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2007 Australian ICT Trends in the business of ICT
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2007 Australian ICT Trends in the business of ICT






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  • Longhaus considers that trends within the ICT industry are not isolated. For every ICT trend there is an equal and complimentary business trend. A ying and yang if you like - where trends exist for the CIO which impact and influence the “business of the ICT organisation” and where trends exist for the CEO which involves “ICT for the business” itself.For the next fifteen minutes I’d like to focus on the trends most relevant to you as members of Australia’s Information Industry and focus in on three major trend for the business of ICT.
  • We have all heard the SOA pitch to the business with promises of increased bbusiness flexibility (Re-usability), potential for multi-channel self-service (Availability), opportunities for process outsourcing (Replaceability). We also know that adopting an SOA provides an opportunity to improve the management of the application portfolio (Flexibility) and reducing change cycles (Agility) as well as standardized interoperability (Neutrality). Yet organisations still ask me how they go about justifying adoption of an service-oriented approach. The reality is that this is no longer the right mode of thinking. Ever since my colleagues at Gartner defined the concept in 1996 most of the SOA success has not been by end users, but instead by independent software vendors who have been SOA-enabled their product lines making them more flexible and easier to integrate.The result – you no longer have a choice about adopting an SOA. If it has not already crept into your ICT portfolio it will - either through applications you bought or through your own developers who have been applying SOA techniques whether you have sanctioned it or not.This inevitable entry of SOA into organisations creates a new challenge. With SOA comes more complex responsibility and accountability for services and new security considerations. As a result just having the A in SOA is no longer enough. The real challenge is managing the SOA you already have. Understanding what SOA capabilities exist within your applications and what your policies will be for access to these services as well as how to deal with consumption of “uncontrolled” services. Just like the advent of wireless networking when a well meaning sole popped an unsecured access point on your trusted network – so too some well meaning tech-savvy business user will save the corporation $1 by using that free Google service embedded into a Excel 2007 formula to calculate the up side on a deal…but what happens when Google stop supporting the service…Yes folks – unmanaged SOA yields more of the same application management problems many of us already face.Anyone starting a new business case for SOA today will find it easier to tackle the issue not from hard to quantify benefits of flexibility and agility, but on the hard cost implications of an unmanaged SOA.
  • From one software topic to another – Open Source Software. Open source software has been so successful since it’s inception in the mid 1980s that it is now a moniker worn proudly by various non-software business models which operate using a relaxed intellectual property licensing model and collaborative and community based production of products. Given the success of the concept in areas outside software it should be no surprise when your CEO knocks on the door and wants to discuss how open source solutions might assist your enterprise.Yet there are a number of changes in this area recently all of which point to the open source movement now becoming much more of market. This means that if like 20% of your peers you are either using or seriously considering using open source you need to understand this shift in order to ensure you gain real value from the “new-look” open source community.First there is now serious money in the game. Harvard estimated in a preliminary report released in ’06 that over $2.6billion had been invested by vendors and venture capitalists into open source related projects. If this is not an indication that a market exists then I don’t know what is.Secondly, we are seeing the signs that typically exist in a traditional software market – consolidation. Consolidation is driven by competition and competition is driven by access to buyers. In the last 18 months we’ve seen Red Hat acquire JBoss, Linux Foundation emerge from the Open Source Development Labs and the Free Standards Group, Oracle offering support for Red Hat and even Microsoft signing “play nice” deals with Novell on patent issues surrounding open source products.Another key change is that corporations are now participating in open source in a very different fashion. Drivers such as skill shortages means many CIOs are no longer willing to devote precious skills to “external development”. Instead they are weighing up their options and deciding it is more economical to pay for some level of support – even if only on production instances of open source products. At first this is an alarming trend – undermining as it does one of the very tenets of the open source model – community participation. Fear not because paying for support is essentially an “outsourcing” of the participation role with major open source service providers now investing in some level of development resources – IBM with over 7000 and Oracle claiming 9000 developer working on Linux. Instead of this direct participation corporations are now divesting internally developed tools back to major open source brands in a sort of once off fashion IP injection. Mimicking the early behaviour of IBM, Sun and others who gave the open source community such a boost through donations of base intellectual property. One example of this behaviour is an internal Enterprise Service Bus developed by a large US Pharmaceutical company which became the core of Red Hat’s ESB.CIOs are also demanding more “solutions” from vendors of all types. The result is increasing demand for ready made stacks from the open source market. In response we’ve seen the rise of the Linux, Apache, MySQL and PHP/Perl (LAMP); Spring Framework, Axis, Struts and Hibernate (SASH); as well as solutions from mainstream vendors such as Unisys who offer OASIS service. Locally we also have some innovative hardware / software combinations like OpenGear providing network management technologies running on the Linux based appliances.Be warned an over zealous push for “solutions” risks exposure to the dark side of the open source force – vendor lock in. Versions and flavours of open source products present in these stacks will ultimately become hard to move away from they have been adopted by your company and standards will only protect you so far. Lastly we have also observed locally that support is a real hurdle for open source. While Australia is an originator of many great open source innovations (including the basis of MySQL) the reality is that beyond Linux desktops and servers the choice of open source services and support can be limited.
  • Institutional - top-down - power is being replaced by bottom up or outside in consumer power in all market places with the customer essentially climbing out of the CRM system and saying \"I am not my order“. In a world of social computing the Gen Y population will more and more refuse to the targeted, segmented and acquired. Instead, the new wave of consumers look to join online communities that then determine their interactions with corporations and their brands based on messages from their peers – not traditional marketing messages delivered via TV and radio adverts or nasty browser pop-ups.In response smart CIOs will partner with the Chief Marketing Officer (CMO) early to provide them with a solution beyond traditional CRM. Just like early accounting applications weren’t enough for the business – it required an integration suite of functionality. So too, Web 2.0 will launch a new suite of tools for the CMO going beyond the current database and search marketing to include new tools in the area of social marketing, such as blogs and wikis. Just look back over the last 30 years of our industry – first it was SAP for the CFO, then Unicentre or Openview for the CIO, more recently Siebel for the COO. Now think of the CMO and it is all about Web 2.0 as the basis of their new “system”.This opportunity to empower the eager CMO allows CIOs to move the focus of their activity into “top line” revenue generating activity often controlled or influenced by the CMO. This is in stark contrast to the domination of the CIO agenda by the “bottom line” (cost reduction and control) activities of the CFO and the ever present ERP system.While business alignment is always a sought-after nirvana for CIOs there is a risk. Any new found authority for CIOs in helping to driving business projects will ultimately test the ICT leadership capability and management depth of many Australian firms. The reality is that many organisations rely heavily on the CIO for both strategic and tactical decision making. Any lack of focus on the ICT operational home front could arrests the upward climb of many CIOs. So some effort is still needed to ensure there is sufficient succession planning and mentoring to build the next generation of operations leaders.

2007 Australian ICT Trends in the business of ICT 2007 Australian ICT Trends in the business of ICT Presentation Transcript

  • 2007 Australian ICT Trends In the business of ICT Sam Higgins Research Director May 2007 Copyright © 2007 Longhaus Pty Ltd
  • Business and ICT Trends compliment each other Trends for Trends for CIOs CEOs “The business “ICT for the of ICT” business” 2 Commercial-in-confidence
  • Managing, not implementing, SOA is the real problem • Adoption of SOA is inevitable – Packaged applications – Application developers • The notion of application changes – Complicating responsibility and accountability – Adding to security considerations • Architecture is not enough – Management and governance are the challenges Unmanaged SOA yields more of the same application morass that organisations already confront 3 Commercial-in-confidence
  • Changing face of the Open Source market • Open source has become a “business model” – CEO awareness is increasing • Consolidation is a mechanism to compete – RedHat + JBoss, Novell + Microsoft Agreement • Nature of participation is changing – Paying for support is now the norm • CIOs are demanding solutions – Open source is not exception • Keep in mind… Harvard estimates – Integration can reduce flexibility $2.6 Billion – Local support is a challenge invested by Vendors and VCs in OSS since ‘95 Source: Harvard Business School (http://www.hbs.edu/research/pdf/07-028.pdf) 4 Commercial-in-confidence
  • CIO + CMO will define the customer experience • Customers are climbing out of the CRM system – No longer targeted and acquired – They choose to join communities and interact • Web 2.0 Marketing Platforms – Database and search marketing is not enough – Add RSS, Blogs, Wikis, Communities and Forums • CMO is a willing learner – A relationship with the CMO targets the top line • Ambition is a two edged sword – ICT operations rely heavily on the CIO – Mentor key personnel to manage day to day operations 5 Commercial-in-confidence
  • Summing Up • Begin to manage the reality of SOA-enabled applications – Refocus organisational efforts away from just SOA development practices • Consider how you will engage with a maturing open source market – Don’t be afraid to pay for support – Look for alternative mechanisms to give something back • Build new executive relationships with social computing offerings – Market power is swinging back to consumers – CIOs can take this opportunity to partner with the CMO – Social computing platforms will become the basis for the CMO’s “ERP” 6 Commercial-in-confidence
  • Thank you Longhaus Head Office Sam Higgins Level 30, AMP Place Research Director 10 Eagle Street sam.higgins@longhaus.com Brisbane QLD 4000 +61 412 621 014 Longhaus Research Centre 7/269 Abbotsford Road Bowen Hills QLD 4006 p: +61 7 3868 4796 f: +61 7 3303 8445 inquiry@longhaus.com 7 Commercial-in-confidence