Over
the last couple of weeks it has been good to see so many bloggers make their forecasts about 2006. But - most are about Web 2.0 - Google this, Flickr
that. Of course, with Apple and amazon.com enjoying a bumper holiday season, the focus on consumer technologies is only accented.
Much as I love Google, it cannot process BOMs for the average
manufacturing company. Much as my daughter loves her iPod, it will not process
insurance claims. Whoever does whatever with AOL will not improve supply chain
logistics at UPS.
As
we did in the last Internet Bubble, we risk making the Web and consumer technologies the center of the
technology world. It’s the Gates/Plattner
scenario again
I wrote about earlier. As I wrote in Florence
during the Renaissance, innovation is happening in a number of other areas
which CIOs are actually much more excited about - especially at amazing new price points. Also as I have said over and over again this year, many elements of enterprise technology spend are grossly overpriced.
So,
here’s my forecast for next year - good and bad - with more of an enterprise focus:
1)
SAP, Oracle and Microsoft (around enterprise software) will have poor years as
pricing pressure intensifies on core products and particularly on maintenance
revenue streams. SAP will de-emphasize its web services talk and go back to focusing
on applications and business payback. Oracle will go the other way and talk
more about architectures as it masks the enormity of rationalizing its various
application acquisitions. CIOs will increasingly question if all they are doing
is subsidizing Microsoft's focus on Google.
2)
We will see version 2.0 definitions of CRM, SCM, HRM etc
emerge which will a) redefine process coverage (e.g. CRM is more than SFA and
call centers) that the market leaders have chosen to define the categories as
and b) utilize appropriate, newer technology building blocks -
GPS, RFID, RSS in the category re-definition process.
3)
CIOs in many non-manufacturing verticals will tire of waiting for robust
software solutions for their major engines (claims processing, trading systems)
and more aggressively look at BPO options to support these processes. These CIOs, especially in financial services verticals, will pioneer attempts to leverage web 2.0 driven discovery and social networking tools with their enterprise applications.
4)
An infrastructure vendor - likely Dell or Sun (as it tries to redefine itself)
- will introduce infrastructure outsourcing at aggressive, "utility"
price points to cover a wide range of network, database, desktop and other
services. In its hype cycle for outsourcing Gartner defines infrastructure
outsourcing as one of the most mature. As systems management automation and
offsite, shared labor models mature, an efficient services "supply
chain" becomes much more viable.
5)
A generation of “appligators” will emerge - small systems integrators which specialize in
innovation areas like web services or telemetry and willing to work with
clients in small, intense teams. We will not be able to tell till 2007 if they are of a more modest breed than their predecessors, the Scients, Viants around
the ebiz boom in late 90s.
6)
Large US and European outsourcers (EDS, Accenture and by extension IBM, HP etc)
will find themselves squeezed between a) private equity firms who want to take
their valuations from 1 or 2X revenues to close to 10X many of the Indian
vendors enjoy and b) CIOs who want price points much closer to what Indian
vendors can quote. This will force these outsourcers to finally get serious
about becoming much more efficient with automation, global delivery models etc. They will find Indian vendors expanding into horizontal process consulting and BPO (finance, HR) beyond their traditional IT competencies.
7)
China will look beyond hardware and start to flex its muscle around software and
services. Chinese firms in these categories will start to raise
significant capital and make small acquisitions in the US and Europe to acquire customer channels.
8)
SaaS models will come under increased scrutiny from buyers about stringent SLAs
and business continuity plans. In 2001, after the India/Pakistan nuclear war
threat, Indian vendors went through a similar spike in scrutiny. After
last week's well publicized outage at salesforce.com, this will become a
required due diligence step in evaluating SaaS options. The scrutiny helped Indian vendors mature - it will similarly increase corporate confidence in SaaS.
9)
CIOs will do serious "spend management" around storage (due to proliferation of volume
demand) and telecommunications (due to proliferation of mobile, broadband and
other products) investments.
10)
CEOs will start lobbying Congress to back off on the compliance burden and
pressure their CFOs to significantly streamline and justify compliance spend. The SOX gravy
train for software vendors and auditors will slow down.
This
plus 6 quarters may buy you a cup of coffee at Starbucks! A version customized by Zodiac signs is planned soon...
Author Note: Sandhill.com carries a slightly modified and expanded version of my 2006 Enterprise IT projections here.
Tacit and Transactional skillsets
Interesting research by McKinsey (registration required) on how workforces in most of the developed world are changing as technology and outsourcing keep shrinking the core transaction processing talent needs.
I have seen many managers resist change because their comp plans and corporate recognition still depended on having large armies report to them. I have seen others struggle to transition from people manager to vendor manager as tasks got outsourced. McKinsey is pointing to a major change going on in the corporate world.
December 30, 2005 in Globalization and Technology, Industry Commentary, Outsourcing Negotiations/Best Practices | Permalink | Comments (0) | TrackBack (0)