IT Predictions for 2005, Part Two

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Last week, we reviewed an IDC report that focused on IT industry predictions for this year. Specifically, the article addressed senior IDC analysts’ forecasts about a moderate growth rate for global IT spending, as well as a proliferation in the number of mergers, acquisitions, alliances and partnerships among corporations in the IT industry.

What does that really mean for the IT industry in the long term, though? More importantly, who will benefit from this environment? As mentioned last week, the end of 2004 was marked by a spike in big moves in the corporate world of IT, including an acquisition of PeopleSoft by Oracle, IBM’s sale of its PC division to Chinese manufacturer Lenovo, and a merger between Veritas and Symantec. Frank Gens, senior vice president of research at IDC, believes that this is part of a larger, more sustained trend that could continue throughout the next few years.


Some of the biggest beneficiaries of the new IT environment caused by corporate restructuring will be the consumers, Gens said. The result of the substantial number of companies combining with others through various means ultimately will be a better range of solutions that are oriented around the customers’ demands. Coupled with new innovations and cheaper prices, this could lead to a near surplus of high-quality, scalable and inexpensive products.


“I think there’s no question that one continuing trend is that customers are the greatest beneficiaries in this shift,” Gens said. “It’s certainly a buyer’s market in many respects. The fact is that the vendors are trying to deliver products and services that actually fit better with customers’ high-priority needs. That’s obviously a positive development for users. I look at that as the IT industry finally catching up to what’s really been gospel in the consumer packaged goods or automotive industries: The industry is learning it’s not all about us. It’s really about the customer. I think the other side of this coin is that vendors are really trying to rethink their whole approach to the way they develop and bring products and services to market, in a way that squeezes unnecessary costs out.”


Part of many leading vendors’ efforts to cut down expenses has included embracing technologies like Linux and other open-source software, and focusing investment and innovation primarily on areas where they can add value for the customer. Alas, in many cases, it also has meant curtailing IT positions through outsourcing and automation, particularly for lower-level positions. “The farther down in the IT organization you go, the more challenging it gets,” Gens said. “Looking into 2005, we continue to see that the areas most at risk in terms of offshoring are around custom application development and simple integration.”


However, IT professionals who are in a senior position, are very visible in business processes, are involved in a cutting-edge and/or important functionalities, or have some combination of these three elements are reasonably secure, he added. “These are almost the anti-offshoring tools.”


The increasing emphasis on having a high level of comprehension of both IT specifically and the business in general is the natural result of industry progression. “The most fundamental evolution of the IT environment is what we call the move to dynamic IT,” Gens said. “The IT environment is increasingly going to be about technologies that are high-speed to implement and high-speed to change. We view it as creating “dynamic platforms” in the IT environment.” All of the platforms will be interrelated and will include: the “dynamic application” platform, which is simply the construction of platforms that are not massive and monolithic, but have integrated apps; the “dynamic infrastructure” platform,” related to the aforementioned corporate mergers and acquisitions in IT; and the “dynamic information” platform, which means a drive toward a broad, inclusive view of data management.


“It really does raise a question when you think about certification from companies like Microsoft, Novell or IBM, and that is: certification and what?” Gens said. “What the marketplace is driving toward is a much more holistic view of the infrastructure, the application environment—including business processes—and the information environment. That’s the challenge to the vendors and the IT professionals: Customers are demanding to see the whole picture, to be able to see broader context. That’s the perspective that’s going to drive the IT skills.”


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