The PC industry suffered its most turbulent year yet in 2001 with sales falling for the first time in two decades. Although the market may see the start of a recovery this year, the main suppliers will continue to struggle to make a profit. While this may not be good news for the likes of Dell and Compaq, it represents an opportunity for IT managers to strike deals on desktop hardware, particularly as chip manufacturers such as Intel and AMD have also slashed prices to boost demand.
With Microsoft no longer supporting Windows 95, IT chiefs will have to make a choice on desktop software - do they go for Windows 2000 or the newer, slightly improved Windows XP? The option of moving away from the Microsoft platform altogether may prove particularly appealing to companies that expect a hike in costs as a result of the software giant's controversial licensing changes.
Many IT directors have said they are actively considering alternatives such as Sun Microsystems' Star Office productivity suite and the Linux operating system, and this may finally be the year when open source software gains a foothold on the corporate desktop.
Other alternatives are non-desktop PC technologies such as thin clients - slimmed down terminals that leave most computing functions to a central server - and wireless mobile devices. Thin clients are becoming increasingly commonplace. American Express is in the process of rolling out 25,000 thin clients across its worldwide operation. Analysts suggest this implementation could be a watershed for server-based computing.
Meanwhile, businesses are starting to see the advantages of mobile devices over and above the traditional personal information management capabilities. Analysts expect that Microsoft's Pocket PC platform will drive further implementations as its features are particularly suited for corporate use.
This year promises to be a busy time for the public sector. The Microsoft licensing debate will figure prominently over the coming months, with both central government and local authorities in the UK working hard to negotiate deals with the software giant.
Government officials have confirmed that the Office of Government Commerce (OGC) is negotiating with Microsoft to draw up a single contract to supply Office and Windows software to nearly 500,000 civil servants. The NHS and the Ministry of Defence have already signed similar agreements with Microsoft.
The Society of IT Management (Socitm), which represents local government IT directors, has also been in talks to negotiate a single software agreement with Microsoft for UK councils. A spokesman for the group says a deal is likely to be signed this spring and the society's officials are liaising closely with their counterparts at the OGC on the Microsoft issue. Socitm estimates that Microsoft's licensing arrangements, announced in May 2001, could cost town halls as much as £80m over the next two years.
Councils will also be eagerly awaiting the next slice of e-government funding from the Department for Transport, Local Government and the Regions. The Government announced in December that local authorities in England will receive £160m over the next two years to help them to improve delivery of services using new technologies. The money, which is subject to parliamentary approval, is coming from £350m of government funds that have been allocated to help councils meet the 2005 target for getting services online.
Finally, the long-awaited National Air Traffic Services control centre at Swanwick, Hampshire, will become operational on 27 January. The opening of the multimillion-pound centre has been delayed for nearly six years by software integration problems.
Broadband Britain will remain a catchy alliterative slogan with little physical substance, as the UK is still in 11th place out of the 13 OECD nations or 13th in Europe in terms of broadband penetration, depending on the figures you choose.
About 70% of the population can now receive cable or ADSL but only 0.8% of the general public has taken the plunge. At the same time business says it is hampered by the lack of broadband as a means of corporate communication and as a channel to the buying public.
This logjam will persist until the achievement of critical mass. But providers are not going to give access away and the public does not yet see the need for it. The market wants seedcorn funds and in the short term this can only be obtained by the Government showing what is possible - treating high-speed Internet as a vital element of the national infrastructure like gas, electricity or water - and introducing tax breaks. The opportunity exists to lead the world as an information society but will UK plc take the bold steps needed?
The slowdown in the IT jobs market is set to continue well into 2002. Despite this downturn in the economy it will not be any easier to hold on to your most valuable IT staff and this period should be used to motivate and train teams.
Even though most people are sitting tight at the moment, if they feel they would do better elsewhere they will move on as soon as the market picks up and this is the worst time to be losing talented staff.
Research has shown that most ITers do not move on because of inadequate salary and benefits but because they are unhappy with management or feel that there are limited opportunities for advancement. Investing in training will ensure staff loyalty when you need it most.
Anticipating what training to give and what skills to develop is part of this process. The Computer Weekly/SSP skills league table predicts the rise of Microsoft's SQL Server and a major increase in demand for Unix skills. C++ will continue to be the most valuable programming language but developers should work on C# as demand for this is expected to increase over the next two years.
Research has also indicated that boards will want more e-commerce projects in 2002 and consequently demand will rise for customer service, Web development and middleware skills.
Most importantly though, the opportunity to build a strong team for when the economy picks up should not be missed.
IT Strategy and management
The first half of 2002 promises to be a tough time for everyone and senior IT professionals are no exception. With money tight in many sectors the emphasis will be on keeping costs down and demonstrating return on investment.
However, with IT budgets so tight, it could be time to tackle those tasks you were always going to do if only you had time, for example, restructuring databases, archiving historical data, documenting systems, auditing PC software and reviewing maintenance agreements. These tasks usually require little or no expenditure but by putting your house in order substantial cost savings can be made.
Staffing issues will again be high on the agenda. Whereas the much-vaunted skills crisis has abated, the challenge this year will be to keep your remaining employees motivated and focused. Your ability to lead and delegate will be tested.
You will need to keep your wits about you too as outsourcing and software suppliers introduce new pricing models. But with suppliers desperate to make sales, now is the time to negotiate some advantageous deals.
Finally, IT will continue its drift towards the centre of most organisations. If you have not already got the message, IT can no longer remain in glorious isolation. Everything must be viewed in terms of the business as a whole.
Recession is the dominant driver for business strategy, and hence IT strategy for the next year. IT spending is forecast to grow by only 6.9%. With only £64.5bn to spend on IT, UK business will be demanding more for less from corporate IT.
While reducing costs internally, for example, by consolidating servers, campaigning against Microsoft's new licensing charges, and shedding staff, some analysts, such as Gartner, are advocating a gap-year for IT.
Value for money and customer service are the watchwords of one IT director that will be echoed by many of his peers. But uncertainty makes planning hard, say other directors. Tony Cornford, of the London School of Economics, advises organisations to consolidate e-business investments, since e-government will increasingly validate the e-economy for consumers, and businesses want cheaper channels to suppliers and customers.
Brace yourselves for yet more mobile computing as not only is the technology developing fast but business will want to cut overheads through hot-desking, ensuring that staff can log on and work from any desktop. Be bold and tool-up with skills while the downturn makes them plentiful, so that you can take off at speed in 2003 when IT growth will head for 10% again.
Last year was grim for IT in the financial services industry and this year will probably be just as tough. The sharp downturn in the economy will cast a long shadow over IT projects and budgets have been held in check, prompting redundancies among IT staff and lay-offs of consultants.
However, despite the widespread economic gloom, this could be the year when long-predicted technologies and IT trends finally hit the corporate and consumer mainstream.
Mobile payments and outsourcing will all see significant changes in the year ahead as companies try to get to grips with wireless technology and find new ways to reach customers, industry experts predict.
It will also be the year when companies attempt to get better returns from technologies such as customer relationship management, which have so far promised more than they have delivered.
The big trend will be in mobile payments for small transactions and this will be boosted by a draft European Commission directive last year which will allow non-banks to issue electronic money. Vodafone is already developing a mobile payment system to allow users to pay for inexpensive items via their phones and other operators are likely to follow.
This is the year when 64-bit systems will really start to make their mark. Intel is due to bring out its McKinley chip, the grown-up version of its 64-bit chip architecture, and Microsoft is expected to release the version of Windows XP which will run on 64-bit servers. Those companies with any budget still to be allocated will be evaluating where McKinley can improve business and a new flock of servers will be launched to celebrate 64-bit's move to the mainstream.
The big news, however, will probably centre on e-business platforms with IBM and BEA continuing to build on their successes so far, while Oracle, Microsoft, Sun and Hewlett-Packard jostle for position in the chasing pack.
Linux will still struggle to make its mark in the higher end business market while consolidating its hold in embedded systems and servers. Thanks to Microsoft hiking up the cost of its licences this year and its well-publicised systems security problems, even the less adventurous financial services companies and public sector organisations are now showing serious interest in open source software.
Computer Weekly asked some leading experts in IT security to predict what security issues will affect IT directors in 2002. Peter Sommer, of the London School of Economics, says the e-mail and Internet monitoring provisions in the Government's emergency powers terrorist legislation will prove unworkable. It will either have to be abandoned or reworked in a way that will prove very unpopular with civil libertarians.
According to Thomas Raschke, a security analyst at IDC, smaller companies will increasingly take advantage of off-the-shelf plug-and-play security packages. Lower equipment prices will encourage these companies to improve their security.
The spread of wireless devices will create new problems for IT directors, he says, and laptops, personal digital assistants and mobile phones could open up new back doors into company systems.
Sophisticated Windows worms will take over from e-mail macro viruses as the biggest headache for businesses, says Graham Cluley, of anti-virus specialist Sophos. They will use shape-changing technology to escape detection. More virus writers will turn their attention to developing Unix viruses.
Security consultant Chris Sundt says companies will begin experimenting with improved versions of public key infrastructure (PKI). These will have improved trust models and will take over from more traditional PKI.