Markets, Pills, and Timing

Bear markets kill technology (and other) spending. Bull markets cause us to lose our
heads and buy just about everything we see. Vendors of course hate bear markets
but buyers should love them. Painkillers include those investments that reduce costs
and increase efficiency. Theyre usually made at gunpoint: someone decides that an
investment has to be made before some huge technology problem arises. Its usually
the CIO who holds the gun to the CFOs head.Vendors love bull markets because the
normal business-case-before-we-buy discipline flies out the window propelled by
unbridled optimism about business technology success. Bull markets breed silver
bullets; bear markets take silver bullets for the team.
Trends That (Really) Matter
What do we really need to know?
Do we need to know every specific feature the next release of Microsoft Office will
have? Do we really need to know exactly what the next version of the SAP ERP
platform will look like? Or is it the macro trends that influence what we buy, deploy,
support, decommission, and optimize that matter most?
Basic Trends
1. Regulatory Trends(Case Study China)Will the government regulate
eBusiness? Will it tax Internet transactions? Will it legislate the end of spam? Will it
define and uphold privacy rights? Will it develop policies around intellectual
property? Will it regulate outsourcing? Id love to have the answers to all of these
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questions. If the government actually discovers the digital world and decides to
respond to its requirements, then things could change dramatically for those of us who
make our livings around business technology. But if the government stays in digital
denial, we can expect lots of problems and occasional chaos.
2-Interoperability Trends(Case Study)Will everything work together? Will Web
services become ubiquitous? Will we be able to (remember the phrase?) plugandplay? This Holy Grail has eluded us for decades, but for the first time that I can
remember, prospects for integration and interoperability areif not excellentat
least good. The way the open versus proprietary trends play out will determine just
how connected data, applications, and communications become. Id love to know how
it will all shake out.
3. Supply Chain Trends(Case Study)Will Wal-Mart connect the world? Will Dell
take collaboration and integration to the next level? Will demand forecasting, dynamic
pricing, and inventory management marry radio frequency identification (RFID) to
enable real-time management? Will business become continuous? Although enormous
progress has been made in supply chain planning and management, theres still a long
way to go to bridge the supply chain haves and have-nots. How will it play out? If we
knew how the world was going to connect and collaborate, we could make business
technology decisions that prepare us for supply chain optimization.
4. Architecture TrendsWill thin clients make a comebackand then rule the
world? Will fat clients get even fatter? Will super servers graze on super server farms?
What will data standards look like? Security standards? Wireless communications
standards? As the industry consolidates, architectures will also consolidate. But what
will they look like? Perfect information here could save the industry billions of dollars
every year. As it is, we have to hedge our technology betsand hedging can be
expensive.
5. Sourcing TrendsWill it make sense to outsource? Will technology utilities
finally emerge? Will companies be able to pay by the drink? Will shared risk
contracting become pervasive? Will we develop best practices around sourcing for
infrastructure services, database management, applications, and communications?
Will robust sourcing TCO and ROI models emerge? Information about how the
industry organizes its providers and users would provide critical strategic information
about what and how to source technology products and services.
6. Infrastructure TrendsWill the Internet collapse? Will security breaches become
routine? Will viruses continue to invade our computing and communications
infrastructures? Will they become intelligent and self-healing? Will we upgrade them
on a scheduled basis? While we tend to think more creatively about customer-facing
applications, the need for secure, reliable, and scalable infrastructures will continue to
grow. Theres a growing chorus about the vulnerability of our networksparticularly
the Internet. Are they alarmists, or is there something to really worry about? It would
be great to actually know.
7. Disruptive Technology TrendsThere are always lists of emerging
technologies, technologies that lots of us think will disrupt business models and
processes. Id love to know that the real list looks like in 2010. Will wireless
communications technology revolutionize B2C and B2B transaction processing? Will
VoIP enable most of our data and voice communications? Will intelligent systems
technology penetrate our infrastructures and applications portfolios? Id sure like to
see the list that will define the next decade.
Recommendations: Perfect information is impossible to acquire. So what should we
do with lists like the one above? First, I think its the effortnot the listthat

matters. What would your list look like? If you can identify the major drivers of
business technology change, you should be able to steer your business technology
investments. Perfect information exercises are intended to reduce uncertainty about
macro trends.
Features of organized plans areas follows:
1. Strategy
2. Applications
3. Communications
4. Data
5. Infrastructure
6. Security
7. Organization
8. Management
Strategy
The CIOs plan to play with BPM this year. They want to determine the value the new
perspective and tools might provide to improving business models and processes,
especially in terms of efficiencies. They are not looking to reinvent or reengineer
their companies with BPM technology; rather, they want to mend them, improve
them, extend themcost-effectively.
Applications
The big story here is about optimization. Many CIOs feel that theyve spent a ton of
money on enterprise applications (like ERP, CRM, and network and systems
management applications), and its now time to reap the benefits of these huge
investments. Benefits realization is the story for 2005: theres very little appetite for
installing new systems as most of the CIOs want to exploit what they have. They also
plan to start looking at the applications that make things connect: application
integration tools (especially Web servicesbased tools), wireless applications,
synchronization tools, and collaboration tools (including distributed meeting tools
and, of course, supply chain planning and management applications).
Communications
Wireless, wireless, wireless. Theres a major push to make everyone mobile. The
expectations about wireless technology-driven cost savingswhich include reduced
real estate and office expensesare huge. Lets hope the industry can deliver. This
also appears to be the year when just about everyone will pilot some VoIP
technologies. But theres still disappointment about the cost-effectiveness of voice
recognition technology.
Data
If you own stock in data-mining companies and companies that have larger offerings
in business intelligence, hold on to it. All the CIOs we interviewed were planning to
widen and deepen their investments in business intelligence. Perhaps surprisingly,
there was also interest in increasing investments in competitor intelligence. There was
concern among the CIOs about the management of whole new data streams,
especially the ones that will be generated by the deployment of RFID tags, as well as
the middleware necessary to make back office applications talk with active RFID tags.
Data storage is also on their minds, as more and more data is collected and mined. Of
special note was the interest expressed in customer analytics. It seems that
all want to know more about their customers than they used to. Applications and tools
that enable customer profiling are more popular than ever. Personalization and
customization are the objective of customer analytics: the more companies know

about their customers, the more they can customize and personalize their products and
services.The CIOs are also interested in Web analytics because theres pressure to
increase eBusiness to expand the digital channel.
Infrastructure
Everyones trying to get out of the infrastructure business. It seems that the
commoditization of IT is most evident in the infrastructure area. No one wants to
manage desktops, networks, orespeciallyhelp desks. Our CIOs expect to increase
the outsourcing of these activities and explore other parts of their computing and
communications infrastructures that can be outsourced. There are also concerns about
supporting an increasingly varied technology environment, not in terms of different
manufacturers but in terms of additional devices, such as PDAs, pagers, smart cell
phones, thin clients, and other devices used to access data, e-mail, and applications
24/7.
Security
The more commerce that occurs in cyberspace, the more numerous and severe
security (and privacy) requirements become. All the CIOs we interviewed will spend
more on security this year than they spent last year. The growing identify theft
problem has stimulated additional investments in data security and network security;
there remains considerable concern about wireless security, a concern that is
hampering the desire for more and more broadband wireless communications.
Organization
The segmentation of technology into strategic and operational technology is
driving some significant organizational changes. Many of our CIOs are interested in
reorganizing their teams into layers of responsibility that fine-tune technology
management roles. For example, many of the CIOs indicated that they were
appointing deputies with specific responsibilities for applications, data management,
security, infrastructure, and strategy, among other duties. Many were experimenting
with offices of the CIO and technology directorates as mechanisms to distribute
responsibility across their teams. The more savvy CIOs see this as a way to disconnect
themselves from many of the more infrastructure-related management tasks: its clear
that CIOs do not want to be called when a network crashes or a server dies. As more
functions are outsourced, theres also increased interest in professional
vendor management. Many of our CIOs expressed interest in the need to better
manage their vendors, to write better requests for proposals (RFPs), and to monitor
performance with diagnostic service level agreements (SLAs).
Management
Standardization is occurring at a rapid rate primarily because the technology industry
itself is consolidating, not necessarily because companies have all discovered the
wisdom of fewer rather than more vendors, applications, databases, and networks.
Industry consolidation is driving a new standardization that our CIOs are well aware
ofand quite happy about. Several noted how wonderful it must be to manage a fleet
of but one kind of aircraftthe way Southwest airlines has managed its
infrastructure for years. But standardization is also occurring because of complexity
and the realization on the part of CIOs that increasing complexity simply cannot be
managed over the long termand theres no way it can ever be optimized over time.
All the CIOs are pushing for less variation in their technology environments.
Governance remains a hot issue for all the CIOs. With more and more technology
entering their domains, the need for clear acquisition, deployment, and support rules
is at an all-time high. The CIOs stated they intend to restart the governance discussion
with an eye toward consistency, simplification, and clarity.

Business Technology Trends to Worry about

What is going on in our industry, anyway? Here are five things to think about.
Should we be happy or worried?
1. The technology industry is consolidating.
2. There are also major changes in the value and location of skill sets.
3.Innovation is at risk
4. Governance is shaky
5. Business processes remain mysterious.