1. Abhishek Chauhan
Consulting Director, Digital Transformation Practice
INDONESIA DIGITAL TRANSFORMATION
OUTLOOK BRIEFING 2016
Indonesia Enterprise ICT Outlook 2016
1

2. “We Accelerate Growth”
Enterprise IT Services Market Trends
Economic factors and industry factors are contributing to build some strong trends
for 2016
• Managed services & Outsourcing growing
• Number of large Managed services/ Outsourcing deals ( 20 Mn
USD +) increasing in Indonesia
• Local players gaining more prominence
11
• Cloud services adoption is increasing
• SaaS increases as small enterprises look to Cloud providers
• SMEs increasingly looking at IaaS to improve their turnaround
22
• Network to application transition
• More deals on applications rather than traditional Network
• Traditional Hosted on premise applications moving to Cloud model
33
• Data centre demand growing
• Co-location will still drive the overall Indonesian DC market
• Increase in Managed Hosting driven by Application hosting
44

3. “We Accelerate Growth”
Trend 1:
Managed services & Outsourcing growing
Growing Economy
• The IMF projects Indonesia will be at the top
3 fastest economic growths among G20
countries1
• Total trade grew at 45% between 2010-2015
• In 2015, 70% of the total population is
estimated to be in middle income class,
growing from 37.7% in 20032
Note: 1. International Monetary Fund; World Economic Outlook Database,
2. Bank Indonesia and Indonesia Statistics Agency) 3. The ASEAN Business Advisory Council Survey on ASEAN Competitiveness
Drivers for Managed services & Outsourcing
0.0 2.0 4.0 6.0 8.0 10.0
Brazil
Korea
Mexico
Turkey
Russia
Argentina
Saudi Arabia
Indonesia
India
China
2017
2013
2012
Growing Investment
• Investment in Indonesia is on a record high
$28.9 billion in 20014 which is forcing
players to expand their IT needs in a
significant manner
• FDI coming in areas – manufacturing,
communications & real estate and these
are areas where Managed services &
Outsourcing will grow
-
5
10
15
20
25
30
35
2010 2011 2012 2013 2014 2015E
Other Services
Real Estate, Ind. Estate & Business
Activities
Transport, Storage & Communication
Electricity, Gas & Water Supply
Other Industries
Metal, Machinery & Electronics
Chemical & Pharma
Food Industry
Primary Sector

4. “We Accelerate Growth”
85%
56%
41%
SaaS IaaS PaaS
Trend 2:
Strong growth for cloud services creating a hybrid IT environment
Adopted
44%Not
adopted
56%
Cloud Services Adoption
N = 150
Current Adoption Future Growth Potential
• Cloud services current adoption shows tremendous potential for future growth. Moving on, Hybrid IT
environment will be the norm across enterprises.
• Current adoption patterns shows a strong focus on SaaS (Software as a service) and SaaS will continue
to remain dominant – UC&C to be #1 apps adopted. This may be attributed to greater ease of adoption of
SaaS, a large SMB population that has access to enterprise class IT for the first time, and higher pricing
potential vis-à-vis other services.
• IaaS to move from T&D to production environments and custom apps
Cloud services market in US$ Million (2015 – 20)
2015 2020
IaaS
PaaS
SaaS 320
11
93.5
53
2
6
Total = 61
Total = 366

5. “We Accelerate Growth”
Trend 3:
Shift in managed services spending from network to application centric
Limited availability of application related skills in Indonesia is driving an up
spurt in demand for managed application services.
ITSP Trends by Enterprise
• Skilled ICT workforce and high ICT usage will led to demand for
Enterprise Desktop, Enterprise Mobility and localized ICT
solutions across verticals
• ERP, CRM and SCM will form bulk of Enterprise Software sales
• Managed Security, Mobility, M2M and BI to grow rapidly due to
faster adoption from Large Enterprises
• IT Transformation Projects and Mobility requirements from SME
to drive DC and Cloud services
Trends & Observations
Business implications
Trends by Verticals
• Shift towards in-country manufacturing will drive growth for
Managed Infrastructure, Managed Enterprise Solutions, etc.
• BFSI will focus on Datacentre & Managed Services (strong focus
on security) to address existing/ new government regulations on
Data Compliance & Security
• Public Transportation infrastructure projects will drive demand for
Managed Infrastructure, Managed Network & Mobility solutions
1. ICT service providers need
to provide affordable, best-
in-class Enterprise
Solutions & Cloud offerings
1
2. Prioritise key vertcals like .
BFSI, E&R, Manufacturing,
F&B, etc
2
3. Successful ICT players will
depend on the ability to
tailor solutions to address
vertical-specific
requirements from both
Large Enterprises and SMEs
3

6. “We Accelerate Growth”
Trend 4:
Continued growth in Datacentre demand
SpaceSpace
OutsourcingOutsourcing
ExpenditureExpenditure
VerticalsVerticals
FacilitiesFacilities
Co-Location Managed Hosting
• Pure space rental, with
power and cooling optional
• Pure space rental, with
power and cooling optional
• Rental of servers and
storage
• Rental of servers and
storage
• Need to have in-house skills
and time spent on managing
and updating
• Need to have in-house skills
and time spent on managing
and updating
• CapEx intensive model• CapEx intensive model • More OpEx focused• More OpEx focused
• BFSI, govt. and healthcare to
continue focus on co-lo
• BFSI, govt. and healthcare to
continue focus on co-lo
• SMEs are leapfrogging
directly to IaaS
• SMEs are leapfrogging
directly to IaaS
• Focus on facilities and
enterprise to manage IT
• Focus on facilities and
enterprise to manage IT
• One of the key aspects of
Security is the responsibility
of the DC Service provider
• One of the key aspects of
Security is the responsibility
of the DC Service provider
• Flexibility and scalability,
especially in IaaS model
• Flexibility and scalability,
especially in IaaS model
Aspect
Migration
• CAGR (2015-2020) = 28%• CAGR (2015-2020) = 28% • CAGR (2015-2020) = 41%• CAGR (2015-2020) = 41%GrowthGrowth

7. “We Accelerate Growth”
ASEAN – An important opportunity and a threat
1967: Original aims
cooperation in the economic,
social, cultural, technical,
educational and other fields,
and in the promotion of
regional peace and stability
2015: Original aims maintained but
vision enhanced
A community comprised of three pillars:
1. ASEAN Political-Security
Community
2. ASEAN Economic Community
3. ASEAN Socio-Cultural
Community.
2020: ASEAN Vision 2020
An integrated and liberalized
region in terms of the trade of
goods, services, investments,
and capital.
ASEAN 2020:
A Partnership
in Dynamic
Development
Deadline for
Non-Tariff
Barriers within
ASEAN to be
eliminated
7
• ICT will be a key enabler for many of the initiatives like Single port facilitation, common immigration platform
etc.
• Indonesia will be the biggest market in ASEAN and hence will be closely watched for many of the initiatives

8. “We Accelerate Growth”
Where are the growth areas where Enterprises can tap further ?
Financial sector
• I. Banking
• Intra and inter M&A
• Consumer banking (e.g.,
stocks)
• II. Insurance
• Reduced role of agents
• Price transparency
Sector Implications on sub-sector
• Banking consolidation will create opportunities for
large scale integration as different IT systems will
need to be integrated .Consolidation will also
increase demand for Outsourcing/Managed services .
• Insurance expansion will also lead to more online
Insurance selling leading to demand in hosting and
integration services as well as Data centre space
Implications for Enterprises
Infrastructure &
Logistics
• Public transport (Urban and intra-
regional)
• Upgrading of national and cross-
border infrastructure
• National logistics providers will
benefit from regional upscaling
• Single window facilitation will ensure IT systems in
ports/shipping companies of all the countries will
need to be upgraded. First movers will have an
advantage in playing a role in other countries IT
systems.
• This will also lead to spill over in IT system enhancing
and up gradation in the back end for 3rd party Freight
forwarders and logistics players and also increased
connectivity requirements
Domestic - Opportunities

9. “We Accelerate Growth”
Where are the growth areas where Enterprises can tap further ?
Energy/Utilities
• Provision of green energy, smart and
international connected grids
• Industry consolidation and cross-border
M&A
• Water and waste management at second
and third tier cities
Sector Implications on sub-sector
• Smart grids will lead to increase in
connectivity and demand for System
integration.
• Investment in utilities will also drive system
standardization and IT system enhancement
Implications for Enterprises
Food & Retail
• Local food-producers will expand their
reach to other ASEAN nations and look for
small acquisition targets. Food quality and
adoption of advanced food-technology will
be essential
• Mid-sized retail real-estate companies are
acquisition targets
• Retail infrastructure investment in new
systems needed for ensuring food
consistency and quality across the region.
• Supply chain will need to be enhanced
• Acquisitions will lead to standardization of
systems
Domestic - Opportunities
Healthcare
• Hospital groups
• Homegrown pharmaceutical sector
• As pharmaceutical laws relax, there will be
new investments in emerging economies
which will lead to IT infrastructure up
gradation and connectivity demand.

10. “We Accelerate Growth”
Our Domain Coverage
Frost & Sullivan’s Tech advisory covers a wide breadth of BPO /IT outsourcing services and IT
Infrastructure / Application services and hardware
Tech AdvisoryTech Advisory
IT Infrastructure/
Application services
BPO Services
BPO Services
• Customer Service
• Finance &
Accounting
• Human
resourcing
• Procurement
• Knowledge
Services
Infrastructure
Services
• Desktop Services
• Data center /
Cloud Services
• Network /
Communication
Services
• Security &
Privacy Services
• Storage Services
IT Hardware
IT Hardware
• Desktop PCs &
Notebooks
• Networking
Equipments
• Storage &
Security
• Servers
• Printers & other
peripherals
Tech
Advisory
Application
Services
• Application
Development
• Application
Hosting
• Application
Integration
• Application
Management
• Application
Testing

11. “We Accelerate Growth”
Our Offerings To Clients (Buyer-Side)
Frost & Sullivan offers the following Procurement Advisory services to our buyer-side clients, who
procure services and goods from vendors
Buyer-SideServices
Client Technical
Requirement
Analysis
Current Business process
analysis
Business Case
Development
Vision & Scope
Development
Risk Assessment &
Mitigation Measures
Client’s Current
Business Analysis
Business Case
Feasibility Analysis
1
2
Relationship
Management
Contract
Management
Monitor & Review
Success
Exit Planning &
Handover
Post Contract
Engagement
5
Vendor evaluation
Vendor Short-listing
for bid invite
Devise Scoring
methodology
Vendor Proposal
Evaluation &
Recommendation
Contract Design &
Negotiation
4
Requirement
Gathering & RFP
Design
Design RFI / RFP /
TOR
Client Requirement
Gathering
RFP release and
clarification support
3
Tech
Advisory

12. “We Accelerate Growth”
Our Offerings To Clients (Vendor-Side)
Frost & Sullivan offers the following Procurement Advisory services to our vendor-side clients,
who sell services and goods to their customers
Vendor-SideServices
Deal Shaping RFI / RFP Analysis
Client
Due Diligence
Cost / Revenue
Modelling
Contract Design &
Negotiation
Articulating
Vendor’s Value
Proposition
• Analyzing and assessing
customer’s requirements from
the RFP
• Requirement clarification
meetings
• Assessing the RFP response
evaluation criteria
Vendor’s
Value Proposition
For Customer
Customer’s
Requirements
Vendor’s Solution
Offerings
Competitor’s
Solution Offerings
• Positioning Vendor’s solution
offerings vis-a-vis customer’s
RFP requirements and other
bidders’ offerings
• Defining a winning value
proposition of the vendor,
specific to the requirements of
client’s RFP
Vendor’s unique value proposition for the client would emerge by effectively showcasing vendor’s
solution offerings in the context of client’s specific requirements and the solutions & capabilities which
the other bidders can offer to the client
• Comprehensive competitive analysis of
other bidders’ capabilities to fulfill
client’s RFP requirements
• Analyzing other bidders’ potential
positioning to meet client’s RFP
requirements
Tech
Advisory

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