Come the start of any new year there is a continuing trend of predicting the future by all the soothsayers in any industry. Well I thought I would add my penny’s worth to the predictions for the forthcoming year. I have done this as a targeted report for private clients in the past – this is the first time that I have done this for the industry in general.
Consolidations
Oracle
Oracle Corporation boasts that its licence revenue is up by 38% and this is without any fusion of the product offering that has been promised for this year. Oracle has broadly three areas of expertise:
- Database
- Middleware; and
- Applications
On the Database front – Oracle remains the corporate power database (despite advances from Microsoft). Its Data Warehousing offerings are now maturing. Oracle has primarily grown its capabilities by internal development. This author’s greatest concern is their adherence to the Warehouse Builder ETL tool – this is so far behind the competition that any organisation looking to build powerful solutions will look elsewhere for their integration/ETL tools (often Informatica). By comparison Microsoft’s offering in this area has become considerably smarter as an out-of-the-box offering.
I have over the past few years wondered why Oracle has not sought to purchase externally to make-up its deficit in the ETL market. Informatica and BPEL would make a powerful pairing. The development toolset continues to expand, but one weakness relates to tools for the SQL DBA or developer, where TOAD, DB/Artisan, and SQL Navigator continue to lead the field over Oracle’s SQL Developer offering.
Adding the Hyperion product line to the Oracle product set strengthens the Business Intelligence offering available, fitting alongside and complementing the Oracle BI Suite.
It is still early in the year but I do not see the application products being fused yet. In order for this to happen there and (and always were) significant challenges - for instance product offerings that do not easily meld together. Fusion is not simply a case of joining products together and hoping they fit; JD Edwards, PeopleSoft, Siebel, and Oracle E-Business Suite all offer Customer Relationship Management capabilities – these cannot simply be parcelled together with a cut and paste job. Fusion requires much re-programming.
Oracle has, generally, a good track record for not delivering before a product it is ready for market. The fused application offering may have an exciting future – but in the immediate period the user community will be nervous awaiting the news of what features will change (or even disappear) from their products.
Microsoft
Whilst Oracle has been busy transforming itself into the major corporate applications vendor Microsoft has not exactly silent in developing its offerings. The two companies do have some differences in focus (particularly as Oracle does not have any competitor for the operating system, “Office”, or games markets – and they show no intent to enter those marketplaces). They do share competition for the Database and Business Applications arena.
Microsoft’s growth within the application arena has also been based on acquisition, particularly with the building of the Dynamics product line. This product line is perceived as less widespread, or powerful when compared to some competing products. CRM is perhaps the best known of this product set. This commentator believes that Microsoft is looking out for other acquisitions to add to the Dynamics product line – as they do this they will be faced with similar problems that Oracle faces – which functions to retain and which to remove. Microsoft’s history is that they tend to remove functions they either do not understand or find awkward in the product set.
The Microsoft application acquisitions are arguably less scalable to the larger corporation than those provided by Oracle. I see fewer issues of scalability now than when the Dynamics applications were first purchased. This is largely because of the underpinning by the latest version of the SQL Server database platform. Any Corporation that uses the Microsoft database should have upgraded to 2005 by now to plug into the extra power and stability.
The Acquisition of ProClarity enhances the Business Intelligence offering and users should consider upgrading to Performance Point Server within the next 6 months in order to benefit further .
In the last 12 months Microsoft has made considerable headway in identifying its future product positioning and is starting to deliver against that plan, which is to be applauded.
IBM
Big blue has continued with its acquisition path. However with such a wide spread of applications it is not always possible to identify where the offerings will end up. Two notable purchases during 2007 were Data Mirror and Cognos.
When the Data Mirror tools were acquired I anticipated that they would be added to the Ascential toolset (now part of the growing Websphere family) but this has not yet occurred. I suspect that this acquisition was more about obtaining a new customer list than adding to the toolset (although good features will be stripped from Data Mirror).
The Cognos acquisition is a totally different category. Cognos has always been database independent with a large percentage of its market being Oracle based. It adds a more complete BI tool to IBM’s product set. Few of Cognos’s Oracle database customers will be interested in a move to DB/2 – this offers no advantage.
IBM will continue to grow by acquisition. This commentator is not convinced that they have any specific plan other than to build the product portfolio of the company that is very diverse due to its operating system and database mix.
One Size Does NOT (Necessarily) Fit All
These corporations and SAP would like to provide a single solution that works across the entire customer enterprise. Is it possible to provide such a solution? The simple answer is yes – not that any software vendor is in a position to do that today. This is at the heart of the corporate acquisitions.
From an end user business community perspective is such a solution desirable? Probably not. Software vendors are losing sight of that fact that software should be a tool to empower the business community. At least one of the top-tier software suppliers has a reputation for forcing customers to change their business practices to fit their software – this approach is no longer acceptable as it increases implementation costs. Good software is made to support business processes. It is for this reason ultimately that it is unlikely there will ever be a “one vendor fits all” solution. Oracle, Microsoft, IBM, and SAP will of-course argue the opposite.
The time has come for a return to implementation on a best-of-breed basis. The best production line solution does not come from the same company that produces the base accounting software. Single vendor solutions are a panacea that is best forgotten.
Other Software Vendors
Investigating the market over the last few months I have noticed that acquisitions seems to be the rule of the day. Specialist software suppliers, who have etched out a unique market focus are being acquired by other software vendors (who operate in complementary marketplaces). These mergers are not from the big-3 but by smaller vendors. This trend is likely to continue throughout 2008 and 2009. The attentive CIO will check what is happening to your proposed vendor before finalising that agreement.
Offshore Services
The two major offshore centres are currently India and China. Growth will continue for the Chinese at the expense of the Indian service providers. Throughout North America public opinion is increasingly against offshore service providers with demands for services to be brought back under internal control, particularly relating to help desk and customer services operations.
One thing that must be remembered when considering a new relationship is that prices are rising across India and salaries are rising for Indian developers, thus they are no longer as cost effective as they once were, particularly as the value of the US dollar falls.
Something to Enjoy
At least one part of the IT market is booming at the moment. In North America for 2007 two of the top 10 titles in the entertainment industry were both computer games – this is fantastic news. I expect this trend to continue.
Delivering Value for Money
Downturn in the USA
With a full-blown shrinkage underway in the US economy this will have an impact in IT budgets, when compared to 2006 or 2007. The manufacturing sector is likely to be impacted most with also financial markets being impacted. This means that CIO budgets will be tight for 2008. The US economy has a similar impact on Canada, Mexico, and the EU – eventhough these economies are not suffering an economic downturn at the moment.
The CIO will be charged with delivering value for money in the current period, as budgets are reined in. When I make such a statement I always feel this should be top of the agenda for any project delivery at any time, not just in a recession – but we all have to realize that value for money is always tested most during an economic downturn. Development is always an ongoing demand – the business community cannot to afford to wait till next year to make essential changes.
Deployment effectiveness
IT departments must remember their reason for existence – to facilitate business through interactive systems. A major aim has always been to aid profitability improvements, this is by either reducing costs or facilitating business development. IT should be a business facilitator providing accurate, flexible, and cost effective deliverables. Value for money implementations are more important now than ever before.
All system deployments will require realistic justification. True business benefits must be identified. The aim is to clarify for the decision makers the expected overall direction of the proposed project in order to support the financial justification. This can be aided by:
- Incremental or staged deliverables focused on the needs of specific business units
- Ensue a consistent approach is adopted for all deliverables
- Adopt a quality first approach – have you adopted corporate-wide business rules, common terminology, and master data management?
- Remember the technology base we are delivering against is undergoing significant change with all vendors adding to their product portfolios.
The best ROI occurs when projects are deployed to the business community faster. By this I mean we look in a delivery cycle for early quick wins and deliver to these within a short time-box. Time-boxing deliverables into a 6 to 12 week delivery cycle has a positive impact that the business sees results earlier and starts to adapt to new business processes earlier. It is not necessary to have all functionality working at the same time but project managers should take on a rolling delivery plan, delivering new functionality at planned and agreed regular intervals.
Short sharp deliverables can stop the focus on the legacy system problems that can get in the way of traditional waterfall type deployments.
The positive impact is that IT is seen as delivering rapidly and is continuing to deliver. The negative side of this approach is that some problems are not as easy to resolve as first thought. Therefore a stage may need to be delivered minus a critical component (which becomes a separate deliverable available as the next project stage). This approach works whether one is delivering custom coding or configuring pre-built business software.
Being frugal in project budgets should not mean sacrificing quality. The CIO needs to make the most of their available budget and spend it in the right areas.
System and hardware costs will need to be controlled – there will be no opportunity for a second dip at the budget – if you have not included a contingency for unexpected costs then try to negotiate these now! Please also take this opportunity to ensure your network is up-to-task. Ask your software vendors for an update on licensing costs (particularly if your software vendor has been acquired by one of the larger software vendors) – ensure you include all software tools in this assessment.
If such an option exists it may be wise to defer some costs till 2009 either by delaying project start dates or making suitable deals with suppliers, then take it.
Master Data Management
One of the keys to delivery effectiveness is the ability to manage data effectively. It has take a long time to ensure that corporations recognise their data assets, but this is now starting to occur. Understanding data ownership is key managing this asset correctly. This applies to customer, supplier, and product data alike.
Data should be managed by the IS department, but should be an asset controlled by the business community. For example it is the business who must ensure that we have full and correct details of the customer. Customer Services departments who maintain contacts with the customer should continue to check that the data held is up-to-date and correct. In some instances customer self-service web sites add an asset. Ultimately customer data will be stored into the CRM (or a customer database)
The IS responsibility is to ensue that the data is mastered correctly and disseminated to all systems requiring customer data. Ensuring that we maintain one master record per physical customer is still a challenge in some organisations.
The challenge during 2008 is to ensure than an effective Master Data Management strategy is put in-place that recognises data mastering to be a joint responsibility. Now more than ever before a corporation lives o dies on the quality of its data.
Privacy Laws
The requirement that applications, systems and databases obey privacy laws has never been more paramount. Privacy is the expectation that confidential personal information disclosed as a matter of business will not be disclosed to third parties. This has been a hot topic in both North America and Europe for the last 5 years and continues on the agenda. In the recent past USA has been criticized for not valuing personal information and data enough. It has created serious problems between the U.S. and European Authorities and continues to be the cause of trade and information security friction between the two economic zones.
Corporations needs to ensure that they maintain the right level of security to ensure customer data is not stolen. There have been some notable instances in the past year that have seemingly occurred as a result of gaps in corporate firewalls. Sometime it seems that whatever action is taken is not enough.
Corporate vigilance is required. Privacy is not simply in the Information Services domain – it is a business issues and the whole organisation requires the training and know-how to identify areas where the organisation can have weaknesses.
Technology Advances
One of the advances in the last couple of years has been in the area of multi-core chipsets. Its development improves energy efficiency of computers. I expect to see more deliveries using quad-core technology specifically in the server arena, as the foundation for the new data-centre. I also expect to see the number of “cores” increase in the chipsets.
There has been a long-running argument by the Apple Mac community about the superiority of their operating system over the PC – particularly as MAC pokes fun at Vista’s short-commings. The introduction of the Mac operating system on the Intel platform makes for an interesting future. I have heard that Dell is already considering selling the Mac operating system. I think this is an interesting scenario the leading corporate PC vendor adding an operating system to their portfolio, how many other vendors will follow suit?
Can this also provide an avenue for a supported Linux growth path? By the way that other apple wannabe icon the iPhone does not seem to be making the market inroads that were predicted for it as other smartphones seem to be holding their market share, with Nokia, Motorola, and Blackberry holding their own. This whole sector of the telecom market is expected to continue growing in 2008.
Will the High Definition disk war come to an end in 2008? There is some speculation that the Blu-Ray standard may be winning – but as soon as I say that someone will almost inevitably say the opposite. This commentator has been hesitant to buy any such device on the basis that I cannot predict the winner of this argument and I don’t want to be left holding a pink elephant.
…In Conclusion
2008 offers tighter IT budgets but for the astute IS manager there are more opportunities than ever before to work hand-in-hand with the business community. The key wins these year will be where IS provides real business benefit. Information Technology should simplify business processes – the tools are readily available to provide this capability it is a matter of implementing them.
