Prepare for IT's industrialisation

Users are failing to make the most of falling prices of products and services

Many organisations are failing to exploit falling prices in products and services that should accompany the commoditisation of IT, according to Gartner. In 2007, 25 per cent of IT spending was on unnecessary and redundant customisation and although this will decline, it will remain at least at 10 per cent overspending until the end of 2010.

The need to move ever faster and at a lower cost is driving a shift from integration activities toward greater interoperability and interchangeability with the direct result that many IT product and services markets are becoming commoditised. Gartner likened this industrialisation of IT to the two earlier industrial revolutions (of mechanisation and electrification) calling it the third industrial revolution: that of digital business in the cloud.

"No IT product or service is fully commoditised today -- as there is still some cost to you in switching suppliers -- but many are commoditising and some are at a relatively advanced state, such as desktop PCs," said Brian Gammage, vice president of Gartner. "As products and services do commoditise, prices should usually fall, but conversely, for most enterprises, one of the biggest impacts of commoditisation is overspending."

For most organisations, the shift from buying and building IT to accessing IT as a service is not new, but the trend is set to accelerate as traditional delivery models are augmented by a range of new, alternative delivery models that rely on a combination of technology and business advances to delineate and define the extent of the service. Increasingly, these are being used internally and externally to deliver scalable IT software and hardware functions. These alternative delivery models often make irrelevant the governing principles that worked with the traditional models.

At the same time, the giants of the software and services industries are building the facilities to deliver these services. They are building the capacity for mass production: platforms for industrialisation. These new mega data centres will form part of the new mass production capabilities companies need for IT.

"Already, more and more tools and applications, such as office software, e-mail, and CRM are being served from such centres, and we can expect the range of applications and services available to grow," said David Mitchell Smith, vice president of Gartner. "Why pay to build it and maintain it, if you can buy it in at a fraction of the price? Achieving the requisite cost advantages will take time and scale, but it will be feasible for many of the applications we use today."

To deliver these applications in a readily configurable and customisable manner, with the promised advantage of scale, will require Web platforms. In a Web platform ecosystem, a service provider uses the facilities of a Web platform provider to build, host, or deliver the service. At a minimum, the service provider will use hosting services of the Web platform and may use additional platform services (compute, storage, security, application management, ecosystem management, information, component, application, and business process) to build and deliver its services.

Len Rust is publisher of The Rust Report

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