The next 12 months will be a time for further consolidation,
integration, and increased competition, with IT playing a huge part
in the drive to increase revenue and cut costs across sectors.
Computer Weekly's writers assess which trends will give your
organisation the edge
Manufacturing
Antony Adshead
In 2002
the IT-enablement of manufacturing continued to occur in two
directions. On the one hand it took place horizontally across the
business as local and national units became regional and
international organisations and enterprise systems were integrated
and data harmonised.
It also took place vertically as manufacturers tackled vertical
integration by striving to link the transactional view at the top
of the business with visibility of the transformational processes
of production and supply.
The outlook for the year ahead is that we will see more of the
same: all the more important as such integration projects help to
sweat assets in the uncertain economic environment faced by many in
the industrial sector.
The underlying driver, which will continue, is the greater
availability of processing power and highly scalable software which
enable businesses to effect the economies of scale that come with
global working.
An example of this is Cadbury Schweppes' ongoing £200m Project
Probe which is rationalising 54 existing datacentres into three and
is integrating 27 separate worldwide iterations of SAP to harmonise
business processes.
Cutting time between production and supply is the
driver for perhaps the largest existing industrial IT project in
terms of scope: Shell's "crude to customer" joint venture with
supply chain management specialist i2. This is designed to provide
an integrated supply chain system that will link near real-time
forecasting of customer requirements with refining capacities at
the optimum location. The project could save the oil industry $35m
(£22m) a day.
This project, which entails the horizontal and vertical linking of
data in Shell's business, will be one to watch in 2003 as it will
be a yardstick of the ability of IT to automate industry.
Within this overall theme of linking data, two technologies will
become more prominent. First, we will see working examples of Web
services as companies automate the linking of data.
Second, product lifecycle management initiatives will help
manufacturers simplify the complex collaboration needed to
facilitate shorter time to market. The industries where these
initiatives will appear include the semiconductor and
pharmaceuticals sectors.
Retail
Daniel Thomas
IT, as
ever, will play an important role for UK retailers during 2003,
with technology at the heart of improvements in the supply chain,
back office and customer-facing services.
Radio frequency identification (RFID) tags, which allow goods to be
electronically tracked along the supply chain, have started to gain
a foothold with high-profile trials at retailers such as Woolworths
and Marks & Spencer, and this trend will continue in 2003.
RFID tags have long been touted as a solution to retail crime,
stock shrinkage and long checkout queues, but the cost of the tags
has been prohibitive. With the cost falling to more acceptable
levels, most IT directors believe RFID will be the most important
retail technology in the next few years.
The UK banking industry's multibillion pound "chip and Pin"
anti-fraud initiative will also be high on the agenda for retail IT
directors during the next 12 months.
Under the initiative, by 2005, all retailers will be required to
authenticate card purchases with a personal identification number
rather than a signature.
Both Safeway and Boots overhauled their point-of-sale systems last
year, adding chip and Pin capability, and with a trial in
Northampton due to start in March, other retailers will not be far
behind.
Another point-of-sale development which will become increasingly
prevalent this year are self-scanning checkouts, which were
introduced at Tesco and Marks & Spencer in the latter part of
last year. The checkouts, a variation of the mobile self-scanning
system in operation at Safeway, Waitrose and others, have proved
massively popular in the US and retailers expect similar success in
the UK.
Mobile devices, meanwhile, will become more commonplace on the
shopfloor in 2003, mirroring recent moves from retailers such as
Tesco and Safeway, which have given personal digital assistants to
staff in a bid to increase efficiency and improve customer service.
The euro will remain an issue during 2003 as the Government
continues to ponder whether to enter, and ensuring systems are
compliant for the single currency will be important for many
retailers.
Financial services and outsourcing
Nick
Huber
In many ways 2003 will be more of the same for the
financial services industry and IT: more consolidation of sprawling
back- and front-office systems to cut costs; plans for major new IT
projects put on hold; plus the likelihood of more job losses.
The corporate vogue for offshore IT outsourcing will continue. The
main attraction is the potential for users to reduce IT costs
significantly by taking advantage of cheap and highly skilled
labour in countries such as India and South Africa.
Many companies, however, will keep quiet about their offshore
deals. Last year, insurance giant Prudential met with a barrage of
negative publicity after it announced it would close its UK call
centre - at the loss of hundreds of UK jobs - and move operations
to an offshore service centre in India.
The year ahead for the traditional outsourcing market looks less
certain than for its offshore spin-off. Demand for certain forms of
outsourcing, particularly business process outsourcing looks set to
be strong. However, the prospects for "mega-deals" - five- to
10-year outsourcing deals worth hundreds of millions of pounds -
look less certain across all industries. The past year saw the
early termination of a series of high-profile outsourcing
mega-deals in the finance sector.
Faced with growing evidence over the limitations of large-scale
outsourcing deals where inflexible contracts have been cited as the
main problem, some industry watchers predict a gradual return to
companies running IT systems in-house.
Elsewhere, the trend for innovation and investment in mobile
payments will gain further momentum, particularly with the prospect
of third-generation mobile services finally entering the market
over the next 12 months.
Watch out also for increased competition in the UK payment market
with high-street banks facing increased competition from suppliers
and card network providers. The technology for real-time payment
and clearing services is available now, so why wait three days for
a cheque to clear?
Management
Julia Vowler
This
is not the time to throw a tantrum and demand a pay rise. As
chairman of user group, Elite, David Rippon says, there have never
been so many IT directors out of work. Even if organisations such
as IDC are forecasting a return to growth in the IT industry - an
increase of around 5% in the coming year, compared with a
contraction of over 2% last year - the prudent watchword is still
caution.
The recession-driven bumpy ride means corporate IT must keep going
with its twin goals of nailing down every rogue cost in sight, yet
delivering more to the business than it used to think possible
simply to justify its existence. If there is any spending going on
it is on "spend-to-save" areas such as infrastructure
consolidation, enterprise application integration and things with
an enticing "free" price tag, such as Linux.
Taking out business cost, either at the procurement or sales
channel and customer relationship end, is the driver for any
e-spending. The calls of outsourcing - especially offshore where IT
salaries are so much less than here - weave in and out through IT
budgets. Even more dramatic than IT outsourcing, business process
outsourcing, which exports so much more than just the IT, beckons
enticingly.
Richard Holway, research director for analyst group Ovum, thinks
business process outsourcing will definitely be the next big thing
for UK corporates. Learning - fast - how to manage outsourced IT,
or the IT that gets outsourced with a business process, could be
high on the IT management agenda this year.
For those with any pounds in their pockets, it is a buyer's market,
from IT services to products. But purchasers will choose suppliers
carefully. There is no point getting the cheapest price from a
supplier which falls by the wayside. Playing safe and buying from
the most financially secure IT companies will look attractive.
With optimists warning that corporate IT should not get too
obsessed with cost-cutting so that it is ill-prepared for the
IT-enabled business agility that global economic recovery will
require, pessimists are having a hey-day that war with Iraq will
mean cyber-terrorism will trash all those who could not be bothered
to invest in adequate IT security.
Public sector
James Rogers
This year promises to be a busy one for public sector IT as the
Government's long-term technology plans for critical areas such as
the NHS start to take shape. Modernising the NHS was a key feature
of Labour's last election manifesto and overhauling health service
IT will play a major part in this, as outlined in last year's
policy document, Delivering 21st Century IT Support for the NHS.
Phase one of the strategy, which promises to be the UK's largest
ever IT project, is scheduled to begin in April. Long-term
objectives of the initiative include the extension of broadband
access to all clinicians and support staff by the end of December
2005, as well as the implementation of domain-to-domain encryption
across the health service.
IT suppliers and users, however, will be eagerly
awaiting details of the service's long-term technology procurement
strategy, which is expected to be unveiled during the next few
weeks. NHS IT tsar Richard Granger, the person charged with
overseeing the ambitious overhaul of health service IT, has warned
suppliers that they must be prepared to demonstrate their ability
to take part in the ambitious plan.
Local government is another area where the public sector is working
towards meeting strict targets in the shape of the 2005 deadline
for making services available online. According to the Government,
councils expect to make 49% of services available electronically by
March.
Electronic voting is also an issue that will be hitting the
headlines this year. As Computer Weekly went to press, councils
were waiting to hear which local authorities had been nominated to
undertake e-voting in May's local elections.
Security
Bill Goodwin
IT
suppliers and service providers will face pressure during the next
12 months to improve their internal security following recent
high-profile hacking cases in the US and the UK involving
suppliers' help desk and technical staff.
Unless suppliers put their houses in order, the Government may be
forced to re-visit plans, currently on the back burner, to regulate
IT security professionals, says Philip Virgo, strategic adviser to
the Institute for the Management of Information Systems. "The
spotlight is going to be on the monitoring of people in positions
of responsibility within the suppliers. This includes, for example,
people on helpdesks who acquire all sorts of access rights," he
says.
An item on everyone's agenda is the need to
improve collaboration between the Government, police, and
businesses on fighting cybercrime. There will be much discussion on
how this can be done, for example by co-opting civilian IT experts
into police and law enforcement agencies.
But with many of the police's resources tied-up investigating a
major paedophile case, some observers are concerned that
investigations into other computer-related crimes will inevitably
take a back seat. "People should not underestimate the drain that
the investigation into the 7,200 suspects will have on police and
computer forensic staff resources. This is going to have a serious
impact on every computer virus or hacking investigation," says
Peter Sommer, security expert at the London School of Economics.
The Government will be pre-occupied with trying to rescue its
proposals for monitoring e-mails and Web data which are in disarray
following objections from the information commissioner and Internet
service providers. Consultation papers are expected in the first
half of the year.
A new generation of viruses will create more problems for IT
departments. They include viruses which specifically target
anti-virus and other security systems and a growing number of
trojans which leave systems vulnerable to hackers, says Alex Shipp,
senior technologist at Messagelabs.
Spam e-mail is also expected to increase dramatically, soaking up
bandwidth and flooding staff in-boxes with time-wasting and in some
cases, obscene messages. Anti-spam company, Brightmail predicts
that in excess of 50% of all e-mails will be spam in the next year.
Hackers, meanwhile, are expected to take advantage of a newly
discovered vulnerability, know as a heap overflow. "A whole set of
system utilities that we formerly thought were proof against
overflows, suddenly are not," says Neil Barrett, technical director
of consultancy IRM.
Linux to grow in datacentre >>Analyst Gartner's predictions for 2003
Business intelligence and datawarehousing
This year
will be a mixed bag for suppliers and users alike. Although major
innovations are unexpected, progress will inevitably occur.
"During 2003, many enterprises will struggle to deploy
datawarehouse and business intelligence technologies due to overall
complexity, a lack of needed skills and lukewarm management
commitment."
Hardware and systems/hardware platforms
Pragmatism, not technology innovation, will dominate in 2003.
"The year 2003 will be another buyers' market, which will lead to
further supplier consolidation as users mitigate risk by selective
spending and choosing trusted suppliers."
Internet platforms and Web services
Internet-era technologies are bringing enterprises strong business
benefits through improved flexibility and agility.
"The closer you come to being a real-time enterprise, the better
will be your interactions with your suppliers, partners and
customers."
Application integration and middleware
Rapid change
will continue to be the norm in the application integration and
middleware markets in 2003. Service-oriented architecture, business
activity monitoring and business process management will capture
"mind share".
"Even in the economic downturn, enterprises continue to expect
suppliers to be innovative and competitors to seek return on
investment through strategic technology deployments."
Software
Consolidation and contraction are the key
words for the major software markets in 2003.
"IT spending is additionally impacted by reduced confidence in the
value and return on investment of past IT projects."
Source:
www.gartner.com