Business Times (Malaysia)
08-17-2001
TECHNOLOGY firms remain optimistic that Malaysian companies will continue
to spend on information technology (IT), despite a trail of budget cuts
on IT worldwide.
"IT spending in Malaysia is still in its infancy. As such the impact
of any economic slowdown in the more developed markets will have a minimal
effect in our local market," said Michael Soh, Hewlett-Packard Services
Malaysia country general manager.
"Malaysian businesses are feeling the pressure to increase
productivity and reduce costs. (They) are looking towards technology to
help them achieve this," he said.
Hewlett-Packard says the adoption rate for technology in the region is
still very low. Malaysia specifically, rates a four on a scale of one to
ten, compared to the US' rating of eight.
The head of a foreign research house agrees, saying companies are
still spending on IT for their back offices and increased their overall
capital expenditure for technology to keep pace of the fast changing new
economy.
"I believe even companies that are in the red will have to spend on IT
to enhance efficiency," he added.
For example, he said, chipmakers Malaysian Pacific Industries Bhd
(MPI) and Unisem (M) Bhd will have to expand capital expenditure when new
orders come in.
"During times of economic uncertainty, postponing capital expenditure
often presents itself as an obvious way to save money but that's not the
solution," said Intel Electronics (M) Sdn Bhd business solutions manager
Kok Hon-Long.
"Delaying investment has always been a short-term solution at best; in
the new economy it could be fatal.
"The Internet plays an increasingly central role in commerce. It could
mean the end of your business altogether if you don't build a competitive
e-business relationship with your suppliers and your customers," Kok said.
Global accounting firm Grant Thornton recently found a majority of
companies in Hong Kong believed e-business development is essential for
long-term industry growth and success.
Kok shares this view and firmly believes that e-business investment
will continue to be viewed as crucial throughout Malaysia as well as the
rest of Asia-Pacific.
In Malaysia, Hitachi Data Systems Sdn Bhd's general manager Safuan Abu
Bakar said IT spending for back-end storage remains strong as companies
continue to see it as a crucial investment despite the economic downturn.
He said said companies are buying twice the amount of back-end
storage, particularly since prices have fallen due to stiff competition
and falling margins.
"Companies are also investing in new IT areas to generate revenues,"
Safuan said, adding that Hitachi's customers in telecommunications and
vehicle manufacturing are continuing with their robust IT spending.
"In 1997, people were saying that IT spending would be hurt by the
regional financial crisis, but it has not happened," Safuan said.
Experts say by 2005, business-to-business (B2B) transactions in Asia
Pacific will be worth over US$500 billion a year - more than it is today.
According to IDC Asia-Pacific Internet research manager Richard
Jacobson, traditional companies rather than dot-coms will be the drivers
of the B2B trend in the region.
"Asia's largest conglomerates are already investing in B2B solutions
that are radically changing the structure of many industries," Jacobson
said in a recent report.
The Gartner Group suggests, as a rule of thumb, that 2 or 3 per cent
of a company's revenue should be invested in IT.
"Also, companies need to look beyond cost and ask what investment in
e- business could ultimately do to their bottom line," says Intel's Kok
Hon- Loong.
IDC's research suggests that businesses in the region are recognising
the potential that investments in e-business have to reduce costs in the
long run. Even in existing markets, e-business investments are becoming
vital to attracting and maintaining customers.
"A courier company whose competitor introduces online parcel tracking
will find its customers soon expecting the same service," advises Kok.
"If the company cannot upgrade its service, it will find itself losing
business to its competitor."
WORLDSOURCES ONLINE, INC., A JOINT VENTURE OF FDCH, INC. AND WORLD TIMES,
INC. NO PORTION OF MATERIALS CONTAINED HEREIN MAY BE USED IN ANY MEDIA
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COPYRIGHT 2001 BY WORLDSOURCES ONLINE, INC.
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