By Dan Farber, Tech Update
Gartner analysts took out their crystal balls and came up with a list of 10 predictions for enterprise businesses. The predictions cover technology, economics, and social boundaries that will morph during the next eight years. What follows is a brief description of each prediction and my commentary.
1. Bandwidth becomes more cost-effective than computing
Network capacity will increase faster than computing, memory, and storage capacity to produce a significant shift in the relative cost of remote vs. local computing. Cheap and plentiful bandwidth will catalyze a move toward more centralized networks services, using grid computing models and thin clients.
Gartner bases this prediction on the fact that optical networking improvements are far outpacing growth in computer-related technology. However, the challenges of the last mile—security, quality of service, and grid economics—are barriers that need to be overcome. Remember when application service providers were going to take over the world? With the exception of a few, like Salesforce.com, companies are staying away from moving their computing resources to the cloud. My guess is it will take more than a decade to pry the big hard disks out of people’s computers.
2. Most major applications will be interenterprise
The evolution of applications and middleware is heading toward more adaptive software architectures that can be reconfigured on the fly with minimal hassle. This concept is the next evolution of the software model that has spawned ERP suites, portals, CRM, and supply chain applications that span various constituencies involved in an economic ecosystem.
This is the promise of Web services, and if they ever mature, we will have more of a plug-and-play capability for configuring applications. But we have already been through eras in which applications would seamlessly resolve into interoperable parts. Initiatives for industry-specific XML standards need to take root as well as other Web services standards. My opinion: Don’t expect a tidal wave of progress toward this ideal for another four to five years.
Gartner analyst Carl Claunch also points out the pit of snakes that could result as companies try to work more cooperatively interenterprise. Among the issues is how you fund and justify major upgrades or resolve conflicting priorities. “Tool sets may not work together, and even if [they] do, they probably don’t include the concept of business to business,” Claunch said. “You want to integrate tools, processes, and help desk.”
3. Macroeconomic boost from interenterprise systems
If prediction 2 comes to fruition, the overall economy would reflect a boost in productivity and efficiency. The logic suggests that corporations closely aligned through industry segment or some other value chain should actually see increased productivity that would flow to the macro economy. This makes sense, but clearing the hurdle of prediction 2 will make this effect a major challenge. Imagine how much savings and increased productivity would result if the government adopted that kind of business process and technology architecture. I know, it’s difficult to imagine, but the private sector should be able to show the benefits within the time frame Gartner suggests.
4. Successful firms in strong economy lay off millions
Given that productivity improvement from IT improvements suggested in predictions 2 and 3 come to fruition—and healthy profit margins—Gartner envisions a shrinking workforce. The concept is that, like the agrarian industry, technology will reach a point where IT system automation substantially lowers labor requirements. Gartner’s strategic planning assumption is that enterprises transformed by the Internet are 70 percent likely to have 10 percent fewer workers by 2005 and 60 percent likely to have 30 percent fewer workers by 2010.
This prediction suggests that tech workers should look to other job segments for employment. Given the massive layoffs over the last year of economic downturn, I would expect that a rebound would expand the market for IT products and expertise and bring some of those people back into the workforce. It appears the two opposing forces will play out over the next several years. I am skeptical that a majority of companies will be able to take friction out of their processes before the latter part of this decade.
5. Continued consolidation of vendors in many segments
Gartner predicts that at least one major player from most segments will disappear by 2004 through extinction or consolidation. That’s not a risky prediction. More of the dot-com companies will evaporate, and the big fish will consume the smaller fish. Claunch said the industry will enter a period of oligopoly, in which a few vendors dominate the enterprise landscape, and that by 2007, the innovation and growth cycle will return.
6. Moore’s Law continues to hold true through this decade
Gartner gives Moore’s Law, which posits that processor power doubles every 18 months, a 70 percent chance to continue unabated through 2011. Gartner projects that by 2008 the typical desktop computer will have 4 to 8 CPUs running at 40 GHz, 4 to 12 gigabytes of RAM, 1.5 terabytes of storage, and 100-Gb LAN technology. By 2011, processors will clock at 150 GHz, and 6 terabytes of storage will be common. And there are numerous technologies such as nanotube transistors and spintronics that could jump the next hurdle when CMOS reaches the end of its run, Claunch said.
7. Banks become primary provider of presence services by 2007
Presence services can manage your preferences, personal information, and experience on the Internet. Gartner considers what it calls “one-click Internet” as essential to bringing convenience and mobility to the Internet. Microsoft (Passport), the Liberty Alliance, AOL, and Yahoo (among others) are vying for a piece of your presence—if not all of it. But Gartner’s Claunch said that the future belongs to independent companies or financial service provides, such as the banks.
Banks have had to deal with security, privacy, and issues of trust for centuries, and that legacy is particularly relevant in the digital age. Gartner gives the banks a 70 percent chance of succeeding in the presence business by 2007. I am not sure that we will have the standards and politics worked out by that time, but Gartner predicts that the banks will play a major role and adopt something like Liberty or Passport as the underlying framework for the trust broker business.
8. Business activity monitoring is mainstream by 2007
Business activity monitoring (BAM) is one of the hottest buzzwords making the rounds. Think of it as having automated sensors that provide the relevant information and context that leads to more effective, real-time decision making.
Claunch describes BAM as reshaping decision making in the enterprise: “In the past, when enterprises made complex decisions, the answers were precooked because the information wasn’t available at the point of contact between your business and customers. In the future, decision making will be pushed down because of more real-time data and business processes throughout the enterprise.”
This concept fits neatly with prediction 2—tighter linkage across enterprises and industry value chains. Without BAM, organizations will fall on their faces trying to do business in real time, which will be a requirement in many areas of business in the coming decade.
9. Business units, not IT, will make most application decisions
The Gartner take is that business units, rather than a centralized IT department, will make decisions on business applications. By 2007, this trend has a 70 percent probability of governing purchasing in 65 percent of enterprises. The downside is that the overall benefits of IT expenditures will degrade. Accounting and business principles will define whether IT expenditures provide the necessary ROI.
Applications will be grouped into three categories, according to Claunch. First, basic utility applications will keep the business functions. Second, enhancement applications will provide some measurable ROI. And third, frontier applications, although more risky, can give a company a significant competitive edge.
Claunch said that empowering business units is a good fit with decentralized organizations and delegated authority. Well-organized, decentralized organizations in volatile markets typically have the advantage of faster decision-response time and result in better business outcomes despite inefficiencies resulting from decentralized IT decision making. The entire process works best if parties from both camps are involved in decisions and collectively understand the business goals.
10. Pendulum swings back from centralized to decentralized
Related to prediction 9, Gartner predicts the focus on more centralized IT during this time of economic contraction will shift by 2004 to a more decentralized model. Business objectives outside of cost containment will drive decision making to business units, where agility is a highly valued commodity and there is resurgence in economic growth.