How will the IT industry of the future be shaped?

IT Services

The Australian IT services market increased almost 20 per cent year-on-year to $12 billion in 1999, a growth rate Craig Baty, regional vice president of Gartner's Dataquest Asia Pacific, described as "good numbers" compared to the rest of the world.

GST remediation and the federal government's outsourcing agenda are two key reasons the local IT services market performed so well, according to Baty.

Gartner's predictions for the future:

* Over the next two to three years, the services market will continue to record a compound annual growth rate (CAGR) of 21.5 per cent reaching a total of about $26 billion by 2003.

* The emergence of solutions-based services such as customer relationship management (CRM), application service provider (ASP) and ‘e-chain' services like supply chain management, enterprise resource planning and e-commerce will buoy the market's growth.

* These solutions-based services will in turn drive an increase in technology and platform-based services such as e-business, infrastructure, service provider-enabled enterprise networks and Web-enabled systems.

Software

Enterprise resource planning (ERP) may not be dead, but it is in somewhat of a coma, according to Neil McMurchy, research director for Gartner's Data-quest.

The ERP industry has seen a dramatic decline in annual growth over the past 12 to 18 months and vendors are being forced to identify new lines of core business to remain viable.

However, attempts by SAP and Oracle to leverage the application service provider (ASP) model to access the small and medium enterprise market have so far shown limited success.

Gartner's predictions for the future:

* Over the next couple of years, "a number" of vendors are likely to disappear from the ERP landscape, McMurchy warned. While not citing specific contenders, he said those at risk were unlikely to be acquired because there would be little reason for competitors to want to buy their products.

* Supply chain management will finally emerge from the cocoon of expectation it has been encumbered with for several years, driven by the hype around improved customer management practices.

* ERP vendors will continue to face challenges adapting their businesses to the ASP environment because the model poses difficulties for the implementation of complex applications in corporate environments.

Hardware and server operating systems

The Australian PC market showed year-on-year growth of less than 10 per cent in 1999, but unit sales hit two million for the first time, Ian Bertram, regional director for Dataquest, said.

Portables continue to comprise less than 15 per cent of PC sales, a trend that is not expected to change in the near future, according to Bertram.

Compaq continued to be the top-seller of PCs locally - ahead of IBM, Dell, Hewlett-Packard and Apple respectively - yet it was the only top five vendor to record less than double-digit growth for the year.

Server and server operating system market revenues fell from 1998 to 1999.

However, Linux is reaching real penetration with an estimated 10 per cent of organisations in the Asia-Pacific region using the open source operating system.

Gartner's predictions for the future:

* The worldwide handheld/personal digital assistant market to total 20 million units by 2003, a figure that fails to spell the demise of PCs and notebooks.

* Unix, NetWare and Windows NT will continue to show growth through until 2004, but others will start to "fade away", according to Bertram.

Application service providers

The application service provider (ASP) phenomena is currently at the peak of its hype curve, but a trough of disillusionment is set to follow as the model fails to meet all the expectations perpetuated by industry players, Rolf Jester, regional director for Gartner's Dataquest warned.

The Asia-Pacific market totalled less than $US0.25 billion in 1999.

Gartner's predictions for the future:

* The Asia-Pacific ASP market will total $4.2 billion by 2003.

* Australia will take the early lead in the Asia Pacific ASP market.

* Of today's ASPs 60 per cent will no longer exist by the end of 2001.

* Network providers will struggle to meet service-levels of ASP customers until 2004.

E-marketplaces

B2B e-commerce transactions in Australia totalled $US4.4 billion in 1999, according to Lane Leskela, research director for Gartner's Dataquest e-business division.

Gartner's predictions for the future:

* The Australian B2B e-commerce market will total $US299 billion by 2004, contributing about 4 per cent of the worldwide total of $7.3 trillion.

* The Asia Pacific B2B e-commerce market is set to total $US996 billion by 2004.

* By 2004 93 per cent of global transactions will still be non-'e'.

GST

Obtaining staffing resources to meet GST-compliance has not been a major issue in large organisations, Bruce McCabe, research director for Gartner's Dataquest, said.

Rather, understanding the new legislation and applying it within their organisations has been their key problem.

Gartner's predictions for the future:

* Having sought assistance from the Big Four, as opposed to IT services vendors who have failed to establish a profile on the GST issue, most large organisations appear ready to meet the July 1 deadline.

* Smaller companies are generally much less prepared to achieve compliance in time.

* Big Four consulting companies will continue to act as "gatekeepers" on IT issues, rather than IT services firms.

* The implications of applying a GST to e-commerce transactions must be considered because consumption taxes in cyberspace "don't work".

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