2001: A year of stark reality

The impact of 2001’s dramatic events will ripple well into next year as IT departments readjust to dramatically altered corporate priorities.

The rapidly declining economy, coupled with the tragedy of Sept. 11 and widespread changes in corporate spending patterns, saw many senior IT executives looking at emerging technologies in a new light.

Bold, long-term e-business plans with vague payback promises were cut midstream as the focus returned to the IT fundamentals: return on investment (ROI), short-term gain, and leveraging existing infrastructure.

“For us, 2001 was focused on managing costs and tying technology investments to business benefit,” said Staples.com CTO Mike Ragunas. “We haven’t invested a lot in noncore technologies.”

The pragmatic approach sent shock waves through much of the industry. The telecom and networking equipment vendors gasped under the collective weight of dot-com failures and stalled infrastructure build-outs. The hardware market hurtled toward commoditization, leaving companies scrambling to reinvent themselves as services companies or to consolidate – most stunningly illustrated by the proposed megamerger of Hewlett-Packard Co. and Compaq Computer Corp.

B-to-b endeavors shifted away from the hype around third-party online marketplaces to more practical solutions such as SCM (supply-chain management) and consortium-led private exchanges.

Meanwhile, companies peddling security, disaster-recovery, and storage technologies received a boost, as the events of Sept. 11 and a rash of worm and virus assaults exposed the vulnerability of IT infrastructures.

Perhaps most telling of the IT priority shift was renewed interest in EAI (enterprise application integration) and the emergence of real-world Web services plans. As a result, it was a true coming-of-age for XML.

Finally, it was a big year for Microsoft Corp., which launched Windows XP in October and rode out its antitrust case to a now-pending settlement with the government that many critics call a slap on the wrist.

Events in key enterprise technologies illustrated the dramatic changes of 2001, and pointed to the coming year’s priorities.

Application development

Although still very much a nascent technology, XML-based Web services promised to change the way applications are designed, built, and, ultimately, consumed. And with the backing of the industry’s heaviest hitters in 2001 – IBM, Sun, HP, Oracle, and Microsoft – Web services standards such as SOAP (Simple Object Access Protocol), WSDL (Web Services Description Language), and UDDI (Universal Description, Discovery, and Integration) began to make their way into products.

Yet all is not warm and fuzzy. The industry appeared to polarize around two camps: Microsoft’s .Net framework and Sun Microsystems’ J2EE (Java 2 Enterprise Edition) platform.

Sun used the launch of its Sun ONE (Open Net Environment) initiative, the success of Java, and an ever-expanding J2EE community as a weapon to attack .Net as Microsoft’s underhanded way of controlling what is supposed to be a standards approach to integration.

Simon Phipps, chief technology evangelist at Sun, accused Microsoft of building Windows APIs into the .Net environment to the detriment of open standards. Yet Microsoft executives argue that it has an emerging role as the company that keeps choice alive in a J2EE world.

B-to-B and enterprise apps

Public exchanges fizzled from lack of participation after riding high in early 2001 on projections that buyers could obtain substantial savings by teaming up online with other buyers to knock suppliers down on price.

The traction around private exchanges left traditional ERP companies such as Oracle and SAP sitting pretty, while former darlings Ariba and Commerce One struggled with massive losses.

SCM stepped up in 2001. Vendors such as i2 Technologies, Manugistics, and J.D. Edwards offered manufacturers solutions to gain visibility into the supply chain and allow them to work collaboratively with suppliers.

Finally, CRM fixed itself firmly on the map as companies turned away from monolithic applications to modular, more easily digestible versions that also included data analysis functions. Market leader Siebel launched Siebel 7, putting a thin-client Web interface on the company’s CRM applications.

Networking and telecom

To say it was a rocky year would be an understatement. In the telecom industry, carriers big and small all suffered. Granddaddy AT&T, reeling from declining voice revenue and the failure of managed services such as VPNs, hosting, and VOIP (voice over IP) to take hold in the enterprise, decided to split itself into four pieces and spin off its wireless and cable businesses, which merged last week with Comcast. DSL upstarts such as Rhythms, Northpoint, and Covad toppled – some of them leaving end-users without service.

On the hosting front, industry pioneer Exodus went bankrupt, being bailed out late in 2001 by Cable & Wireless’ intentions to buy it.

And it was all bad news for network equipment vendors as dot-coms died and enterprise customers opted to squeeze more value out of existing networks. Networking technologies reflected the delivery of more services over traditional infrastructures such as Ethernet over copper. Another push entailed methods of fine-tuning network performance through intelligent routing platforms, smart-edge devices, and network management.


Alliances between wireless carriers, handset manufacturers, and software vendors with mobile operating systems became commonplace as vendors such as Nokia courted software developers to build applications for their products.

For enterprise customers that wanted to incorporate wireless into their networks, wide-area wireless fell short on delivery of more reliable voice service and high-speed data services. Likewise, deployment of 3G (third-generation) 1X services and 2.5G or GPRS (General Packet Radio Service) was little more than vaporware.

On the other hand, wireless LANs using the 802.11b standard are proving themselves as a way to reduce costs by allowing mobile employees, such as those on factory floors and warehouses, to be tied into the corporate network.

In hardware, Intel’s 64-bit Itanium processor, introduced in 2001, is expected to drive more consolidation. As profit margins shrunk and demand fizzled, it was the first time in history that PC sales had ever witnessed negative growth.

Top trends of 2001

Microsoft gets away with it?

Microsoft critics say Bill Gates has reason to smile after the company avoided the threat of a breakup and escaped a harsh antitrust settlement.

Web services take hold

IBM, Microsoft, Sun, Oracle, and others embraced Web services and began to implement standards such as SOAP, UDDI, and XML into their products.

Telecom crumbles

AT&T hit the skids and decided to break up, while upstart carriers, DSL providers, Exodus, and WorldCom suffered devastating declines.

Networking stumbles

Networking equipment vendors sank badly after losing telecommunications sales. Cisco dropped $3 billion in revenue, and Nortel laid off approximately 45,000 employees.

Year of the plague

The likes of Nimda, Code Red, Badtrans, and Anna Kournikova infected millions of systems.

Sept. 11’s call to arms

IT departments everywhere got a wake-up call to secure their infrastructures and implement disaster-recovery plans.

HP-Compaq: Marriage made in heaven?

The merger of the year moves to shaky ground as investors and heirs of HP’s founding fathers raised objections.

Death of exchanges

The public exchange buzz fizzled as enterprises turned instead to creating private exchanges and managing supply chains.

Whither the mighty PC?

For the first time in history, PC sales declined in the United States and Europe.

Storage surges

Buoyed by insatiable demand and healthy margins, storage vendors attempted to solve the critical user issues of storage management and interoperability.