Survey reveals discrepancy in approaches between manufacturers in the Middle East/Africa, and in Europe.
In our latest survey among 333 manufacturers in the central and eastern Europe, Middle East and Africa region (Ceemea), we at IDC asked them about their perceptions of cloud computing and its suitability for planned IT purchases in the next 12 to 18 months.
Although the overall result was not a great surprise – cloud will be considered for about 33 per cent of new IT purchases, predominantly “software as a service” – the breakdown by sub-region showed a significant divergence in attitudes to cloud between the Cee half of the region and the Mea half.
Middle East manufacturers are more enthusiastic about IT than those in Cee. This stems from their age and focus: many of them are much younger than comparable firms in Cee, and they are driven by a general regional ambition to accelerate their development to compete with the most advanced manufacturers in the world.
The long-term oil and gas-driven economic boom of the region has produced significant cash resources and high consumer IT spending. New technologies are naturally welcomed here, and are often perceived as exciting innovations, including those in the domain of cloud computing, big data, mobile, and social technologies – what we call the third platform.
The survey confirms a couple of other factors in the two regions that we already knew from our deep presence in these markets. Confidentiality of company information seems to be a greater concern in Mea than in Cee. But providers of cloud-based services have done a great deal to address these concerns in their solution portfolios. A more significant issue is that of legacy systems. Mea manufacturers are generally not as burdened with client-based solutions to the same degree as Cee manufacturers, opening the door to easier migration to a cloud-based solution.
Mea manufacturers are also more likely to have budgets set aside for cloud-based solutions. This is crucial, as talk is starting to turn into action, which will drive spending on cloud-based solutions. Undoubtedly, sales cycles in Mea are likely to be longer than in Cee. As a result, we have seen some manufacturers in the region change their strategies after starting an implementation. But by and large, the demand for cloud-based solutions should grow.
Looking more closely at the percentages of budgets dedicated to cloud, it ranges between 1 to 10 per cent of total IT budgets, with the majority of respondents reporting more than zero per cent but less than 5 per cent. While there is disparity between Cee and Mea in terms of cloud perception and dedicated resources, we reckon the gap is not large enough to provide one region, such as Mea, a significant advantage over the other.
Third platform technologies, such as cloud, will generate more traction in Mea than in Cee. But Mea manufacturing is far from being some kind of “cloud heaven”, The implementations of cloud will be still relatively small and precisely targeted in Ceemea manufacturing companies. In other words, manufacturers will be testing all new technologies, and will be searching new synergies and value, often represented by a technology mash-up including cloud offerings.
Generally speaking, growth in IT spending among Cee and Mea manufacturers will be in third platform technologies. Mea manufacturers will remain more progressive. Some of the large Mea asset-oriented manufacturers could kick off a large-scale IT project deployed via cloud in 2014, as they have shown signs of transformation of their rigid IT environments recently.
Should these big projects turn out to be successful, they will make the case for the others. In addition, small and medium-sized enterprises are much more interested in innovative technologies overall, and most of them are already benefiting from the agile and scalable cloud model.
Martin Kuban is a lead research analyst of IDC manufacturing insights at the global ICT market intelligence and advisory firm IDC