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Software & Services

  China's CIOs Demand Best Practices
June 12, 2008

The role of China's large enterprise MIS departments are changing from technology buyers and maintainers to strategic planning and business partners. This role shift has had a profound effect on China's software and services industries.

Communications and technology has broken down global barriers such that China's manufacturing, financial services, transportation industries are increasingly competing internationally. As a result, larger enterprises in these and other industries demand their CIOs be innovative business partners that help provide strategic solutions.

CIOs in turn are looking for industry best practices, and they are demanding their vendors to be not just tools providers, but also best practice providers.

Impact on software and services vendors.

In China, software product revenues reached 73.884 billion Yuan in 2007, up 17.9% over 2006, and growth has been steady. However, larger enterprise customers are not just looking for technology; their users don't care as much about what SOA, virtualization and Web2.0 are, but rather, how these technologies will solve their business problems.

Earlier software products focused on tools and point solutions. Starting in 2006, software vendors began focus more on integrated solutions, and solutions targeted to specific industries. “Information islands” became a problem that CIOs wanted to solve. Focus also shifted, in 2007, of software solutions that ultimately provided timely decision support and management best practices.

On one level, various enterprise applications such as EFP, FM, CRM, HRM, SCM and BI will be eventually integrated into a centralized management and control platform.

Taking software and services to the next level.

Software and services vendors and their partners are expected to know how to configure and apply such systems specific to industry need. Vendors need to provide consulting services and methodologies that ultimately help enterprises adapt to change, better utilize its assets, and support its business development.

For example, earlier ERP implementation really just meant product installation and training. Now, vendors in China are expected to also provide services in education, planning, IT architecture, process flow modeling, education, and other customization, all with an eye toward solving enterprises' business problems.

At the next level, Chinese enterprises are becoming aware and favorable towards various management best practices such as Key Performance Indicators (KPI), the Balanced Scorecard (BSC), and the Dupont System. Therefore, software solutions will eventually need to support and integrate smoothly into such best practices.

IT outsourcing grows.

As Chinese large enterprise MIS departments focus more on strategic business problems, basic MIS functions are being outsourced. Not only do MIS departments free itself of more operational tasks, but third party IT outsourcers (ITO) also provide economies of scope and scale to the services they provide. IT outsourcers are then well equipped to help ensure reliable and stable IT systems operations.

China's ITO revenues reached 4.153 billion Yuan in 2007, up 33.5% over 2006. More customized services are offered to large enterprises, while more standard maintenance services are targeted towards SMEs. Outsourced services also include internal help desk, desktop, network, data center, security and applications management.

Expansion will follow this introductory phase. CCID Consulting forecasts 31.0% CAGR in the next five years, with ITO revenues reaching 16.031 billion Yuan in 2012.

For more information

Please contact us for these and other China-related data, information and products.

Unless otherwise specified, all information provided is sourced from CCID Consulting.


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