High Performance IT 2008 : There’s No Substitute for Substitution For five years following the 2001 tech bust, IT investment in the major industrialized economies all but dried up. Spending was driven mostly by replacement activity.
2007 was the first time in nearly a decade that IT investing was not simply about replacing broken boxes.
T he first half of 2008 might be dominated by uncertainty over global economic growth, and business leaders will reassess their current investment plans.
P ure-play consumer Internet companies have raced forward and established a completely new set of expectations
On a positive note, CIOs understand that most of the new technology is technically mature, cheaper than the technology it replaces and easier to install.
Respondents said enterprise systems were already fully depreciated.
IT teams spend n early 40 percent of their time running & fixing existing systems, drip-feeding life support to legacy systems .
High Performance IT 2008 : New Substitutes This time it is technology adoption and not technology innovation that is driving the change: Enterprises will not be creating new technology, but using ready-made (and tested) success stories from the consumer world.
Virtualization: Saying goodbye to the box. Desktop, networks, servers, data centers—they’re all like electricity. However they have zero effect on differentiating your business. Infrastructure virtualization—the physical decoupling of business processes, software and hardware—has made IT-as-utility a reality .
SOA: Making dynamic processes more dynamic with IT . After years of talking about process centric IT, organizations worldwide are now choosing service-oriented architecture initially to address technology integration challenges, but also to help them move toward business process integration.
Software-as-a-Service: Owning is obsolete. Since the earliest days of hosted applications, CIOs have wondered whether they really need to keep developing and maintaining
so many of their solutions and systems in-house. That discussion has intensified with the rising costs and difficulty of maintaining and upgrading legacy systems.
High Performance IT 2008 : IT investment, CIO’s Agenda Focus IT Investments on your end customer.
Customer facing systems are among the portfolio’s poorest performing applications in terms of technical and business adequacy
Many organizations must take a look at their core front-office systems and associated processes : CRM, sales & marketing, billing.
The test should not be about technical and business adequacy. Instead, a good way will be to base their reviews on expectations built up from consumer Internet experiences
Two broad kinds of technologies - Rich Internet Applications and Real-time Insight—form the basis of what the consumer Internet offers other industries and government in improving their own customer experience:
High Performance IT 2008 : IT investment, CIO’s Agenda Let user-determined computing transform the way your employees work
Many organizations try to increase productivity by supporting outdated ways of working through information technology.
Their legacy systems usually don’t support to change the processes - only to standardize them.
As a result, for all the investment over the past decade, relatively little has changed at work.
In the early information age, the workplace was the arena for cutting edge technology.
Now, employees are seeing more IT innovation outside of the workplace.
“ user-determined computing”: employees bringing technology into the enterprise, ranging from PDAs and instant messaging tools to Internet telephony, technical blogs and message boards.
New collaboration platforms - The media-rich, natural, synchronous collaboration platform prototype for personality-oriented tasks, HP’s Halo - highly integrated, asynchronous platforms for process-oriented tasks. IBM’s Jazz
Mobility for enterprise applications. - enterprises must take advantage of this ubiquity
Web 2.0 enterprise applications. - InnoCentive post R&D problems or challenges for any of 90,000 registered “solvers” from 170 countries. - Solvers whose solutions are accepted receive rewards ranging from $25,000 to as high as $100,000; a small investment compared to the value delivered.
Good Enough Crisis Create Configure Host Maintain Industrialization of the Value Chain Lowered Barriers to Entry Full Hierarchy End of Wave Consolidation the Internet seeded something else…
Create Configure Host Maintain From Product-based Differentiation to TCO, Speed to Value, Customer Experience Speed Efficiency Customer Intimacy Good enough crisis Open standards 50% to 90% of TCO IT Complexity crisis IT Doesn’t Matter crisis Developing Value Shifts in the Software Value Chain Creation Delivery 1 2 1 From Proprietary Innovation to Speed, Efficiency, Customer Intimacy 2 Open Source Industrialization of the Value Chain: why the old value chain must be re-invented.
Create Configure Host Maintain Software as a Service First success for on-demand Open Source Collaborative, networked governed development model LAMP (Linux, Apache, MySQL, Pearl) Over 100,000 projects on SourceForge IBM, Microsoft, Google, Sun, BEA, SalesForce, all key contributors The first successful shots at the old value chain: both of them disruptions.
Create Configure Host Maintain Industrialization of the Value Chain 2. Internet Based Disruption 1. Internet Triggered Consolidation Lowered Barriers to Entry Remember we have two sets of dynamics at play…
From To The Big Get Bigger The Rise of the Lilliputians Disappearing Middle So, as anything shaped by multiple influences, the industry will be a hybrid: concentration and fragmentation …
OS Database Middleware Applications IT Services Business Services Horizontal layering and vertical integration
ON PREMISE UTILITY On-premise and utility based computing—both industrialized. INDUSTRIAL STRENGTH INDUSTRIAL STRENGTH
On-premise vendors must industrialize their value chain—the blueprint for the next value chain is already becoming evident—SOA is a key to it
Beyond this, different vendors will face this changing market differently
Best of breeds face tough choices as their space mature: diversification, reinvention, complement position, exit—many will slowly disappear
Consolidators can create the next great software distribution companies—but consolidation cannot be the only strategy and is rife with challenges
Platform candidates must act quickly: the window of opportunity for creating the next proprietary platform is closing rapidly
Software-as-a-service disruptors still have a long way to go—to prosper, they must continue to perfect their innovation: the business model
3. What should vendors do?
End of Wave Dynamics Internet-based Disruption Regular Wars Guerilla Wars Disruptors Vendor Traditional Vendors Two wars for software vendors. Create Configure Host Maintain Industrialization of the Value Chain Lowered Barriers to Entry
End of Wave Dynamics Internet-based Disruption Regular Wars Guerilla Wars Disruptors Vendor Traditional Vendors Platform Strategy Mergers and Acquisitions Industrialization of Value Chain The weapons of choice.
Mega Vendor Challenge at the Top End Disruptor Challenge at the Bottom End “ IT Does Not Matter” “ Complexity” “ Good Enough” Incumbent Vendor (e.g., best of breed) International Markets SMB Vertical Solutions Consolidation Orchestration Disruption and Orchestration Disruption Market Challenge Market Opportunity SaaS and Open Source For best of breed vendors: avoiding the Perfect Storm.
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Glossary Appendix Source: Gartner (October 2007) IT operations management ITOM hierarchical storage management HSM enterprise service bus ESB Europe, the Middle East and Africa EMEA data integration DI digital content creation DCC corporate performance management CPM customer data integration CDI business process management suite BPMS business intelligence BI business-to-business B2B application and integration suite AIS application integration and middleware AIM application development AD Definition Acronym/Abb r. transaction processing monitor TPM service-oriented architecture SOA security information & event mgmt SIEM supply chain management SCM software change , configuration mgmt SCCM portal, process and middleware PPMW project and portfolio management PPM product information management PIM open-source software OSS operating system OS object-oriented analysis and design OOA&D message-oriented middleware MOM master data management MDM Definition Acronym/Abb r.