IT firms see a challenging year ahead

THE IT sector could be facing a difficult year. The economic and financial crisis made businesses carefully watch their expenditures and that included investments in IT systems and upgrades. Slovakia’s upcoming general election is also slowing down government decision-making in some areas, complicating the completion of various IT initiatives that use EU structural funds and impacting the IT sector as well.

THE IT sector could be facing a difficult year. The economic and financial crisis made businesses carefully watch their expenditures and that included investments in IT systems and upgrades.
Slovakia’s upcoming general election is also slowing down government decision-making in some areas, complicating the completion of various IT initiatives that use EU structural funds and impacting the IT sector as well.

The Slovak Spectator spoke with Branislav Šebo, chief executive officer of IBM Slovensko, František Imrecze, country manager of SAP Slovensko, Martin Kohút, country manager of NESS Slovensko, Tomáš Osuský, member of the board of directors of Asseco Central Europe and Michal Hrabovec, president of Anasoft about developments in the IT sector in 2011, the trends they expect to see in 2012, and their company’s plans to meet customer needs in this challenging year.

The Slovak Spectator (TSS): How would you assess the IT sector last year from the global point of view as well as here in Slovakia? What factors were most important?
Branislav Šebo (BŠ):
The business volatility caused by the financial crisis forced companies to adjust to the changed behaviour of their own customers. Their perception of IT and its strategic value changed. We see this as an advantage because we can better predict their behaviour and offer comprehensive solutions with added value. Today, Slovakia is perceived as a mature market – not only with respect to business but also its IT environment. Large enterprises as well as small and medium-sized businesses in Slovakia are looking for advanced technologies such as analytics, cloud computing, collaboration and security.

The IT sector is among the most dynamic industries and its customers are searching for smarter solutions. Today, both private sector companies and public-sector institutions need to keep IT costs under control while addressing the need for security, reliability and flexibility. They want to achieve more with less.

František Imrecze (FI): Unfortunately, final numbers for the IT sector for 2011 are not available yet but I dare to say that IT companies have been able, thanks to measures focused on the most effective operations possible, to not only flourish but also to create new jobs. SAP, with the best economic results last year in its entire 40-year history, is a good example of this. Data from the Slovak Statistics Office confirm that employment in the ICT sector rose by 13.9 percent y-o-y during the January-November period, the biggest employment growth in all monitored economic sectors in Slovakia.

The complicated global economic situation is also affecting the IT sector. This brings not only higher demands from customers in terms of price and performance but also quality and the scope of services linked with supplied solutions. And, of course, the pressure on innovation and development of technologies based on mobile platforms and cloud computing has been constantly growing.
Companies unable to keep pace with this trend do not have any chance of success.

Martin Kohút (MK): At the very beginning it is necessary to remember that IT customers come from two sectors: the first is commercial businesses and the second is public administration. These two sectors have been moving in diametrically different ways and 2011 was no exception. In the commercial sphere the trend continues of cutting costs and making processes more effective and searching for solutions that lead to operating at the lowest possible cost. Many IT projects were halted in both the commercial and public administration spheres, particularly projects that were financed from the Slovak government’s Operational Programme Informatisation of Society (OPIS) or through funds allocated from the state budget. Funds were finally released only at the end of 2011 and now many projects are being launched.

Tomáš Osuský (TS): The IT sector was affected by several factors. In early 2011 moderate optimism with regards to positive economic indicators prevailed. But after these began to sag, concerns in the IT sector began to increase as well. The political situation also partially contributed to a slowdown of many projects that had started in state and public administration. The IT sector in Slovakia is strongly affected by funds coming from EU structural funds and many large projects are now in the last phase of the approval process. All of us in the IT sector strongly believe that a change at the wheel of government after the early parliamentary elections will not result in a halt in preparation of these projects, which are already lagging behind right now; a further slowdown may have the fatal consequence of not being able to draw down the EU funds available to us.

Michal Hrabovec (MH): Last year Anasoft grew most with its customers in the industrial sector. These customers were searching particularly for solutions focused on increasing effectiveness and cost savings, either direct or indirect ones.

TSS: What are your expectations for 2012? What will have an impact on the IT sector?

BŠ: Now is the time for government offices and companies to get smarter about IT. To succeed during times of financial austerity, governments must transit to optimised systems that leverage big data, tuned to specific tasks, and provide quick and easy access through the cloud. They need to manage the growing complexity. The results of the 2011 IBM CIO Study, in which we spoke in person with 3,018 CIOs [chief information officers] in 71 countries and 18 industries, showed that to increase competitiveness, 83 percent of the CIOs have visionary plans that include business intelligence and analytics, followed by mobility solutions (74 percent) and virtualization (68 percent). The CIOs are increasingly helping their public and private sector organizations to cope with complexity by simplifying operations, business processes, products and services.

FI: I am an optimist. SAP has proved that its strategy focused on continuous innovation is correct. As I already said, customers are increasingly demanding in this respect and I do not expect that will change this year. They will expect a fast return on their investments and want strong arguments from their suppliers that will persuade them to make investments into IT. I strongly believe, even though we will not be able to speak about a full solution of economic problems in Europe and Slovakia, that political leaders will be able at least to create a solid base for restarting economic growth.

MK: This year will certainly be affected by the general economic situation and especially by the early parliamentary elections in March. Not only the public sector but also commercial companies will wait to see the results and only then respond to the many decisions to be taken. Right now it is very difficult to predict developments in either the eurozone or in Slovakia.

TS: I believe 2012 will be a difficult year for the IT sector. Domestic financial institutions face significant problems connected with the general financial situation in EU countries and pressure to reduce costs will accelerate during 2012. Industrial companies have also been facing a difficult period of time because demand for their products will slowly decrease until there are indications that the credit crisis in the EU and in the world is over. All this is spiced up by our local political situation, since after the early elections it will be necessary to form a new cabinet. I firmly believe that the second half of 2012 will bring us a positive turn, that the EU will find a political solution for its economic problems, that the Slovak political scene will move into a standard form, and that by the end of the year we will see positive results also in the IT sector.

MH: We expect that the trend of searching for savings in operating costs will continue.

TSS: What products or services are customers most interested in? What solutions will IT companies focus on?

BŠ: Slovakia belongs among the so-called growth markets where IBM is investing into the development of capabilities based on customer demands for long-term growth. Over the past few years, the growth markets in the world have far outpaced what we have seen in the major markets. Many companies and government bodies are investing heavily to build their infrastructure and IBM’s Smarter Planet capabilities map well with these projects.

FI: Speaking about the segment in which SAP operates, then it is unequivocally orientation on mobile technologies, cloud computing and strong tools for analysis and business data management. This is because today companies need to adopt correct solutions immediately and this is impossible without mobile technologies and tools which offer them swift and reliable information, often generated from hundreds or even thousands of entries. On the other hand, the phenomenon of cloud computing is linked with efforts for maximal flexibility of a company’s IT while minimising the costs for its acquisition and administration. These are fields that will certainly dominate for corporate customers. With regards to the state government and self-governments, we expect that the process of informatisation of public administration necessary to provide quality services to citizens, as well as to save taxpayers’ money, will be restarted.

MK: The trend of pursuing effectiveness, effectiveness and – one more time – effectiveness in all activities will go on. Funds spent on IT will remain closely watched in both the commercial sector as well as in public administration. But recently mobility and the demand for applications for mobile devices are becoming more important. It is worth realising that neither the economic crisis nor the political situation will impact this trend because this is a development pushed forward by the business core – it is grounded on mobility closely interconnected with effectiveness and independence of its users.

TS: During this difficult period of time IT companies will have to reach deeply to the bottom of their abilities and come with innovative solutions to help their customers face the political, economic and financial challenges of 2012. This will be a period of sharpened competition not only in the IT sector but also in other economic fields. Modern innovative solutions provide customers with an ideal tool to increase their competitiveness by reducing operating costs and by helping them bring out new products.

MH: While companies will focus on solutions bringing savings in operating costs, this creates space for supplying solutions focused on boosting effectiveness and quality and new commercial models for providing them.

TSS: What are your company’s plans for 2012?

BŠ: We perceive business analytics and optimisation, cloud computing and smarter solutions as key areas for 2012.

IF: In late 2011 we hired more than 20 experts into our development centre and our customer support centre in Bratislava. They will have a chance to work in a top-notch workplace, rated one or two in the world. We are pleased that SAP Slovensko has a very stable employment structure.

With regards to new products, SAP has been incessantly bringing innovations; we are among the leaders in this respect. I do not want to reveal in advance what we will bring this year but I can say that these will be solutions that will be at the top of technological development. We are, of course, cooperating with top scientific institutions and leading universities in their development.

MK: Our company has been adapting to market demands which, however, cannot be predicted very well right now. NESS Slovensko stands on three pillars. One is products for public administration, the second is for commercial customers, and the third is off-shore development. We want to continue to develop all three and work on their growth. We plan to invest into development of off-shore and recruitment of employees is linked with this. The other two pillars of our business will depend on the launch of planned projects and the general situation in Slovakia as well as in Europe.

TS: Within the Asseco Group, which operates in 20 countries of the world, Asseco Central Europe is one of the strongest software houses in central and eastern Europe and from here we manage software solutions customised for our customers in the Czech Republic, Slovakia and Hungary. This is a huge advantage for us because we can diversify our efforts over a larger geographical area as well as with a larger backdrop of customers. Our plan for the future is to continue to develop solutions and products for our customers, to continue in unification and facilitation of our product portfolio, and to closely cooperate with our customers so that we can provide the most effective solutions as possible for their businesses.

MH: Anasoft invests into development of products reflecting the needs I previously mentioned – those to reduce costs and raise effectiveness and quality.

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