IDC has been tracing the ups and downs of the information technology sector since 1965, with our Australian operation opening for business in 1979. Few, back then, could have foreseen the twists and turns of a rapidly evolving industry, or by just how much technology would pervade all aspects of work and play by 2003. And this is a process that IDC believes is by no means over.
IDC’s opening in Australia coincides with perhaps the second stage of the IT evolution. In 1979, computers the size of rooms were already giving way to consoles to allow information workers easier access to the huge volumes of data being processed by these supercomputers or mainframes. Our operation entered the Australian market at the dawning of the Personal Computer revolution. In the 25 years since then, the personal computer has utterly transformed human behaviour and has been the catalyst for so much of the change that has driven technology since.
As PCs proliferated, networks appeared to sate the desire for connectivity and access to multiple sources of information. This required the forming of an ‘information highway’ that, just by chance, had already been developed for other purposes within the US military. Step up, the Internet. Simple graphical interfaces and the ability to pass messages across technology platforms instigated what can only be described as a revolution in the world of communications — the impacts of which continue to be felt today. Technology at this point is evolving towards a wider and wider audience with simple interfaces masking the underlying technological complexity.
Perhaps one of the most surprising elements of the Internet was the transformation of the way we communicate. E-mail has become a mainstay medium for communication between friends, family and business — a powerful and fast complement to the spoken word. The onset of the next revolutionary force in our industry perhaps held another surprise: the fact that we wanted to communicate so much of the time. The explosion in mobile voice services and attendant technologies (handsets) has again, like the Internet, produced fundamental shifts in behaviour. The convergence of Internet and wireless and mobile technologies is beginning to combine to produce anywhere, anytime access to information.
Which segues neatly into the main point behind these technological shifts. At each of the stages outlined above more and more people have been interacting with technology, becoming more and more dependent on the services available. But the driving factor behind each industry gear change has been the desire for faster access to information. That is, the application of these technologies has been the principal driver of change and development. Vendors have come and gone. but the underlying applications and needs remain.
So where does this leave us now? Left to itself this high-level view of key developments would paint a rosy picture of uninterrupted progress through technological innovation. Our industry has seen too many false dawns, white elephants and plain old turkeys for anyone to believe this to be the case.
The extraordinary growth (and it has been extraordinary, make no mistake) of the industry and the pervasiveness of technology, certainly within business, presents us with something of a crisis at present: the complexity crisis. The last 25 years has seen layer upon layer of complexity being added to the computing infrastructure within organisations in both depth and breadth. The need for a holistic view of customers and more efficient methods of dealing with suppliers has forced a reappraisal of the patchwork architecture. The expense of ripping out and putting in place new systems has led to an increased focus on integrating disparity, of applying standards where once platforms were multiple and bespoke. (The Internet has been a key catalyst for this pursuit of standards).
The deepening complexity of software has been supported by the increasing speed and capacity of hardware. This sophistication has also led to dramatic changes within the IT services sector. The implementation of key technologies has required the redesign of business processes, the manifestation of which has been the acquisition of consulting firms by technology vendors.
The current economic climate has accelerated another long-term process: the need for technology to support the creation of business value. In the hyperbole that surrounded the Internet boom of the late 90s, some key business principles were lost in the mad dash to be the first to find the transformational business model. Ironically, many of the winners in that dash found that Internet business often works best alongside bricks and mortar. The Internet crash, the tragic events in New York, Afghanistan, Bali and now Iraq have created a macro environment that is much tougher than many can remember.
As all aspects of spending tighten within Australia, IDC does not foresee a time when the total market will see the double-digit growth that it once did. This has forced a necessary correction in the marketplace in both perspective and spending. In the current environment, IDC sees the following long-term drivers operating in the market:
The speed of change. IT managers need to ask themselves how adaptive is the infrastructure they manage. How tolerant of change is it, and can IT enable fast organisation-wide responses?
ROI demands. Businesses are demanding closer scrutiny of IT purchases and clearer measurement of the benefits. Vendors need to demonstrate the benefits of their products and services, and in the current environment CIOs can afford to make these demands.
Mobility. Mobile voice may be all-pervading, but the impacts of complete mobility are in their infancy. The need for flexibility and adaptability play naturally to the strengths of mobility, while placing pressure on infrastructure. The notion of anywhere, anytime connectivity offers a solution to the productivity paradox that attends many of today’s mobile workers: the need to be fully connected while away from the office environment. The applications and networks are in place today to allow many organisations to reap these benefits.
Corporate governance. Corporate governance obligations for company directors are also an important factor at present. Given IT systems are central to a very high percentage of businesses, directors are realising that they have a proactive duty to protect this vital corporate asset. The need to protect systems from attack, and to provide business continuity are guiding the nature of investment at present.
The cult of core competence. IDC sees continuing evidence that companies are looking externally for partners to help improve their business. While this is not new in the realms of sales and distribution, we see business considering other functions for outsourcing from manufacturing, to product design, marketing to finance. The impact here is that companies need to become more transparent and integrated with a greater number of partners, posing big problems with respect to security and integrity.
To summarise, CIOs are facing a deeply challenging environment. The overriding issue here is complexity — dealing with this complexity through integration projects and more consideration of third-party partners is a clear problem facing many. Secondly, however, CIOs are no longer in thrall to the changing whims of the industry, rather vendors need to do more to capture their share of your IT budget.
Within this context, IDC each year makes its predictions as to what will be the key medium term technology drivers. Some of these are summarised below:
The mobile enterprise. Australia is a world leader when it comes to mobile professionals, with more than 30 per cent of the workforce away from the office more than 60 per cent of their time. While the enhancement of worker productivity in the field was first boosted by the mobile phone, investments in applications from e-mail to CRM are the next big thing to go wireless. IDC projects there will be more than four million subscribers with access to high-speed mobile data services in Australia by the end of 2003. Additionally, more than one million portable computing devices with integrated wireless networking capabilities will be purchased this year. This profound trend will reshape an enterprise’s use of all its communications tools and technologies and the means by which employees, partners, suppliers, and consumers interact with one another.
Security. In a recent IDC study — entitled the Market Sentiment Monitor — Australian business and IT leaders representing medium and large organisations were asked to rank the importance of IT security. Some 90 per cent of respondents surveyed rated security as either “very important” or “important”. These results show an increase in corporate awareness surrounding security threats plus a more mature understanding of the role technology can play in combating threats.
This change in perception will have a direct impact on levels of investment in security technologies and related services in 2003 that are intended to facilitate appropriate and sustainable security solutions for each enterprise. In many situations, the existing security environment has been exposed as limited. The absence of broader architectural approaches is also becoming evident.
Linux Deployment. IDC anticipates that during 2003 Linux will come to represent a sizeable area of spending for Australian organisations — but principally in test environments. Prior to 2002, the operating system had very little support from the multinational vendor community or ISVs in the local market. Its perception as a low-cost alternative for network edge and first-tier data centre applications in many ways hindered its appeal to the broader market. Coupled with Linux’s inability to scale beyond four-way systems and low market supply of trained labour, it appeared that Linux would find it hard to move out of the university and second-tier ISP space. Linux has already noticeably established itself in the low-end Intel server space over the past few years and its credibility has been enhanced with the backing of IBM, HP, Dell, and now Sun Microsystems.
Web services. IDC believes that Web services technologies will allow companies to become more responsive to changing market conditions. Or rather, companies that deploy Web services effectively need not be inhibited in exploiting opportunities by inflexible IT architectures.
The maturation of Web services will be a key technology driver throughout the next decade. In Australia, IDC expects the market opportunity for Web services to grow the fastest in manufacturing and services industries and to generate more than $30 million in 2003.
The utility model for IT services. The utility model of IT services delivery, embryonic in nature, promises to be a change of significant magnitude. In a number of recent IDC studies we have found a number of indicators that confirm the user pursuit of flexibility, access to skills and technology, and cost effectiveness from their outsourcing arrangements. Such market readings provide an increasingly strong argument for expectations of a positive take-up of network-based services, as per the “utility” model. Not surprisingly, the Web hosting arena is showing the way, but early signs of enterprise interest of a broader nature are emerging across the areas of network infrastructure, storage, and security services. IDC’s prediction also reflects an acknowledgement of an anticipated market focus on the SME business sector. In many ways, the utility model is made for this sector, where the advantages of controllable cost-effectiveness, freedom from IT skills hassles, reduced asset expenditure, accessible best technology and services practices, and guaranteed delivery have been effectively denied up until now.
Home networking. Driven by increasing broadband subscriptions, more affordable digital peripherals, multi-computer households, and simplicity; home networks deployment will become a more commonplace feature of the IT landscape. IDC predicts residential broadband subscribers will increase from 275,500 in 2002 to nearly 600,000 in 2003. IDC estimates the average home connected to the Internet has an investment of roughly $5000 in IT equipment and further spends between $300 and $1000 annually on Internet access.
Conclusion: In the medium term, IDC does not predict any immediate impacts of the magnitude with which the Internet and then mobile changed the way we work and live. The confluent effect of both these developments are, however, clearly shaping the evolution of the market at present and for the foreseeable future. The real emphasis in today’s world is focused on making technology relevant for consumers and business.
Where will IT be 25 years from now? The journey to date has been something of a roller coaster, with many ups and downs still to come. We can be certain that technology will matter more and not less in the coming years. We can also be sure that people will have FASTER access through SMALLER devices to MORE information than ever before. Computers will crop up in more and more places — from the much (un)vaunted Internet fridge to embedded devices in humans, and organisms of all shapes and sizes. It is easy, however, to fixate on the gadgetry of the hardware and wizardry of the software, and lose sight of what really drives the industry. As with all predictions, we are guided by the past. The future for IT seems to offer ubiquitous access to relevant information — a direction in which, it seems, we have always been headed.
Andrew Doyle is consulting manager, IDC Australia