NEWS: Areas of ICT spending

THE top management of Malaysian companies are quite aware of the importance of information and communications technology (ICT), although not all are necessarily tech savvy. And when it comes to ICT investment, the CEO’s main concern is whether he can justify the amount used. The CEO needs to evaluate the cost effectiveness and viability of an ICT investment, which usually involves a lot of money. Here, the costs include time and commitment from not only the IT department, but also the rest of the organisation.

It is no wonder that ICT is viewed as a cost centre, in which the benefits are only to be translated into business improvements at a much later date. But more importantly, as companies plan many years ahead of time, any ICT investment is required to generate the requisite return on investment (ROI) within that time frame.

Despite such issues, ICT spending trends in the Malaysian private sector is still strong. One key area of ICT investment is security. A major concern to both public and private sectors, ICT security is getting additional attention lately due to the increasing risks of malware in the Internet and compliance to regulatory requirements. In Malaysia, banks, for example, are bound by the central bank’s mandated compliance to the Basel II Accord.

Local banks believe that compliance is important because of the need to meet with local regulations and to be able to trade with foreign companies.

Many companies have also already implemented basic risk policies and controls to meet corporate mandates such as Sarbannes-Oxley, and the ISO 17799 standards.

The ideal enterprise ICT solution to address compliance needs must be able to help companies lower their risk of non-compliance and improve internal controls through a combination of automation, process improvement and training.

Besides ICT security, another area of ICT spending comprises ICT solutions and applications that are key in improving on front-end service that deals with customers.

Although ICT and business functions are to an extent treated in compartments, top management realise that they can no longer be segregated into merely business or ICT issues. In fact, more top executives are beginning to think of ICT and business as linked matters and are no longer separately treated.

To facilitate this, it is the role of ICT vendors to work with the company towards putting in the business context.

Without a proper link to business goals, ICT becomes irrelevant. So, the enterprise must be convinced about how an ICT investment can eventually lead to large cost savings and higher profits for the organisation.

Analysts say that the local ICT spending growth will continue to remain bright.

The Malaysian ICT market is expected to grow at least 10 per cent this year due to the stronger local currency and the ICT projects from the Ninth Malaysia Plan that has revived spending from the public sector.

Some of the key areas that are expected to be quite lucrative now is security, storage management, shared services and outsourcing space.