Indonesia Digital Transformation Outlook Briefing 2016

Abhishek Chauhan

Consulting Director, Digital Transformation Practice

INDONESIA DIGITAL TRANSFORMATION OUTLOOK BRIEFING 2016

Indonesia Enterprise ICT Outlook 2016

1

“We Accelerate Growth”

Enterprise IT Services Market Trends

Economic factors and industry factors are contributing to build some strong trends for 2016

• Managed services & Outsourcing growing • Number of large Managed services/ Outsourcing deals ( 20 Mn

USD +) increasing in Indonesia• Local players gaining more prominence

11

• Cloud services adoption is increasing • SaaS increases as small enterprises look to Cloud providers • SMEs increasingly looking at IaaS to improve their turnaround

22

• Network to application transition • More deals on applications rather than traditional Network• Traditional Hosted on premise applications moving to Cloud model

33

• Data centre demand growing• Co-location will still drive the overall Indonesian DC market• Increase in Managed Hosting driven by Application hosting

44


Trend 1: Managed services & Outsourcing growing

Growing Economy• The IMF projects Indonesia will be at the top

3 fastest economic growths among G20 countries1

• Total trade grew at 45% between 2010-2015• In 2015, 70% of the total population is

estimated to be in middle income class, growing from 37.7% in 20032

Note: 1. International Monetary Fund; World Economic Outlook Database, 2. Bank Indonesia and Indonesia Statistics Agency) 3. The ASEAN Business Advisory Council Survey on ASEAN Competitiveness

Drivers for Managed services & Outsourcing

0.0 2.0 4.0 6.0 8.0 10.0

Brazil

Korea

Mexico

Turkey

Russia

Argentina

Saudi Arabia

Indonesia

India

China

2017

2013

2012

Growing Investment• Investment in Indonesia is on a record high

$28.9 billion in 20014 which is forcing players to expand their IT needs in a significant manner

• FDI coming in areas – manufacturing, communications & real estate and these are areas where Managed services & Outsourcing will grow

-

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015E

Other Services

Real Estate, Ind. Estate & BusinessActivitiesTransport, Storage & Communication

Electricity, Gas & Water Supply

Other Industries

Metal, Machinery & Electronics

Chemical & Pharma

Food Industry

Primary Sector


85%

56%41%

SaaS IaaS PaaS

Trend 2: Strong growth for cloud services creating a hybrid IT environment

Adopted44%Not

adopted56%

Cloud Services Adoption

N = 150

Current Adoption Future Growth Potential

• Cloud services current adoption shows tremendous potential for future growth. Moving on, Hybrid IT environment will be the norm across enterprises.

• Current adoption patterns shows a strong focus on SaaS (Software as a service) and SaaS will continue to remain dominant – UC&C to be #1 apps adopted. This may be attributed to greater ease of adoption of SaaS, a large SMB population that has access to enterprise class IT for the first time, and higher pricing potential vis-à-vis other services.

• IaaS to move from T&D to production environments and custom apps

Cloud services market in US$ Million (2015 – 20)

2015 2020

IaaS

PaaS

SaaS 320

11

93.5

53

2

6Total = 61

Total = 366


Trend 3: Shift in managed services spending from network to application centric

Limited availability of application related skills in Indonesia is driving an up

spurt in demand for managed application services.

ITSP Trends by Enterprise

• Skilled ICT workforce and high ICT usage will led to demand for Enterprise Desktop, Enterprise Mobility and localized ICT solutions across verticals

• ERP, CRM and SCM will form bulk of Enterprise Software sales• Managed Security, Mobility, M2M and BI to grow rapidly due to

faster adoption from Large Enterprises• IT Transformation Projects and Mobility requirements from SME

to drive DC and Cloud services

Trends & ObservationsBusiness implications

Trends by Verticals

• Shift towards in-country manufacturing will drive growth for Managed Infrastructure, Managed Enterprise Solutions, etc.

• BFSI will focus on Datacentre & Managed Services (strong focus on security) to address existing/ new government regulations on Data Compliance & Security

• Public Transportation infrastructure projects will drive demand for Managed Infrastructure, Managed Network & Mobility solutions

1. ICT service providers need to provide affordable, best-in-class Enterprise Solutions & Cloud offerings

1

2. Prioritise key vertcals like . BFSI, E&R, Manufacturing, F&B, etc

2

3. Successful ICT players will depend on the ability to tailor solutions to address vertical-specific requirements from both Large Enterprises and SMEs

3


Trend 4: Continued growth in Datacentre demand

SpaceSpace

OutsourcingOutsourcing

ExpenditureExpenditure

VerticalsVerticals

FacilitiesFacilities

Co-Location Managed Hosting

• Pure space rental, with power and cooling optional

• Pure space rental, with power and cooling optional

• Rental of servers and storage

• Rental of servers and storage

• Need to have in-house skills and time spent on managing and updating

• Need to have in-house skills and time spent on managing and updating

• CapEx intensive model• CapEx intensive model • More OpEx focused• More OpEx focused

• BFSI, govt. and healthcare to continue focus on co-lo

• BFSI, govt. and healthcare to continue focus on co-lo

• SMEs are leapfrogging directly to IaaS

• SMEs are leapfrogging directly to IaaS

• Focus on facilities and enterprise to manage IT

• Focus on facilities and enterprise to manage IT

• One of the key aspects of Security is the responsibility of the DC Service provider

• One of the key aspects of Security is the responsibility of the DC Service provider

• Flexibility and scalability, especially in IaaS model

• Flexibility and scalability, especially in IaaS model

Aspect

Migration

• CAGR (2015-2020) = 28%• CAGR (2015-2020) = 28% • CAGR (2015-2020) = 41%• CAGR (2015-2020) = 41%GrowthGrowth


ASEAN – An important opportunity and a threat

1967: Original aimscooperation in the economic, social, cultural, technical, educational and other fields, and in the promotion of regional peace and stability

2015: Original aims maintained but vision enhanced

A community comprised of three pillars:1. ASEAN Political-Security

Community2. ASEAN Economic Community3. ASEAN Socio-Cultural

Community.

2020: ASEAN Vision 2020 An integrated and liberalized region in terms of the trade of goods, services, investments,

and capital.

ASEAN 2020: A Partnership in Dynamic Development

Deadline for Non-Tariff Barriers within ASEAN to be eliminated

7

• ICT will be a key enabler for many of the initiatives like Single port facilitation, common immigration platform etc.

• Indonesia will be the biggest market in ASEAN and hence will be closely watched for many of the initiatives


Where are the growth areas where Enterprises can tap further ?

Financial sector

• I. Banking

• Intra and inter M&A

• Consumer banking (e.g.,

stocks)

• II. Insurance

• Reduced role of agents

• Price transparency

Sector Implications on sub-sector

• Banking consolidation will create opportunities for

large scale integration as different IT systems will

need to be integrated .Consolidation will also

increase demand for Outsourcing/Managed services .

• Insurance expansion will also lead to more online

Insurance selling leading to demand in hosting and

integration services as well as Data centre space

Implications for Enterprises

Infrastructure & Logistics

• Public transport (Urban and intra-

regional)

• Upgrading of national and cross-

border infrastructure

• National logistics providers will

benefit from regional upscaling

• Single window facilitation will ensure IT systems in

ports/shipping companies of all the countries will

need to be upgraded. First movers will have an

advantage in playing a role in other countries IT

systems.

• This will also lead to spill over in IT system enhancing

and up gradation in the back end for 3rd party Freight

forwarders and logistics players and also increased

connectivity requirements

Domestic - Opportunities


Where are the growth areas where Enterprises can tap further ?

Energy/Utilities

• Provision of green energy, smart and

international connected grids

• Industry consolidation and cross-border

M&A

• Water and waste management at second

and third tier cities

Sector Implications on sub-sector

• Smart grids will lead to increase in

connectivity and demand for System

integration.

• Investment in utilities will also drive system

standardization and IT system enhancement

Implications for Enterprises

Food & Retail

• Local food-producers will expand their

reach to other ASEAN nations and look for

small acquisition targets. Food quality and

adoption of advanced food-technology will

be essential

• Mid-sized retail real-estate companies are

acquisition targets

• Retail infrastructure investment in new

systems needed for ensuring food

consistency and quality across the region.

• Supply chain will need to be enhanced

• Acquisitions will lead to standardization of

systems

Domestic - Opportunities

Healthcare

• Hospital groups

• Homegrown pharmaceutical sector

• As pharmaceutical laws relax, there will be

new investments in emerging economies

which will lead to IT infrastructure up

gradation and connectivity demand.


Our Domain Coverage

Frost & Sullivan’s Tech advisory covers a wide breadth of BPO /IT outsourcing services and IT

Infrastructure / Application services and hardware

Tech AdvisoryTech Advisory

IT Infrastructure/

Application servicesBPO Services

BPO Services

• Customer Service

• Finance &

Accounting

• Human

resourcing

• Procurement

• Knowledge

Services

Infrastructure

Services

• Desktop Services

• Data center /

Cloud Services

• Network /

Communication

Services

• Security &

Privacy Services

• Storage Services

IT Hardware

IT Hardware

• Desktop PCs &

Notebooks

• Networking

Equipments

• Storage &

Security

• Servers

• Printers & other

peripherals

Tech Advisory

Application

Services

• Application

Development

• Application

Hosting

• Application

Integration

• Application

Management

• Application

Testing


Our Offerings To Clients (Buyer-Side)

Frost & Sullivan offers the following Procurement Advisory services to our buyer-side clients, who

procure services and goods from vendors

Bu

yer-

Sid

e S

erv

ices

Client Technical Requirement

Analysis

Current Business process analysis

Business Case Development

Vision & Scope Development

Risk Assessment & Mitigation Measures

Client’s Current Business Analysis

Business Case

Feasibility Analysis

1

2

Relationship Management

Contract Management

Monitor & Review Success

Exit Planning & Handover

Post Contract Engagement

5

Vendor evaluationVendor Short-listing

for bid inviteDevise Scoring methodology

Vendor Proposal Evaluation &

Recommendation

Contract Design & Negotiation

4

Requirement Gathering & RFP

Design

Design RFI / RFP / TOR

Client Requirement Gathering

RFP release and clarification support

3

Tech Advisory


Our Offerings To Clients (Vendor-Side)

Frost & Sullivan offers the following Procurement Advisory services to our vendor-side clients,

who sell services and goods to their customersV

en

do

r-S

ide S

erv

ices

Deal Shaping RFI / RFP AnalysisClient

Due DiligenceCost / Revenue

ModellingContract Design &

Negotiation

ArticulatingVendor’s Value

Proposition

• Analyzing and assessing customer’s requirements from the RFP

• Requirement clarification meetings

• Assessing the RFP response evaluation criteria

Vendor’sValue Proposition

For Customer

Customer’s Requirements

Vendor’s Solution Offerings

Competitor’s Solution Offerings

• Positioning Vendor’s solution offerings vis-a-vis customer’s RFP requirements and other bidders’ offerings

• Defining a winning value proposition of the vendor, specific to the requirements of client’s RFP

Vendor’s unique value proposition for the client would emerge by effectively showcasing vendor’s solution offerings in the context of client’s specific requirements and the solutions & capabilities which

the other bidders can offer to the client

• Comprehensive competitive analysis of other bidders’ capabilities to fulfillclient’s RFP requirements

• Analyzing other bidders’ potential positioning to meet client’s RFP requirements

Tech Advisory

Indonesia Digital Transformation Outlook Briefing 2016

Presentations & Public Speaking

Transcript of Indonesia Digital Transformation Outlook Briefing 2016