Asian IT Competencies

Databases: rise of the giantsIT shops across Asia fell in behind the bigger brands from 2004 to 2006. These three years saw usage of some brands go up by 25 per cent or more. For example, in Malaysia, the number of organisations reporting usage of Microsoft's SQL Server grew by 28 per cent between 2004 and 2006. Similar dramatic increases were seen in Singapore and Hong Kong for SQL Server usage. Significant though smaller growth was reported for Oracle adoption. As SQL Server is seen as the cheaper option for mid-range applications, the difference between the two brands could point to an increase in application modernisation among end-users. Typically, application modernisation would call for the separation of the database from the processing portion, followed by the re-location of the database onto a shared platform. Also, IT managers could scale small departmental applications into divisional ones. And application integration could be driving the need to separate databases from front ends. This is in line with the Asian business profile, which is dominated by small to medium-sized organisations. The decreasing number of people reporting the use of Microsoft Access supports the trend towards application modernisation and consolidation. Access is typically used in smaller work groups and comes free with higher-end versions of the MS office suite. Are Asia's small teams not using databases any more? Not likely. What might be happening is that as help desks become more outsourced, fewer IT staff are on-site to help create and maintain Access operations. Small-team needs are being slipstreamed into larger organisation platforms or else abandoned. The adoption of the open-source MYSQL database management software has also seen dramatic increases, in some cases, over 100 per cent between 2004 and 2006. However, adoption is starting from a very low base. Still, CIOs should take note that the base of professionals with skills in MySQL should grow as well.

ERP: smaller brands vanishingEnterprise resource planning (ERP) systems go to the heart of an organisation's business processes. And if there was any proof needed that Asia's organisations are evolving into more western models, one only has to look at ERP usage. On the whole, more organisations are reporting the use of ERP. Of these, more are reporting the use of big-name brands, such as Oracle and SAP. Internal factors, such as the desire to emulate the processes of global companies, might be responsible for this. External factors such as aggressive supplier pricing and new SME products might also be the cause. The largest increases in the usage of SAP and Oracle products are seen in the emerging economies of the Philippines, Indonesia and Thailand. As these countries rise from the rubble of the 1997 financial crisis, IT budgets have apparently been rising in unison. Thailand, for example, has seen the largest spurt in the usage of SAP and Oracle come from the manufacturing sector. As the industry is the second-largest component of GDP in the kingdom after agriculture, this supports the argument that a robust economy is driving the purchase of top-tier products. Indonesia, Southeast Asia's largest economy by GDP, also saw growth in SAP and Oracle usage in the manufacturing sector, driven by modest increases in economic performance in 2004 and 2005. On the flip side, the use of ERP boutique brands shrank rapidly during the same period. Likely reasons include IT simplification projects driven by fatter budgets, and the inability of lesser-known brands to scale with organisational growth. Interestingly, the largest drop in the use of boutique products occurred in Malaysia and Hong Kong. In Malaysia, almost twice as many organisations reported the use of small brands as those reporting SAP use in 2004. By the following year, SAP had overtaken boutique brands by a small margin. Next year could see 2004's ratio, but in reverse. Another ERP trend that jumps out: In-house customisation is growing in tandem with SAP and Oracle use. In fact, the numbers of those performing customisation in each country can be derived from the sum of SAP and Oracle users. For CIOs, this indicates that labour shortage will get worse before it gets better.

Server OS: virtualisation, where art thou? Here, it's a picture of gradual but inevitable change. Novell Netware usage fell across all countries over the period. The numbers reporting use of the IBM-proprietary operating systems also declined in all countries. The picture for Unix (non-Solaris, non-AIX) is more mixed. The more developed economies in the region are moving off the Unix OS, in line with the rest of the developed world. Indonesia, however is an anomaly (Figure 8). Slightly more organisations in the archipelago reported using Unix in 2006. The key sectors in this regard are manufacturing and wholesale and retail. The picture is similar in Thailand. Roughly the same number of people reported using Unix from 2004 to 2006 (Figure 9). So unlike CIOs in other countries, who are replacing end-of-life Unix servers with Linux ones, IT heads in Thailand and Indonesia are hanging on to their Unix boxes. One reason could be IT heads in these countries don't have the capital expenditure budgets that others do; hence the need to retain older gear, paying out of operating expenses. In addition, salaries in Singapore and Hong Kong form the bulk of IT cost, so axing as many Unix sysadmins as you can is a no-brainer. But in Thailand and Indonesia, the cost pie chart is reversed. You would keep your Unix systems running, but also buy the cheapest servers you can: X86-based Linux boxes. So Linux use in both countries is also growing healthily, and at roughly the same rate as others in Asia. In our survey, both Linux and Windows adoption grew strongly from 2004-2006. It would appear that both these platforms are winning share as hardware based on Unix and other platforms come to end-of-life (with exceptions noted above). Given the smooth gradients in both server hardware and operating system usage trends, no disruptive technology has made an appearance. Operating system virtualisation, therefore, seems to be still in its infancy in this region.

Server OS Summary

Unix-trained staff costs may fall in many parts of Asia as more IT shops shed the OS. Conversely, Linux sysadmins may enjoy pay raises.

Those in the manufacturing sector in Thailand, Malaysia and Indonesia who use Linux may see higher staff turnover as higher adoption rates could mean more competition for talent.

Operating system virtualisation lacks a sizeable installed base in Asia.


Free and open source (FOSS): time for review If there is a single technology that all IT shops, regardless of industry and company size, should be looking at this year, it would be free and open source (FOSS). With a long history among academics and individual developers, FOSS has only been taken seriously by IT directors in recent years. In the period of 2004-2006, it has got even closer to the heart of Asia's enterprises. Developing markets, like China and the Philippines, are known for their advocacy of FOSS. Our data shows enterprises in the Philippines were walking the talk with their choices of operating systems. In the past two years, the average Linux adoption rate among Philippine companies was 8.52 per cent, the highest in the region. Apart from the government's support, the relatively high Linux adoption rate is also backed by the supply of low-cost IT skill sets for development and support. But that does not mean the developed markets, which have higher staffing costs, are overlooking FOSS development. Despite being less vocal on FOSS, Hong Kong has the most number of respondents using Linux. Enterprises from Hong Kong indicated an 8.19 per cent Linux adoption rate. Yet, Singapore remains the slowest in Linux adoption at a rate of only 4.62 per cent. In addition to operating systems, the acceptance of FOSS has also been extended to database management software (DBMS) over the past two years. The adoption of the FOSS MySQL DBMS among Asian enterprises in 2006 has shown tremendous increase. There are two versions of MySQL: a free (as in no-fee) version distributed under the GNU General Public Licence and a paid-for proprietary version. The survey did not ask which version was used, but it would be safe to assume that the fall in the use of MS Access (cheap when bundled with MS Office) can be linked to the rise of the free version of MySQL. The Philippines was a clear winner in the adoption of MySQL in 2006. Yet, Malaysia and Indonesia have demonstrated the strongest growth over the past two years. The two markets indicated zero MySQL implementation in 2004, but have climbed to become the second and third highest adoption markets in 2006. Universities, who tend to be adventurous users in technologies, are the major MySQL users. But interestingly, some enterprises from the more conservative industries, including banking and utilities, are also early adopters of the FOSS DBMS. To name a few, Bumiputra Commerce Bank in Malaysia and the Metropolitan Bank & Trust in the Philippines are users of MySQL. Among the utilities industry, power companies CLP in Hong Kong and Tenega Nasional in Malaysia have also stated they implemented MySQL for database management in 2005. Bureau of Internal Revenue from the Philippines and the BPS Statistics in Indonesia are a few of the pioneers in the public sector that use MySQL. Known for its large volume of online transactions, the Leisure and Cultural Services Department in Hong Kong, which handles the online booking of sports venue, is also a user of MySQL. The growth demonstrates Asia IT shops are in-sync with the global trend on FOSS adoption, particularly in the last few months of 2006. In October, Oracle announced full support on its applications running on Red Hat Linux. Earlier in the year, Sun also released the source code of the Solaris operating system under an open-source licence scheme. Among all the vendors' move in FOSS, Microsoft's perhaps was the most interesting one. The company closed a deal with Novell to offer sales and support for Suse Linux in November and one month later, it launched the long-waited Windows Vista for business. With vendors' recognition of FOSS, 2007 is expected to be a year when many IT directors will review their FOSS strategy.

Conclusion

According to FBM’s IT leaders Agenda Survey 2006, CIOs from 212 organizations in the region stated their top three challenges were: reducing costs/ lack of resources, aligning IT to business and developing business cases for IT.

These are the challenges related to demonstrating IT value in business terms. By taking up more strategic roles, the CIO’s focus has moved from building technical teams to business matrices.