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.
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
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?
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.
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.
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."
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."