IDC’s Direction
Market Intelligence Sharing Session for MDeC (29th July 2009)
Philip Carter; IDC Asia Pacific

Pricing Innovation – Is it Sustainable in the `New Economy’

Pricing Innovation:
1. New Model
2. New Player
3. New Opportunities

New Model
What drive CIOs to adopt these technologies?

Model/Business Model
- The `Cloud’
- Managed Services
- IT Financing & Leasing
- 
CIO trying to access IT Resources without paying up front. This is all because of CFO. CFO wants to `decapitalize’ IT.

Conversations with CFO (Regional HQ, Spore) for US MNC:
-Focused on cashflow at the moment…payment terms are capital..we are exploring new options
-IT budget is being monitored frequently…quarterly/monthly as opposed yearly
-`I don’t understand technology’

LANGUAGE IS CRITICAL

Now vendor has to present to CFO…not CIO presenting the case anymore.

IT Matters
-transform business
-`No’ waiting time
 - resource optimization
 -revenue capitalization

Different Models Emerging

Fixed Price – Time & Material – Cost Plus – Open Book – Usage-based – incentive-based – Business benefits-based – Shared Risk & Reward

This allows new players to enter the game.
New Players – eg Google (Google Apps)
New Models introduces New Players but at the end of the day, customers will benefit.

New Opportunities
India – sandbox in the region
- Users BOT (build, operate, transfer) of certain asset back to the government

In India; the BOT Model is being used.

Education

- 1.8 million children to 5,000 schools in 4 months

Ministry of External Affairs  (Passport Seva Project)

- 6 million passports annually – 77 facilitation centres – Target Process: 3 days

Conclusion
A business case with ROI measure will need to be clearly articulated to the influential CFO-persona.

The economic situation is forcing organization to tie IT initiatives to business outcomes.

As a result: new pricing models are emerging & new players.

The new economy will require innovative ways of growing market share. Pricing innovations is going to be a key part of this.