The list of companies comprising the Strategic 100 — whether they are in the New Zealand 25, Global 50 or Rising Stars 25 — is an indication, even a barometer, of how competitive the ICT landscape is. It also demonstrates how the key players have to be prepared to constantly reposition themselves, change course or be ready to acquire a rival firm — if they want to stay in the game and hold or increase their share of the market.
Agility, a work mantra for today’s IT organisations, also applies to the vendor community which has to adapt and compete in a fast-changing environment. This comes as no surprise as change — its management and mastery — has been a key theme for the ICT vendors that have been featured in the past three years of the Strategic 100 in New Zealand.
In the past 12 months, the ICT vendor community has to contend with a range of issues that are prompting them to rethink policies, even take risks and venture into non-traditional territories. Thus, in the following pages, you will read how ICT vendors are operating amidst mergers, both as acquirers and as takeover targets; pursuing environmental themes; trying to stay on top of sure-fire markets such as virtualisation and on demand software and services; or working on the edge of Web 2.0 technologies.
Consolidation remains constant
Consolidation — exemplified by mergers and acquisitions, friendly or unsolicited — has always marked the ICT vendor space. Acquisition remains a major strategy for expansion of the companies, particularly in the Global 50. Google, for example, has been buying a range of software and Web 2.0 companies, from the massive deals for YouTube and Double Click (at US$1.65 billion and US$3.1 billion respectively) to the more modest community photos website Panoramio and browser-based security software company GreenBorder.
Google, in fact, is an interesting phenomenon since Strategic 100 was started in New Zealand. The company was a candidate for the Rising Stars in 2005, but did not muster enough votes from the panel which chose companies like Skype, Vocera and Salesforce.com. Two years later, Skype has been acquired by eBay and Google and Salesforce.com are now ensconced in the Global 50.
Alcatel and Lucent were separate Global 50 companies in 2006 and are now listed as Alcatel-Lucent since their merger. Likewise, SAP and Business Objects are separate entries this year, but with the recent amalgamation of the two European companies, they will most likely share a profile in the next Strategic 100.
Oracle, meanwhile, continues to be a big spender on the acquisition trail, the latest being an unsolicited bid for BEA. But unlike the SAP and Business Objects merger, this planned union may hit some rough spots at BEA. Indeed, the public has not yet entirely forgotten the drama surrounding Oracle’s takeover of PeopleSoft more than two years ago.
On the local front, Japanese firm Fujitsu (a Global 50 company) has acquired Infinity, a mainstay in the New Zealand 25. Jade Software has also made two major acquisitions — respectively a local company and an Australian company. Vodafone, another Global 50 company, acquired internet service provider ihug, which is listed in the New Zealand 25.
Rebranding and repositioning is a key theme for both local and global firms. Global companies are muscling in on the consulting space and moving into new areas like on demand software and services. Corporate rebranding is the name of the game for some New Zealand 25 companies like BCL, which owns New Zealand’s third most extensive telecommunications network, and has rebranded as Kordia. And now Kordia — which made it to the list for the first time this year — is itself on the acquisition route, having bought internet service provider Orcon.
Hot markets
Companies in the virtualisation space are represented in the Global 50. Sam Higgins, research director for Longhaus, and a member of the judging panel for New Zealand and Australia, says enterprises are now past the awareness stage for virtualisation and are deploying the technology. “The big change in the past 12 months is that they are actually implementing beyond the business case stage,” says Higgins.
Citrix, for instance, has entered the space with its acquisition of Xensource, number two in the virtualisation space headed by VMware, a subsidiary of another Global 50 company, EMC. Hitachi has also stated virtualisation is part of its growth goal.
Software as a service is another sure-fire market for ICT vendors. Salesforce.com, now in the Global 50, started as one of the contenders in the Rising Stars’ category. Citrix, meanwhile, also dips its toe in the on demand software market, and the same is true for Cisco’s purchase of Webex. Fronde, which was known as Synergy until its rebranding early this year, is also expecting growth through its work on the SaaS space.
Business Objects is another Global 50 company moving into the SaaS space as it starts offering an on demand service for its full suite of business intelligence software.
True, SaaS is a lot quicker to get to market, and more streamlined for operational and capital expenditures. But Higgins cautions the necessity of looking at both the “silver lining” and “dark clouds ahead” for implementing organisations.
SaaS is a lot more like buying a mobile phone, he says. “The contract providers want to get you to sign up for multi-year deals, it is not month by month.”
“Where people have to be careful is around governance,” says Higgins. “What is the
governance around the information? With the change in Australia and New Zealand on data disclosure, is there sufficient control in place? How do they get their data back from a SaaS environment?”
As well, there are developments in the area of outsourcing. This year, Indian outsourcing companies HCL, Infosys and Wipro made it to the Global 50. Higgins expects these outsourcing companies to take a bigger slice of business in New Zealand and across the region. He notes how these companies are adopting a “hybrid model”, doing some of the work locally. “They are starting to look like an Asia-Pacific EDS.”
Vendors in the open source space are regular entries in the Rising Stars’ category. One of them Orbeon, makes it to the list for the first time. “We believe in web technologies, in standards, in open source, and in great customer support,” says Alessandro Vernet, co-founder and CTO, on the company’s guiding principles. Orbeon software is free and the company revenue comes from subscription support. It is also described as one of the companies working on the edge of Web 2.0. As a member of the judging panel observes, we can expect more Web 2.0 start-ups to emerge in the next few months and become contenders in the Rising Stars’ category next year.
The green agenda
With environmental responsibility making it to the boardroom agenda, more global vendors are drawing strategic plans and appointing top executives to focus solely on the issue of sustainability — as seen in the cases of Sun Microsystems and Dell. And the companies are not shy on beating the drum on the programmes they are doing that are connected to eco-responsibility — from joining industry forums, to setting up recycling programmes and getting certifications for meeting certain environmental parameters.
Sun has said it is commited to reducing its greenhouse gas emission by 20 per cent in five years. Sony has set up drop-off centres with the end goal of being able to recycle one kilo of old equipment for every kilo of new products it sells. Fuji Xerox is another vendor focusing on the environmental space, setting up recycling systems across the region and producing a biomass plastic suitable for industrial use. It recently received the Environmental Choice New Zealand accreditation given to manufacturers that have made substantial gains in energy efficiency and using fewer consumables.
Prime time
Interestingly, New Zealand and Australian companies have more representatives this year in the Rising Stars’ category than in the previous two years. Back then the list was dominated by start-ups in North America, the UK and Israel.
New Zealand companies made it to the list like iVistra, FX Networks, M-Com, Sonar6 and GFG Group; and it is the same with Australian companies exemplified by Cargowise, Holocentric, Infohrm and Trust Defender. An open source, business intelligence company in the US, Pentaho, has a New Zealand connection. It acquired Weka, an open source, data mining tool developed by the University of Waikato.
The consistent presence of organisations like Jade, Axon, Simpl Group, Solnet Soultions, Eagle, Fronde and Weta Digital in the New Zealand 25 shows how well entrenched these organisations are and how they continue to flourish with local and offshore work.
One thing is for sure, consolidation will continue to be a theme for companies in the three categories — as acquirers or being acquired. Green ICT, virtualisation and on demand software service may still be hot, but there will be another sure-fire market that will emerge, and most probably it will be on the back of Web 2.0 technologies.
The people factor
One issue that emerged, from the leaders of both global and New Zealand organisations, is staff recruitment and retention. Mark Ratcliffe, chief operating officer, technology and enterprises for Telecom, compares the extent of the skills shortage to that of the dotcom boom and Y2K seven years ago.
“The biggest challenge as we grow in size is finding the people,” says Orion Health CEO Ian McCrae. And companies are becoming more creative in managing ways to ease the shortage. Orion, for instance, is taking on 40 graduates this year as an approach to managing the skills’ shortage. Optimation executive Neil Butler is entering into a strategic partnership with Indian-headquartered Satyam Computer Services. With Satyam’s 40,000 staff around the world, the New Zealand company can access a global resource base of skills. Overseas stints or assignments for staff are becoming more common incentives today, which is an advantage for companies with global operations or offshore subsidiaries and partners.
On the other hand, the skills’ shortage is a global phenomenon and is helping the growth of companies like Infohrm, which provides software around workforce planning, analytics and reporting; and Sonar6, which offers human resources applications, delivered through SaaS.
The skills’ shortage is set to be an ongoing challenge. How the offshore and local companies will address this and the scale of its impact on the growth of the companies, are key concerns to watch out for in next year’s Strategic 100.
Who made it to this year’s Strategic 100?
New Zealand 25
These organisations display an impressive local business focus and often perform well on foreign shores. These companies are important to New Zealand ICT organisations that value working with entities fully attuned to the needs of the local business community, while being flexible and innovative at the same time.
1. Axon
2. CityLink
3. Datacom
4. Datamail
5. Eagle Technology
6. ETSL
7. Fronde
8. Gen-i
9. Ihug
10. Infinity Solutions
11. Intergen
12. Jade
13. Kordia
14. Optimation
15. Orion Health
16. Rakon
17. Revera
18. Right Hemisphere
19. Simpl Group
20. SolNet Solutions
21. Tait Electronics
22. Telecom NZ
23. TelstraClear
24. Weta Digital
25. XSOL
Global 50
These companies are the big hitters — the ones CIOs can not afford to ignore. These companies, and the people that drive them, make a difference with their products, processes (and predictions) influencing buying patterns here and throughout the world.
1. Accenture
2. Adobe
3. Alcatel-Lucent
4. AMD
5. Apple Inc
6. Avaya
7. BEA Systems
8. BMC Software
9. Business Objects
10. CA
11. Canon
12. Cisco
13. Citrix
14. Cognos
15. Dell
16. EDS
17. EMC
18. Fuji Xerox
19. Fujitsu
20. Google
21. HCL Technologies
22. Hitachi
23. HP
24. IBM
25. Infosys
26. Intel
27. Lenovo
28. McAfee
29. Microsoft
30. Motorola
31. Nokia
32. Nortel Networks
33. Novell
34. Oracle
35. Red Hat
36. Research in Motion
37. RSA
38. Salesforce.com
39. Samsung
40. SAP
41. SAS
42. Skype
43. Sony
44. Sun Microsystems
45. Symantec
46. Toshiba
47. Unisys
48. Vodafone
49. Wipro
50. Yahoo
Rising Stars 25
This section of Strategic 100 is an early flag flyer of companies that are already impressing savvy CIOs, who locally and internationally keep a tab on cutting-edge companies set to make a difference in ICT.
1. Agitar
2. Attensity
3. CargoWise
4. Cognizant
5. FX Networks
6. GFG Group
7. Holocentric
8. Huawei Technologies
9. Infohrm Group
10. iVistra Technology
11. K2
12. M-Com
13. Netcat
14. NetSuite
15. Orbeon
16. Orchestria
17. Pentaho
18. Sonar6
19. TrustDefender
20. Unica
21. Univa UD
22. Vocera Mobile
23. Wherescape.com
24. Xterprise
25. ZettaCore
The Strategic 100 2007 Panel of Judges
New Zealand
Steven Mayo-Smith, chief information officer of Radius Health Group
Garth Biggs, executive director of HiGrowth Project
Tony Clear, associate head, School of Computing and Mathematical Sciences, AUT University
Stephen Whiteside, director of IT systems and services at the University of Auckland
Sam Higgins, research director, Longhaus
Tim Sheedy, senior analyst, Forrester
Amit Gupta, country manager, IDC New Zealand
Marcel van den Assum, independent advisor
Derek Locke, CFO, FX Networks
Anthony Hafoka, director, KPMG’s IT advisory practice
Australia
Simon Smith, CIO of News Digital Careers, a division within News Digital Media
Gus Jansen, chief information officer, Australasian Performing Rights Association
Bob Hennessy, general manager of technology and shared services , AAPT
Helen Harms, general manager of IT, State Super Financial Services
Tom Worthington, visiting fellow, Department of Computer Science, Faculty of Engineering and Information Technology, Australian National University
Julie Fahey, KPMG
Mick Mioduszewski, chief information officer, New South Wales Office of State Revenue
Chris Morris, IT consultant
Craig Baty, group vice president and distinguished analyst, Gartner
Sam Higgins, research director, Longhaus
Asia
Peter Chan, director, regional head of IT, Invesco, Hong Kong
Waleed Hanafi, SVP — CIO, Global Refund Group, Singapore
Michael Ma, vice president, information technology, AIG, Hong Kong
Kanchan Nijasure, chief technology officer, Bank Danamon, Indonesia
Deny Rahardjo, senior director, regional IT — Asia and global IT web services, Vishay Intertechnology, Singapore
Deepak Sarup, senior executive vice president and CIO, Siam Commercial Bank, Thailand
Andy Tan, senior general manager, IT Department, Employees Provident Fund, Malaysia.
Tan Kok Meng, head of Group Service Delivery Zone 3, British American Tobacco, Malaysia
Gopal Varutharaju, director, information technology, Jebsen & Jessen, Singapore
Michael Wirth, head of IT, Oasis Hong Kong Airlines
The 2007 MIS Strategic 100 report appears in the November 2007 issue of CIO New Zealand magazine.