According to Reed, corporate enterprises are going to spend their IT budgets on technologies that help extend their business, which means a focus on back office processes, not hot products.
Reed’s biggest prediction? That the on-demand software model, known as software-as-a-service, will see escalating corporate adoption, especially in SMB and mid-market companies. Long term, this trend has the potential to cause a ripple-effect in the industry, decreasing the need for both corporate software and hardware purchases. Reed says to watch for shifting priorities among software and hardware vendors as the trend of software-as-a-service sweeps away old business models.
Reed oversees the technology deployment for Logicalis’ customers, representing a wide range of industries—including financial services, manufacturing, healthcare and retail. He says it’s just that perspective that has helped him develop some important IT trend predictions for 2006.
These trends are more like waves that have been approaching the enterprise shore for some time and are going to crest in 2006, sometimes with unsettling force for those who are not prepared. Based on Reed’s assessment of customer IT priorities, he has developed The Logicalis Top Technology Trends to Watch in 2006:
Software-as-a-service will become a corporate standard. Driven by a common sense, pay-as-you-go approach to software needs, Logicalis believes that 2006 will finally be the year when the ability to purchase hosted software, such as customer relationship management applications, email and enterprise resource planning packages, is fully embraced by corporations.
“Software-as-a-service represents a profoundly different business model for the enterprise IT community,” says Reed. “Some examples are Microsoft Live, Salesforce.com and MySAP, just to name a few. This will be a win for customers, but it may cause some pain for vendors as the model turns some traditional enterprise servers and applications into a utility play.”
Service oriented architecture will be the glue that binds. Web services and service oriented architecture, which serve to expose and link data sources among partners, will continue to be prevalent in the enterprise as companies increase their ability to integrate back office systems to suppliers and partners in order to drive revenues.
Reed comments, “By exposing their data and making application programming interfaces (APIs) readably available to the rest of their supply chain, companies can drive down costs and inefficiencies.” Furthermore, this trend will drive the adoption of “software-as–a-service” as companies are able to expose critical data to outside vendors who can then integrate it in to applications that don’t need to be inside the corporate firewall.
Software will become more “verticalized.” Corporate IT will benefit from a renewed focus on vertical industry-specific solutions and business processes by large enterprise software companies like IBM and HP. IBM WebSphere is already being used to develop industry-specific portals. And HP OpenView is being enhanced to drive actual business processes.
“This ‘verticalization’ of enterprise software will also increase the pace of M&As in the software industry,” says Reed. “Keep an eye on service oriented architecture (SOA) companies like BEA and Tibco. These represent solid acquisition targets for the IBMs of the world.”
Security & Compliance will become more important, and more complex. SEC regulations for public companies, privacy regulations for industries such as healthcare and the increasing use of mobile devices and IM at work will continue to place an enormous strain on enterprise IT resources for security and storage. Couple this with the fact that the current Internet architecture is inherently “insecure”, and security will remain a focus for the IT world.
“Secure email archival and retrieval for compliance will be top of mind for many companies. Enterprise workers will require more network-level and application-level secure data access,” comments Reed. “Watch for companies like EMC and Cisco to provide more secure storage and network access, and IBM and Microsoft and HP to provide more identity management and enterprise-wide authentication.”
2006 will be all about access. The consolidation of voice, video and data networks coinciding with the explosion of powerful mobile devices – combined with the trends above – will begin to remove any remaining barriers to the “virtual corporation.”
“We’re seeing more converged devices on the horizon that will directly connect end-users with corporate data,” predicts Reed. “Dual mode VoIP-over-WiFi-cell-phones from companies like Motorola and continued Blackberry and Treo penetration will ensure real-time, multi-channel access to corporate network assets.”
“And maybe a few new industry acronyms,” jokes Reed.
Logicalis (logicalis.com) is a global provider of high-performance technology solutions. Logicalis and its affiliated companies employ 1,000 people worldwide, including highly-trained service specialists who specify, design, deploy and manage IT infrastructure to meet the needs of over 5,000 corporate and public sector customers. Logicalis maintains strong partnerships with technology leaders such as HP, IBM, Cisco and EMC.
Logicalis is a part of Logicalis Group, a division of Datatec Limited (DTCJ.J), a $3 billion business listed on the Johannesburg Stock Exchange. With its international headquarters in the UK, Logicalis Group will have annualized global revenues of approximately $700 million from operations in the U.S., UK, Germany and South America. In North America, Logicalis’ annualized revenues will amount to some $450 million with nearly 400 employees in the U.S.