Following flat 2013, Malaysia's 2014 IT spend will leap 10.2%, Gartner says


Richard Gordon, Managing Vice President at Gartner. modified 

Photo - Richard Gordon, Managing Vice President at Gartner.


Following a flat 2013, IT analyst firm Gartner predicts that Malaysia's IT spend will increase 10.2 percent and reach almost RM69.8 billion [US$21.29 billion] in 2014 while In total IT spending in the Asia Pacific region is forecast to reach US$758 billion in 2014, up 4.2 percent from 2013.

Gartner managing vice president Richard Gordon said worldwide IT spending is projected to total US$3.8 trillion in 2014, a 3.1 percent increase from 2013 spending of US$3.7 trillion, according to the latest forecast by Gartner.

Gordon said in 2013, the Malaysian market saw flat growth, growing 0.4 percent year over year. "Spending on devices (including PCs, ultramobiles, mobile phones and tablets) contracted 1.2 percent in 2013, but it will grow 4.3 percent in 2014 (see Table)."

Convergence of the PC, ultramobiles (including tablets) and mobile phone segments, as well as erosion of margins, will take place as differentiation will soon be based primarily on price instead of devices' orientation to specific tasks, he said.

Enterprise software spending growth continues to be the strongest throughout the forecast period, Gordon said. "The 2014 annual growth rate is expected to grow 6.8 percent. Customer relationship management and supply chain management (SCM) experienced a period of strong growth."


Gartner - Malaysia IT spend modified 

Table - Source: Gartner (January 2014)

 Focus on customer experience

"Investment is coming from exploiting analytics to make B2C [business to consumer] processes more efficient and improve customer marketing efforts," he said. "Investment will also be aligned to B2B [business to business] analytics, particularly in the SCM space, where annual spending is expected to grow 10.6 percent in 2014." "The focus is on enhancing the customer experience throughout the presales, sales and post sales processes."

"[However] a downward revision of the 2014 forecast growth in spending for telecom services - a segment that accounts for more than 40 percent of total IT spending - from 1.9 percent to 1.2 percent is the main reason behind this overall IT spending growth reduction," Gordon said. "A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers. The latter coincides in Western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones."

"The data centre systems spending growth outlook for 2014 has been cut from 2.9 percent in our previous forecast to 2.6 percent," he said. "This is mainly due to a reduction in the forecast for external controller-based storage and enterprise communications applications. These segments represent 32 percent of total data centre system end-user spending."

The IT services compound annual growth rate between 2012 and 2017 has been slightly reduced. The largest contributor to this revision comes from reductions in IT outsourcing - specifically, in colocation, hosting and data centre outsourcing growth rates. "We are seeing CIOs increasingly reconsidering data center build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent four to five percent annual growth through 2017," said Gordon.

The Gartner Worldwide IT Spending Forecast is an indicator of major technology trends across the hardware, software, IT services and telecom markets.