2001, MphasiS. All rights reserved. Ayşe Başar Bener
CMPE 484 IT Industry Trends and
Directions February 22, 2001
2001, MphasiS. All rights reserved. Ayşe Başar Bener
1. What key trends and events will drive new business investments in IT?
2. What technology advances and changes will have the most significant impact on IT deployment decisions?
3. How can organizations harness and exploit IT despite ever-increasing complexity and volatility?
IT Driving IT Driving BusinessBusiness
Business Business Driving ITDriving IT
E-BusinessE-Business
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Business Drivers of the New Economy
Global financial interdependencies Deregulation Unrestricted capital flows Global workforce sourcing Digitization Global communication and
transportation systems New geopolitical realities
E-Business: Drivers and ResponsesKey Business Challenges: Agility and speed Focus on core competencies and processes Customer centricity Mass customization Geographic scalability Flexible IT architectures Interoperability of infrastructure and applications portfolios
New Business Models andStructures: Aggregators Portals Info-mediaries E-tailers Hybrids Virtually integrated Mega-mergers
E-BusinessIntegration
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Key Technology Discontinuities
S/360Mainframe
PC-Client/Server
Web-Internet
1960 1970 1980 1990 2000 2010
10.0%
5.0%
0%AcceleratingBusiness UnitSpending
North America
Western Europe
Asia/Pacific (Dev. Economies)
Total IT Spending as a Percent of Revenue
(Central IS Budget plus Business Unit and “Hidden” IT Spend)
IT Capital Spending as a Percent of Corporate Capital Budget (U.S.-Only)
Fin./Banking 7.70% $26.8K 76% Telecom 7.27 29.5K 70Hospitals 4.10 2.9K 72Insurance 3.57 38.6K 66Services 3.51 8.8K 78Transportation 2.11 2.6K 77Manufacturing 1.80 3.6K 75Utilities 1.32 4.5K 70Retail/Wholesale 1.11 2.4K 73
Central Central IT Baseline/ IS Budget IS Budget Infrastructure % Revenue Per Employee as % IS Budget50%
5%
10%15%20%25%30%35%40%45%
90 1095 00 05
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Increasing Application Cost
Additional Features• Intranet Applications• Interactivity• Personalization• Basic search • Linked sites
Features• Marketing information• Brochures
Additional Features• E-Commerce Integration w/existing processes & systems
• Communities • Streaming Media
• Customer Data Aggregation• Decision Support Architectures
Additional Features• Optimized e-business models• Mass customization• Industry-specific e-process models• DTV Exploited
• Advanced Digital Set-Top Box Apps. • Data Mining • Agent Technologies • Advanced Personalization
1996-1999Presence(CyberspacePlaceholder)
1998-2003Transaction
(Channel Development)
2000-2005Transformation(Channel Exploitation)
IncreasingBusinessValue 1997-2000
Interaction(Channel Exploration)
Phase IIIPhase II Phase IVPhase I
New Media Changes MarketsWeb-Enabled E-Business: Four Phases
Tactical Strategic
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Transactions Not Enabled
Transactions Are Enabled
Low Impact
B2B E-Market Maker Types
HighImpact
Content & Community Portal
ChannelEnabler
DynamicMarketplace
EfficientCommerce Hub
BuyerAdvocate
SellerAdvocate
NeutralExchange
- Prepares the Existing Channel for
E-Commerce
-Brings Together Communities of Buyers/Sellers
- Streamlines the Process Surrounding
E-Commerce Transactions
- Builds Efficient Markets and Assists in Market/Price Discovery
Tra
ns
ac
tio
n E
na
ble
me
nt
Impact on Pricing & Sales Models
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Degree of Possible “Webification”
Book Travel (e-tickets)
BusinessValue
(and difficulty of “Webification”)
Physical Products
Local Services
Digital Products/ServicesIndustry/Product E-Business Benefits
Process Healthcare Claims
Download Music
Conduct Financial Transactions
Order Prescription Drugs
Media Transmittal
Order Grocery Delivery
Schedule Haircut
Schedule Auto Maintenance
Attend Online University
Schedule Surgery
Order Books
Renew Driver’s License
Retail GroceriesRetail Brokerage
Music
Extremely HighVery Low
Indep. Travel Agency
Opportunity/Threat Model
Vote Online
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Comfort
Challenge
Embryonicor Early
Emerging Growth Mature Declining
SalesVolume
Market Maturity Stage
Web-Enabled Mobile Phones
Wireless LANs
PCs
PDAs
Voice Recognition
Notebooks
XML
2-Tier Client/Server
Terminals
Browser-as-
platform
JAVA
ERP
ClientServer
IT Challenge and Comfort Zones
2001, MphasiS. All rights reserved. Ayşe Başar Bener
NowNow 20032003 20062006
NLP & NLP & RetrievalRetrievalWireless Wireless
WebWeb
SpeechSpeechRecognitionRecognition
XMLXML
E-E-PaymentPayment
Image/VideoImage/VideoAnalysisAnalysis
BluetoothBluetoothBiometricsBiometrics
DigitalDigitalAuthorizationAuthorization
Flex. & LEP Flex. & LEP DisplaysDisplays
2010201020072007
2003200320012001
20022002
20052005
TextTextAnalysisAnalysis
AffectiveAffectiveComputingComputing
Synthetic Synthetic Characters/ Characters/
AvatarsAvatars
ASPsASPs
WearablesWearables
Voice Voice PortalsPortalsWebtopsWebtops
Enterprise Enterprise Application Application integrationintegration
EnterpriseEnterprisePortalsPortals
Voice Voice over IPover IP
Smart Smart CardsCards
2010201020072007
2003200320012001
20022002
20052005
60% +
50%
40%
50%
40%
30%
<20%
30%
<20%
TechnologyPrevalence
(% of Companies that really need to care)
Take-off Point(Inflection)
Emerging Technology Radar Screen
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Potential
2005 Forecast (P=0.7) Implications Surprises (P=0.3)Client - One primary business prof. - Continued shift from “cost of - MSFT broken up (P=0.35);
device (2-spindle Wintel laptop) purchase” to “cost to support” - Non-MSFT or browser-- Palm/OS share drops below - TCO continues to rise based clients grab 30%+ 50%; multiple alternatives - 100% of wireless devices market shareaddress unique needs (voice) have Internet connectivity - Network computing becoming - MADs success in consumerprevalent; 3rd Gen NCs succeed segment hits enterprises
Server - “Big 4” (IBM, HP, CPQ, Dell) - Technology and price are - Linux achieves 15% +retain 80%+ Wintel server mkt. no longer key decision criteria market share- mainframe vendors look - Users must find alternative - W2K meets the needsfor scale means for support of 90% of enterprise
application requirements
Network - Policy-based networks - Major network vendors/carriers - Wireless grows from lessimprove network mgt. must source professional svc’s than 5% of traffic in ‘99 to
for policy implementation to 15% in ‘04- Converged data, voice, video - Multivendor networking - Telecommuting backlashservices save 20%, but declines; 6-7 major telcos and low penetration rates at desktop 4 major equipment camps
Storage - Enterprise “Virtual I/O” -SANs are critical pipelines for - Fibre is displaced is still an illusive dream. e-commerce channel - SAN deployment stalls (P=0.2)- Most external storage networked -Disk space (rather than tape) - Disk capacity doubles per year becomes primary backup media- Shared file systems mainstream - Proprietary lock-in issues
Technology Directions: Platform Infrastructure
2000-2005
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Technology Directions: Application Infrastructure 2000-2005
Potential
2005 Forecast (P=0.7) Implications Surprises (P=0.3)Electronic - Platform adjustment & “follow - Authentication issues - 50% of med/large enterp.
Workplace me” profiles emerge for nomads - Infrastructure, Infrastructure! recentralize personal apps; - No single uniform authorization - Human impact (info glut, (P=0.2)!method for access to bus. apps queue mgmt.) - Bleaching the blue collar- Intuitive design supercedes -Integration with enterprise - Internet implodes under content richness for New Media apps an imperative its own weight (P=0.1)
Application - 70% of AD performed by ESPs - No AD silver bullet - Backlash against “vanilla”Developmt. - Internal AD skills: 3GLs 40%; - “Mass or focus” defines packages/templates; return
4GLs 30%; OO/Java/Web 30% enterprise AD strategy to “build” strategy (60% - Integration is the new AD - Procurement/contract mgmt. share of AD) - Regulation and new acct. rules key AD competencyrewrite AD economics
Middleware - 75% of new apps use off-the- - Big growth in real-time integ., - End user rebellion as jobDatabase shelf integration middleware accelerate business processes creativity diminishes (P=0.2)
- RDBMS acquisitions merge - Zero latency moves to a - OODBMS replace RDBMSs with OS, apps and app servers must-have-to-stay-in-business for Internet apps (P=0.1) strategy
Enterprise - 70% of strat. biz app decisions - Big get bigger; share of top 5 - SAP implodesBusiness are front-office/value chain/CRM ERP ISVs grows to 80%; but - MSFT aggressively entersApps. - New players emerge to can’t be all things to all clients low-end enterprise apps
address trading partner systems - ERP market leadership market (HR, financial acct),- 20% of large enterprises defined by vertical expertise gaining 15% shareimplement a front-office suite to - ERP vendors stumble, but - Siebel becomes ERP/CRMenable a CRM strategy eventually competitive in CRM powerhouse (via acquisition)
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Business Process Sourcing and Integration
C-Commerce
Front Office / CRM
Back Office / ERP
Source
PackageApplication
SubscriptionBuiltTemplate / Component
Configured Package
Supply Chain Mgmt. / B2B
Business to Consumer
Process Scope
Enterprise-wide
Market-wide
MoreCustomized
More Commoditized
ERP ‘99ERP ‘05
CRM ‘99
CRM ‘99
CRM ‘05
“PureWeb” ‘99
Type A Type B
TypeC
SCM ‘99SCM ‘05
Integration Intensity
Low
HighSCM ‘05
“PureWeb”‘05
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Connection and Application Paradigm Evolution
ApplicationIntegration
Point-to-PointPoint-to-Point Pre-BuiltPre-BuiltIntegrationIntegration
XML/EAI XML/EAI AdaptersAdapters
Weeks/DaysWeeks/Days Hours/MinutesHours/Minutes Seconds/Real-timeSeconds/Real-timeInfo. Latency
UserUserProductivityProductivity
Collaborative Collaborative InteractionInteraction
E-CommerceE-CommerceTransactionsTransactions
ApplicationParadigm
C-CommerceC-CommerceE-CommerceE-CommerceDomain AppsDomain Apps
EnterpriseEnterprise Trading PartnersTrading Partners Cyber-MarketCyber-Market
InteractionModel
One-to-OneOne-to-One One-to-ManyOne-to-Many One-to-AnyOne-to-Any
CommerceModel
Channel Partners w/ Channel Partners w/ Risk sharingRisk sharing
Channel MasterChannel Masterw/Supplier Slavesw/Supplier Slaves
Channel Master w/ Channel Master w/ Preferred SuppliersPreferred Suppliers
ConnectionParadigm
2001, MphasiS. All rights reserved. Ayşe Başar Bener
2. Envisioning Business Systems
1. Leadership For Fusion
3. Relationship Building
9. Contract Facilitation
8. Business Improvement Management
7. Informed Buying
5. MakingTechnologyWork
4. Information Management
6. Architecture Planning
10. Resource/Skills Management
11. Contract Monitoring
12. Vendor Development
Business and IT Vision
Designing IT Architecture
Delivering IS Services
Critical IS Capabilities and Competencies
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Evolution of CIO Role and Enterprise Governance
Mainframe Era:Mainframe Era:Conventional PlusConventional Plus
• Functional Head • Operational Manager
• Deliver on Promises
• Advisor on ‘How to’ Not ‘What to do’
• On-Time delivery • Reliable operations
• Automate for Efficiency
• Alert Line-Mgmt. to IT Investment Opportunities
Distributed Era:Distributed Era:Transitional, ShiftingTransitional, Shifting
• Strategic Partner• Expectation Manager• Technology Advisor
• Align IT with Business
• Access to the Executive Invited ‘Seat at Table’
• Manage IT Department • Provide Infrastructure• Manage vendors
• Reduce Business Process Cycle-time
• Set Direction and Secure Benefits from “Selective” Outsourcing
Web-based Era:Web-based Era:Hybrid, EmergentHybrid, Emergent
• Business Visionary• Technology Opportunist
• Drive Channel Strat.
• Member of Executive Team or Assumed ‘Seat’
• Jointly Develop Bus./ IT Model; Leverage Extra-structure
• Integrate Client/ Supplier Value-Chain
• Define Office-of-the Future; Lead effort to Customer-centricity
CIO Role
KeyResponsibility
BusinessInput
Major Tasks
System Objective
Leadership
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Workforce Trends Collaborative JIT work styles Team empowerment/performance External focus, customer focus Knowledge vs. task centricity Dispersed and mobile Employability vs. long-term employment Balanced risks and rewards Greater diversity Business-technology savvy
Workplace Trends More collaborative work spaces Universal connectivity Flexible interiors and furnishings Emphasis on functionality Alternative workplace solutions: - Hoteling - Hot desking - Shared offices - Telecommuting
Workforce -Workplace Trends
The workplace is morphing into a blend of spaces and cyber-spaces.
Business processes and connectivity form the new
work ecology!
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Sourcing Strategies
A “Step-by-Step” Approach
• Establish clear goals with strong consensus• Create “supporting” terms and conditions• Define “relative” service level agreements• Develop effective measurements and metrics• Conduct periodic performance audits• Demand continuous improvement!• Aggressively monitor and manage
What’s In? (Retained Internally)
Leveraging ESPs
CIO
N . . 3 2 1
RetainedInternal ISCompetencies
ESP PrimeContractor(s)
Best-of-BreedSubcontractors
IT Management& Governance
Multisourcing• Integrating Business-to-IT Strategy• Business/IT Risk Management• IT Planning, Architecture and Standards• Security Strategy, Intellectual Property• Relationship and Vendor Management• Sourcing Strategies• Skills Management• Financial/Contract Management
• Enabling IT Infrastructure - Data Center Hardware/Software Platform - Desktop Hardware/Software Platform - WAN and LAN Network - Help Desk• Enterprise Administrative Applications• Noncore Business Processes• E-Business Development/Platform• Security Administration/Support
What’s Out? (Commonly Outsourced)
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Business Trends• E-business becomes the primary driver of IT investment; B2B e-commerce reaches $7.3 trillion by 2004, representing 6.9 percent of the global economy• “Hybrid” e-businesses become the dominant enterprise business model, with service quality and fulfillment, rather than cost, the key success factors• 75 percent of enterprises will under-budget e-business transformation costs by 50 percent or more, especially when trading partner related
Technology Directions • Industry consolidation continues: 3-5 dominant vendors control 70 (+) percent market share in virtually all enabling technology markets/segments• Application integration becomes a critical IT core competency, and one of the most important factors to achieve end-to-end e-business success• High availability, security and privacy become critical issues when deploying new e-business applications and infrastructure• Collaborative commerce becomes the primary objective of enterprise application initiatives
Summary and Action Items
2001, MphasiS. All rights reserved. Ayşe Başar Bener
Summary and Action Items
IT Management Directions• Information exploitation and interenterprise operability drive IT management strategies, rather than traditional efficiency/effectiveness metrics/methods• Business processes and connectivity form the basis of the new work ecology• While selective outsourcing remains the dominant IT organizational model, 20 percent of enterprises choose a general contractor to manage the ESP chaos• The fusion of business and IT is about enabling greater enterprise speed, innovation, adeptness and customer centricity