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Taking you Farther

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VoicenData Bureau
New Update

Communication has become a critical part of an

enterprise's ICT strategy. And it is evident from the fact that telecom spend

has recorded a growth rate of 27% even in the recession. Last year, telecom

spend was 22.3%. ICT spend growth rate according to the Enterprise

Communications Priorities Survey '09 is 19% and IT spend growth rate is 17%.

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The survey covered 200 enterprises with the maximum number

of companies (26%) coming from the ITeS segment. About 25% of the companies

interviewed are from the manufacturing segment, and 18% from BFSI. Nearly 64% of

the enterprises recorded a turnover in the range of Rs 200-999 crore, and 32%

recorded more than or equal to Rs 1,000 crore. The rest of the enterprises had a

turnover of less than Rs 200 crore.

Where employee size of organizations is concerned, about

55% of the enterprises had less than 1,000 employees, and 20% had employees in

the range of 1,000-1,999. About 15% of the organizations had about 2,000-5,000

employees, and 10% had over 5,000 employees. Nearly 76% of the organizations had

less than 499 personal computers and 11% had about 500-1,000 PCs, and the

remaining had more than 1,000 PCs.

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As anticipated, ITeS recorded the highest average ICT

spend as percentage of turnover. The vertical also recorded the highest average

IT spend and average telecom spend as percentage of turnover. Information

technology vertical comes second where average IT and telecom spend is

concerned. Telecom spend per employee is highest in ITeS and BFSI. Predictably,

average IT as well as ICT spend per employee is lowest in the manufacturing

vertical.

Key Takeaways
  • Tata Communications ranked highest on the satisfaction level
  • Overall satisfaction goes up from 82.6% last year to 89.4% this year
  • Like last year, ITeS recorded the highest average telecom spending per

    employee
  • 42% of the respondents signed SLAs as compared to 54% last year
  • Average telecom spend grew by 27% in FY 2008-09

Buying Behavior



Where primary connectivity service provider is concerned, 19% of the

respondents said that they use Tata Communications, followed by MTNL and Airtel,

with 18% of the respondents opting for these service providers. About 16% of the

respondents use BSNL as a primary connectivity service provider and 14% use

Reliance. The rest of the market is dominated by players like Aircel, Tulip,

Sify, etc.

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There is not much change where the decision-making is

concerned. It is centralized at the head office. Around 61% of the respondents

opted for this model and the rest 39% have decentralized their decision-making

process. There is clearly a movement to decentralize the decision-making since

last year, 83% of the firms said that decision-making is centralized at the head

office. This year it has come down to 61%.

Spend as % of

Turnover of the Organization

 

All

Manufacturing

Pharma*

BFSI

IT

ITES

Retail*

Avg ICT spend as % of

turnover

0.68

0.41

0.26

0.79

0.92

1.03

0.70

Avg IT spend as % of turnover

0.58

0.29

0.20

0.69

0.82

0.85

0.61

Avg Telecom spend as % of

turnover

0.13

0.12

0.07

0.10

0.11

0.18

0.09

However, last year 61% of the respondents said that CTOs,

CIOs, and IT heads were the primary decision makers. But this year the

percentage came down to 56%. The central management of the company, managing

director, CEO, and COO came second in primary decision makers category with 38%

of the respondents saying that they are the decision makers. 4% of the

respondents said that others, like committee and vice presidents, were the

primary decision makers.

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Last year, there was a clear movement that communication

is different from IT; 60% of the enterprises last year said that voice

communication is managed by the same group which manages IT and Internet

services. This year the number has gone up to 66%. This might be because of the

economic recession. In the previous year, 27% of the respondents claimed that a

separate group was managing voice communications, and this year the percentage

has come down to 25%. In the same vein, 13% of the enterprises last year said

that they have both groups but there was some overlap. This percentage has come

down to 9% this year.

Top 5

Technologies for Future Spend

 

All

Manufacturing

Pharma*

BFSI

IT

ITES

Retail*

Domestic Leased Line (local)

1

1

1

1

1

1

5

DSL

2

2

2

2

2

 

3

Domestic Leased Line (NLD)

3

 

4

 

3

2

 

Cable Modem

4

     

4

3

1

VPN-MPLS

5

4

 

4

 

4

4

ISDN

     

3

     

Voice over IP (VoIP)/IP

Telephone

             

PSTN- Dial-up

   

3

   

5

2

VSAT

             

Domestic Leased Line

 

5

 

5

     

Metro Ethernet

             

IPLCS/International Leased Line

       

5

   

VPN

             

VPN-ATM/Frame Relay

             

VPN-IP

             

Wireless LAN

             

Application Hosting (ERP, CRM,

AND SCM)

 

3

5

       

Audio Conferencing/Web

Conferencing/Videoconferencing

             

Web Hosting

             

IP Fax

             

IP Centrex

             

Mobile Email and Other

Applications

             

Note: * statistically

unviable data

             

Like last year, the IT division staff remains the top

influencer with 76% of the respondents claiming the same. This is followed by

CTO/CIO and IT head as the top influencer for ICT purchase with 59% of the

interviewed enterprises claiming the same. About 13% of the respondents claimed

that CFO and VP, finance were the top influencers for the ICT purchase in their

organizations.

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In access technologies, 56% of the respondents have

adopted ISDN, followed by 54% for PSTN, 50% for domestic leased line and 49% for

DSL. Surprisingly, there is a drop in the percentage of respondents opting for

audio/videoconferencing solutions. While last year, it was 60%, this year it has

come down to 56%. Not surprisingly, the IT vertical has seen the maximum

adoption with 74% of the firms going in for audio/videoconferencing solutions

followed by pharma at 67%. VPN (ATMFR) has recorded the least adoption with only

9% of the firms, across verticals, going in for this technology.

Top 5

Technologies for Future Spend

 

All

Manufacturing

Pharma*

BFSI

IT

ITES

Retail*

Domestic Leased Line (local)

1

1

1

1

1

1

5

DSL

2

2

2

2

2

 

3

Domestic Leased Line (NLD)

3

 

4

 

3

2

 

Cable Modem

4

     

4

3

1

VPN-MPLS

5

4

 

4

 

4

4

ISDN

     

3

     

Voice over IP (VoIP)/IP

Telephone

             

PSTN- Dial-up

   

3

   

5

2

VSAT

             

Domestic Leased Line

 

5

 

5

     

Metro Ethernet

             

IPLCS/International Leased Line

       

5

   

VPN

             

VPN-ATM/Frame Relay

             

VPN-IP

             

Wireless LAN

             

Application Hosting (ERP, CRM,

AND SCM)

 

3

5

       

Audio Conferencing/Web

Conferencing/Videoconferencing

             

Web Hosting

             

IP Fax

             

IP Centrex

             

Mobile Email and Other

Applications

             

Note: * statistically

unviable data

             

Challenges



Across verticals, lack of after-sales services remains the key challenge for

enterprises. This is followed by shortage of trained manpower. The third most

important challenge is unreliability of network followed by managing network and

scalability of technology. The vendors would do well to keep these challenges in

mind.

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Most of the segments have identified lack of after-sales

and shortage of trained manpower as the first or second most biggest challenge.

In the manufacturing segment as well, lack of after-sales

is the biggest challenge being faced. The second challenge is increased network

access requirements due to increase in remote access. Not surprisingly, managing

network is the single biggest challenge for the ITeS segment, followed by lack

of convenience and ease-of-use.

For the retail segment, shortage of trained manpower is

the biggest challenge being faced where the is communication infrastructure is

concerned, followed by unreliability of network.

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Practice of Outsourcing



Many enterprises believe that outsourcing of ICT management is essential to

continue the focus on core competencies. This is visible in the survey as well.

Like last year, price and post-sales support are the most important criteria in

the selection of an outsourcing service provider. Besides, reputation of service

providers, and whether the vendor is a total solutions provider or not are the

other important selection criteria.

Criteria for

Selecting Service Provider

 

All

BSNL

MTNL

Airtel

Tata Communications

Reliance

Network Robustness,

Reliability and Redundancy

1

2

2

2

1

3

Total Ownership Cost/Price

2

3

5

1

3

1

Ability to Take End-to-end

Responsibility

3

4

1

4

4

2

Network Security

4

1

4

3

5

 

Understanding of our Business

Connectivity Needs

5

     

2

4

Availability of Suit of

Hybrid (multiple type of) Connectivity Solutions

     

3

   

Customer References

           

Past Experience of

Vendor/Service Provider

           

Proactive Network Management

           

Profile and Clientele of

Service Provider

         

5

QoS Commitments

           

SLAs Committed

 

5

3

     

Geographical Coverage

           

Billing and Support

           

Image

     

5

   

Value Added Service

Availability

           

Lead/Response Time

           

Track Record for Innovation

           

Managing/in Business in Long

Term

           

Bandwidth

           

Customer Service Levels

           

Around 31% of the respondents have outsourced their

domestic leased line management, 22% outsourced their VPN management, and 19%

outsourced the mobility applications management. Nearly 13% of the respondents

were outsourcing VSAT management.

SLA Signed

with Connectivity Service Provider

 

All

BSNL

MTNL

Airtel

Tata Communications

Reliance

NBase (numbers)

200

32

38

35

38

27

Yes

52%

50%

65%

44%

66%

37%

No

42%

32%

35%

53%

31%

58%

Planning to Sign

6%

18%

0%

3%

3%

5%

Nearly 3% of the respondents said that they would be

outsourcing VSAT management in the future; 2% claimed that they would be

outsourcing domestic leased line management. In the pharma segment, 8% of the

respondents plan to outsource VSAT management, domestic leased line management,

VoIP, and VPN management. Last year, mobility applications management was in the

roadmap of the retail segment. But this year not even a single respondent

mentioned it. Mainly because 25% of the respondents in the retail segment are

already outsourcing mobility applications management.

Technology

Penetration

Telecom

Infrastructure
             
Access Technology

All

Manufacturing

Pharma

BFSI

Retail

IT

ITeS

Base (numbers)

200

50

15*

35

10*

35

55

DSL

49%

64%

80%

40%

50%

43%

35%

PSTN

54%

72%

47%

51%

60%

43%

45%

ISDN

56%

60%

53%

49%

70%

57%

55%

Domestic Leased Line

45%

50%

47%

49%

40%

43%

38%

Domestic Leased Line - NLD

40%

36%

40%

40%

70%

43%

35%

Domestic Leased Line - Local

50%

58%

60%

54%

10%

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