The global economy is creating an atmosphere of uncertainty in the IT sector, but what can we expect in 2012?
This time last year there was mild optimism about growth in the economy following the carnage left by the credit crunch. But hope has quickly changed into despair and the Euro crisis threatens to push parts of the world back into recession.
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Even the Chinese economy is growing at a much slower rate as European customers of its manufactured products tighten their belts.
Variables such as the economic backdrop and security threats will, as always, influence IT decision makers. But the evolution of cloud computing, the move from IPv4 networking to IPv6, as well as the introduction of Windows 8 will be worth watching over the next 12 months.
Industries of particular interest will include the public sector, which is battling with massive budget cuts, and financial services, which faces trouble in the form of the Euro crisis.
There will be another year of uncertainty and CIO plans could be put on hold as many CFOs expect the UK to re-enter recession, according Deloitte.
Research from the business consultancy revealed that chief financial officers (CFOs) believe there is a 54% chance of the UK experiencing a double-dip recession.
With CFOs already “pricing in a UK recession,” according to Deloitte, CIOs are likely to be hit by reduced budgets alongside pressure to do more for less.
“CFOs are working on the assumption that the UK is likely to fall back into recession,” said Deloitte.
New IT investments could suffer as a massive 87% of the CFOs interviewed said it is a bad time to take extra risks in terms of spending. This marks a change from a year ago when businesses believed a recovery was on the horizon.
“CFOs entered 2011 with a focus on expanding into new markets and increasing spending; they enter 2012 with a focus on cutting costs and increasing cash flow,” said the report.
Part of last year’s focus on moving into new markets involved the creation of enterprise-wide mobile strategies. Mobile banking and mobile shopping services were, for example, introduced en masse by the major banks and retailers.
Securing the business
The proliferation of such strategies has introduced a new challenge for 2012. The amount of business done through mobile devices has made them a potentially more lucrative target for hackers.
Security is always a challenge as new IT trends throw up new vulnerabilities. Many in the industry agree that new mobile threats are likely to be among the most pressing for businesses in the coming year.
This is due to the range of vulnerabilities that affect increasingly popular mobile platforms such as smartphones and tablets, and range from the high risk of data loss and the availability of unsecure applications from app stores, to the growing threat from mobile malware, says Ruggero Contu of research firm Gartner. McAfee Labs expects attackers will bypass PCs and go straight after mobile banking apps, as more and more users handle their finances on mobile devices.
And it is not just mobile devices and applications that look set to be targets for hackers. Embedded systems designed for a specific control function within larger systems that are commonly used in vehicles, medical devices, and printers, are also tipped to be an area of emerging security threat. Security experts expect to see to see proofs-of-concept codes exploiting embedded systems to become more effective in 2012.
Meanwhile, security threats that emerged last year such as those related to consumer cloud computing services are likely to continue to be pressing issues. With business take-up of the cloud expected to increase, these threats will grow.
New cloud debate
Research from Computer Weekly's parent TechTarget found that 24% of businesses plan to grow their expenditure for cloud services over the next year.
But boardroom discussions about the cloud will turn from the technology, where the argument has been won, to the commercial models.
Most IT leaders have learned that the cloud is an evolution, not a revolution, in technology delivery. But they are now learning how the cloud will radically redefine the relationship with their key suppliers. CIOs have bought into the concept of pay-as-you-go pricing, and the idea that cloud providers take ownership of IT risk elements such as availability and scalability. But when pressed, many established vendors are proving unable to transfer the marketing hype to their products.
This will reshape the relationship between IT suppliers and their customers, and provide opportunities for smaller, innovative firms that are not tied down by outdated software licensing models.
As cloud adoption accelerates the supplier landscape will change. Traditional IT service providers, if they have not already, will have to re-engineer their service offerings. At the same time they will have to radically change how they charge customers. This combination could fuel consolidation in the sector as suppliers acquire the skills and technology to give them a foothold in the cloud.
The big IT firms such as Microsoft, Oracle and SAP have already launched cloud versions of software but the 2012 release of Windows 8 will generate much discussion about cloud-style subscriptions. Cloud subscriptions will offer instant updates, compared to the conventional upgrade-based cyclical licensing model of products such as Windows. This is likely to be a further catalyst to a fundamental debate about the future shape of the IT industry.
Microsoft is expected to have the next version of its desktop and server operating system (OS) available this year. The desktop version is set to provide tight integration with Microsoft’s Live cloud services, and the Windows Store for Windows 8 applications. Many businesses, however, are unlikely to make any plans to upgrade their desktop OS to Windows 8, as they are still migrating to Windows 7.
According to some experts, the Windows 8 Server OS may become a viable alternative to VMware for server virtualisation. Microsoft says Windows 8 Server, “Delivers a fully isolated, multi-tenant environment with tools that can guarantee service-level agreements, enable chargebacks through usage-based billing, and support self-service delivery.”
Windows will also support the ARM microprocessor based on system-on-a-chip architectures, which Microsoft claims will enables smaller, thinner devices while reducing the amount of power required for the device, and increasing battery life.
Through a project called Redstone, HP is developing ARM-based blade servers, that could dramatically reduce the thermal footprint of Windows-based blade servers in data centres.
Another key technology driver in 2012 will be the shift from IPv4 networking to IPv6, as a result of the depletion of IPv4 addresses on the global internet. The IPv4 Exhaustion Counter shows that RIPE NCC, the regional internet registry allocating internet addresses across Europe, will run out of addresses on 22 July 2012.
Telecoms providers, the government and businesses will need to migrate to IPv6 to run new applications and services that requires additional IP addresses, once the IPv4 address space has been depleted. The switch-over will not happen overnight, but with no more new IPv4 addresses, network managers will need to build IPv6 into their networks.
There is likely to be a cost involved in hardware, software and training to switch, but according to Verizon Business, benefits include a reduction in internal enterprise network and IT operating expenditure and seamless integration with mobile devices like smartphones and tablet devices.
Sectors to watch
Two of the biggest areas in terms of IT spending are financial services and public sector.
After the carnage of the credit crunch, which began with the collapse of Lehman Brothers, banks shook up their IT to cut costs and to manage the huge mergers between troubled banks and acquisitions of failing banks.
Thousands of IT professionals in the sector lost their jobs over the last few years and that might not be the end of it. Gartner predicts that by 2014, more than one-third of European banks will collapse as a result of major national defaults in Europe.
Another area that experienced severe turmoil was the public sector. This was the result of its very own credit crunch - the debt crisis. Here too, thousands of IT professionals have lost their jobs but in the UK the government has set out a strategy that at least aims to make IT work better in Whitehall.
The public sector will be looking closer at the cloud; it will switch to a "digital by default" model for public services; and at the same time it will be busy developing systems for the massive Universal Credit programme.
The significance of the cloud in government is set to grow in 2012 particularly after the publication of the G-Cloud framework in February, which will enable the public sector to buy from a list of accredited suppliers. But while the government has its fair share of evangelists for on-demand services, the cloud is likely to remain at a nascent stage this year as many organisations remain locked into existing contracts and public sector leaders get their heads around an entirely new way of procuring IT.
Meanwhile the digital-by-default agenda led by the newly-created Government Digital Service team will gather pace, as departments seek the most cost-effective means of delivering services in an environment of fiscal restraint. This year more services are set to go online, with Cabinet Office minister Francis Maude having stated the government’s approach will be "online-only" where possible.
In the background, but of no less significance, the development of systems for the Universal Credit programme will gain momentum in 2012 to meet the tight roll-out deadline for 2013. Some critics have predicted this could be the next large-scale public sector IT failure due to the complexity of the systems involved. True or not, 2012 will certainly be the key year in determining the project’s success.
2012 will be a little different than was expected 12 months ago. The green shoots of recovery have been stamped on before they had a chance to bloom. CIOs will have to yet again take a leading role in making technology do more for less. But at least, with the latest technologies utilising the cloud, they will have fresh options to consider.
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