Helping IT Thrive in an Economic Crisis

1. Helping IT Thrivein an Economic Crisis Ed Brown, Chairman of Momentum Presentation to NICS ICT Conference 20 October 2009

2. Momentum • Momentum is the representative body for the Information and Communications Technology and the Digital Media industries in Northern Ireland • The membership base is wide and includes: • Indigenous SME companies • Major corporations, most headquartered outside NI • Companies who use ICT solutions • Public Sector Bodies • Consulting Organisations • Academic Institutions • Currently we have 160 member companies, together with over 8,000 employees in NI

3. Our Strategic Vision To design and delivera range of innovative services to members and stakeholders which support the development of a globally competitive ICT industry in Northern Ireland based on a thriving indigenous sector successfully addressing global markets and high value add operations established by international corporations

4. The NI ICT Industry – A Broad Spectrum • Small indigenous companies with less than 20 employees • Indigenous companies with more than 20 employees • Multi-national corporations selling into the NI market • Multi-national corporations with off-shore development centres in NI

5. An Economic Crisis

6. Small Indigenous Companies • Increased difficulty in accessing funding and working capital • Customers are typically small, private sector companies in NI who are also suffering from access to capital • sales opportunities are reduced and competition increased

7. Larger Indigenous Companies • Less impacted by access to capital • Companies report cautious optimism, especially those addressing global markets • Demand continues to hold up even in markets such as financial services where the need for improved regulation implies more investment in ICT but ……Potential delays in public sector spend due to next year’s general election and changes both in Westminster and locally

8. Multi-national Corporations Selling into NI • Typically have a substantial proportion of their business with the public sector. In the short term this market has held up well • Larger, longer term contracts typically provide more protection for these companies • Concerns expressed regarding the longer term prospects for public sector business given the need to substantially reduce public sector spend but …Facing increased competition from lower cost service delivery countries and regions

9. Multi-national Development andService Centres • Freeze on hiring new employees imposed by parent company in many cases but few reports of staff reductions • Optimistic view of the future as NI centres remain competitive from a cost perspective with other regions • Possibility of more jobs being relocated to NI even in the case of financial services companies but …….decision-making often at arms length and can be victims of sentiment swings

10. Challenges from IT Marketplace New market conditions? Same old challenges! Products/Services Cost Resources

11. Challenge of Products/Services There are opportunities, but… • Products and services must fit current market • Only must-do projects will be likely to be addressed • Regulatory/compliance related (e.g. banking sector) • Cost reduction/efficiency projects (e.g. meeting budget deficit) • Mandated directives (e.g. new Carbon Reduction Commitment) • Must develop products/services for future market • Keep track of new technologies • Digital Content/Cloud Computing/Smart Grid/Converged Telecoms but …….there must be a real business need!

12. Challenge of Cost As always, cost is King! • Product and service costs must be reviewed • Internal processes must be addressed to look at own efficiencies and cost saving opportunities • Primary focus on Return on Investment • Base price for products must be keen • Overall delivery strategy for services must retain efficiencies • New service delivery models must be exploited • Software as a service? • Shared risk/shared benefits? • Proof of Concept, Incubation Centres, Innovation  Reality

13. Challenge of Resources Available Qualified Personnel • Thrive = Success and Growth • The IT industry needs to invest in training • Young resources needed to enter the marketplace • Continued training in new technologies for current staff • Continued support needed from education and public sectors • Successful skills initiatives must be continued • Career attractiveness campaigns • Conversion courses • Incentivisations for STEM sources

14. Surviving the Downturn • Increased focus on controlling costs and managing cash across the whole industry • Attention by small and large indigenous companies on developing markets outside NI and reducing dependency on local opportunities • Increased focus from indigenous companies on developing a recurring revenue business model • A recognition that sales into the private sector must be increased to reduce depending on public sector spend

15. What Our Customers Can Do • Work with us to find new ways of satisfying your end-user needs • Be open to new ideas and new service models • Explore the use of newer technologies to deliver joint ambition • Review solution design • Will current trends deliver same benefits in this different, more challenging market? • Are you losing out on the niche or smaller suppliers who could deliver the benefit you seek? • Review traditional procurement practices • All organisations now qualifying opportunities hard • Lengthy procurements • Increased cost of sale • Increase of cost of service • Doesn’t always result in lower cost solutions

16. Questions