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Singapore Information Technology Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2007 Product Code: R302-1332 Description Market OverviewWith Singapore recently marking the one year anniversary of the launch of the landmark iN2015 project with some new initiatives, conditions seem right for the IT market to continue to enjoy healthy growth in the near-term. The total size of the domestic IT market is expected by BMI to increase from US$3.8bn in 2006 to around US$4.7bn in 2011. A combination of government infocomms spending and strong demand from electronics, financial services, healthcare and other sectors is driving spending. A recovery in the global IT market in 2007 should also have beneficial effects for an economy in which IT and electronics are the main export categories. Meanwhile, the key IT vertical of financial services is another sector expected to enjoy above average growth over the next few years as Singapore enjoys increasing popularity as a regional service hub. With the ‘Intelligent Nation 2015’ (iN2015) plan placing IT at the heart of the government’s strategy to improve economic competitiveness in the next decade, Singapore’s IT sector therefore has plenty of grounds for optimism. The government has announced upwards of SGD700bn worth of tenders for ICT in 2007, in addition to the project to create a standard operating environment, which was launched in April. Overall IT market CAGR for the forecast period is estimated at 4%. Growth in notebook sales exceeded analyst expectations in 2006, providing strong momentum to the PC segment as a whole and stimulating new vendor retail tactics. In 2007, SMEs, a key element of the economy which represent around 90% of all enterprises in Singapore and one quarter of GDP, are expected to account for more than 40% of IT spending. In recent months key Government bodies such as the National Research Foundation (NRF) have been promoting the need for SMEs to adopt technology solutions. ERP and other e-business applications are enjoying increasing popularity with the SME market as enterprises look to enhance productivity and reduce workforces through the automation of essential functions. Industry Developments Reviewing one year of the landmark Intelligent National 2015 (iN2015) plan the government said that much progress had been made but much remained to be done. Speaking recently in Singapore, Minister for Information, Communications and the Arts Dr. Lee Boon Yang said that since the launch of the Singapore IC Masterplan iN1015 in June 2006 a number of programmes and initiatives had been rolled out collectively by the Government and Industry. The landmark programme has gained recognition from the global community, with a recent e-government study by Accenture placing Singapore first among 22 countries, ahead of Canada and the United States of America. Meanwhile government figures have revealed unprecedented revenues growth. In 2006 total infocomms revenue reached S$45.4bn, representing a 20% growth from 2005 to 2006. Exports accounted for US$28.98bn or 64% of this total. The figures reflect a steady continuing increase in IT penetration and utilization. In 2006 almost all enterprises with 250 employees or more have an established web presence and used internet and broadband. Company News Highlighting strong opportunities for IT vendors in the Health sector, leading local IT Services company Singapore Computer Systems has announced the completion of the latest stage of the iPharm project implementation for Singapore’s National Healthcare Group (NHG). The major project aims to create a centralized pharmacy system across health institutions with the integration of iPharm and the Electronic Medical Records (EMR). Meanwhile IBM recently won a major contract from SingHealth, the nation’s largest public healthcare group, to standardise hardware and software platforms across its various institutions. According to IBM, local enterprises are looking to improve business efficiency and evolve their business models to enable growth for the long term. Singapore’s status as a regional IT hub received a major boost when Dell announced plans to split its world headquarters between the city state and its current Austin, Texas base. Dell’s supply base is now disproportionately located in Asia, particularly in Taiwan, China and some other parts of the region. As a result, Singapore is increasing in its importance as a global support hub for its supply chain operations and manufacturing. A series of recent developments have also underlined Singapore’s regional role as a centre for the semiconductor and components industry. Computer Sales Spending on IT hardware is expected to rise to around US$1.8bn in 2007 from around US$1.7bn in 2006, as healthy economic growth leads a pick up in the IT market. According to the latest report of the Infocomm Development Authority (IDA), 74% of Singapore households now have a PC and, following PC demand growth of close to 20% in 2001-2005, this level of saturation will act as a constraint going forward. However, there still exists a significant digital divide in Singapore, particularly between income groups, something that represents a source of potential demand given the government’s intention to address the issue. (However, recent data reveals that the digital divide has narrowed somewhat.) A further area of potential growth is the SME sector, with growth of 4.5% in spending by SMEs predicted across each of the next few years. Given overall high rates of penetration, the increasing number of products and services available on the internet is likely to be a major driver of demand for computer hardware. Software Software accounted for about 15% of the domestic IT market in 2005 with estimated spending of US$565mn. As the market focus moves from hardware to services and solutions, the share of the IT market accounted for by software should rise to 18% by 2011, with enterprises seeking greater leverage from their investments. ERP and other e-business products will find increasing popularity with the SME market, as enterprises look to enhance productivity through the automation of essential functions. As evidence of the importance of this segment to vendors, Microsoft is offering SMEs six different options to migrate to the Windows Vista operating system, along with a variety of financial packages. Security is another growth area: according to an IDA survey 80% of those surveyed in 2006 had installed anti-virus software, while 60% had installed anti-spyware and firewall applications. IT Services IT services accounted for about 38% of the domestic IT market in 2006, with spending of US$1.47bn, up from US$1.41bn in 2005. CAGR for the segment is estimated at 5% over the 2006-2011 period. The BPO market is currently growing at a double-digit rate, and the IDA has said that it will devote US$12mn in 2006 and 2007 to developing Singapore’s BPO industry. Finance and accounting will remain the most important BPO categories, with Singapore currently enjoying revived popularity as a BPO location for financial sector organisations. The government is to tender a major outsourcing contract this year, following large deals in the private sector in recent years, with companies such as Singapore Airlines. Local companies are also following the trend, with Singapore Computer Systems (SCS) recently handing business continuity and disaster-recovery solutions provider SPRING Singapore a three-year deal to outsource its infrastructure and applications. E-Readiness The government has pre-qualified twelve bidders to deploy Singapore’s ultra highspeed NGN broadband Network. The NBN will be capable of offering high speeds of 1Gbps or more, and aims to provide affordable broadband for 95% of all homes and businesses by 2012. Broadband has become an increasing important driver of PC and notebook sales in mature market such as Singapore, with vendors such as Acer and HP rolling out new models with popular multimedia and entertainment features. The National Broadband Network is at the core of the government’s ‘Intelligent Nation 2015’ project. The contract for the first phase of the project, which will link businesses, schools, hospitals and homes, involves 45% of the network being rolled out within three years and the entire network by 2012. The second phase of the project will place an emphasis on pervasiveness and the provision of wireless access at affordable rates. Table of Contents
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