A Challenging Year, 2012 will Bring More Uncertainty
As technology gains importance in the digitally connected world, enterprises look for solutions that will help develop their business. Gone are the days when the ICT emphasis was that of a supporting role and for enabling business and communication. Gone is the focus on process automation technology, integration, control and similar solutions. Many enterprises have implemented ICT solutions in their environment so basic solutions are no longer enough to keep or possibly gain, a competitive advantage. The economic downturn forced enterprises into so called "optimisation mode". Everyone was cutting jobs and costs, eliminating internal inconsistencies and putting additional strain on suppliers and partners. What was missing was innovation and improved customer relationships, hindering sales in the process.
Luckily these trends were noticed on many levels and are being dealt with. Even though economic uncertainty is forcing companies into shrinking budgets, the Government is increasingly aware that information technology, as a whole, is needed to improve strategies and operations. Technology is gaining a key role in providing innovation, great operational performance and business growth.
IDC Adriatic reports that in 2011, the ICT market in Slovenia shrank by 1.5%, corresponding to the global trend in ICT markets. More than half of market value was generated by telecommunication services followed by hardware and software sales and IT services.
"IDC expects Slovenian IT spending to remain flat in 2012. Over a five year period, the country's IT market should expand at a CAGR of 2.4% to reach USD 1bn in 2015 and the total ICT market at a CAGR of 0.4%, to reach USD 2bn in 2015," explained Darja Jama, Country Manager at IDC Adriatic.
Experts predict a key role for certain technologies that will change not just the way companies do business but business models. The future lies in business intelligence, mobile computing, cloud computing, collaborative technologies, virtualisation, tools for IT management, CRM and ERP solutions and security technologies. Analysts globally are stressing the importance of combining these technologies, such as analytics and mobility, with the aim of improving the operations and field sales or business intelligence and social tools for better insight into the minds of customers. Even the definition of technology itself is changing as traditional systems are combined with a variety of consumer devices and numerous applications and services. In this way, modern technology is gaining new dimensions and ways of creating business value.
Smart investments into ICT solutions will help organisations achieve more effective business practices, active supply chains and increase competitiveness through differentiation and improved design of products and services. Great reserves are also hiding in handling with internal resources and better customer relationship management. Organisations must realise that IT is not only an enabler of cost reduction, they can use IT to increase revenue in ways not seen before. Modern technology will have a central role in the strategic and operational decision making which will be enhanced by smart applications and breakthrough innovation.
The Slovenian ICT industry consists of around 3,500 companies with around 16,000 employees. As this sector outperforms many others in terms of growth and revenue generation, it plays an important role nationally. Innovative solutions and great technical expertise can be found in software companies which are trying to make a mark on the global software market. The basis for success of Slovenian IT is its relatively new ICT infrastructure that was built in the last twenty years and can easily adapt to new business delivery models. Many companies are already beginning to see that IT can bring them a crucial competitive edge over the competition and are keen to adapt to new ways of creating business.
Win a tender, win a quarter
The relatively small local market has its rules. A limited number of local customers means that most big orders are placed in the form of a public or private tender. These orders actually define market conditions in each quarter as sales figures vary between solution providers. Customers of ICT companies have proven their loyalty in the past and only the tough financial conditions have recently broken some of these links.
As the economy is slowly but surely falling to pieces, the public sector shows little compassion. The analysis of IT purchases made by different public organisations shows that they still invest in IT solutions. The only real problem is that there is no master plan. As in enterprises, the country would have to get a Chief Information Officer for the entire State Administration. Only then would the annual plan for computerisation of the country which is now established and published by the Ministry of Public Administration, have some effect. Now it reads like fragments - every public organisation tends to its own solution and the interoperability between systems is at a fairly low level. This of course doesn't help the citizens as their money is simply not well spent.
In this case there are no true winners. People want a lean administration and less bureaucracy to enable them to solve their issues quickly and with lower cost. This could be made possible by making sure that the digital infrastructure of public institutions share a common denominator. But this would also result in layoffs in the Public Administration and reduced financial support for "loyal local" companies. It is obvious that some Slovenes are not yet willing to suffer for the greater good. Changes are necessary and inevitable. Modern technology is just a tool that can improve our lives; therefore we must give it a fair chance.
E-health is like a shiny trophy
In difficult economic times, when money is tight for just about everybody, companies are even more likely to seek business from the Public Administration. Albeit, contracts are not easily signed, the money is there as opposed to the private sector that is choking from poor payment discipline. What is really going on in the public sector that has IT companies so interested? Well, usually it is good money and secure. Once a company deploys an IT solution in the Public Administration, it also signs a maintenance contract and that in itself is a great source of income. Winning a public tender is like winning a trophy. The race to the top is by no means easy as there is fierce competition at every stage but the rules are clear: the winner takes all - in millions, that is.
The true nature of some big public tenders and projects has been put in bad light due to different issues. The implementation of a new tax system is currently delayed but still very much in effect, the highway renewal program cannot lose its bad reputation and so on. There is a great opportunity on the horizon to earn money, the e-Health project. It is little wonder that it raises a lot of dust and media attention, various providers of IT solutions are trying numerous tactics to tip the scales in their favour. At a fraction more than EUR 130m, the games played are to be expected.
Do you want to know the public secret, why everyone is struggling to be a part of the e-Health project? The explanation is very simple. The company/companies and chosen solutions will most likely build the foundation for the new IT infrastructure used by the Public Administration. It is safe to assume that these building blocks will be later used in other public institutions. Actually, this is no longer a story about a few tens of millions but at least EUR 250m. Those who will be the ones cashing in will enjoy at least a decade of virtually guaranteed revenue. That is what suppliers call a big order.