Welcome to the latest BriefingsDirect Analyst Insights Edition, Vol. 35, a periodic discussion and dissection of software, services, SOA and compute cloud-related news and events with a panel of IT analysts.
In this episode, recorded Dec. 19, 2008, our guests make their top five predictions for IT in 2009. We're going to look at what trends may have changed in 2008, but with an emphasis on the impacts for IT users, and buyers and sellers in the coming year.
Please join noted IT industry analysts and experts Jim Kobielus, senior analyst at Forrester Research; Tony Baer, senior analyst at Ovum; Brad Shimmin, principal analyst at Current Analysis; Joe McKendrick, independent analyst and prolific blogger; Dave Linthicum, founder of Linthicum Group; Mike Meehan, senior analyst at Current Analysis, and JP Morgenthal, senior analyst at Burton Group. Our discussion is hosted and moderated by me, BriefingDirect's Dana Gardner.
Here are some excerpts...
Gardner's Top Five Predictions for 2009:
1) Shadow IT. Spending from shadow IT activities will actually grow, and the amount of money devoted to shadow IT activities will come from outside traditional IT budgets, from a variety of different sources, maybe even petty cash, and we'll see a bit of growth in these rogue activities. Moving into these areas for business development purposes is going to be an overwhelming temptation. We will see a flattening, and in many cases a reduction, in officially sanctioned IT activities.
2) Cut Costs. Inside of traditional IT we're going to find a lot of new ways to quickly cut costs. This is going to be a drill for organizations to not spend money or spend less money. Virtualization will be a big part of that. Hypervisors will perhaps go commodity, and the value-add in the virtualized environment is going to be at the stacks -- virtualized stacks or containers at the applications level. There will be a blurring between which WOA activities happen inside IT and outside. We're going to see a lot more dumping of Unix and mainframes. We are going to sunset a lot of applications that aren't essential and save on the underlying costs of supporting them.
3) High-Scale Business Intelligence (BI). Extreme BI will require a move up scale to larger sets of data, larger sets of content, and more mingling or joining of disparate types of data and content in order to draw inferences about what the customers are willing to do and pay across both B2B and B2C activities. We'll start to see an increased use of multi-core and parallelism to support these BI activities.
4) No Stomach for Upgrades. Upgrades will suffer. We're not going to see a lot of swapping out of one system for another, unless there's a very compelling return-on-investment (ROI) scenario with verifiable short-term metrics. This is going to hurt companies like SAP and Microsoft (MSFT), and Oracle (ORCL) and IBM to a lesser extent, given their diversification. I think Windows 7 is in trouble. People are not going to just run to Windows 7. They're going to continue to stay with XP. This makes the timing around the Vista debacle all the more injurious to Microsoft. This provides an opening for Linux and non-Microsoft virtualization. It also means Microsoft needs to move to its cloud offerings all the more quickly, which then could actually spell earnings troubles for the company.
5) Social Data-CRM Mashups. The role of social media and networks will continue to grow and be impactful for enterprises, as marketers and salespeople begin to look to these organizations from the metadata and inference about what customers are willing to buy, particularly under tight economic conditions. There's going to be a need to tie traditional customer relationship management (CRM) and sales applications with some sort of a process overlay into the metadata that's available from these Web-based cloud environments, where users have shared so much inference and data about themselves. I look for some mashups between social data and the sales and business development applications and data.
Kobielus's Top Five Predictions for 2009:
1) Obama. The new administration will most likely appoint a national chief technology officer or a national tech policy coordinator. Obama is going to choose a heavy hitter who has huge credibility and stature in the IT space. It's going to be someone who's going to focus on SOA at a national level, in terms of how we, as a country, can take advantage of reusing agility, transformation, optimization, and all the other benefits that come from SOA properly implemented across different agencies.
2) Cloud Computing. Clouds are going to become less of a work in progress, in terms of public clouds and private clouds, and become more of a mature reality, in terms of how enterprises acquire functionality, how they acquire applications and platforms. Clouds will stratify, which means that the vendors, like Google (GOOG), Microsoft, and Amazon (AMZN) and others with their cloud offerings, will build full stacks, strata, in their cloud services that include all the appropriate layers, application components, integration services, and platforms. So, the industry will converge on a more of a reference model for cloud in 2009.
3) Recession. We are in a deep funk, and it might get a lot worse before it gets better. That's clearly hammering all IT budgets everywhere. They're going to put a freeze on projects. They're going to delay or cancel upgrades. Users are going to dip into petty cash and go around IT to get what they need. They're going to go to cloud offerings.
4) Governance, Risk and Compliance (GRC). Government is cracking down. If it has to bail out the financial-services industry, bail out the auto industry, and bail out other industries, the government is not going to do it with no strings attached. Compliance, regulations, reporting requirements, the whole apparatus of GRC will be brought to bear on the industries that the government is saving and bailing out.
5) Social Networking. Social networking will pervade everything in terms of applications and services. We'll see more BI become social networking, in the sense of mashup as a style of BI application, reporting, dashboards, and development. Mashups for user self-service BI development will come to the fore. It will be a huge theme in the BI space in 2009 and beyond that.
Baer's Top Five Predictions for 2009:
1) Cost Savings. It's going to put a lot more emphasis on using the resources and infrastructure that you already have. It's going to damp down entering into new long-term contracts for anything. You'll actually see little less emphasis on outsourcing, because that does imply a long-term contract. I don't think anyone is really doing any meaningful projecting beyond Q1.
2) Low Cost or No Cost IT. It's going to be a lot of low cost, no cost. There will be a lot more use of open source, a lot more. This is definitely the year that the cloud and Software as a Service (SaaS) come into their own.
3) Managed Clouds. I think it's going to be managed clouds. Essentially, to take advantage of raw clouds, like Amazon EC2 you have to put in more of your own management infrastructure. I don't see the use of what I would call "clouds in the wild." I see more managed clouds from that standpoint.
4) IT Service Management. For IT organizations, it's going to dictate more attention to IT service management to show that we're not just keeping systems going and keeping the lights on, but more along the lines of, "Here are the services that we're delivering to the business," as they try to justify the systems. On the back-end, it will be "Use more of what you have," and huge renewed investments in BI.
5) GRC. It's going to take a while for this to unfold -- you just don't regulate overnight -- but there will be much greater attention to GRC.
Shimmin's Top Five Predictions for 2009:
1) Collaborative Social Networks. Vendors will tackle enterprise-plus-consumer based social networks, a blended view of those. Enterprise-focused vendors are going to do more than simply sink info from public sites like Facebook. They're going to take that information and build into or out from the enterprise into those social networks and drive information from those. It's going to become a two-way street.
2) Cloud Software. I see the vendors within the collaboration space settling beyond the small and medium business (SMB) market and looking more toward the larger enterprises that are looking to squeeze more out of their existing IT infrastructure or cut costs. Folks like IBM and Microsoft have already shown us that they can hit the long tail with stuff like Bluehouse and Microsoft Online Services (MOS) for collaboration. But, you're going to see vendors like Cisco (CSCO) and Oracle take up this challenge with more of a focus on managed hosting services that look more like SaaS, but they are really managed.
3) Enterprise Oligarchy Models. Enterprises are going to move away from a steep hierarchy, or the word might be "oligarchy," of an organizational model internally. To become not just more efficient and agile, companies are going to want to self organize to create these internal ecosystems where organizations are built around employee experience, associations, interests, and energy levels -- what they want to focus on. This allows companies to more efficiently harness the users. People are going to be tasked with setting up their own BI queries and mashing up their own applications.
4) Blended Internal and External Communities. In terms of communities, both internally and externally -- I am seeing silos breakdown between those. Gone are the days of consumer-faced social networking and enterprise-faced social networking existing as independent entities. Thanks to user profile standards like OpenID and expansion of APIs, community providers and third-party aggregation and integration tool vendors are going to allow applications and users to flow between what were heretofore closed communities.
5) Virtual Worlds Gain Foothold. I think we're going to see that change how virtual networks can be utilized inside the enterprise. I'm looking for virtual worlds to gain a foothold in the enterprise. It's not just for marketing and sales, but also to support B2B and B2C communities, where effective communication between your supply channel members is really paramount. We'll see virtual worlds actually make an impact in terms of allowing these global, loosely coupled entities communicate more effectively in 2009.
McKendrick's Top Five Predictions for 2009:
1) It's the Economy. Recession planning is so 2008, because SOA, which I focus on as well as IT, is a long-term process. You need to look three years down the road. The economy is going to turn around. I see it turning around at some point in 2009.
2) IT Can't Cut Too Much More. IT has already been tight. IT has been tight since the dot-bomb era of 2001-2002. There probably is not going to be a huge diminishment in IT departments, because of the fact that the budgets have been lean, things have already been tight, companies already know, or have been running very efficiently, and IT departments have been overworked as it is.
3) Enterprise 2.0. The recession and downturn isn't going to be like it's been in the past. People are more empowered with social networking tools, as employees and as people looking for jobs. They're looking to start new businesses. We have a lot of tools available to us now that we didn't have back in 2000. People don't have to be victims of an economic downturn, as they have been in the past. We have the capability to network across the globe. We have the capability to start new businesses.
4) Cloud Economics. I just heard about another company that spent about $200 for its first two months of IT. They don't have to go out and buy servers. They don't have to go out and buy disk arrays, and worry about the maintenance, hiring people, and know how to maintain those things. We are going to see folks -- maybe IT people, or people who work for vendors and have been laid off -- have the ability to start their own business at a very low cost of entry.
5) Low-Cost Methods to Reach Markets. With the social-networking and cloud-computing phenomena, companies have these tools to employ low-cost methods to reach their markets and to interact with their customers. A marketing campaign doesn't have to cost $200,000 to reach your customers. You can use the social network, the Web 2.0 tools, to interact and collaborate and find out what's going on in your markets at a very relatively low cost.
Linthicum's Top Five Predictions for 2009:
1) Cloud Computing Matures. The interest in cloud computing, which I have been focusing on in my career, at least for the last eight years, is finally going to come into its own. What we're going to see in 2009 is a lot of startups, specifically some cloud-computing startups. You're going to see even more around what I call "cloud mediation." That is guys like RightScale, and a few other folks in the space that sit between you and the major cloud providers. They basically mediate issues around data semantics, performance management, load balancing, and those sorts of things.
2) Open Cloud Services. A big hole in the cloud computing movement so far is that most of the solutions out there, even the database solutions, are proprietary. They use different APIs, different interfaces, and different sets of standards. It's going to be a play for a lot of companies to get in there and provide more reliable infrastructure in and between these various guys out there.
3) Some Cloud Social Connections. The links to social networking will be there. They're not going to be quite as pervasive as everybody thinks. Social networking is going to have its place, but once we figure it out, it will be, "Okay, yeah." It's going to have its value, but we're just going to move on as far as this revolution goes. I don't think that's going to happen in 2009. People are going to use it as a marketing opportunity, just like they used email, Web sites and those sorts of things, and now blogging opportunities, but eventually it's just going to fall into place.
4) Rogue Clouds and PaaS. There will be a huge explosion in the rogue cloud movement, and also the platform-as-a-service (PaaS) space. The architects and CIOs out there are going to be scrambling around trying to figure out how to place governance around that. Everybody is going to be building applications, typically using free platforms like Google App Engine. They're going to start launching these things into production, and there is going to be no rhyme or reason around how they fit into the existing infrastructure.
5) SOA Gets Cloudy. There's going to be a larger focus on inter-domain SOA technology. The focus will still be on the short-term tactical and the ability to provide quick value in the SOA space to justify it, so you can get additional funding. As we start building these things, people are going to look at the departments that are implementing their SOA projects and try to figure out how to bind these things at an enterprise level. I call this the micro domain versus the macro domain. On the downside, the jig will be up for poor SOA technology vendors out there. Guys who haven't been able to get acquired or haven't been able to hit that inflection point ... are going to eventually just going to have the plug pulled. And, 2009 is going to be when it's going to happen. They're just going to run out of steam. SOA predates when the buzzword was created, and it's going to postdate when the word "SOA" was created. It's going to morph into different things, and the cloud computing movement is going to get into it and define it in different directions. The whole SOA movement is going to be more defined by the cloud.
Meehan's Top Five Predictions for 2009:
1) Take My Hardware, Please. Back in 2001, when that recession hit, all of a sudden you could buy wonderful amounts of IT gear on eBay (EBAY) for next to nothing. I remember talking to one guy who was smiling like a Cheshire Cat, because he had replaced $45,000 worth of Unix with $500 worth of Linux. I think you are going to see a lot of that. Expect a glut of servers and storage gear and network gear, and you are going to be able to get it cheap and affordable. That's going to hit the storage and network and server companies.
2) Tough License Negotiations. CIOs are ... going to be asked to cut budget, and there is only so much flesh you can cut out before you have to deal with that maintenance license. I think every company in the world is aware of the fact that they pay more in licenses than they want to. They have always theoretically wanted to lower those costs. The pressure now is going to be too great for them to not consider options. This is going to be great for open source companies, which are going to be able to come in and say, alright, you don't have to pay me a rolling license, here is my support cost, see how much it's going to lower your license. It is going to be bad for Microsoft, because again, to a degree they are becoming commoditized across their portfolio, and that's going to hit them right in the breadbasket. This should hit some enterprise resource planning (ERP) vendors too. Anybody who can sell SaaS in the ERP market is going to be doing better. I think you are going to see some erosion on the SAP and Oracle side, as far as enterprise apps go.
3) Easier Integration. "Make my life easier or go away." That basically means, users are going to need productivity and ease-of-use integration. You're going to see those in requests for proposals (RFPs). If they're not stated explicitly, they will be there implicitly. Don't come in and tell me how much work I'm going to have to do to make all of this come together. Come in and tell me how this is going to make my life easier on day one. The companies that can deliver that will be the ones making the sales. The ones who are telling you that you're going to need to do eight months of work to get this up and running are going to be pushed to the back burner.
4) Smooth SOA. What you're going to see in a lot of the SOA projects out there in particular is, "All right. Make it easy for me to assemble an application. Make it easy for me to reuse my assets. Make it easy for me to modify my existing applications. Make it easy for me to integrate different applications and even information between different divisions of my company." You almost want it to be governable on the fly. What you really want is that you don't have to dedicate too much time and resources to undertake these functions. Users aren't going to have that much time or that many resources. So, how quickly can I do things now, as opposed to how thoroughly can I do things? You're going to want to be thorough to an extent, but really it's going to be speed to market and speed to end of project that's going to be a determinant in there.
5) Telecom Realignment. The U.S. government is going to start treating telecom like it's our national road system, and you are going to see some serious investment in that area. That's going to become one of the key points in the economic stimulus package that you're going to see. I also think you are going to see European telcos begin to encroach, either through acquisition or just through offering services into the U.S. market. ... The last one, HP (HPQ) buys Sun (JAVA). Somebody is going to get bought this year, somebody fairly big. I'm saying HP is buying Sun.
Morgenthal's Top Five Predictions for 2009:
1) Business Process Focus. We're going to see a greater focus on the business process. Not business process management (BPM) per se, although initially people will target that. I think SOA is dead, and I believe companies have no stomach for IT initiatives that cannot immediately be attributed to a value. They're going to do some small-scale business process re-engineering, they're going to get tremendous value from it. They're going to see that simplification is the way to go. Why are we doing all these complex things -- this hooking to that, hooking to this, hooking to that? I can just go into this one box and get everything done there. The age of disposable computing is here.
2) Social Networking Backlash. Everyone is getting into it, having a little fun. Certain ones of us are on the leading edge. We're already getting bombarded and tired. We're already fried and overloaded from these social networks. The new people think it's a great new toy. Give it a couple of years and you are going to see a tremendous backlash. You're going to see a rise of firms that will get paid to get people off the grid.
3) Era of Anti-IT. The pain from the economy is going to impact the open-systems market. We're seeing the rise of what I call the "anti-IT." You read about people reaching into petty cash, doing things on the cheap, finding other ways to get things done. The one that's going to be the biggest impact is that people are treating open source like free software. That will destroy the open-source market for sure. It's the death knell. I remind every one of my customers of that ... open source is not free software. You're either contributing dollars to the team that's doing it, or you are contributing your time and effort. It's not free software. You just don't take it and use it. That will be the death knell for open source for sure.
4) Millennial Workforce Shifts. The millennial workforce is starting. This is going to change everything, and it's starting to already. These people have attitude that I haven't seen in a workforce since marketing people came out in the dot-com era. They definitely feel like, "I want my toys. I want to be able to use my phone at work. I want to use my computer at work. I want to be able to access my sites at work." I see companies dealing with this issue in a unique way. Their first inclination isn't to push back with the old adage and the old way of talking about it, saying, "Hey, it's our way or the highway. We've got the money." It's "Okay, what do you want?" This is going to really change things. How? It's yet to be seen, but clearly the introduction of a much more mobile force, more telecommuters.
5) Digital Rights Management Changes. There's a big change coming in Digital Rights Management ((DRM)) and patent and copyright. It's being led by this initiative out of Harvard with the Recording Industry Association of America (RIAA). RIAA may have just started a war for everybody in the industry who has any copyright or any patent infringement suit. A Harvard law class, I believe, represented by a Harvard law professor [Charles Nesson], is backing it. They're representing it as unconstitutional. So this case could be landmark for DRM, copyright infringement, and patent infringement. It would have a tremendous impact going into the potential for a startup economy. Landmark cases like this will do a lot to further the opportunities of these firms to go out there and build something without worrying, "Am I going to get taken out by Microsoft? Am I going to get taken out by Apple (AAPL)? I can't afford that." It's really interesting what could happen, given the cases like this are now falling on the side of the small guy, and not on the side of big companies.