Three trends that are reshaping IT, Three trends that are reshaping IT, business, and our livesbusiness, and our lives

IT Trends and DirectionsIT Trends and Directions

ConclusionsConclusions

Three major trends are shaping the future of business and ITThree major trends are shaping the future of business and IT

• The New Economy is transforming the oldThe New Economy is transforming the old

– A loss of power for sellersA loss of power for sellers

– The power of communities comes to businessThe power of communities comes to business

– From dot.com to dot.bomb to ? -- the hype and the realityFrom dot.com to dot.bomb to ? -- the hype and the reality

• Ubiquitous Computing is unfoldingUbiquitous Computing is unfolding

– Profound effects on enterprise supporting infrastructureProfound effects on enterprise supporting infrastructure

– The wall between work and personal lives is crumblingThe wall between work and personal lives is crumbling

• The risks and rewards of IT have never been higherThe risks and rewards of IT have never been higher

– Spending will climb past 10% of revenues on averageSpending will climb past 10% of revenues on average

– IT leader becomes a business leaderIT leader becomes a business leader

– IT will be increasingly focused outside the enterpriseIT will be increasingly focused outside the enterprise

– Coming technologies to watch, to try, and to exploitComing technologies to watch, to try, and to exploit

– Be prepared for the ASP vendor implosionBe prepared for the ASP vendor implosion

Increased consumer

expectations

Increased consumer

expectations

Shortereconomicproduction

runs

Shortereconomicproduction

runs

Reducedbarriersto entry

Reducedbarriersto entry

Moreperfect

information

Moreperfect

information

Collapse ofdistanceand time

Collapse ofdistanceand time

Emergingglobal

middle class

Emergingglobal

middle class

Customerfocus

Customerfocus

Mass customization

Mass customization

“Retreat”of

government

“Retreat”of

government

Shorter strategycycles

Shorter strategycycles

Shorterproductcycles

Shorterproductcycles

Morecompetitors

Morecompetitors

The Transformation of BusinessThe Transformation of Business

SocietalSocietal

TechnologicalTechnological

PoliticalPolitical

Economic Economic

EnvironmentalEnvironmental

ManagerialManagerial

A B2B e-marketplace is an enterprise that brings buyers and sellers within a particular industry, A B2B e-marketplace is an enterprise that brings buyers and sellers within a particular industry, geographic region or affinity group together for the purpose of commerce. It provides content, geographic region or affinity group together for the purpose of commerce. It provides content, value-added services and — often, but not always — commerce transaction capabilities It is a value-added services and — often, but not always — commerce transaction capabilities It is a market intermediary.market intermediary.

3,950

45 145 403 953

2,188

7,297

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1998 1999 2000 2001 2002 2003 2004

E-Marketplace EC

All Other EC

WW B2B E-Marketplace Growth

USD Billions

E-Marketplace and B2B E-Marketplace and B2B ForecastForecast

Horizontal• CommerceOne MarketSite

• Ariba

• MRO.COM

• MYSAP.com (MRO)

Vertical• Automotive supplier exchange

• Chipcenter.com

• PlasticsNet

Enterprise-Specific• Neoforma

• Shell

• Kraft

Public• E-Vis.com design collaboration

• I2 Trade Matrix supply-chain collaboration

• MySAP.com Marketplace business application integration

Enterprise-Specific• Celestica/MatrixOne/Aspect

contract manufacturing

• Adaptec/Extricity supply-chain integration

• Lockheed/PTC collaborative product development

E-Commerce C-Commerce

B2B ExchangesB2B Exchanges

What Others Like You Also LikeWhat Others Like You Also Like

Enduring Transient

Traditional Communities: Selected by People

Emerging Communities: Discovered by Technology:

FamilyHobbies/ Sports

GeographyWork

Medical

Education

Project

Issue

Task

Purchase

Entertainment

Collaborative Filtering

Expert/Knowledge-Communities

Rating-Communities

Group Purchasing

Automated Hyperlinking

ContentAnalysis

C-Commerce and CommunitiesC-Commerce and Communities

Transaction efficiency

More information and transparency

More liquidity and choice

Capacity meets demand —> more competitive prices

Interoperable interfaces

Virtual organizations

Common terminology

Reshaped trade structures

Economies of scale and scope

Communities Knowledge sharing

“E”

M&A

Who will have the power? Where is your attention?

--> The UI, infomediaries?Low switching costs

The Investor’s Hype CycleThe Investor’s Hype Cycle

TechnologyTrigger

Peak ofInflated

ExpectationTrough ofDisillusion

Slope ofEnlightenment

Plateau ofProfitability

Dot-Com ShareFall-Out

Dot-Com Shake OutCash burn means debts

EuropeanIPOs 1999

U.S. Xmas1998

U.S. IPOs1997/8

Dot-ComStarts

InternetWWW

Equity Times Debt Times

Mergers/buyouts of dot-coms

managed by M&A

Economies of scale pay off:

globalization of dot-coms and VCs

Post-NetBusinesses:

Hybrid models

“dot.com” is Best

1990-96 1999 2000 2002 2004 2006

Visibility

Dot-coms survivors bought by B&M

Positive Cash Flow

dot

Ubiquitous ComputingUbiquitous Computing

2001

1960

2040

Concept invented at Xerox PARC by Mark Weiser

Thousands of people per computer in 1960s going to thousands of computers per person in the future

We have crossed the Rubicon -- now past the 1:1 level

Technology For Ubiquitous Computing• Connectivity -- wireless leaves on wired tree• Follow-me profiles and data access • Device-insensitive access• Computers disappear into the environment• Location-awareness

MostUsers

ManyUsers

SomeUsers

FewUsers

Today

Most Users

Many Users

Many Users

Most Users

2005

MostUsers

User Access — Uncontrollable?User Access — Uncontrollable?

Problems• Security exposures• Support complexity• Multiple formats

Standardized Chaos

User . . .• needs vary, so do

the best device• buys device• picks which to

carry and when• switches from

device to device

Recommendations• Support the edges• Plan for diversity

Infrastructure TrendsInfrastructure Trends

““Supranet”Supranet”

Independent work

Mobile/fully digital

Reliance on paperand location

Office = LocationBandwidth rulesVisual interfacesPhysical environment

Office = ConnectionUbiquitous accessStandardized interfaceService-based

Office = AttentionWearable or mobile devicesWireless connectivityInstant-on

Office = CommunityVirtual communitiesWorkflowMonitoring and access

Need for Supervision

Office 2010 - The Wall Comes Office 2010 - The Wall Comes DownDown

TelecomTelecom 12.7012.70 $10.4K$10.4K 7272InsuranceInsurance 9.429.42 17.4K17.4K 6767Fin./BankingFin./Banking 8.668.66 19.1K19.1K 7676ServicesServices 6.476.47 7.1K7.1K 7878Retail/WholesaleRetail/Wholesale 4.544.54 3.1K3.1K 7373HospitalsHospitals 4.534.53 1.7K1.7K 7272UtilitiesUtilities 3.863.86 5.6K5.6K 7777TransportationTransportation 3.303.30 1.4K1.4K 7777ManufacturingManufacturing 2.992.99 4.1K4.1K 7676

Total IT Spending as aTotal IT Spending as aPercent of RevenuePercent of Revenue

IT Spending IT Spending % % RevenueRevenue

Central IS Central IS Budget Per Budget Per EmployeeEmployee

IT Baseline/ IT Baseline/ InfrastructureInfrastructure

as % IS Budgetas % IS Budget

Key Technology Key Technology DiscontinuitiesDiscontinuities

S/360S/360MainframeMainframe

PC-PC-Client/Client/ServerServer

Web-Web-InternetInternet

19701970

10.0%10.0%

Accelerating Business Accelerating Business Unit SpendingUnit Spending

North AmericaNorth America

Western EuropeWestern Europe

Asia/Pacific Asia/Pacific (Dev.Economies)(Dev.Economies)5.05.0

002010201020002000199019901980198019601960

Functional Head Functional Head Operational Operational

ManagerManager

Manage IT Manage IT Department Department

Provide InfrastructureProvide Infrastructure Manage vendorsManage vendors

VisionaryVisionary Technology Technology

OpportunistOpportunist

CIO RoleCIO Role

Evolution of CIO Role and Evolution of CIO Role and Enterprise GovernanceEnterprise Governance

KeyKeyResponsibilityResponsibility

BusinessBusinessInputInput

Major Major TasksTasks

System System ObjectiveObjective

Leadership Leadership

Mainframe Era:Mainframe Era:Conventional PlusConventional Plus

Web-based Era:Web-based Era:Hybrid, EmergentHybrid, Emergent

Distributed Era:Distributed Era:Transitional, ShiftingTransitional, Shifting

Automate for Automate for EfficiencyEfficiency

Advisor on Advisor on ‘How to’ ‘How to’ Not ‘What to do’Not ‘What to do’

Alert Line-Mgmt. to Alert Line-Mgmt. to IT Investment IT Investment OpportunitiesOpportunities

On-Time delivery On-Time delivery Reliable operationsReliable operations

Deliver on Deliver on PromisesPromises

Strategic PartnerStrategic Partner Expectation ManagerExpectation Manager Technology AdvisorTechnology Advisor

Align IT with Align IT with BusinessBusiness

Access to the Access to the Executive Invited Executive Invited ‘Seat at Table’‘Seat at Table’

Reduce Business Reduce Business Process Cycle-timeProcess Cycle-time

Set Direction and Set Direction and Secure Benefits Secure Benefits from “Selective” from “Selective” OutsourcingOutsourcing

Member of Member of Executive Team or Executive Team or Assumed ‘Seat’Assumed ‘Seat’

Jointly Develop Jointly Develop Bus./ IT Model; Bus./ IT Model; Leverage Leverage Extra-structureExtra-structure

Drive Channel Strat. Drive Channel Strat.

Define Office-of-the Define Office-of-the Future; Lead effort to Future; Lead effort to Customer-centricity Customer-centricity

Integrate Client/ Integrate Client/ Supplier Value-ChainSupplier Value-Chain

Adapted from Ross & Feeny

E-Business Addresses the E-Business Addresses the Complete Business EcosystemComplete Business Ecosystem

TheBusiness

Supplier

Supplier

Adviser

Intermediary CustomerE-Marketplace

Virtual or Nodal Structures

Manufacturing

Fulfillment

Marketing

Trough ofDisillusionment

Slope ofEnlightenment

Plateau ofProductivity

Maturity

TechnologyTrigger

Peak of Inflated

Expectations

Visibility

ASPs

Speech Recognition

Smart Cards

Micropayments

Digital Ink

Biometrics

Enterprise Portals

Audio Mining

Jini

xDSL/Cable Modems

Wireless Web

Voice Portals

XML

Quantum Computing

Voice Over IP

BluetoothJava

Language

Peer-to-Peer

Location-BasedComputing

KeyWill reach the “plateau” in:

Less than two years

Two to five years

Five to 10 years

More than 10 years

X

X

X

X

X

Technology, Hype, and MaturityTechnology, Hype, and Maturity

Service ProvidersService Providers

DemandManagement

DemandManagement

TCO vs. Monthly Cash FlowTCO vs. Monthly Cash Flow

Rampant M&A

Activity

Rampant M&A

Activity

Buy vs. RENTBuy vs. RENT

FinancialFinancial StaffingStaffing

IT Skill ShortageIT Skill Shortage

EscalatingSalaries

EscalatingSalaries

High StaffTurnoverHigh StaffTurnover

BroadCompetitionfor SimilarSkill Base

BroadCompetitionfor SimilarSkill Base

ASP DriversASP Drivers

Business/ Market

Business/ Market

Extend the Business Boundaries

Extend the Business Boundaries

The Needfor SpeedThe Needfor Speed

Software asa Service

Software asa Service

Can’t Be Held BackBy the Legacy IT

Can’t Be Held BackBy the Legacy IT

Service ProvidersService Providers

ASP TrendsASP Trends

ExplosionExplosionExplosionExplosion

ConsolidationConsolidation

ASP RevenueASP Revenue

Cost of ASPCost of ASPservicesservices

RestructuringRestructuring

19981998 ‘‘9999 ‘‘0000 ‘‘0101 ‘‘0202 ‘‘0303 ‘‘0404 ‘‘0505

MarketMarketInitiationInitiation

‘‘0606

NumberNumberof ASPsof ASPs

RecommendationsRecommendations

Adopt, where appropriate, New Economy techniques Adopt, where appropriate, New Economy techniques and technologies to transform your enterpriseand technologies to transform your enterprise

Adapt enterprise infrastructure, applications, Adapt enterprise infrastructure, applications, processes, policies, and culture to the coming processes, policies, and culture to the coming realities of Ubiquitous Computingrealities of Ubiquitous Computing

Apply business values and skills to reshape the Apply business values and skills to reshape the enterprise while managing risks such as changing enterprise while managing risks such as changing technology and the implosion of ASP vendorstechnology and the implosion of ASP vendors