Writing this article, we are only hours away from a hopefully stable and prospering new business year 2008. Istanbul, Maslak traffic is more chaotic then ever, since everybody rushes to finish last work and visits for 2007 before preparing for the evening celebrations, and before buying the last gifts for the family that should have been bought weeks ago. And behind the windows of the plazas around us and in other business districts of the city, the CEO’s of the leading Turkish IT companies are still working, fine tuning the last details of their strategies for 2008.
So what exactly will 2008 bring to us, and how will Nexum Bogazici cope with the upcoming challenges of the year 2008? To start with a frank statement: I don’t know what will happen, and the fact that I am, despite improvements, still a foreigner with limited knowledge of the Turkish economy, Turkish culture and mentality, and last not least the Turkish language, does not help a lot to close the gap. In fact, this was more or less the same in previous years, so the fact that Nexum Bogazici is fast and continuously growing for years, more and more profitable and with a coverage of an increasing number of market segments is obviously not due to special knowledge about he upcoming year.
What drives Nexum Bogazici in all its consultancy and IT business segments is the belief in some very stable longterm trends in Turkey, and in a strategy that is aligned with these trends. These main trends are, in our opinion, the same since we started our business in Turkey in 2000, and we believe they will become more and more visible in 2008 and in the following years.
Internationalization: Turkey is becoming more and more integrated in the world economy, and in the world markets. Turkey’s imports and exports are increasing, and, more relevant for the IT sector, Turkey is becoming an exporter of IT solutions as well, especially for the European market. This means not only that Turkish IT companies have a good opportunity to sell their services and products to customers worldwide but that methodologies, trends, relevant products etc. have to be more and more comparable with the best ones offered in fully developed countries, meaning at the same time that pure domestic solutions will either adapt fast to world market standards, or they will disappear from the market. Similar rules apply for the internationalization of capital markets, which will lead to more transparency among all companies, to more mergers and acquisitions and to increased expectations about the return on the initial investments placed into a business investment by professional shareholders.
Professionalization: The increasing integration with world markets leads to higher expectations towards a professional management – not only in the IT sector but in all sectors of the industry. Professional investors expect not only a skillful and professional management but the application of up-to-date management and controlling tools that allow both managers and majority investors to gain insight into the company’s operations, cost and earnings product by product, region by region and process by process. This increasing demand for professional managers is countered by an increased supply of young and well-educated Turkish managers, often not only educated in leading Turkish universities but in international universities as well. Both developments will lead to significant changes in management style and management tools in an increasing number of Turkish companies, and to an increasing demand for professional business consultancy and state-of-the-art management and backoffice applications.
Sophistication: Some years ago, it was not easy to find accountants in Turkey that had even heard of International Accounting Standards; in 2008, we expect a law to pass legislation that introduces Turkish Accounting Standards, which are more or less equal to International Accounting Standards, as a must for all Turkish companies. In 2000, we had to educate companies in the art of website-building; in 2008, having a corporate website will be a must, and most companies even are having, or are planning to have, their own B2C or B2B solutions on top of that. In 2008, the race is not over, a new trend we expect to take place will be towards professional treasury and risk management methodologies and tools, both for improved financial management anf for complying with an increasing number of legal requirements like IFRS 7. And of course still a lot of work needs to be done in order to integrate tools, applications and processes throughout the whole business, and throughout whole sectors in order to link the value chain through electronic communication and trading channels.
Computerization: One of the biggest challenges for us when introducing IT solutions and applications in 2000 was to compete with the alternative of non-automation, or “doing it manually”. At this time, work was cheap, the speed of economic transactions was slow, cumbersome bureaucracy was common, and it seemed as if not one single process could happen in the same manner even twice. All this changed significantly. Turkey’s labor force, especially high-skilled employees, are not easy to find or cheap any longer – the international labor market is waiting for them to meet their expectations. Bureaucracy is successfully cut down, the speed of economic transactions increased to international levels (and sometimes faster), and processes are becoming more and more standardized. What is needed not only in 2008 but in all upcoming years is continuous process automation, process improvements and computerization – more and more, immaterial manual work, done by a huge workforce of low-qualified personnel, will be transferred to computers and electronic systems, demanding much less but a well-educated and skillful workforce to maintain or develop processes further.
Diversification: The Turkish Economy of the past was, in a lot of sectors, quite straightforward. Only a limited number of products and suppliers existed, and the markets were quite stable, making it very difficult for new market entrants to change existing market behavior, and to get a share from the respective market. With increasing welfare of the Turkish citizens, with more international experience and connections, and with an increasing interest in upcoming international trends and new products, the Turkish consumer became much more demanding, and much less predictable. Consequently, like in every developed economy, markets are becoming more and more diversified and differentiated, new markets can develop very fast, old markets die much quicker, and more and more young companies seeing these trends try to get a share in newly developing markets. At the same time, established companies are adopting to market developments by decentralizing decision procedures, and by creating smaller and more flexible units for these markets. For the business consultancy and IT applications markets, this is good news – all of these companies need not only professional advice and a stable application framework but fast and flexible tools to get and monitor the right position in increasingly competitive market environments.
To summarize these thoughts, we see a continuous and further growing demand for professional business consultancy and IT applications, with additional service export opportunities. Companies in this market that are willing to adopt to international standards, methodologies and products should be able to maintain a profitable growth of at least 25% per year for the upcoming years.