What's in store for 2004?

Summary:IP telephony Hayward makes a distinction between voice over IP (VoIP)--carrying voice traffic over a wide area network as a method of bypassing long-distance calls between offices etc.--and IP telephony, which is using your local area network wiring and special IP telephones in place of your PBX.

IP telephony
Hayward makes a distinction between voice over IP (VoIP)--carrying voice traffic over a wide area network as a method of bypassing long-distance calls between offices etc.--and IP telephony, which is using your local area network wiring and special IP telephones in place of your PBX.

While VoIP is quite mature, and Hayward expects it to reach full maturity by 2006, IP telephony is still less advanced. In those businesses with under 500 phones, IP telephony is relatively straightforward, but may encounter problems interoperating between "multiple small installations or integrating with established PBX networks," says Hayward.

Once you pass the 500-phone mark, there are still features in PBX-based systems that IP telephony can't currently match, but this feature gap will narrow over the next few years. However, Hayward warns that there will be scale issues for installations of more than 2000 phones even after three years.

Utility computing
Gartner distinguishes utility computing--where you pay only for the results of an IT system--from outsourcing, in which you pay someone to own and operate the systems for you. A utility computing customer only cares about the end results; the details of how the provider achieves them is irrelevant. "The arrangement with the provider specifies a function or result to be delivered, as well as service commitments and prices," says Hayward. Pricing is usually on a per-use basis, which is a useful way to handle the cyclical and random fluctuations in demand for IT. Examples of utility computing such as application service providers, storage service providers, and hosting services are already available.

Grid computing
Gartner acknowledges grid computing has received more than its fair share of hype over 2003. Most of it has come from large computing vendors such as IBM, Sun, HP, and Dell, but there has been no shortage of hyperbole from all corners. "Because the term has such cachet, it will increasingly be added to marketing brochures and slide presentations, often with only minor justification," as Hayward diplomatically puts it.

Grid computing is extremely useful for solving very large problems that can be split up into a reasonable number of smaller parts, where the results of each part don't greatly depend on the other results. As you might expect, this technique has many applications in the scientific and engineering world, which is where it originated. Hayward distinguishes a grid from a cluster of computers in that a cluster is owned by a single organisation, whereas the computers in a grid can be owned by more than one. For the forseeable future, Hayward suggests this approach is most suited to large-scale technical problems.

Unified network security
Security problems are currently addressed with a patchwork of independent applications including antivirus gateways, vulnerability assessments, intrusion detection systems, and firewalls. There are overlaps and gaps, and the lack of any unified management structure makes the whole thing difficult and time-consuming to manage.

Hayward expects vendors will develop standardised management tools for security products and all-in-one products in 2004, with significant market share by 2007. However, Hayward thinks content scanning and spam blocking software will remain closely tied to e-mail software and not be bundled with security packages.

RFID (radio-frequency identification) tags
The use of RFID tags in supply chain applications has so far been stymied by the high cost of RFID tags compared with barcodes or other markers. Hayward thinks 2004 will be a big year for RFID, as increased adoption will drive costs down, while early adopters can achieve high value from the advantages RFID has over bardcodes.

Once tags are embedded in products, rather than inserted in the packaging, this will allow manufacturers to track products throughout their lives, which will greatly benefit service offerings. The technology will also provide speed and cost advantages in warehousing, distribution, and retail environments, but these companies will first need to invest in hardware and software to make it work, which could slow the adoption rate, warns Hayward.

The Butler did it
Martin Butler, president of research firm Butler Group says 2004 will be the year of the long-awaited recovery in IT spending.

"Many of the vendor organisations I speak with are simply waiting for the economic climate to improve, since they believe that this will herald a new wave of IT investments. I disagree. Senior management in most large corporations is in no mood to embark on a new IT spending binge, with questionable returns and unfulfilled promises. There will be a pick-up in spending, but this time it will not be to burden the organisation with more IT than it can productively use," he says in a report.

Butler identifies five key areas that will allow vendors to prise open CIOs' wallets.

"The unchecked greed of the early part of this decade brought about its own downfall," Butler sermonises. As a result, organisations will face significant demands to comply with legislation governing corporate behaviour. The US Sarbanes-Oxley Act is the "flagship" for this trend, which Butler says will create a huge market for IT systems to help businesses "manage the information and processes that feed into the financial statements a company makes". Butler estimates this market "will become larger than the market for ERP systems and services".

Companies have wised up from the mad spending days of the dot-com boom and as a result are keen to improve their IT governance practices. The key areas of concern are "alignment of technology with business goals, risk management, portfolio management, and imposing architectural standards on the way IT is used," says Butler. Of course, these practices will need IT systems to support them, in something of a chicken-and-egg paradox, so Butler predicts companies will invest big in IT to better control their IT spending.

Having spent a fortune on enterprise applications like ERP and CRM (see above), companies are now searching for ways to take the vast amounts of data these applications generate and turn them into something of business value. Business intelligence (BI) tools, which were one of very few technologies to show impressive growth in 2003, can help turn those reams of data on business processes and customers into useful business information. Butler thinks 2004 and will be a particularly good year for BI vendors.

The other problem with all these enterprise applications is that they're terrible at communicating with each other, no doubt they were viewed as solving all an organisation's problems, at least by the vendors who were selling them. The logical progression, says Butler, is to integrate these applications as another step towards extracting better business value from them. Butler says 2004 will also be a good year for integration, with both services and technology vendors getting a piece of the action.

Butler thinks 2004 will be the "springboard" year for the growth of outsourcing, including offshoring, and that the market will be worth US$500 billion by the end of the decade. Once again, ERP and CRM will see the largest share of the action, but "using offshore resources will perhaps be the largest of all growth opportunities," Butler adds.

Fran Foo contributed to this article.

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Topics: Security, Enterprise Software, IT Priorities, Networking, Social Enterprise

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