Software Paradigm Shift to Improve IT's Ability to Respond to Business Change
Growth in information technology spend in Western Europe lags behind rest of world
Cannes, France, 1 November 2004 — Speaking at its annual Symposium/ITxpo today, Gartner said the information technology (IT) industry continues to face challenging times in Western Europe as growth in IT spend lags behind other regions. Outlining their views on the key technology developments that will enable IT to respond more quickly to the changing needs of the business, analysts pinpointed changes in software as one of the most significant shifts in IT. This shift will have significant implications for both users and software technology vendors.
Spend on information technology in Western Europe is forecast to grow at just 2 percent in 2005 when viewed in local currencies, according to Gartner forecasts. When translated into US dollars, spending looks slightly higher at 3.6 percent. Compared to 2004 this will be a positive change. Spend in 2004 is expected to decline in local currencies by 3.8 percent, though this looks better from the US with 5.8 percent growth in US dollars. While this has been another tough year for technology suppliers, Gartner said the good news for enterprises is that the environment continues to favour buyers of technology, whose purchasing power has been strong throughout 2004 due to the weak dollar.
Business leaders have to find new ways to maximise the effectiveness of their business operations and IT professionals must make significant contributions to corporate goals of revenue, profit and cash flow. Gartner said some of the most heated debates between IT and business operations center around the issue of change - mostly IT's inability to respond effectively to it.
"Our research shows that the cost of change is now the central constraint on business success, said Peter Sondergaard," global head of research for Gartner. "For years we have responded to change with new technologies and applications, but this has lengthened the IT change cycle at a time when the business change cycle continues to shrink. A number of advances offer hope of progress, however, we believe it is changes in the field of software that can have most impact in providing the agility businesses need to keep pace with change," said Mr Sondergaard.
Technology Trends and Enablers 2004 - 2010
Trend 1 - Consumerisation of Technology
The relentless march of Moore's Law continues to drive improved performance and reduce costs, with micro-processors increasingly finding their way into an ever-expanding range of devices, especially in the consumer space.
According to Steve Prentice, Chief of Research for Hardware and Systems at Gartner, "Business no longer drives the hardware agenda."
"Already, 45 percent of semiconductor chip sales is destined for consumer devices and by 2013, this will increase to more than 50 percent. Consumer requirements rather than business needs increasingly will be the major influence on product features, lifecycles and costs."
"Moore's Law isn't some abstract concept," said Mr Prentice, "It underpins the economy of the modern industrialised world." Gartner predicts that by 2006 more than 10 billion processors will ship every year, building an installed base in excess of 200 billion by 2013.
Trend 2 - IT Virtualisation
"Virtualisation breaks the direct link between software and specific hardware devices and is a critical step towards the ultimate goal of building an agile IT infrastructure," said Mr Prentice. Hardware virtualisation will help improve server utilisation, potentially reducing the number of systems required by as much as 40 percent. Virtualisation is already impacting the storage market. It is also starting to appear on desktop PCs, offering significant reductions in the cost of deploying and securing a consistent software environment across the enterprise. "The growth of virtualisation, and the increasing deployment of multi-core processors is forcing software vendors to rethink their existing approach to licensing," said Mr Prentice. "Ultimately, virtualisation will demand a new generation of applications software capable of exploiting the potential of a virtualised hardware environment."
Trend 3 - Wireless World
Increasing wireless connectivity may not be new, but as the technologies mature Gartner expects wireless communications will become ubiquitous among almost all devices, including the broad spectrum of 'smart devices' with embedded sensors. Hybrid networks will be the norm with short-range technologies like Bluetooth and Zigbee leading to Ultrawideband (UWB) working alongside WiFi and longer-range solutions. "Always-on connectivity, and massively enhanced data streams offer organisations an unparalleled ability to monitor their business and the events which affect it," said Mr Prentice.
Trend 4 - From Products to Services - Real-Time Infrastructure
"We see a continued move away from the need for physical ownership of products towards the purchase of services across the full spectrum of IT," said Mr Prentice. "Things like Managed Network Services are already well established. The continuing growth in outsourcing, coupled with the trends in virtualisation, are encouraging a focus on services and ultimately business processes, to build the dynamic and agile infrastructure today's business requires." Gartner sees the development of a Real Time Infrastructure (RTI) as a critical step towards this ultimate goal. The RTI is an IT infrastructure shared across customers, business units or applications, where business policies and service-level agreements drive dynamic and automatic optimisation of the IT infrastructure.
Trend 5 - Software
Changes in the field of software are often summarised as the maturing of service-oriented architecture (SOA). An SOA architecture is an application architecture that is designed to map directly to business requirements and is key to achieving the agility required. SOA, together with the emergence of service-oriented business applications (SOBAs) and the new frameworks for creating and maintaining software systems known as service-oriented development of applications (SODA), are among the most significant shifts in IT. The evolution of SOA architectures and systems affects all levels, from business-IT alignment to hardware and devices. It twill help software developers develop business applications faster and will help users to realise the full potential of integration tools, workflow, portals and business activity monitoring (BAM).
According to Mr Sondergaard, "Cost of change is high, time for change is shrinking and ability to quickly change business processes has become a basic business requirement. Advances in software are not a panacea. Clearly technology must be harnessed within the right culture. However, this new generation of software has the potential to do a better job of meeting the business challenge. We believe it is here IT can have most impact in the quest to achieve this improvement in business agility."
Software is often completely inflexible once deployed. Changing the nature of software can improve agility. For this to work, packaged business applications need to be broken down into smaller pieces that are easier to change. SOA makes it possible to look at software in pieces. As technology and standards evolve SOA will allow enterprises to mix applications services with others - regardless of the original supplier and where they run from.
"In the world of service-oriented architecture, each element in the process or processes becomes a service," said Yvonne Genovese, research vice president at Gartner. "This increases the agility of the software because it's now easier to re-arrange the process or determine who will actually perform each step in the process. In this way, business process is shifting IT projects from large multi-year marathons to rapid deployment gap applications, and reconfiguration of existing systems via process-based tools."
Although the theoretical advantages of SOA are obvious, the challenge of investments made in established systems is still present. In most businesses, there is scant funding for building what has already been established. Initially, companies must live with past investments and treat the new software as additive rather than a replacement. In effect SOA becomes a 'wrapper' of the established systems.
Type A (leading-edge), Type B (mainstream) and Type C (conservative) enterprises will adopt the next-generation applications at a different pace. In 2004, most Type A enterprises will move quickly to implement early SOA styles.
Type B enterprises will begin to refocus their architectures and rebuild infrastructures in 2004, but wait for wide availability and stability of new applications before beginning implementation in the 2007 frame. Type C enterprises will wait until next-generation approaches are proven and mainstream, but by 2010 most will adapt their architectures and infrastructures to begin implementing these new applications.
Significant impact on software technology vendors
For software technology vendors the scale of the shifts has huge implications.
Said Ms Genovese, "Gartner expects consolidation of software vendors across three areas of capability - software technology, business process, and business strategy related to IT. This is already starting to happen with large vendors such as Microsoft, IBM and SAP creating 'ecosystems' where they shape the environment, creating frameworks and standards within which other vendors operate. This will consist of large and small vendors who need each other to thrive. Increasingly a company is destined to become part of an ecosystem in order to survive, unless it is an 'ecosystem vendor."
This leads to a fundamental shift in how users should think about software vendors. Rather than making an individual purchasing decision, they are entering into relationships with an ecosystem.
"In this environment enterprises need to prioritise carefully where they need the most agility and choose the ecosystem accordingly, said Ms Genovese. Users may need to change vendors and take control of their architecture in business process design."
Mr Sondergaard concluded that "Major changes are happening in the software industry that go well beyond technical issues. They have the potential to impact everything from IT governance to procurement. A major benefit of these changes is that software comes closer to meeting the agility demands of today's business environment. Meanwhile continuing change in tools, technologies, skills, processes, products and vendor relations will pose significant challenges going forward."
About Gartner Symposium/ITxpo
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Gartner, Inc. (NYSE: IT and ITB) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Intelligence, research and events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,500 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide For more information,
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