyond only mobile-enabling basic applications such as email, IM, contacts, and calendar. Twenty percent of enterprises plan to mobile-enable advanced applications like location-based services in the coming 12 to 24 months, while 37% of enterprises want to mobile-enable customer relationship management.
Mobility is among the top enterprise priorities for 2012 and investment is set to rise. For business decision-makers at enterprises and SMBs in India, provisioning mobility is one of the top three priorities in 2012. As a result, investment in all aspects of mobility — such as mobile devices, applications, middleware, and services — will increase.
The workforce wants employers to support mobility at work. The consumerization of smart mobility devices like smartphones and tablets is beginning to have an impact on the enterprise front. More than 60% of employees want to use smartphones at work.
Airtel launched India’s first 4G LTE services in Kolkata yesterday. Airtel delivers the service using TDD technology, making it one of the few operators globally to launch a TD-LTE network. The majority of commercial LTE launches are still based on FDD technology, which begs the question: What impact will TDD have on the LTE landscape? Will TD-LTE get support from equipment manufacturers, or will it suffer a fate similar to that of WiMAX? What does it mean for operators? I believe that TDD will affect the entire mobile ecosystem. Here’s how:
Price parity between paired and unpaired spectra. Both paired and unpaired spectra will be viewed as media that deliver wireless service irrespective of the underlying technology; this will drive price parity between the spectra. The dichotomy between the FDD spectrum (used primarily for coverage) and the TDD spectrum (mainly for capacity) will disappear as technological advancements make it possible to achieve similar capacity and coverage on both spectra. Consequently, the “spectrum crunch” may diminish, as any spectrum will be satisfactory for the deployment of mobile broadband services.
I presented the keynote at the Biztech2 event in Mumbai last week. It was a big evening, as almost all key Indian CIOs were present at the event. The theme of my keynote was “The Empowered BT CIO,” which triggered some interesting thoughts, as all of the discussions that I had after the presentation were mainly around “business” with hardly any mention of “technology.” Below are the key points mentioned by CIOs in my discussions with them:
“We do all the work and business leaders take all the credit. But if something goes wrong, we are the ones who get the blame.”
“The money is with the finance and marketing departments, and we have to depend on them for our budget. My CEO should change this structure.”
“I don’t have followers in my organization.”
“My organization doesn’t give me the same importance as it gives the CFO or CMO.”
“Through technology innovation, I helped the company reduce IT spending and save money.”
All of these points have one thing in common: “my present role and issues that I face today.” But no one talked about their future role! My response to them was consistent, as I categorically highlighted that CIOs have two options:
Continue with your current approach — but then the future role of the CIO will be dismal.
Step up and take the challenge to shape the business. Take it as an opportunity to transform your role in the empowered world.
The Indian government announced its 2012-2013 budget on March 16, 2012. While the announced budget does not contain direct incentives to promote the domestic ICT industry, there will be adequate indirect opportunities for vendors to explore. The excise duty will increase from 10% to 12%; this will have a marginal impact on the sale of PCs (desktops, laptops, and tablets), but the government’s focus on improving infrastructure, creating efficient delivery mechanisms, and improving e-governance will provide substantial indirect opportunities to IT vendors.
The latest budget aims to achieve long-term and inclusive growth for the economy and is in sync with my upcoming report, “India’s 12th National Five-Year Plan (2012-2017) Provides Massive ICT Opportunities.” The report answers questions such as why and how technology will act as a key enabler for the Indian government to achieve its growth target.
The 2012-2013 budget will provide adequate ICT opportunities for vendors, such as:
Packaged and industry-specific applications, e-governance, mobile apps, and analytics will support the strong need for sustainable revenue sources to fund investments. A common problem that India faces today is the significant imbalance between expenditures and revenues. The budget categorically highlights the need to deliver more with existing resources; we will witness increased demand for packaged and industry-specific applications, e-governance, and mobile apps to help generate sustainable revenue to fund investments. Also, the outlay for e-governance projects will increase by 210%, from the equivalent of US$62 million to US$192 million; applications from software vendors for e-governance initiatives will present some of the most exciting opportunities in India. And the government will use various analytical tools to improve revenue sources and take corrective actions by identifying gaps.
In their Asia Pacific Tech Market Outlook For 2012 report, Andrew Bartels and Frederic Giron show that government and business IT spending in the emerging markets of Asia (including China, India, and the ASEAN countries) will reach US$180 billion in 2012, growing by roughly 13% over 2011. While emerging Asia’s IT spending is surging this year, economic obligations in the developed markets of North America, Europe, and Japan will ensure continued austerity — and limited IT spending growth. In other words, emerging Asia is clearly a lucrative region of opportunities for US, European, Japanese, and South Korean vendors looking for new sources of growth to offset lower business prospects in their home markets.
Asia is a region of highly disparate countries, with regulatory complexity, cultural differences, and a limited pool of skilled resources. These barriers to entry and expansion will compel vendors to look beyond organic growth, which is simply too time-intensive. Instead, mergers and acquisitions (M&A) of local/regional incumbents with local know-how, skills, and client relationships will increasingly be a strategic imperative for vendors targeting emerging Asia. I’ve highlighted some examples from the Indian market below, but I foresee similar trends in the overall ICT sector throughout emerging Asia: