Taking you Farther

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%.

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.

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.

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.

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%.

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.

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.

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.

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.

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.

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.

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.

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.

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.