IT spending seen reaching $1b this year
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.