The Longhaus Australian Tech Index strengthened slightly by 0.8% (or 1.2 points) to finish at 142.7 in Q4 2009. Although a minor improvement, for the first time since its launch last year the index has recorded consecutive positive growth. This upbeat performance only partially reflected the confidence of CIO’s from Longhaus’ Q4 2009 CIO Poll study which predicted a sharp 5% rise in Q4 2009. The major force dragging down CIO expectations was the declining ICT trading volume. Both the import and export of ICT products and services shrunk on a quarter to quarter basis by 7% and 11%. This decline was most likely consumer related. This shift offsets significant gains in both investor confidence and the ICT labour market with contributions of 10.3 and 25.2 points respectively. By far the most notable comeback was still the performance of ICT employment which rose 12%, showing that the Australian ICT labour hire market had indeed commenced its revival during the Q3-Q4 period. According to the Q1 2010 Longhaus CIO Confidence Poll, the local human resource market can expect even more ICT permanent staff to be employed and for the first time in the four quarters of 2009, contractors were back in demand. 

The traditional desktop offering of most Australian medium to large enterprises represents their flagship ICT service. Its performance is often the most highly noticeable representation of their technical capability for existing and prospective employees, not to mention in many cases their customers. Unlike its data centre-based cousin, the desktop is renewed far more regularly and ICT organisations considering desktop renewal in 2009 have been faced with far more than just an en-masse device replacement involving benign questions of processor speed, hard disk size, memory capacity or screen dimensions. Instead, CIOs in Australia have been faced with a meaningful choice in the desktop arena: the new Windows 7 offering from Microsoft or the increasingly popular desktop virtualisation solutions from vendors such as VMware, Citrix, Sun or Novell. However, according to the results of the Longhaus 2009 ICT Spending and Priorities Study and Q4 2009 CIO Confidence Poll, the traditional approach to desktop deployment will continue with wholesale adoption of centralised virtual desktop infrastructure yet to occur. Only 19% of Australia’s medium to large enterprises indicated that they had adopted this model of desktop delivery, while in contrast 36% already use some form of terminal or remote desktop services approach for their central desktop needs. Meanwhile, 49% of these same firms will make the move to Windows 7, many from Windows XP. Giving further consolation to Microsoft is the fact that the same level of firms, 49%, would consider Microsoft’s alternative desktop deployment offerings, compared with only 32% that would consider VMware’s approach to desktop transformation. Irrespective of the solution provider chosen, organisations should seek to understand their current starting position in relation to the use of desktop virtualisation and plot a journey that ensures they are not proliferating alternatives that ultimately undermine this most visible of all ICT services.

The Longhaus Australian Tech Index strengthened by 6.6% (or 8.8 points) to finish at 141.5 in Q3 2009. Following four straight quarterly falls, the Australian Tech Index has for the first time since its launch, recorded positive growth. This rally confirmed Longhaus’ Q3 2009 forecast based on our CIO Confidence Poll which predicted a rise in activity heading into the last half of 2009. Within the Index itself, all individual measurement indices scored positive growth, including gains in investor confidence and ICT exports contributing significantly to the positive outcome with gains of 16.7 and 13.4 points respectively. Although by far the most notable comeback was within the performance of ICT employment which rose 5.5 points, showing that the Australian ICT labour hire market had indeed commenced its revival during the Q2-Q3 period. According to the Q4 2009 Longhaus CIO Confidence Poll, the local human resource market can expect even more ICT permanent staff to be employed and steady contractor workforce growth between now and December. Looking forward, amid the further easing of downside risks within the global economy and positive local ICT industry performance CIOs have again forecasted positive growth in Q4 2009 with the 47 respondents anticipating significant gains of between 4.9% and 9.2% in Q4 2009. Compared to the Q3 2009 positive forecast, CIOs are expecting even better economic performance in the months ahead. As predicted in the previous report, the growing number of business projects in Q3 will act as the catalyst for improvement in ICT project approvals and consequently employment in Q4 2009. The most recent poll reinforces this position with 40% of CIOs, the highest since the start of the poll, expecting to commence new ICT projects in the coming quarter. The latest Longhaus Australian Tech Index forecast predicts positive growth of between 6.9 (pessimistic) to 13.1 (optimistic) points providing tangible evidence of green shoots in the Australian ICT economy. Aggregating previous forecast patterns and actual results, Longhaus believe the actual Q4 2009 Tech Index figure should land slightly below CIOs’ pessimistic forecast into the 140 - 145 range bringing the index back to Q4 2008 levels. Longhaus maintains its previous assertion that following a serious of discrete adjustments, the index will start to gain firmly around Q2 2010 on its march towards the next peak in 2015 at around 220 points.

The Longhaus Australian Tech Index lost 6.1% (or 8.7 points) to finish at 132.8 in Q2 2009. It was the fourth straight quarterly fall over the last two years. This latest decline was largely led by the deteriorating performance of ICT employment capability, with indices sinking 49% compared to the same period last year. Although investor confidence as measured by the index showed signs of recovery by growing 13 points, the overall index presented its worst quarterly performance in two years. The decline corresponded to the previous downward forecast derived from Longhaus’ Q209 CIO confidence poll, despite the sharp decline of 6.1% being beyond the expected fall of only 3.6%. Looking forward and amid the easing of downside risks within the global economy CIOs have, for the first time since the economic crisis, forecasted positive growth in Q3 2009 with 48 respondents anticipating slight gains of between 1.5% and 2.9% in Q3. The poll also indicated that funds previously frozen in late Q2 are likely to be rolled over to the new financial year with business project approvals increasing. Subsequently the growing number of business projects will act as the catalyst for a material improvement in ICT project approvals and consequently employment capability in Q4 2009. The aggregated forecast for Q3 is projected positively between 2.0 (pessimistic) to 3.8 (optimistic) points providing tangible evidence of green shoots in the Australian ICT economy. If indeed Q3 2009 marks the beginning of the rebound then Longhaus believe that following a serious of discrete adjustments, the index will start to gain firmly around Q2 2010 on its march towards the next peak in 2015 at around 220 points.

Interest in cloud computing is on the rise. After the successful market entry of Amazon’s Web Services, including Elastic Compute Cloud and Simple Storage Service, every major vendor has now announced some form of cloud-based initiative in the last 18 months. In 2008 Longhaus research confirmed that Australia is not immune from the hype with 45% of Australia’s large to medium enterprises seeing cloud computing as a priority. In 2009 the level of interest had risen by a further 10%, with 56% of Australia’s medium to large organisations now saying that they were taking an interest in cloud computing’s potential. And while only 10% of these same firms had adopted some form of “as-a-service” offering, 40% indicated that they were either actively planning or considering moving in this direction within the next 12-24 months. Of course the term cloud computing is broad and covers software-as-a-service, platform-as-a-service and infrastructure-as-a-service offerings. Yet despite significant latent demand for cloud computing services Longhaus can now confirm that Australia’s ICT market has focused on software-as-a-service at the expense of other cloud offerings. As a result, the choice of infrastructure-as-a-service rests within a very small pool of suppliers including Rejila and LC9. End-users seeking to implement infrastructure-as-a-service may be forced to take a private cloud path in partnership with a major vendor or seek off-shore providers in the short term until the local supply markets improve.