By Sandra Sieber, IESE professor
A tribute to those who made it possible for Microsoft to make this decision.

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Title: Cases of valorizing corporate R&D
Source: Fundación Cotec para la Innovación tecnológica
Date: May 2009
Abstract: Driving innovation up to European levels is key for the competitiveness of Spanish companies. Nevertheless, such innovation, “as with any change that is based on knowledge and creates value (...) needs to be valorized, i.e., turned into value.” The COTEC Foundation, “using real-life Spanish examples to illustrate how the efforts made in R&D projects translate into increased business competitiveness,” has published a report with 10 real-life innovation undertakings. These efforts have allowed businesses of varying sizes and sectors to not only create new products and services, but also improve their manufacturing processes, diversify their operations, expand in the international market and bolster themselves in order to compete with their rivals in China and Korea. They have also been a means for these firms to improve or increase their employment situation, reduce costs and boost sustainability. The research is available as a case study and in PDF format.


Read more  (PDF, 4176 Kb)  (spanish)

Study: Sociedad de la Información eEspaña 2009
Source: Fundación Orange
Date: June 2009
Abstract: Fundación Orange has released its annual study on the progress of the information society in Spain. This 2009 edition calls attention to the negative impact of the current financial crisis on efforts to meet the Lisbon Strategy objectives in several European countries, including Spain.

If the preceding editions of the report already considered these objectives overly optimistic, this edition shows that the new economic situation will further widen the gap between hopes and realities in most European countries. Spain slides from 17th to 16th in the European ICT rankings released by Fundación Orange. Its notable achievements include: significant penetration of wireless broadband, which now has 15.6 million potential users, these being defined as individuals liable to use wireless Internet services; 35% of Spaniards having a digital ID card (with over 10 million issued), which should lead to more widespread use; and the major success of social networks among Internet users above 15 years of age (74%).

On the negative side is its glaring lack of Internet usage, particularly among the over-54 age bracket. In the corporate realm, the analysts at Fundación Orange calculate that 97% of businesses with over 10 employees already have broadband Internet access but note that Spain still must get past such hurdles as the IT readiness of its SMEs, while ramping up its investment in R&D and stimulating the use of e-commerce, among other pending tasks aimed at offsetting its considerable weaknesses in the use of technology. 

Read more (spanish)

Investing in technology could help businesses deal with their current difficulties and come out of the crisis stronger, so that they are seen more as an investment than an expense. At least theoretically, this is the mindset that has been adopted by corporate IT leaders. But the fact is that, in light of the present economic situation, the majority are focusing on cost reduction. And the ICT market is feeling the consequences. “Companies are rethinking their top priorities, investing in projects that bring immediate return on their investments, postponing the implementation of major IT projects, and turning to subcontracting to lower their cost structures,” explains Laura Converso, analyst at IDC Europe in Dealer World. Meanwhile, the magazine Channel Partner, which belongs to the same publisher as the previous citation, quotes Richard Gordon, vice president of research at Gartner: “While the global economic downturn shows signs of easing, this year IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings.”

In this difficult year of 2009, global providers such as IBM, Microsoft, Oracle, Google, Adobe, Intel and Yahoo! are still earning money, though in general are turning less profits than in previous years, due in part to the falling prices. One notable exception is Apple, which has experienced a stock outage with its iPhone 3G S, and reported 14.6% growth for its fiscal third quarter, outperforming its revenue numbers posted for the non-Christmas season. But some of the giants took large steps backwards, such as Nokia.

The fact of the matter is that the global ICT market this year is taking a historic beating, in sharp contrast with the sustained growth seen in recent years. International consulting firms have repeatedly downgraded their forecasts for 2009, which were already rather gloomy. Gartner has adjusted its initial predictions of a 3.8% decline in the global IT market in 2009, saying we are more likely to see a 6% dip, with hardware taking a nosedive (-16%) and software inching up 1.6%.

The French newspaper Les Echos recently cited forecasts put out by the Japanese economic research institute Yano, which include global sales of 1.094 billion mobile devices, with a 7.5% decline “due to the tumbling revenues for the first half of the year, which will not be offset by the upturn of the second half.” Gartner, meanwhile, expects PC sales to drop 5% in the second quarter.
 
As for the Spanish market, IDC in January anticipated flat growth or at most a decline of 1% for 2009. But in mid June the EITO report predicted that in 2009, “the volume of ICT business in Spain will see a decline of 1.7 percent to 57.2 billion euro.” According to the European observatory, IT hardware will fall 7.4% whereas the “much more stable” IT software and services market will remain at its 2008 level. Will that really be the case? “The service sector does have some projects already underway but any new ones are being shelved. Prices are actually going down and customers are becoming more demanding,” explained Josep Mir, account manager for the public sector at T-Systems.

In a nutshell: 2009 is a forgettable year.

Articles in Channel Partner (spanish), Cinco Días (spanish), Dealer World (spanish) and Reuters

“The third quarter of 2008 was a good one for ICT providers but the same period in 2009 could be just the opposite, which will undoubtedly mean a disappointing year-on-year comparison. Nevertheless—explains Miquel Bada—this may change in the year’s final quarter, whose results will stack up favorably with those from the fourth quarter of 2008, which for many was among the worst ever for ICT.” This improvement, says the marketing director for Adobe Systems, will be interpreted as the confirmation that the upturn is finally starting. As they wait for the moment of truth to arrive, analysts at Forrester Research already see the light at the end of the tunnel: “Between now and year’s end, the tech sector must still go through some lean times [but], the situation will start doing a 180 in the final quarter and return to growth figures in 2010,” reads an article in Baquia. “Businesses and governments overreacted to the global recession and credit crisis,” Forrester said, “by cutting back too much on spending in the past nine months. As companies realize that the recession is not as deep, or as long-lasting, as they feared, they will resume technology spending.”

The EITO Report cited in the preceding section predicts that in the coming year Spain’s ICT market will grow 0.3% to 57.4 billion euro. As for the fourth quarter of 2010, IDC expects the Spanish ICT market will see a 3.5% year-on-year improvement. In light of that outlook, what can one do aside from hoping that it comes true?

The Spanish employers’ associations ASIMELEC and AETIC remain wary and are calling on the nation’s leaders to take more decisive action to revive the market. In June, the government responded by allocating an additional 400 million euro in loan money for IT investment. Our readers, before closing up their suitcases and heading off on their well-deserved summer vacation, can print the white paper Readying for recovery: A pragmatic approach to organizational change. Prepared by Datamonitor in cooperation with Canon, the publication shows how to “redefine business processes according to the symptoms of economic recovery that European companies are gradually starting to see.” Let’s hope that it becomes necessary very soon.

Articles in EITO (spanish), Baquia (spanish), Les Echos (french), and EITO