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04 Jan 2011 - Cloud Computing

THE grey clouds of the global economic crisis seem to be making way for a new sky of cloud computing opportunities for TeleChoice International Limited (TeleChoice), which has set up a new infocomm technology (ICT) services unit to extend its offerings to customers. Mr Ng: 'It is very clear to us that we have to evolve the telecom business a lot more, so we started growth in areas such as cloud computing.' Steven Ng, senior vice-president of the ICT services unit at TeleChoice, said: 'I think most companies felt the impact of the crisis. But the crisis also made us feel the urgency to transform and it also accelerates certain trends such as cloud computing. During the crisis, people don't want to spend. 'They save upfront money for more important things, but they still need to run the operation. If they can buy cloud services to solve their problems, they would.' Cloud computing is a general term used to describe hosted services on the Internet. Clouds can be public - which means that anyone can purchase the services - or private, whereby the hosted services are limited to a group of people. According to IT research agency International Data Corporation (IDC) Asia-Pacific, cloud services in the Asia-Pacific excluding Japan (APEJ) region will be worth US$1.28 billion in 2010, rising to US$4.59 billion in 2014. This is one of the reasons why TeleChoice bought a 90 per cent stake in integrated information technology solutions provider S&I Systems Pte Ltd (S&I) for about $18 million last October. The acquisition will allow TeleChoice to plug the gaps in its cloud computing services. For while TeleChoice has the expertise in telecommunication services, S&I's strengths are in service and storage infrastructure solutions. The latter also has a strong presence in the financial services industry (FSI), selling bigger machines for virtualisation and storage solutions. The acquisition thus helps TeleChoice gain a foothold in FSI as well as expand the range of services that it provides. Mr Ng said: 'It is very clear to us that we have to evolve the telecom business a lot more, so we started growth in areas such as cloud computing. 'At the same time, we recognise that there are some gaps. These are still very organic moves and we may have limitations in terms of skills and more capabilities that we don't have and need to slowly build. That was why we moved out and looked for S&I.' For the nine months ended Sept 30, TeleChoice posted a 26.4 per cent increase in revenue to $247.7 million. Net profit attributable to shareholders rose 19.2 per cent to $9.2 million. The acquisition of S&I is expected to beef up its top and bottom line. According to a previous announcement made by TeleChoice on the Singapore Exchange, S&I recorded a revenue of about $58.25 million for the year ended March 2010. Net profit after tax and non-controlling interests came to $950,000 over the same period. Prior to the acquisition of S&I, TeleChoice was mainly involved in the provision of telecommunication services and solutions, including paging and a tracking service for people to monitor the location of their trucks and assets live on Google maps. There is also the international direct dialling (IDD) business and the wireless space. But as the ICT industry changed, TeleChoice saw that it had to change as well. Mr Ng explained: 'Over time, different services and technology appear. But you can see that they are interdependent and from the consumer's perspectives, the touch points are blurring. 'For example, one of the things that we are trying to look at is the whole video cast and broadcast, where you can use it not just for news, but also for product training, presentation, and support of a live lecture at a university. 'So do you call this an enterprise application or do you call this a telecom service? It is probably a bit of both. So you can see the industry is really changing.' This convergence will draw more competition, but 'winners' are those who can use their capabilities and 'tailor it to be more relevant' to the specific market segments, according to Mr Ng. One such segment is the small- and medium-sized enterprises (SME). According to DP Information Groups 2010 SME Development Survey, two in five SMEs plan to increase their investment in technology. This is a potential area of growth that the ICT services unit is eyeing. 'As cloud computing becomes more and more pervasive, SME uptake of it will grow. It does not make sense for them to invest in hardware, because they still need an IT person to manage the hardware. 'Or they might assign the responsibility to an admin manager instead, but they might not do a good job and hence end up buying more expensive things.' TeleChoice's new ICT services unit comprises about 170 staff and is readying itself to ride on the increase in ICT spending. According to another forecast by IDC, the Singapore ICT market could be worth US$12 billion in 2011, up 2.9 per cent from 2010's US$11.7 billion. Mr Ng said: 'There are going to be different types of players creaming the pie and to capture a bigger share of the pie, one of the things the acquisition granted us was the capabilities to help us strengthen and cream more of the growth opportunities.' Already present in Malaysia, Thailand, and Indonesia, the group is hoping to extend its presence to other parts of South-east Asia, especially the emerging countries, which 'are tougher but have greater opportunities and are more interesting'.