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Gartner Predicts: The Future of IT

  Industry Statistics published in DM Direct Special Report
October 22, 2002 Issue
  By DMReview.com Web Editorial Staff

Gartner outlines 10 predictions for information technology (IT). The predictions are, for the most part, aimed at the remainder of this decade, each becoming obvious by 2003 in some way, even if not reaching their full expression until later.

The predictions Carl Claunch made in his presentation, "Gartner Predicts: The Future of IT," are all the result of certain trends and pressures. Automation previously targeted within the boundaries of single enterprise for the most part will be increasingly applied to multiple separate entities as this decade unfolds. These interenterprise systems are first developed for formally associated organizations (supply or value chain) but will eventually come to server markets and industry segments as a whole. Many technologies within IT are improving at a rapid pace and will continue to do so as innovations overcome potential roadblocks. The resulting capabilities and their impact on us are difficult to imagine as the specifications of future products rocket to new peaks. The current economic climate will drive changes to the vendors of IT products and services. The direct linkage of IT with the strategies and objectives of the overall business of every enterprise will shift attitudes, requirements and behaviors. Finally, as many enterprises find business value in reducing information delays, they will increasingly begin to create and deploy real-time enterprise (RTE) systems. The effects on those businesses and others from the improved information velocity will produce noticeable external results.

Prediction 1: Bandwidth Becomes More Cost-Effective than Computing

For many years, it was a truism that network capacity grew more slowly than computing power, but optical technologies have broken that mold. Gartner expects that network capacity will increase faster than will compute, memory and storage capacity. Over time, this will produce a significant shift in the relative cost of accomplishing a task remotely vs. locally. The balance will tip steadily, but not uniformly, across the three dimensions of network connections. Capacity will be less expensive as optical technology improvements yield lower costs for devices and network operations. Certain practical issues will still moderate the delivery of this capacity uniformly - economic issues, regulatory challenges and physical challenges will foster an uneven distribution of these benefits. Latency will come down only minutely with the speed of light dictating minimum delays for a given distance.

The coming rebalance to cheaper networking leads to an emphasis on:

  • Application service provider (ASP) model of applications as an external service;
  • Hosting, outsourcing, shared centralized facilities;
  • Thin clients with minimal local processing; and
  • Consolidations inside enterprise away from distributed centers.

Prediction 2: Most Major New Systems will be Interenterprise

Originally, IT systems capabilities made them appropriate to use as the foundation for entire business processes. Suites, such as enterprise resource planning (ERP), allowed for the automation and coordination of the entire back- office production. Customer facing, front-office functions considered entities outside the enterprise. Then supply chain and collaborative design initiatives spread IT systems across the spectrum. These new systems that allow ad hoc trans-enterprise automation are supported by technologies such as Web services, XML and improved business application integration capabilities.

When IT systems span enterprises, they bring a host of new issues that need solving. There is a problem that different owners of the entities involved mean conflicting priorities without a "buck stops here" point in the enterprise to resolve them. Inside the enterprise there is always such a point; between enterprises, it will be a very different and slower process. Another challenge: The tools for managing networks, systems and applications are not mutually compatible and the design of these tools does not consider the cross-enterprise reality we will be facing with such systems.

Prediction 3: Macroeconomic Boost from Interenterprise Systems

Just as ERP systems improved the efficiency of the back office - reducing waste, lowering levels of protective inventory to be maintained and permitting quicker responses to market shifts - the interenterprise systems that are coming this decade will cut out the waste and inefficiencies in the interstices between separate enterprises, producing further improvements in the productivity of capital and less waste or rework as entire systems of enterprises in a market or value chain are able to react more rapidly to change. This will begin to be seen in overall economic results and provide yet more evidence of the true business value of IT.

The challenge for interenterprise systems will involve not only operational issues, but also the need for new model to coordinate investments in these assets that do not have a single owner. Consortiums or independent firms might create these systems or groups of enterprises might form joint ventures or separate entities to manage these systems. As they approach market- or segment- wide use, the model for investment and coordination will become more difficult.

Prediction 4: Successful Firms in Strong Economy Lay Off Millions

Each new round of IT systems seem to add more functions, more bells and more objectives than its older version. This growth masked much of the underlying improvement in productivity - instead of spending less to do less work, we accomplished new things with the resources. The relentless improvements in IT capabilities are outpacing our ability to find refinements. We are beginning to see the overall evidence as productivity improvements exceed the add-ons. This will accelerate because we found much of the "low- hanging fruit" of additional functions.

In some cases, the improvement in productivity will mean that a growing business with healthy margins will require fewer and fewer people - producing layoffs at a time of plenty. This shift of people out of the automated areas will create some social problems as new demands for labor arise to accommodate them.

Prediction 5: Continued Consolidation of Vendors in Many Segments

Gartner expects serious reduction in the number of vendors in many pressured segments during the next few years. Not only will the small and weak disappear, major players will merge or be acquired to cause even well known and substantial brands to vanish.

Sourcing decisions must take into account the business situation of prospective vendors, their future prospects and the market forces in the segment to identify and rank the relative risk of possible choices. The value of a particular solution can warrant selecting a vendor with medium or even high risk, but the purchases should have a well-developed plan for what to do in the event of a merger, acquisition or even pure collapse. Although the vendor might survive in a merger, certain products, strategies and directions may not.

Prediction 6: Moore's Law Continues to Hold True Through this Decade

Gordon Moore of Intel commented on the pace of the semiconductor improvement which seemed to be highly correlated to the pace of improvement in lithography - the method and precision of forming the features and devices on the chips. The rate of improvement seemed pretty linear in creating ever-smaller features which gave rise to a squared improvement in devices that can be placed on a given chip area. He referred to this as Moore's law, that semiconductor capabilities would double every 18 months or so.

This observation held true for decades and Gartner projects that this observation will continue to be true pas the end of this decade. The 40GHZ processor projected in late 2008 will be around 150GHz early in the next decade and internal PC storage will balloon to more than six terabytes of capacity.

Prediction 7: Banks Become Primary Provider of Presence Services by 2007

Presence is the service that notifies us that some person or resource of interest is available for use. Combining presence, instant messaging and e-mail services creates a powerful platform for mobile and small-device access to information and systems. The goal of capturing impulse or instant attention, the needs of easy use for overloaded users and the real-time demands of coming real-time enterprise (RTE) business applications will all drive us to reliance on a one-click objective.

The presence service will hold key links, important private information such as credit card numbers and preferences for our one-click environment. Because of the security, privacy and availability characteristics we will demand, the role of presence service will migrate from the current providers, network service operators and software vendors, to "banks" that provide the trustworthiness we expect. Financial service providers are well-positioned to take on this role, having high IT expertise, extensive systems in place and proven abilities to deliver private and safe services.

Prediction 8: Business Activity Monitoring is Mainstream by 2007

Most decision in an organization are either preprogrammed or made by designated managers. Business activity monitoring (BAM) provides more of the relevant facts and context to people at the point of decision, allowing the decision to be deferred until the actual need rather that determined in advance. This can lead to more cost- effective decisions and a more responsive organization. It will, however, also lead to decisions being made by the people at the touchpoint. This will increase the number of decisions that are truly made by individuals rather that simply enacted by individuals based on canned policies. Additionally, some simple and low-risk decisions will be made directly by automation. Audit - the after-the-fact or parallel act of informing a human - will still take place, but humans will be removed from the approval/rejection path. Effective decision delegation depends on good information at the touchpoint. RTE analysis will determine the level of currency needed to make appropriate decisions.

Prediction 9: Business Units, Not IT, will Make Most Application Decisions

As the true business value of IT is increasingly evident, so will the decisions regarding IT become the purview of business leaders. In any organizational design, the decision to centralize implies cost- efficiencies and minimum redundancy, while the choice for decentralization fosters faster reaction to volatility and more localization to the specific needs of its market/customers/responsibilities. As IT decisions move outward to the business departments, they will often be less optimal overall than the centrally planned decisions previously made by IT. On the other hand, to the extent that the increased responsiveness affords the business departments greater success, the overall value to the enterprise should outweigh the redundancies and lessen scale advantages. Generally, an enterprise in a static field with little external volatility is best served by a very centralized, cost-efficient structure, including centralized IT; while more volatile and competitive environments are best served by appropriate dispersal of authority and responsibility, including IT decisions.

Prediction 10: Pendulum Swings Back from Centralized to Decentralized by 2004

Tight times lead to budget pressures. A common reaction to budget pressures is to reduce expenditures by consolidating. The original decision to decentralize considered factors beyond pure total cost. Often the IT decentralization was closely related to an organizational decentralization where a multidivision structure would best fit the needs for economy and responsiveness. Local difference might be addressed with redundant but slightly different approaches. A quickly changing external environment might force small organizational units to allow fast response, although there is no benefit from economies of scale.

Gartner predicts that the business objectives outside of cost will begin to be felt strongly so that the pendulum will begin its swing back toward decentralization for many clients in 2004. Eased budget retractions will combine with experienced difficulties reacting to volatile markets or strong competitive pressures, pushing the return to more decentralization of IT systems.


For more information on related topics visit the following related portals...
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This piece has been brought to you by the DMReview.com Web Editorial staff.

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