Job cuts, consolidation continues to hit IT

While the long-term technology outlook is bright for Australia's ICT market, Gartner predicts 50 per cent of technology suppliers worldwide will be extinct by the end of 2005.

"There are currently more than 2300 publicly traded software companies in the world, that's about 50 to 60 per cent too many," said Gartner analyst, Bob Hayward, highlighting the Top Trends for Asia Pacific.

"For those companies that survive, this means that they can focus over the next several years on providing quality and not be price driven."

The IT industry would be hit by "global accelerated job losses and vendor consolidation", Hayward said.

Today's buyers market for IT products will shift into a sellers market within the next year, and most IT sectors will see a few large vendors - not ruled by cut-throat pricing - running the show. The days of 'customer is king' will soon end as market forces extinguish the weaker players.

On a positive note, he said Australia's ICT market would increase by four per cent from 2003 to 2004. Australia, in concert with New Zealand, would see a beefier enterprise market than all ASEAN combined.

CEOs, CIOS and IT head honchos will start forking over cash next year on a technology refresh (acquired pre-Y2K).

"The combination of business transformation with key technology advances, architectural changes, market forces and best practices will lead to a strong recovery for IT in the near future," Hayward said. "We are on the cusp of the most fundamental changes to business processes driven by technology advancements since the Internet. However, the resulting huge impact will be both positive and negative."

He said outsourcing would continue to mushroom. By 2005, enterprises seeking outsourced deals wouldincrease by 30 per cent.

"This trend will be driven by organisations' desire to focus on three key areas: core competencies, the need to access 'best-in-breed' capabilities and the ongoing requirement to remove costs from their existing operations," Hayward said.

On the software front, Linux and other alternatives to Microsoft will make inroads, but to the detriment of Unix.

In 2004, 90 per cent of big organisations in Australia would use some form of open source software - and Linux would be in the mix somewhere, he said.

Linux will grab more users from the Unix space than it will from a Windows environment.

Security is another hot market, he said.

Next year, IT security operations will look to vulnerability shielding, mitigation and practices to improve overall business processes.

Enterprises that use a vulnerability management process would have 90 per cent fewer successful attacks than firms that set their sights on intrusion detection systems, he said.

"Intrusion prevention rather than detection will be key as IT security projects and spending will be driven by the need to improve resiliency in the face of rapidly spreading external threats, support emerging Web-services-based applications and provide more efficient, functional identity and access management capabilities," Hayward said.

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