IDC Predicts ‘Hyperdisruption’ in 2007

With worldwide IT spending expected to grow a modest 6.6% in 2007, many industry leaders will be more willing than ever to take chances, and embrace change to open up new pockets of growth. The result, according to IDC, will be a year of hyperdisruption, with many IT vendors stepping up their adoption of new business models and technologies, and crossing traditional market boundaries.

“While overall IT market growth will appear almost boringly moderate, its impact will be the opposite,” said Frank Gens, senior vice president of research at IDC. “As IT market leaders step up their relentless hunt for growth, we’ll see many disruptive shifts, with the importance of small business becoming very big, secondary economies becoming primary, software offerings becoming services, services offerings becoming software, channel-oriented players going more direct, direct players developing radically new channel strategies, and less distinction between business and consumer players and technologies.”

Against a background of moderate IT spending growth, one of the main stories in 2007 will focus on “the great disrupter” - globalization. While 2006’s hottest emerging markets (including the hyper-growth BRIC [Brazil, Russia, India, and China] markets) will continue to drive worldwide growth, a new group of countries will show their early potential as the next hot markets. In 2007, these “beyond BRIC” opportunities will be greatest in the Emerging Asia Countries, Latin America’s Southern Cone, the Middle East and NEW (North/East/West) Africa.

The search for market opportunities will also bring the “Long Tail” of small and medium businesses (SMBs) further into the forefront for many IT vendors. Here, the ability to “scale down” offerings will become critically important, and software vendors will shift their software-as-a-service (SaaS) initiatives into high gear. Further disruption will come from online and offshore services players pushing into the SMB market with innovative new offerings and becoming prime acquisition targets in the process.

IDC also predicts that services/software fusion will pick up speed. Offshore services vendors will continue to increase their footprint, swimming upstream and onshore into higher value IT and business consulting markets. To tap the mid-market opportunity, “Service as Software” offerings will emerge that graft traditional BPO services onto high-leverage, online delivery capabilities.

IDC said there will be heightened competition in the information access and management space. With customers demanding “rapid access to relevant information” as a top business requirement for IT, the major vendors will slug it out for “information platform” leadership while Web 2.0 tools will disrupt the market with “good enough” information access.
Virtualization and software appliances will reshape the infrastructure landscape, according to IDC. Already one of the most disruptive forces in the infrastructure marketplace, virtualization will shift into a new phase, delivering higher IT service levels and creating new opportunities for software vendors to create products that manage an increasingly virtualized IT environment. A key innovation here will be “software appliances” - limited function, self-contained products that are easily and inexpensively acquired and replaced.
Consumer and telecom markets will continue to churn, IDC predicts. Both the consumer and telecom markets will be their usual concoction of convergence, creativity, confusion and change in 2007. Internet video will continue to be a hotly contested online niche, while quad-play offerings from cable providers will further challenge the telcos to make a competitive response.

“These disruptions will force many market leaders out of their comfort zones, and open up new opportunities to those that choose to surf with the disruptive tide, rather than stand against it,” said Gens.

If we’re going to read and analyze carefully the predictions made by IDC, I would say it’s going to be a great year in general for the Philippines. Since most of our companies here are in the SMB bracket and with our world-class talents, we can provide better products and services offering competitive pricing. It’s a matter of determining which offerings we are going to present to the world market. This is one opportunity that all of us should grab. We have all the ingredients to make it big - we just have to focus and get our acts together.