We found five technologies with the potential to make wary IT leaders brave enough to unlock the coffers and invest in IT in 2004. Nick Langley reports.
IT users approach 2004 lean, scarred and wary. A cost-cutting mentality has become so ingrained that chief information officers are spending, on average, just 80% of their budgets, says analyst firm Gartner Group. Computer Weekly set out to find five technologies that offered enough realistic business value to encourage a more positive approach to IT investment.
We drew up our list: web services, wireless, utility computing, real-time computing and open source software. We then presented it to analysts and users, asking for their reactions.
The results are mixed. For example, users see web services as a still-distant prospect, but analysts insist they will be playing a key role in service-oriented architectures and application integration next year. How famous will our five be in 2004?
For users, being able to buy it cheaply, plug it in and go without expert help is a no-brainer. Wireless is becoming ubiquitous and is deployed in thousands of small projects, often operating outside traditional IT departments.
Julian Hewett, chief analyst at Ovum, says that most of the truly dramatic telecoms developments happen because a terminal population is put in place – just think of fax or SMS. “These days you can barely buy a laptop without a wireless chip in it, and slowly but surely we are building a population which is Wi-Fi-enabled,” he says.
“It is surprising how many hotspots there are, and how you can move around and still remain connected,” says Steve Prentice, chief of research at Gartner. “I have come across a number of hotels that are finding it easier to wireless-enable their buildings than provide Ethernet access in the rooms.”
But there is a downside. The security implications of leaky, unencrypted wireless Lans carrying internal business traffic are alarming. Prentice recently found his laptop had spontaneously connected to someone else’s wireless Lan. “Get a WLan policy set up and enabled,” he says.
All that remains is for service providers to work out something profitable to do with wireless. Hewett says it is either expensive, such as hotel with their grand old tradition of 1,000% mark-ups for telecoms, or there is no business model at all.
The challenge for Wi-Fi service operators is to provide compelling services that people will pay for, beyond internet and e-mail access, and to create a viable charging structure. Service providers will have to compete with coffee shops, which are happy to lay on free hotspots to encourage people to linger.
That business model may work better for the independent coffee shop, rather than the fast-food chain, says analyst Robin Bloor. "If your business is geared to rapid throughput, you would rather they cleared off to let the next person in. So it is surprising that McDonalds should want to set up hotspots."
With a few simple precautions, it is possible to be completely in control of wireless deployments, without the need for expensive infrastructure or external services.
"XML and web services will certainly grow, but how fast I am not sure," says interim ITdirector Ed Darnell.
Prentice thinks web services and XML will play a key part in the move to environments where the emphasis is on business processes rather than discrete applications.
"This means service-orientated middleware and software components to build an overall whole, rather than creating new applications every time." Prentice says he sees a rapid growth of interest among users.
Rakesh Kumar, vice-president at analyst Meta Group, says web services will be the catalyst for enterprise-wide application integration projects. Hewett agrees, although he does not think it will be a major focus for investment. "Web services will be tremendously important in knitting existing systems together, but I do not see it as representing a new wave of spending. It will just make life a bit easier."
Peter Abrahams, an analyst with Bloor Research, warns of the danger of standards divergence. Microsoft and IBM are pursuing a separate strategy to the Oasis Web Services Composite Application Framework, which takes input from Oracle, Sun and others. "If these two initiatives do not come together, the industry will suffer. Standards must be developed before too much emotional, developmental or fiscal capital has been spent."
Steve Barrie at Bloor Research, adds that most businesses will not want to invest time and resources in developing web services infrastructures. "It is likely that web services will be implemented as a part of a solution purchase, such as enterprise resource planning or customer relationship management functions delivered as services.
"However, it will be necessary to ensure that additional web services are able to integrate fully. The only way to guarantee that, will be to use the same supplier."
Open source software
The rise of open source is another example of a user win against suppliers. Darnell thinks that open source will grow rapidly, and says that the MySQL database and PHP scripting language are particular technologies to watch.
But the honeymoon may be coming to an end, says Prentice. "People are voting with their hearts, not their heads. The total cost of ownership of open source is open to question. It is a bit like the move from mainframe to server-based computing: it may cost less to buy, but in the long-term, it may cost more to manage and maintain."
Kumar has similar doubts. "Organisations are now far more receptive to open source, because Microsoft cannot get its house in order on pricing. There is also a growing band of influential technical people putting Linux on mainframes. But I am not convinced by the technology arguments. You can get as much availability as you need for most applications on a clustered Intel box running Linux - not as good as a mainframe, but a lot cheaper."
Prentice says Microsoft has it in its power to upset the Linux apple-cart by making significant changes to licencing and pricing, but that it shows no sign of preparing to do so.
Other suppliers are tackling the pricing issue. IBM's On Demand and Hewlett-Packard's Adaptive Enterprise are both ways of selling users only the processing power they need, when they need it. This is an extension of the application service provider model; using third-party resources outside the walls of the enterprise.
"At the network, hardware and software infrastructure levels, IT is not a business differentiator, which is why the utility computing model is being received with interest," says Ovum research director Katy Ring. But, she adds, it is debatable whether it actually lowers costs. "It makes costs more manageable and predictable and removes them from capital expenditure."
"On Demand, Adaptive Enterprise and other infrastructure initiatives are all similar and aimed at the idea of virtualising the hardware layer," says Bloor. "Companies are receptive to the idea of a corporate computer resource that is both managed and efficient."
Kumar says the devil is in the contractual detail. "Users will sign if they can see it ties their payment schedules to some real business metrics, but if it is going to be a bastardised lease contract, forget it. They want creative business models they can take back to the non-IT people in their organisation. This is going to be a hot area in 2004."
The last of our five, real-time computing, is really about things getting faster, rather than everything being available instantly. "It is about time all banking transactions were instant, but I doubt that will be sorted in 2004," says Darnell.
"What real-time actually means is taking out unnecessary delays and being a more responsive organisation," says Prentice. "It is built upon better infrastructure management, more ubiquitous networking and the virtualisation of servers and storage."
However, that means spending money, which means shaking IT leaders out of the cost-cutting mentality of the past three years into thinking about strategic investments which provide a payback of good business value. Happy new year...
Five to adopt in 2004
Already here and spreading fast. User organisations need to think about making it secure and service providers must think about how to make money from it.
Web services (pilot projects)
Pick a pilot application or process, but beware supplier lock-in.
Spreading fast. MySQL and PHP are set to join Linux in the mainstream. But scrutinise those TCO figures - the software may be cheap or free, but how much does it cost to manage?
Pay only for the processing power you use.
Cut out the delay to compete better. But be prepared to spend on infrastructure.
Five for the back boiler
Gartner believes it will not have much to offer before 2007 and says, "There is nothing you can do with it now that you cannot do with the 2G that is already available."
Web services (enterprise applications)
Wait for technology to mature and standards to be thrashed out before attempting those big application integration projects.
Only for big research and development organisations, or those on the bleeding edge of data-mining.
Linux on the desktop
Watch and wait. Microsoft may have to lower prices.
IP version 6
Strictly for network operators.