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