For better or for worse in 2002

For an industry accustomed to answering calls for growth with a resounding, “no problem,” 2001 was, to say the least, a wake-up call. The malaise started early and never let up. The lingering effects of the dot-com hangover were followed closely by the collapse in the network sector. Increasingly powerful worms and viruses continued to emerge out of the ether, inflicting damage on systems worldwide. Then came the shadow of Sept. 11 and a renewed focus on security – or, in some cases, a lack of it. All in all, IT took it on the chin.

The big question is, will the industry get off the mat and get back in the fight, or will 2002 instead find it wandering, dazed and confused, vainly searching for a way back to the glory days? recently asked some of Canada’s leading IT lights what they expect to see in 2002. Here’s what they had to say:

Jon Nightingale, president, Canadian Information Processing Society (B.C.)

The black clouds many industry insiders see hanging over Canadian IT workers have not yet let loose, and don’t seem likely to rain too hard on the West Coast, according to Nightingale.

“It’s still pretty bright out here. You hear doom and gloom stories but on the other hand I work for a small Internet company in (Vancouver neighbourhood) Yaletown which is a hotbed of Internet development and there are still lots of companies around. Not only do they not seem to be going out of business, they are still looking for people,” Nightingale said.

In the “To Keep An Eye On” file, Nightingale, who is also manager of product evolution for Vancouver’s ACT Cinemage Group, suggested a combination of increased bandwidth and disincentives to business travel may well spark interest in online enterprise collaboration tools.

“I think because organizations are leery of travel for both economic and other reasons they are trying to find better methods of internal communication. It’s something that’s been around for a while, but I think these types of computer conferencing applications, like NetMeeting and a few others, are about ready to come into the fore.”

Gaylen Duncan, president, Information Technology Association of Canada

Duncan is breaking the recession-talk trend and offering a dose of optimism.

“In terms of getting back to business, I think business is actually on the upturn,” Duncan said from his Toronto office. “I think we bottomed about six months ago. The bounce back has not yet occurred, but it is going to occur in the next year.”

But Duncan isn’t optimistic about everything. In fact, there is one trend that he feels is positively “unnerving.”

“There is one story that we are hearing and that is that people used to have a two to three quarter view of the market and they were reasonably assured of what their numbers would be and now they don’t know,” he said. “That is a massive change. Where people used to be able to say they were going to grow at X per cent plus or minus, now they are unsure of what is going to happen.”

Duncan sees major developments in government technology procurement and handheld devices as the big issues for 2002.

“I’m hearing that government procurement is running quite healthily right now, compared to large company procurement,” he said. “We have been saying for a couple of years that the government is lagging the public sector. The governments are now on a catch-up campaign.”

And those government workers – along with just about everyone else – are likely to be communicating via handheld computing devices, he expects. “They are just going to explode,” Duncan said. “The fact that you can do everything on this little, tiny device for a lot less money, 24 hours a day wherever you are is driving it.”

Alan Freedman, research manager, servers and storage, IDC Canada

All will likely be quiet on the server front for the first half of 2002 but, as long as the economic impasse breaks, the second half of the year should see a burst of buying activity for midrange and high-end boxes, said Freedman.

“Right now Canadian companies are focussed on buying small servers to fill their immediate needs, but they are going to have to go back to being proactive about planning for capacities and requirements,” he said.

Freedman also suggested that one particular momentum-generating event could well be the release of the second 64-bit processor from Intel Corp.’s Itanium Processor Family (IPF).

“The first processor that Intel unveiled under the IPF was Itanium, but the next one – code-named McKinley – is where they and the server vendors are hoping for volume shipments,” Freedman said.

For it to take off, he added, there are several things that have to happen. “The Microsoft 64-bit operating system has to be unveiled, people have to become more comfortable with running a 64-bit Intel chip, and they have to get porting done for 64-bit applications that were originally created for (mainframes running) Unix, zSeries or System/390.”

“After putting it off for as long as they can due to the downturn in the economy, companies are going to have to start reinvesting in their computing infrastructures . . . and all the major vendors should do OK – but remember, this is all second half stuff,” he added.

Faye West, director of information systems, Alberta Research Council

Powerful viruses emerged on a seemingly regular basis this past year. In recent days, Reeezak caused havoc among PC users havoc, and its predecessors like Melissa, I Love You and Nimda also proved grimly successful in shutting down computers across the globe. And while the infestation will continue, it’s not because the hackers are any more brilliant.

“I don’t think the hackers are getting smarter. They continue to do the same old thing over and over again and we fall for it,” said West.

But as Internet use continues to rise and the technology gains acceptance, she said it will become everyone’s responsibility to protect their data – and the Internet itself.

West added that mergers within the information technology industry will continue based on the same trend that has already occurred among insurance, law and accounting firms. Economies of scale dictate that companies will inevitably merge because of their financial state or because merging will lead to consolidating of resources and technologies, such as the proposed HP/Compaq deal, she said.

Hung LeHong, e-business research director, GartnerG2 Canada

2002 will see e-business inch closer to being adopted as regular business practice, predicted LeHong

Through e-business pilot projects, particularly in the consumer product areas, B2B standards (like UCCnet) are starting to mature and become more widely accepted in the industry, LeHong said.

“I don’t know if (2002) is necessarily going to be a turning point, but the level of acceptance will go up one notch for those types of standards,” LeHong said.

“At the same time we will probably see some consolidation of some of the B2B exchanges and the technologies that exist as services for the retailers and the manufacturers within that space. From B2B and consumer products standpoint, that’s what I would say is going to probably develop in the next year.”

LeHong said the term “collaborative commerce” is going to have a lot more meaning as standards progress.

“[That’s] because the standards I talk about have to do with trading item information, being able to see inventory either at your customers or at your suppliers site – so those kinds of collaborative processes will become a lot more new,” LeHong said.

“The concept of e-business being consolidating transactions in a marketplace, that’s going to fall by the wayside. They don’t exist in commodity areas for sure I think collaborative commerce will be a lot more real in the eyes of many of the retailers and suppliers out there.”

LeHong noted that from a consumer standpoint, e-business security will be critical to the future of e-business.

“There won’t be a solution in 2002 but there will be momentum in that direction because companies are going to demand that something be done, maybe even from a government standpoint, to ensure that security standards be there because we can’t place commerce through the Internet without it,” LeHong said.

Alex Ferworn, computer science professor, Ryerson University

All bets are off when it comes to the technology industry in 2002, says Ferworn.

“Let me look at my glass-monkey entrails,” he said. “I have no idea and no one else knows either. If you go and read Report on Business, everyone predicts that ‘There may be a soft recovery in the next quarter,’ but these are the same guys who didn’t call it a recession for six months. I suspect the economy will pick up when people put cash into the market again.”

What Ferworn was willing the wager was that Web-based services won’t see the kind of growth it has enjoyed in the past.

“I would expect there is going to be a contraction in Web-based services in 2002,” he said. “There isn’t enough money out there to run some of these companies even, so it costs a lot of money to run a Web site. People are a lot more focused on what their core business is.”

That means consumers can forget about companies covering the costs of shipping and handling and other incentive deals. “You will have to pay what it is worth and, right now, it is better for them if you walk through the store door,” he said.

And because companies are seeing hard times, employees are feeling the hit as well. “There’s no money,” Ferworn said. “I was talking to an IT recruiter today and he had 600 applications for consulting positions in November and he had zero jobs.”

Ferworn also has an idea what the hot item will be for next year. “If it has something to do with golf, someone will buy it,” he said. “I saw a virtual reality, improve your putt thing on the way to the train today. It’s amazing, what we can build really well – bombs that destroy mountains and things to help us play golf.”

Dan McLean, networking analyst, IDC Canada

While McLean doesn’t like to tempt fate, he still predicts that the networking industry should see modest growth in 2002.

McLean expects to see major changes next year for the network equipment market.

“There will be growth, but it will be fairly conservative and it also sort of depends on what spaces you look at…in the communication and networking equipment (space), there is growth that is being seen, albeit fairly conservative. I think that the big growth area in IT next year is in around services,” McLean said.

“I think that it’s been a very successful market – a lot of services companies have done really well in 2001 and I would expect that to continue in 2002. Whenever companies feel the pinch in an economy, they start looking closely at the dollars they’re spending, particularly around IT.”

The big news item, McLean said, is how the proposed Hewlett-Packard/Compaq merger plays out.

“I think that that’s one definitely to keep an eye on because of the implications that is has for the industry. I think that when that one came around it caught people kind of blindsided just because of the magnitude and the scope of the proposed merger,” McLean said.

“You think that when two companies of this size and magnitude consolidate whether it will send a signal throughout the rest of the industry,” he added, adding that companies might try to increase competitiveness through such mergers.

The fates of network equipment companies such as Nortel and Lucent are also up in the air heading into the new year, McLean said, but noted that consolidation is and has always been the trend in the networking industry.

“I think you’ll see more of that and I would name Nortel, Cisco and Lucent, as the big three companies that would probably look to focus on more of their core businesses and marry or pair off certain investments that they’ve made over the years that they don’t think have a tactical payback, and really look at the core of what they do well, McLean predicted.

“Next year will continue to be the period of consolidation where companies probably won’t do a whole lot to expand into new areas of businesses but will instead look to kind of strengthen the positions that they have in current markets.”

Rob Ashe, chief corporate officer, Cognos Corp.

The information technology industry of 2001 can be compared to this past fall’s World Series classic between the Yankees and Diamondbacks – it had it all, except the game-winning hit.

What happens next, what trends will continue or crumble in the upcoming year is the big question.

“From a security perspective, people will continue to break down the walls between themselves, their customers and suppliers. It’s more of an open exchange of information and data. Security will only become more important,” said Ashe.

For one-time industry giant Nortel Networks and its competitors, the future may not be so bright. Ashe said network systems have already been over-built; the infrastructure sector on the whole could experience stiff challenges in the New Year. He added that the evidence he has seen to date, the projections for the over all IT sector next year is “flat to down”.

Organizations have really begun to look at its return on investment (ROI) in the latter stages of this year, a trend that will continue, said Ashe. “We’re in a market right now that is kind of being over-ridden by technology issues. The focus now is on ROI, the number one thing on people’s minds these days.”

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