Top 10 trends in enterprise IT

How can Asia's IT organizations get their groove back? Focus on Web 2.0 and look to the latest consumer tech innovations like the Nintendo Wii for inspiration, says industry research veteran Bob Hayward.

According to the former Gartner Asia-Pacific research fellow, who recently joined three-year-old analyst company Springboard Research as a vice president, IT heads looking to rejuvenate their IT organizations should, among several things, embrace consumer technology trends.

Below are Hayward's pick of top 10 trends to watch in enterprise IT:

1. The growing influence and impact of consumer technologies
Hayward said it is time for a change in the business mindset as "business growth increasingly relies on participation in consumer technology ecosystems".

"There have been attempts to ban, delay or control a lot of technology, including PCs, BlackBerry handhelds, smartphones, and instant messaging, but most IT departments recognize it is fruitless," said Springboard's research vice president.

So instead of ignoring these trends, enterprises should embrace them and recognize that consumer technologies present not just threats but opportunities, too.

"Consumer technology is an indicator of all future technology trends," Hayward said, adding that enterprises are starting to look at games like the Nintendo Wii, which sports a unique user interface, for ideas that work for business applications, too.

2. Web 2.0 heralds the participation age
According to Hayward, Web 2.0 is all about participation, which means a bigger pool of consumers and greater consumer empowerment at all levels.

Businesses should therefore recognize the power of collaboration and collective intelligence offered by Web 2.0 applications, and improve their Web sites by leveraging features like RSS feeds, podcasting and wikis. Within the enterprise, wikis and blogs will dominate the Web 2.0-style projects in 2007, Hayward said.

The Web is also changing in other ways. Domain name speculation does not matter as much now, and has given way to a bigger focus on search engine optimization. That is because many people today search for Web sites by going to Google and typing a key word first, instead of typing the domain name, Hayward said.

3. Software as a service (SaaS) gains broad acceptance
SaaS is gaining acceptance, especially among small and midsize businesses (SMBs) and for non-core or non-critical business applications, Hayward said.

The SaaS term also seems to be sticking. "The industry has settled on SaaS," Hayward said, noting that other terms like ASP (application service provider), utility computing and on-demand are hardly used these days.

According to Springboard Research, global SaaS revenues will grow from less than 5 percent in 2006 to more than 25 percent of all software revenues by 2011.

Web APIs (application programming interfaces) also offer SaaS for enterprise IT. Businesses can make use of Web APIs offered by Internet companies such as Google, eBay and Yahoo, instead of duplicating efforts and building applications from scratch.

Even Amazon.com has gotten into the act. Enterprises, especially those on a shoestring budget, can take advantage of Amazon Web Services, which allow external developers and businesses to build their Web applications on a pay-per-use basis.

"I don't know why Amazon is doing it, but it's great," said Hayward.

4. Wireless Internet drives enterprise mobility
With Wi-Fi hotspots sprouting everywhere, consumer-led wireless Internet is helping to drive the mobility message to businesses.

"Despite talk of mobile for years, most enterprises have struggled to derive business value, but this is changing in 2007," said Hayward.

Major drivers are business applications such as salesforce automation (SFA) and CRM (customer relationship management), which are being delivered on a mobile platform. Other applications include IM (instant messaging) and scheduling, as well as "mobile e-mail with mobile VoIP (voice over Internet Protocal) as a wild card", said Hayward.

5. SOA enters the mainstream
It is no longer all talk in the SOA (service-oriented architecture) space. Global SOA IT spending will double from 2005 to 2007, while SOA-related services will grow at double the rate of SOA-related products, said Hayward.

However, the majority of enterprises still need help with the mapping of processes and SOA-related information. And while unconnected islands of services will begin to be integrated, Hayward cautioned the industry to "prepare for some disillusionment with SOA as prominent failures appear".

"SOA makes traditional tasks like integration easy. However, it allows far more complex projects to be undertaken [and] this complexity is frequently not adequately allowed for," Hayward said.

6. Green IT becomes important
Not just a fad, the go-green campaign will be a key business IT issue in 2007, as energy costs of operating servers escalate and exceed purchase and other operational costs by 2015, said Hayward.

The upshot of this spells good news for mainframe vendors. "Mainframe sales [will] rebound as they are more efficient users of power, and require less cooling and floor space than large numbers of blade servers," said Hayward.

In addition, the level of kilowatts each server consumes will be an important buying criterion, he added.

7. Open source becomes broadly accepted
Expect continued proliferation of open source software (OSS) across the entire IT spectrum, with strong growth in horizontal applications such as business intelligence, enterprise content management and infrastructure management.

"Open source is becoming business as usual," Hayward said, noting that most enterprises today understand the TCO (total cost of ownership) arguments for and against OSS. Those who do deploy it, do so for practical reasons.

Enterprises, he added, are also taking "a more holistic and strategic view of OSS in the context of SOA, rather than as a piece-meal tactical approach".

But the enterprise desktop operating environment will remain Microsoft's domain, at least for this year. Despite the opportunity presented by the shaky launch of Windows Vista, there will still be little movement in OSS as the enterprise desktop in 2007, said Hayward.

8. Strong business intelligence demand
The demand by business executives for "a real understanding of the business" is driving IT departments to focus on real-time analytics, Hayward said.

"Enterprises are drowning in data, and the flood is going to get a lot worse," the analyst noted. "But there is an even more urgent need to gain insights from the data that determine key strategic and tactical decisions."

9. IT for emerging markets flows back into the developed world
Tech vendors that have been introducing products, services and business models adapted for emerging markets, will subsequently roll them out across other parts of the world.

Citing Big Blue's SMB strategy as an example, Hayward said: "IBM is experimenting with different strategies for go-to-market in China, with expectation that lessons learnt will improve SMB sales globally."

Products designed for the "lowest part of the pyramid" will win out as vendors develop "bare-bones, good-enough, low-cost products that can thrive in severely-constrained environments", said Hayward.

10. India IT companies make broad acquisitions
Tech company buyouts will continue, but this time, the Indian IT companies will do the acquiring instead.

"Prior to 2007, the acquisition flow was one way," Hayward said, referring to the acquisitions of Indian companies by western or international companies. "For example, Oracle with i-Flex, Hewlett-Packard with Digital GlobalSoft, IBM with Daksh, EDS with Mphasys, and Cap Gemini with Kanbai."

Hayward explained that although the revenues of the top five Indian tech companies are lower than, say, Accenture, their market capitalization is higher than their international counterpart. Therefore, it will not be unexpected for the Indian giants to take more aggressive steps to acquire companies that expand their geographical footprint and market expertise, he said.

According to Springboard Research, unless the traditional vendors are able to conjure a significant amount of capital for limited cost, which is a highly unlikely scenario, the likes of EDS, CSC or IBM are highly unlikely--if not impossible, from a capital point of view--to acquire one of the top give Indian providers.