Sunday, December 20, 2009

Top 10 Trends for Enterprise IT in 2010

This is the season of the year to talk about the Enterprise IT Trends for the upcoming year 2010. As usual, I am not going to talk about Technology Trends. Being part of Enterprise IT, I would like to write about the forecasts for Enterprise IT shops (especially the bigger ones).

This recession has structurally impacted the IT organizations to seriously re-look at the opportunities for cost optimizations - be it organization structure changes, new process introductions, new way of partnerships with their vendors to get more value for the money.

From my perspective, the new year will see the following 10 developments.
1. Get ready for the long tail. The age of million dollar projects, billion dollar outsourcing contracts are gone. IT investments are scrutinized at various levels and only the critical projects are cleared from the annual budgeting process. To combat the bureaucracy of convincing the top management on high-cost projects, IT managers have started to fragment those projects into smaller bites that would be less scrutinized. This could be a tactical change in terms of defining the projects and funding them. But, it has its own consequences. The immediate result is that this approach leads to proliferation of long-list of micro/mini projects that requires the attention of both IT shops as well as vendors (not in terms of complexity. But, in terms of numbers).
2. Need for new Governance Models The proliferation of micro/mini projects leads to new forms of IT Governance. Especially, when this long-tail is being managed by multiple vendors and requires hand-offs between the participants, greater level of attention is required to ensure successful accomplishments. The Governance functions like Project Management Office, Operational Excellence Groups will get into the mainstream management operation system of Enterprise IT. New Tools, New Processes and methods would come into existence as part of the Governance.
3. Total IT outsourcing - Year-on-Year, IT is forced cut costs but deliver more value to Business. Now, that can only go little distance. Beyond a point, the Enterprise IT organizations would have to compeltely depends on their vendors if they have to radically deliver on their cost pressures. One of the solution is to completely hand-off the entire risks to one or two IT vendors who will directly manage a portion of IT relieving Internal IT staff. Its upto the IT outsourcing vendor to manage their own staff and infrastructure and deliver on cost expectations.
4. Business and IT - Alignment getting more wider - Relating to point no.1, if there are more and more number of 'parts', that is small projects, there is no 'whole'. That leaves a 'hole' in Business-IT alignment. Few years before, in a consulting assignment, one of the senior leaders of IT in a huge manufacturing company in US said - 'Our organization strategy is to build silos' - of course, pun intended. But, that is the reality. Any intra-organizational efforts to integrate the systems are seen as 'boiling the ocean'. And hence, the alignment is going to be a continuous challenge.
5. SaaS apps for new business verticals - Customers, Business/IT - would be demanding more and more SaaS applications from the vendors. CRM is only the beginning. Though there are concerns towards security, the cost equations are so compelling to resist for the IT leaders. This would lead to emergence of SaaS applications in new vertical functions.
6. Vertical-oriented, Platform-based BPOs - BPOs are getting smarter. Not just plain/mundane, back-office functions, Customers are getting improved options. For example, some of the vendors are offering complete 'channel business anlaytics' on their own platform/technology stack relieving the business/IT shops from capital investments and offering
high-value solutions 'on-the-tap'.
7. Flexible perimeter security - If a company has to consume services outside the firewall or export data to a vendor, the traditional perimeter methods are going to be challenged. The scenarios will get complicated if there are composite applications that are developed that has a mix of both internal services plus external systems. Lots of work are happening in this area by cloud vendors as well as Chief Security Officers. Some of those solutions will get into mainstream in the coming year.
8. Reporting/Data aggregation tools becoming a key capability - With proliferation of projects & information and increased need for compliance/Governance and scrutinity, there will be too much of reporting and data floating all around the company. And if a company needs to systematically view and manage the data, reporting tools and technologies would become a key requirement both for IT as well as Business. Analytics - is still seen as an 'exotic' food for Business/IT. It may take few more years to see real analytic solutions that solves compelling business problems.
9. Software Compliance Management Solutions - With increased transition to Open Source, Companies are also being vulnerable to underlying license infringements. There is a clear need for education in terms of the range of licenses, their limitations and usage options. New breed of solutions such as Software Compliance Management solutions (e.g. Black Duck) are gaining momentum in the market. IT shops/vendors will put themselves at greater risks if they ignore these considerations.
10. Innovation in packets - As the economy showing early signs of recovery, some of the high-performing departments in IT would look for inexpensive innovative experiements with latest technologies (e.g. Android/Mobile based applications). This would be a tactical arrangement to test the waters and not a sustainable organization model. However, this could be a good business opportunity for IT service companies if they can carve out a meaningful offering that suits multiple clients.

1 comment:

cebess said...

Bala, those look like a pretty good list of trends.

I always do have an issue with the concept of "aligning" business and IT. One of the big shifts that's coming is IT is business and vice versa. The concept of alignment implies continued separation -- to me that is part of the problem not the solution.

The issue of open source licensing is one I didn't point out in mine. Many IT organizations do not fully understand the implications of these licenses on their behavior, so that's a good one to point out.