IT spending seen reaching $1b this year
The Jakarta Post, Jakarta
Total spending for information technology (IT) in Indonesia is projected to increase by 20 percent from US$840 million last year to $1 billion this year, as more companies seek to increase their competitiveness ahead of the implementation of the regional free market.
Marcellus Liman, a senior executive at PT SDI Technologies, said over the weekend that IT spending in Indonesia would continue to increase in the coming years as the country sought to catch up with other Asian countries, where information technology penetration is much higher.
SDI Technologies is an integrated technology solutions provider, offering such services as enterprise resource planning (ERP), customer care and billing systems.
"Based on data from the IDC (International Data Incorporation), more local companies will increase their spending on the application of technology in anticipation of the ASEAN Free Trade Area (AFTA) in 2003 and to expand to foreign markets," he told The Jakarta Post.
He said multinational companies and large domestic firms had prompted local enterprises, particularly small and medium-size businesses, to use information technology, including solution- related services, as a way to minimize costs and maximize profit.
"However, there are still big domestic companies which are reluctant to spend more on IT," he said.
According to him, the growth prospects for IT applications and solutions, such as ERP, remained promising. He cited data from the IDC, which showed that only about 20 percent of some 5,000 small and medium-size enterprises in the country were already using the ERP technology. In other Asian countries, this figure reaches 50 percent.
"If local companies want to compete with Asian firms and expand their overseas market, they have to implement the ERP solution, which will cut 30 percent from operating costs such as shipping, inventory and sales," he said.
He said many local firms failed to invest in the technology because they did not understand it would help increase sales and profit.
"Actually, the cost for implementing ERP is not expensive, ranging from $10,000 to $500,000, depending on the type of modules to be implemented," he said.
However, he noted that the country's poor technology infrastructure, including low access to the Internet and telecommunication services, could discourage companies from applying the ERP solution, because this lack of infrastructure would affect the success of its implementation.
A recent study by SDI Technologies indicated that the rate of success for ERP implementation in the country reached 75 percent in the manufacturing sector, while in the financial sector it was 100 percent.
"Implementing ERP in the manufacturing sector is more complicated than in the financial services sector. But we are optimistic it will gradually improve in the years ahead," he said.