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Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.
The Changing Landscape. Industry’s focus in 2008 & Beyond
By:
CYRUS DARUWALA
MANAGING DIRECTOR, ASIA PACIFIC.
FINANCIAL INSIGHTS – AN IDC COMPANY15th August 2007
2© 2007 IDC
Agenda Agenda
TODAY’S DISCUSSION POINTS
• About IDG / IDC / Industry Insights
• The Asia/Pacific Overview
• Drivers for Change in Manufacturing
• Drivers for Change in Financial Services
• Conclusions
3© 2007 IDC
Who We Are
� MANUFACTURING INSIGHTS� RETAIL INSIGHTS� GOVERNMENT INSIGHTS� LIFE SCIENCES INSIGHTS� ENERGY INSIGHTS
IDG VENTURES ASIA PTY LTD
4© 2007 IDC
The Current Environment in Asia PacificThe Current Environment in Asia Pacific
• Earnings for most companies is the highest it has been in years.Next year will be even bigger !!
• Generally accepted now that the economies have recovered – all major equity indices and indicators are up
• Still some concern about long-term sustainable economic growth in light of recent world events, specially in Thailand and Indonesia
• The law gets tougher everywhere !
• Increasing demands from the progressive and ever more sophisticated customer base
• Unfortunately, cost is still a major considerations & some institutions are focusing more on bottom line savings than top-line growth.
• IT governance in the spotlight - who should own the budget and decision making?
© 2007 IDC
6.0%6.8%
9.8%
1.9%
3.3%
1.9%
U.S. WesternEurope
Japan China India Russia
The Economic DivideThe Economic Divide
2007 GDP Growth in %
6© 2007 IDC
4.9%
22.1%
13.7%
1.3%
5.6%5.0%
12.3%
22.2%
19.7%18.8%
5.5%5.0% 5.1%
1.3%
WW U.S. WE Japan China India Russia
IT
Telecom
The Digital DivideThe Digital Divide
2005–2009 CAGRs
7© 2007 IDC
Client-Server,
Data-Warehousing, Process- automation,
Middleware
Centralized - delivery,
Wider access,
Hosted-services,
Outsourcing
Utilities-model,
Convergence,
STP, SOA
Mid-80s–Mid-90s1970s–1980s Mid-90s–2004 2005–2010+
10 years10 years 10 yearsTransactional;
internally focusedDepartmental
systems spread unchecked;
transactional focus
Growth, Consolidation
& Decentralization
Growth &Efficiency
Consolidation,Complexity Increases
Dynamic IT Transformation
Mainframes,
Applications,
Silos.
~10 years
Current State of institutions in Asia Pacific
���
Institutions in AP are at various stages of evolution
�
8© 2007 IDC
2007 APAC IT Spending by Segment2007 APAC IT Spending by Segment
0
5
10
15%
0 10 20 30 35
Pulp/Paper
Metal
Aerospace & Defense
Chemical
CPG
Automotive
Manuf’g
FSI
Growth (2007/2008)
Relative $$$ Size of 2007 IT Spend (in Billions)
>$30B
9© 2007 IDC
2007 APAC IT Spending by Sub-Region2007 APAC IT Spending by Sub-Region
0
5
10
15
20
25
30%
0 10 20 30 40
ANZ
India
SoutheastAsia
Korea
ANZ
GreaterChina
Growth (2007/2008)
Relative Size of 2007 IT Spend
InBLN
10© 2007 IDC
We will also see Public Sector Grow – IT Spending Forecast 2007-2011We will also see Public Sector Grow – IT Spending Forecast 2007-2011
Compounded Annual Growth Rate of 7.9%
2007
2011 I
ncr
-
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
PR
CA
ustra
lia
Indi
aKor
eaTai
wan
Mal
aysi
a
New
Zea
land
Sin
gapo
reTha
iland
RO
AP
Hon
g Kon
gIn
done
sia
Phi
lippi
nes
Vie
tnam
2011 Incr
2007
11© 2007 IDC
Asia/Pacific Public Sector Trends – IT Spending by Broad SegmentsAsia/Pacific Public Sector Trends – IT Spending by Broad Segments
2007
58.4%
8.7%
32.9%
Government Healthcare Education
Copyright 2007 IDC. Reproduction is forbidden unless authorized. All rights reserved.
We wanted to poll in the industry and get their views.
The CXO Survey
13© 2007 IDC
Survey of 1,000 Institutions (1840 CXO’s)Survey of 1,000 Institutions (1840 CXO’s)
ROAP (5.4%)
India (24.1%)
Korea (11.1%)
Southeast Asia
(24.4%)
ANZ (6.9%)
Greater China
(28.1%)
N = 998
• This survey included CEO’s, CIO’s and CFO’s
• Companies include large conglomerates & SME’s
• Manufacturing & FSI
14© 2007 IDC
IT Spend by IT Category - SmallIT Spend by IT Category - Small
Services (16.3%)
Software (7.6%)
Hardware (76.1%)
Total = US$14.0B
15© 2007 IDC
IT Spend by IT Category - Medium
Services (39.6%)
Software (18.1%)
Hardware (42.4%)
Total = US$19.1B
16© 2007 IDC
IT Spend by IT Category - Large
Services (41.9%)
Software (19.1%)
Hardware (39.0%)
Total = US$25.3B
17© 2007 IDC
Drivers of change in ManufacturingDrivers of change in Manufacturing
� New sources for revenue growth
� Profitable growth remains elusive for many
� Key strategic objectives: innovation & productivity
� Demand, capacity & inventory variability still of concern
� High costs of inputs (eg. steel & other base materials) + energy
� Finding cost-effective and efficient distribution channels
� And most importantly “Effective Supply Chain Mang’nt”
18© 2007 IDC
Drivers of Change in the Financial Services industryDrivers of Change in the Financial Services industry
• Core Banking Systems Transformation
• Channel Investments
• Customer Centricity Initiatives
• Profitability and Performance Management
• Regulatory Compliance and Risk Management
• Business Process Automation/Reengineering
• Payments
• Transaction Banking Investments
• Selective Sourcing
• Security and Fraud Management
19© 2007 IDC
What presently takes up most of your time & moneyWhat presently takes up most of your time & money
Others (11.5%)
Distribution
processes (9.0%)
Accounting &Reporting (3.8%)
Transaction-
related processes
(14.1%) Core Processing /Production (51.3%)
Customer Acquiring
(10.3%)
20© 2007 IDC
So it comes’ down to your Products, People and ….. most importantly - your Business Processes
Business Intelligence (BI)Business Performance Management (BPM)Customer – Info-Management Business Analytics
Analytic Applications Data Visualization
Corporate Performance Management (CPM)Enterprise Performance Management (EPM)
Business Activity Monitoring (BAM) ETL
Data Quality Profitability Assessment Production ReportingQuery & Reporting Enterprise Reporting
Data Warehousing (DW) Ad-hoc AnalysisPortals Advanced Analytics Dashboards
Data Mining KPI’s balanced scorecards
DIFFERENT INSTITUTIONS CALL IT DIFFERENT THINGS !
21© 2007 IDC
“One does not track profit, one tracks processes and performances and productivity which eventually lead to profitability – Cyrus”
– Firstly understand and create matrix / scorecards to assess lines of business and their reciprocating IT performance at granular level,
– Address the: chart of accounts, general ledgers, and ERP
– Address the: Financial, operational, IT and customer data,
– Make Budgeting and planning a focus
– Look for changes in the proposition of vendors around this space
– Bringing accurate and relevant data to those who require it. Integration and seamless communication is key
– ‘Business Process Assessment, and Re-engineering’ is the most important element of tracking productivity & performance.
– Unfortunately even the best initiatives fall prey to politics and turf wars.
Productivity, Performance & Profit Issues
22© 2007 IDC
A View of Enterprise BPM
A knowledge repository with all of the process maps, business rules, organizational and skill models, and decision trees together with related reference data and historical changes�A workflow engine to drive all of the manual procedures and to handle exception
processing�An Enterprise Application Integration engine, which acts as the backbone for straight-through processing (STP)�Content management to capture, store, retrieve, and manage version control for all document images and other desktop documents�Transaction repositories to store the historical and statistical analytics�Dashboards and other graphical user interface tool kits to allow end users to interact with business process management systems�
23© 2007 IDC
Map ..Where are you in a typical BPM Roadmap ?Map ..Where are you in a typical BPM Roadmap ?
Full profitability reporting,Advanced customer metrics,Service metrics,Basic HR
Level 1 Level 2 Level 3 Level 4 Level 5
Traditional,
Lacks integration,
Hierarchical
Risk adjusted returns,Customer metrics,Segmentation
Balanced scorecards,Full integration to planning,Stakeholder values,Personal performance assessments
Linked to plans,Integrated GL,Traditional risk management
ST
RA
TE
GIC
AL
IGN
ME
NT
Cost Reporting
Cost Reporting
Risk & Customer
Centric
Risk & Customer
Centric
Profitability Reporting & Behavioral
Profitability Reporting & Behavioral
Financials focused
Financials focused
Full maturity,EPM, Balanced
scorecards
Full maturity,EPM, Balanced
scorecards
24© 2007 IDC
0%
10%
20%
30%
40%
50%
Developing an in-house
proprietary solution
Buying an off-the-shelf
standardized application
Buying a solution &
extending it
Outsourcing the processes
& development
Custom solution provider
data management project
% of responses
How ? Build it, Buy it, outsource it ???
25© 2007 IDC
A Hint: Setting a Bull’s Eye can helpA Hint: Setting a Bull’s Eye can help
Str
ate
gic
Ali
gn
men
t
Execution Enablement
Maturity Level 1 2 3 4 5
Business oriented evolution
IT oriented evolution
..but remember hitting the bull’s eye requires strategic alignment with an EPM system that spans “the enterprise” …not just your division !
26© 2007 IDC
People + Products + Processes
Need for strong, committed
technical team that understands
the business. To succeed, buy-in and commitment
must come from top management.
Products vary, ranging from point solutions to
comprehensive solutions from one-stop shops.
Understanding the strengths & limitations of each offering, & that no 1
product alone will solve all your issues & needs.
Need for proper policies & procedures in place to protect the
core businesses. Strike a balance between
cost, functionality, & practicality.
26
In Conclusion …..your 3-step approach
