Speaking at the CEO and CIO Vision Forum at CeBIT last week, Steve Prentice,
distinguished analyst and chief of research at Gartner Inc. outlined Gartner's
10 Year Scenario for Information Technology, Business and Society. Prentice
described how eight major trends, in four pairings, are combining to produce an
unstoppable whirlwind of change throughout enterprise IT, the industry and
society as a whole
"We are half way through a 60 year journey from an analog world to a
digital one, which started in 1980 with the PC," said Prentice. "The
first 30 years have been about driving technology into the enterprise. The next
30 years will see technology reaching every individual, in every part of society
and will in turn have a huge impact on the way businesses operate."
Gartner predicts a fundamental shift in the balance of power between big
business and the consumer and between supplier and customer, which will quickly
lead to significant challenges for all organisations regardless of size and
business sector. Business agility is becoming critical in a world where
companies are compelled to meet rising consumer expectations, but many
organisations are shackled by legacy systems. Similarly, ethical and
environmental issues can no longer be brushed to one side as consumers demand
that companies operate as good global citizens. Finally, established businesses
are increasingly finding themselves squeezed by entrepreneurial 'green
fielders' who, unrestrained by legacy systems and unblemished by previous
corporate misdemeanors, are challenging conventional business practices and
pioneering new business models.
Prentice underlined the growing interdependence of technology, business and
society and stressed that it is the collective impact of the eight trends that
will further amplify their individual effects. "While the technologies
continue to evolve, it is their effective deployment and cultural assimilation
that will drive growth and prosperity," he said
Trends 1 and 2 - Commoditization and Consumerization
The increasing integration of technology into every day life, made possible by
the proliferation of the PC and the Internet, lies at the heart of this trend.
The three facets of Pipes - affordable broadband access and ubiquitous wireless
connectivity, Platforms - low cost, simple to operate PCs and fixed or portable
media devices with a wide range of universally available (and often free) tools
and applications, and Content - search results, location-based services,
downloadable multimedia, news and personalized micro-publishing, have already
combined to destabilize the balance of power between technology producers,
business users, consumers and the state.
"Previously expensive business tools such as PCs have become every day
commodities bought on the web, via mail order or even at the local
supermarket," said Mr. Prentice. "Like the grain of sand which creates
the pearl in the oyster, so the PC has become the nucleus for an IT revolution
in the home."
At the same time, new web-centric software business models are challenging
traditional license-oriented software business models in the consumer space.
This is increasingly influencing the wider enterprise market, not only for
software but also for hardware, telecommunications and support hardware.
The impact of commoditization and consumerization of IT on enterprise
technology and business as a whole will be far greater than anyone could have
ever predicted due, in the main, to two factors:
- The commoditisation of the PC is enabling new enterprise architectures
- Technology-enabled consumer power is forcing businesses to become more
agile and update their legacy systems
Trends 3 and 4 - Tera-Architectures and Virtualization
Demand for infrastructure capacity will increase a hundredfold over the next ten
years according to Gartner. For four decades 'scale-up', has been the
dominant architectural technology. This is set to change due, in large part, to
PC commoditization. The trend is increasingly towards tera-architectures which
combine with virtualisation technology to establish highly distributed systems
from many low cost components. Google, for example, uses a tera-architecture
approach comprising of more than 170,000 servers providing the company with a
resilient, flexible, agile and scalable system that Gartner believes to be
around 10 times less expensive than one built using a more traditional approach.
Virtualization is breaking the direct link, which has existed for many years,
between the physical devices and their usage. Virtualisation allows greater
utilisation levels, delivering improved efficiency and greater flexibility.
Virtualization and tera-architectures support the model of the real-time
enterprise (RTE) - a business that uses a real-time IT infrastructure to sense
opportunities and problems faster and responds to them more quickly. In a
real-time infrastructure (RTI) standard components and architectures enable
faster changes and reduce support costs. People-intensive functions are
increasingly automated, extending across entire domains over time. This
automation leads to improved efficiency, quality, cost structure and agility,
ultimately transitioning purchase models to a utility or service model.
Prentice highlighted that the new architectures will help deal with
increasingly significant challenges such as heat generation and power
consumption to provide more environmentally friendly solutions.
Trends 5 and 6 - New Development and Acquisition and Delivery Models
Gartner predicts that the move in software development towards services spells
the demise of the monolithic application, and with it the dominant positions
held by leading software vendors in the market. The most common revenue model
today is software as a product, with upfront payment for a perpetual license to
use the software. However, the trend is towards offering software as a paid
service with payments over time and based on a usage model. The issues that
software and IT services providers must wrestle with include lower gross
margins, the move to business-based rather than technology-based service level
agreements, new go-to-market models that rely less on their current direct sales
force, and difficulties in educating the financial community about the new
business models and their impact on profit and loss statements for the first
several years.
There are already early indications that hardware will follow in the same
pattern, with similar financial consequences for hardware vendors. As the price
for technology falls it becomes more valuable to offer support and management
services to help enterprises manage their growing array of storage, as well as
growing demands of regulatory and compliance authorities relating to data sets,
than it does to sell a physical device. With growing bandwidth available at
declining costs, many of the drivers for locally based devices also diminish.
This paves the way for an era of utility-style computing where many enterprises
will choose only to purchase access to a shared service on a remote device.
Trends 7 and 8 - Community and Collaboration
With commoditization and consumerization come not only revolutionary changes in
enterprise IT but also life-altering changes to the way we interact with the
wider world. Gartner predicts that by 2010, 70 percent of the population in
developed nations will spend 10 times longer per day interacting with people in
the electronic world than in the physical one.
Whereas we once lived in geographically defined communities, this is becoming
less true every day. The home is becoming a "docking station" for an
extended electronically supported existence. New communities operating on the
free-sharing of information are emerging at the expense of conventional
advertising and broadcast media. Such network marketing, feeding information on
products and services back to prospective purchasers, has been the basis of the
move from transactions towards participation and interaction - enabled by a raft
of technologies including AJAX but generically referred to as "Web
2.0."
As people increasingly drive the creation of communities, companies face at
least two challenges in this vein: Are they equipped to translate those large
and fluid networks of trusted friends into professional contacts and value? How
effectively can they set guidelines for workers for interaction across cultures
and regions and for privacy and confidentiality in these virtual communities?
Environmentalism and ethical behaviour have been slowly growing issues in
business over the last decade. The increasing scope and power of activist
communities and their ability to effectively publicise their discoveries means
that consumer pressure and the threat of financial damage through disclosure
will become a more powerful influence than formalised regulation and
governmental intervention. Merely adhering to the letter of the law will no
longer be sufficient and consumer pressure will likely judge historical actions
by contemporary ethical standards. "Green" credentials, both for
enterprises and vendors, will become a critical success factor, accelerating the
move towards "Green-IT".
Forward not legacy thinking
While "Green" is an issue that companies need to get to grips with,
Gartner said that this is just one of the hurdles to maintaining competitiveness
in the new world order brought about by consumerisation. Legacy systems and
particularly legacy thinking are the single biggest challenge to transforming
business today. A majority of enterprises still operate ageing systems, which
consume a majority of their IT budget to maintain.
"The dot.com threat may have been a mirage, but transformational
business models enabled by Internet era IT are not," said Prentice.
"The challenge to established companies comes not from other established
players, but from start-up entrepreneurs who will use technology to upset the
status quo."