This year will see every top vendor working to overhaul its application suites to realize the benefits of SOA (service-oriented architecture), a methodology for connecting software components through standards-based Web services in order to ease IT integration. According to Forrester Research Inc., 77 per cent of large enterprises will be actively implementing SOAs by the end of this year. But don’t expect simplification from the SOA trend, note industry observers. While building an IT system from components gives IT managers flexibility, on the flipside, it also means every one of those components has to be maintained.
Over the past 18 months, SOAs have become more a reality, says Don Campbell, vice-president, product innovation and technology, for Ottawa-based business intelligence (BI) vendor Cognos. “It’s still not everywhere, but I think that everyone is really serious about them. Leveraging the infrastructure in the environment is very important.”
In particular, 2006 will continue the trend of focusing on the big IT picture, Campbell notes, as enterprises are perhaps less interested in fringe technologies and more about the core infrastructure and how to support them going forward.
The rising interest in SOA means more interest in BI tools to facilitate the availability of real-time access to live business data. As in 2005, this year will likely see increased use of BI software to spot business trends and figure out how product lines and business units are performing. Specialist vendors include Cognos Inc. and Hyperion Solutions Corp., while platform vendors Microsoft Corp., SAP AG and Oracle Corp. have been expanding the BI capabilities in their products.
“The vendor that can provide the most integration and breadth of solutions is high on (organizations’) lists right now,” Campbell said. Indeed, research firm IDC predicts that IT consolidation in 2006 will drive new patterns of infrastructure acquisition and management; this will help simplify the existing complexity and also help pave the way for implementing a SOA in future.
According to Cognos user Mike Der, senior business analyst for Mark Anthony Group, the current challenges are around managing huge amounts of information and making sure the data is accurate for its mobile workforce. BI software plays a large role in the firm’s operations, including analyzing purchasing data to provide the sales force with factual information needed to negotiate sales. This information is also helpful for improving shelf space and helping to gain profitability for its customers.
Specifically, the Vancouver-based manufacturer and distributor of premium wines and alcoholic beverages uses BI to generate status reports and sales dates to in-house and mobile workers. Standardization will play a big part in 2006, he adds, as the firm looks to improve its IT infrastructure.
“A lot of it isn’t about technical limitations.…It’s about taking full advantage of the software,” Der said. “We have a lot of information and it’s about getting the resources to manage it.”
Productivity Trumps All
IDC also predicts that 2006 will see moderate growth in software spending, a modest increase of 5.5 per cent. This seems to reflect a continuing trend: IT has been moving away from developing new systems in favour of getting more out of existing systems.
“IT departments are going to face ongoing security threats, application and information management/integration issues and the challenge of using IT to deliver on greater productivity throughout the business,” says David Senf, an analyst with Toronto-based IT research firm IDC Canada Ltd. On the vendor side, the large platform players such as Microsoft, Oracle, SAP and IBM, Senf said, will continue to beef up making strategic and tactical acquisitions to grow share into many more niche markets.
Ultimately, it’s about taking the existing software further, said Laura Ryall, an MIS director for automotive lumbar manufacturer Schukra Lumbar Systems in Windsor, Ont. The firm recently upgraded its automated IT infrastructure based on ERP software from SSA Global. The Web-based technology allowed the firm to reduce its data recovery processes by 30 per cent, and order-planning activities from three hours to less than 30 minutes.
This year Schukra will focus on improving its Internet e-tools and improving its BI capabilities for mobile workers. “It’s such a competitive automotive industry…we take our advantages where we can,” Ryall says.
Business is about agility and flexibility for maintaining competitive advantage, says Stephen Ibaraki, an IT professional based in Vancouver. “Not so much in 2006, but over a three-to-five year period expect this to shift to smaller services where costs are budgeted and distributed using pay-as-you go Web services,” he predicts.
According to Frank Gens, senior vice-president of research at IDC, “A critical new ingredient we’ll see [this year] is the acceleration of disruptive business models; ‘open innovation’ in IT product and service development, the open-source effect and online delivery of IT as a service — the Google effect.”
Most of the big marketshare leaders in IT — Microsoft, IBM, Oracle, SAP — got that way by keeping tight control over their own product development, Gens says. “The go-it-alone model of innovation is an endangered species in the IT industry, and incorporating a community-based innovation model — open source — is quickly becoming an important ingredient for market leadership.” In 2006, IDC predicts that building more open innovation communities will be a big focus for IT leaders, including software giant Microsoft.
For example, the Redmond, Wash. vendor launched its Windows Live offerings, along with new Windows Server and SQL Server offerings. Indeed, this year should be big for Microsoft, not only as it prepares to launch its new Vista operating system, but as it works to adjust to the new “seamless model of connectedness” made possible by standardization and technical advances.
This year will host the debut of Windows Vista, the first major update to the Windows client OS since Windows XP. “We’re seeing a shift in (Canadian) IT,” says Andrew Dixon, director of Windows Server System for Microsoft Canada in Mississauga, Ont.
Currently, 70 per cent of IT dollars go towards maintaining existing systems and 30 per cent towards spending to grow the business, but this is changing, Dixon says, adding that enterprises are slowly going to spend more on software.
Microsoft has yet to set a date, but intends to release the Windows Vista OS later this year, said Microsoft Canada product manager Elliott Katz. Despite the consumer-centric features around the upcoming OS, including new digital media tools, Katz notes that Microsoft is also positioning Windows Vista as an enterprise product with nods towards better security, improved network, metadata and file organization and a new Web services architecture.
Industry observers note that users of Windows 2000 are likely to be the first to move to Vista, as vendor application support dwindles for that operating system. Windows XP users have more time, as mainstream support from Microsoft for that software will continue two years beyond the Vista release.
Analyst firm Gartner Inc. is advising its business clients to conduct thorough tests of Vista before deploying the new OS, which could delay their purchases until 2008.