– IT Trends in 2005

Last updated on: October 20, 2005 at 4:23 pm by Desh Kapoor

– IT Trends in 2005 2005-10-20T16:23:56-05:00 Desh Kapoor

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Here is a summary of a report from Gartner on the IT Trends in 2005

In a new special report, Gartner, Inc. outlines key issues and projects adoption rates on five topics that the industry-leading research firm is encouraging clients to actively manage in their information-technology (IT) programs and budgets this year. The topics include open-source software, voice/data convergence, service-oriented architecture, IT utility, and global sourcing.

“These five trends represent inevitable and irrevocable shifts in the information technology landscape,” said David W. Cearley, a Gartner Research vice president. “In the face of such shifts IT decision-makers must ask – ‘When do I have to face up to this, or end up left behind?’ and ‘How do I actually get some business value out of this?’ ”
“Service oriented architecture (SOA), open source software (OSS) and IT utility together drive a fundamental change in how applications are built and delivered,” he said. Voice/data convergence and global sourcing will also be disruptive forces in the IT industry.

Mr. Cearley is a co-author of the report, “Gartner’s Positions on the Five Hottest IT Topics and Trends in 2005.” Other authors are Jackie Fenn, Gartner Fellow and vice president, and Daryl Plummer, Chief Gartner Fellow and group vice president. All three are specialists on emerging business and technology trends and how these trends shape the way individuals and companies derive value from technology.

“The research we summarize in this report confirms why Gartner’s past and current advice to clients on these issues is more urgent than ever,” Mr. Plummer said. “IT leaders need to address these five topics and trends as high priorities — not only for the success of their company’s technology strategy, but also for the success of their company’s business.”
Voice/Data Convergence

IP Telephony and VoIP, new communications technologies made possible by the Internet, will drive voice/data convergence activity in more than 95 percent of major companies by 2010. This will lead to new classes of business applications, and cause the greatest upheaval in the telecommunications industry since its founding. Also by 2010, 40 percent of companies will have integrated their entire voice and data networks into a single network, and more than 95 percent of large and midsize companies will have at least started the process.

By 2009, half of the Tier 1 network service providers will have merged or been acquired. Through 2010, price decreases of 15 percent per year for data services, and 7-to-15 percent for voice services, can be expected. However, traffic growth of 30-to-60 percent means network budgets will grow 5-to-10 percent per year.

Service-Oriented Architecture

Developers will shift their focus to business processes and away from software functionality. In turn, software will become a facilitator of rapid business change, not an inhibitor. The value creation in software will shift to subscription services and away from packaged software, and to composite applications (i.e., best of breed) and away from monolith suites.

By 2006, more than 60 percent of the $527 billion market for IT professional services will be based on Web services standards and technology. By 2008, 80 percent of software development projects will be based on SOA. The distinction between software integrators and vendors will blur as packaged applications are broken apart and delivered as service-oriented business applications.

Open-Source Software

OSS will not destroy industry giants, such as IBM and Microsoft, but it will revolutionize software markets by moving revenue streams from license fees to services and support. In doing so, it will be a catalyst that restructures the industry. OSS refers to software whose code is open and can be extended and freely distributed. In contrast to proprietary software, it allows for collaborative development, and a continuous cycle of development, review and testing.
By 2008 95 percent of Global 2000 organizations will have formal open-source acquisition and management strategies; and, OSS applications will directly compete with closed-source products in every software infrastructure market. By 2010, IT organizations in Global 2000 companies will consider open-source products in 80 percent of their infrastructure-focused software investments and 25 percent of their business software investments.

IT Utility

This mode of computing, based on real-time infrastructure (RTI) architecture, enables companies to increase their flexibility in delivering IT business services. Instead of having to dedicate resources to specific roles and processes, companies can rely more on “pools” of multifaceted resources.

The resulting improvements in efficiency will enable large organizations to reduce IT hardware costs 10-to-30 percent, and labor costs 30-to-60 percent, as service quality improves and agility increases. By 2010 large companies typically will fulfill 25 percent of application demands from shared, rather than dedicated, sources, and 30 percent of their software will be delivered by external pay-as-you-go providers.

Global Sourcing

Global sourcing is an irreversible trend in delivery models, not a cyclical shift. Its potential benefits and risks require enterprise leaders to examine what roles and functions in a given business model can be delivered or distributed remotely, whether from nearby or across the globe. The political, economic and social ramifications of increased global sourcing will be enormous.

By 2015, 30 percent of traditional professional IT services jobs will be delivered by people based in emerging markets. India will continue to play a significant role, but by 2008, the most likely sources of additional labor will include China, Russia and Brazil. Labor rates for application services in India will rise 40-to-60 percent by 2008 from the levels of 2004.

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