Analysis: State of the New Zealand IT market

Analysis: State of the New Zealand IT market

Pockets of success but challenges in skills

Government, healthcare and software development are some of the leading areas shaping up the New Zealand IT market. But retaining talented staff is one of its biggest challenges.

In June, the New Zealand government released an ICT strategy stretching to 2017 with the aim of creating a one-stop shop for all government support and advice, looking to save about $100 million a year in the next four years.

It also wants to put all new services online, look at how the government will use information and technology to provide better services; and enable the private sector to have access to government services and data using machine interfaces.

IBRS advisor, Jorn Bettin, said the government has an opportunity to succeed with its ICT strategy, but there were some significant risks involved including the difficulty of rationalising systems and deriving gains from shared services, unrealistic expectations regarding the speed that cost savings can be achieved and a lack of expertise in government in the development of reliable and trustworthy digital services.

Bettin said that even though the government was committed to open data, there are only limited number of local providers with expertise related to data science and Big Data.

The New Zealand government is the largest user of IT services. Statistics show that in 2006, the total government operating expenditure on ICT was $1.1 billion.

“A number of departments have undergone recent mergers and are facing the challenge of rationalising systems and deriving gains from shared services, which is always difficult,” Bettin said.

On the export front

The New Zealand marketplace presents an interesting ground for IT exports, particularly in the areas healthcare IT with vendors like Orion Health, business software vendors such as Xero and digital games and entertainment such as Weta Digital.

“These vendors are successful internationally, but all are challenged in locally sourcing the staff needed for further growth,” Bettin said. “NZ tends to act as an incubator for software businesses and once a certain stage of growth is reached, they get acquired by larger players overseas. A fairly recent example of this pattern was the acquisition of Right Hemisphere by SAP in 2011.”

Bettin said the amount of staff turnover in the IT sector was fairly high.

“That level of churn creates a bit of a challenge,” he said. “Adding to that, if you’re a locally-based vendor, it’s almost impossible to succeed if you only focus on the local market because of its size.”

Regarding further innovation in e-Health and Healthcare IT, Bettin highlighted the key challenge relates to privacy, individual control over health data, and the quality of information security.

“ The challenge is not limited to NZ, but it must be successfully tackled by NZ Healthcare IT vendors if they want to further strengthen their position in the global market,” Bettin warned. “More and more personal devices gather health data, and in a few years the management of personal genetic information will further raise the stakes.”

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