Forrester’s Asia Pacific team of analysts has just published our regionwide technology predictions for Asia Pacific in 2014. Here’s what we see for the ASEAN market in particular:

  • ASEAN IT spending will grow by 7% in 2014. A weak global economic recovery and unstable domestic spending led to slower 2013 economic and tech industry growth in China and directly or indirectly affected export-oriented economies in the Pacific and ASEAN. This combined with ongoing structural problems in India and dwindling foreign direct investments in ASEAN to produce slower than expected IT spending growth across Asia Pacific in 2013. Forrester expects IT spending growth in the broader Asia Pacific region to improve slightly in 2014 versus the prior year, with regionwide growth of 4%, while IT spending in ASEAN will grow by about 7%.
  • Transformation projects are the main drivers of IT spending. Debt levels in countries like Malaysia and Indonesia will continue to be a major source of concern for foreign investors, whose lack of investment will in turn limit growth in these countries. Vietnam, the Philippines, and Indonesia will lead the ASEAN region in terms of IT purchase growth, most of which will come from companies undertaking large IT transformation projects and implementing best practices to improve their competitiveness in a slower, more uncertain economy. Thailand’s ongoing political uncertainty may also affect how IT investments flow into the country, and hence its IT spending growth rate in 2014.
  • Lines of business are increasingly key IT spenders. Forrester has identified a critical shift in IT spending: Business stakeholders are increasingly using their budgets to make IT purchases — eating into CIOs’ tech budgets. Recent Forrsights survey data shows that the trend has accelerated in 2013: Asian CIOs now exclusively control just 51% of enterprise IT procurement decisions, down from 58% just 12 months ago. In dollar terms, Forrester predicts that IT purchases made by the CIO will decrease through 2016.
  • Customer experience will become a top CIO priority. The topic of customer experience came out of nowhere in 2013. At first, it wasn’t even on CIOs’ agendas; now it’s one of their top priorities. In 2014, we expect CIOs’ focus on the customer experience to drive very rapid spending growth in this area, primarily by firms seeking to use a superior customer experience to differentiate themselves from their competitors. For instance, a large Indonesian telco has embarked on a three-year, CEO-led customer experience program to improve ARPU, reduce customer churn, and optimize its network assets for sales and marketing campaigns. Singapore is also leading the charge on this front, with numerous ongoing customer experience projects across industries like retail, airlines, and telecommunications.
  • Public cloud usage will grow, but organizations will struggle to manage hybrid approaches. Demand for cloud-based services continues to increase for specific usage scenarios, including storage, disaster recovery, and cloud-bursting. But lack of consistent download speeds and ongoing latency issues will hinder a more widespread migration of enterprise applications to the cloud in many Asian markets. Software licensing models will also continue to constrict organizations that are not designed to support multitenant cloud or on-premises deployment scenarios.

Growth and spending in the ASEAN market in 2014 will be uneven. However, what’s clear is that, in the coming year, CIOs will focus on improving the customer experience and building connections with lines of business to ensure that IT’s goals align with desired business outcomes.