experture predictions for 2009: grc and security /rfg · infrastructure library (itil ... tinkered...

December 7, 2009 Executive Technology Strategies ETS 09-12-02

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Predictions for 2009: GRC and Security RFG believes 2009 will be a year in which executives focus on the 3Cs – cost, capital, and compliance – and, of course, revenues. This will result in

cancelled or deferred projects, outsourcing of non-core functions, and a push for better procurement deals. This will be reminiscent of 2001, when executives remained very short-term focused and budgets were revisited at least monthly. Compliance will be top of mind driven by auditors, governments, oversight boards, and regulatory agencies. The decade of unfunded mandates not only continues but will get even more onerous in 2009. Executives will be greatly challenged to comply with the new rules, as much of it will be in uncharted territory and the underlying standards and tools will not exist. Security and privacy issues will not diminish; in fact, as the shift to cloud computing, service-oriented architecture, software as a service, and virtualization gains momentum, the exposures will increase. In sum, 2009 will be a very challenging year for IT executives, as they seek meet their objectives and align their efforts with the business needs while being constrained by the 3Cs. Overall 2009 Prediction: 2009 was a very challenging year and unfolded very much along the lines that were projected for the year. The 3Cs were critical for all firms as they tried to keep afloat in a tough environment. For most, long range planning was at best three months out and projects were deferred or delayed. Compliance uncertainty proved to be a big issue during the year, as many of the debated government mandates and regulatory changes failed to materialize and remained trapped in governmental committees. 2009 also proved to be a watershed year for many of the new technologies, as cloud computing, service-oriented architecture, software as a service and other concepts gained conceptual acceptance. IT executives devoted energies to understanding the options and determining how to reduce costs by employing them without compromising availability, performance, reliability and security. Security attacks and breaches persisted and remained a major threat throughout the year. For IT executives that survived the year, it was a very demanding one across all dimensions.

Governance, Risk, and Compliance (GRC) 2009 Prediction The continuing ripple effect from the financial meltdown will flow into 2009 and be an impetus for auditors, boards of directors, executives, and outside oversight organizations to get their arms around business operational risk, strategically and tactically. As stated above, new policies, rules and regulations will spew forth throughout the year, which will make it quite challenging for IT and vendors to keep up. These changes will inhibit the ability for the creation of standardized risk methodologies, metrics, and generally accepted risk baselines, databases, tools and transforms. Thus, while GRC will be top of mind, there will be many varied opinions on governance, key indicators, and metrics, and knowing what to do and measure will be difficult and full of uncertainties. RFG expects enterprise risk management (ERM) to be the mantra that all will be seeking to follow. However, as in 2008, the executive management challenge will be driving enterprise-wide unification and standardization of data definitions, data, information, key performance indicators (KPIs), key risk indicators (KRIs), metadata, metrics, policies, processes, and standards across the business units and geographies. Except for those

Experture /RFG

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entities that are run by strong top executives, progress will be slow, as unit executives push back as they struggle to maintain control of their sectors. Disaster recovery/business continuity (DR/BC) remains as an ERM top priority but will have some new twists in 2009. The use of cloud computing, outsourcing, and/or SaaS for key business components on top of the disruptions caused by of natural disasters and terrorism will force executives to re-examine their DR/BC, privacy, and security policies and procedures. Too many companies have borne unacceptable levels of risks up to now and in 2009 need to re-evaluate their decisions and implement corrective actions before an unrecoverable disaster strikes. RFG expects to see reports next year about well-known companies that failed to take the appropriate ERM actions and whose business was brought to its knees. RFG expects the major other areas of ERM investment will be business performance and performance management, content management, controls management solutions, IT Infrastructure Library (ITIL), and master data management (MDM). This will be an extension of the efforts begun in 2008, although these projects may move more slowly due to funding constraints. GRC 2009 Reality: RFG's GRC predictions of the meltdown's impact were on target across the board, although many of the expected new policies and directives are still being discussed and tinkered with by the branches of government and the various agencies. RFG had expected a quicker consensus building and thus a faster release of new regulations. The fact that this is still inching along means that the GRC uncertainties and the ripple effect of regulatory changes will flow well into 2010. This is not good news for the business community. Nonetheless, vendors enhanced their GRC products with more analytics, policy-based options, key indicators, and metrics. The ERM mantra has gained some traction but because of the overall regulatory uncertainties, it is not the leading management directive. Instead, executives that are focused in this area have been working to drive standardization across the enterprise. Overall, as expected, progress has been slow. DR/BC continued as a top ERM priority into 2009 and saw a new twist as new cloud computing options came on the scene. RFG's expectation of well-known company failures due to ERM failures was borne out starting early in the year with more bank failures, car company bankruptcies, and other companies and institutions around the globe. By the second half of 2009 the economy stabilized, which allowed for the number of these failures to decrease. The investments in ERM enhancements did occur as expected. The vendors made a number of improvements to their product sets while a large percentage of user organizations recognized the value of implementing these tools. However, funding remained constrained for most and projects are moving forward at a snail's pace. User initiatives will continue to advance and remain active into 2010.




Security and Privacy 2009 Prediction

There will be an increase in public security breaches; however there will be a shift to unknown threats and multi-factor attacks with public knowledge mainly being disclosed through required public reporting. The current economic climate will make it difficult to get broader adoption of multi-factor security tools, but public announcement of successes here will lead to financial justification of investment of these tools in 2H09. RFG predicts a tremendous increase in insider data theft activity. The increase in employee layoffs will lead to both more disgruntled employees as well as those that will feel pressured to sell information to make ends meet. Moreover, disgruntled employees are more likely to make a public statement, whereas folks stealing and selling are motivated to not make a public scene. This cultural shift will make data theft even harder to detect. Security reporting will shift to focus on data protection reporting. This reporting will not just cover technical details such as log monitoring and specific elements breached, but will help IT governance come up with economic impact models, which will further serve to justify security investments. Security virtualization will be the main security growth area in 2009. The growing vogue of cloud computing and, more importantly, software as a service (SaaS), will be the main IT infrastructure issues that companies will pursue that will gain wider acceptance in 2009, and the security of these environments will be one of the biggest areas of uncertainty. RFG expects security vendors to release a spate of products in 2009 that are designed to enhance or enable security in virtualized environments. Some of these will be real innovations, but many will be the same products labeled as "virtualized", which will require IT and security executives to be very cautious in the trial and adoption of these virtualized security solutions. The spinning out of VMware, Inc. from EMC Corp. will make it more difficult for VMware to partner with RSA (acquired by EMC). This will allow IBM Corp. to gain an upper hand in exploiting its security, management, and services integration to develop integrated virtual security management solutions. RFG expects companies are more likely to find security issues in cloud computing and software as a service before security leaks in service-oriented architectures (SOAs), mainly because they are now going to be deployed more broadly first. Security vendors will continue to be reactive to SOA security, with major innovations likely stalled until the mid 2010.




Security and Privacy 2009 Reality: 2009 was another year in the ongoing escalation of security attacks and breaches. RFG was right in believing the attackers would up their game, move to multi-factor attacks and continue to aggressively pursue their attempts to breach corporate and organizational firewalls. IT executives can expect greater challenges to happen every year. The question really was the willingness of companies, governments and non-profits to invest in better processes and tools during a tough economic environment. The answer was mixed – some companies and governments made the commitment but a good percentage did not. For example, Iran demonstrated it use of security tools to track down dissenters; on the other hand, almost 75 percent of companies are not up to snuff in storing customer data, according to the Payment Card Industry Data Security Standard (PCI-DSS). But the fact that companies like Health Net can allow a massive security theft to occur and delay reporting it to security officers is very troubling. Examples like this reinforce the fact that best practice business processes and best of breed tools to protect data in transit and at rest are not deployed at the majority of firms. And unfortunately limited gains were made this year. So to RFG's surprise, there was not a major increase in insider data theft activity; there were significant breaches over the course of the year – just not as many as RFG expected. Security reporting did shift to data protection reporting but it also moved into imaging and real time analysis and detection. The latter categories enable security vendors to show a return on security investments, which will help justify further spending on new security initiatives. Another new security concern did prove to be security for virtualization. While there were gains in this area this year, the real gains have not yet materialized, as virtualization still has a long way to go in production systems. As 2010 unfolds virtualization density will increase, as will cloud computing environments, and these will drive the need for more security solutions for cloud computing environments and highly virtualized systems. RFG was wrong about EMC's ability to get RSA to work with VMware solutions. EMC was able to keep all its component businesses working together to solve customer solutions. The company has excellent processes in place that enable it to bring its varied divisions together. On the other hand, IBM did advance its security, management, and services offerings for all environments, including virtualization and has made a number of acquisitions to fill in gaps in its offerings. Security was and will continue to be a highly contested area and key component for companies offering cloud, SOA and virtualized solutions. The Bottom Line: Cost control, capital and compliance were the major drivers and critical success factors of 2009 for IT executives. It was a year where outside influences such as the economy and politics created huge uncertainties, requiring business executives to keep close reigns on all initiatives and spending. Short-term planning was the norm. Cash, funding, and innovation were the trump cards and executives that balanced them tackled the challenges and delivered on their commitments. 2009 was a very challenging year for IT executives; 2010 will be a little easier.




Predictions for 2009: HCM RFG believes 2009 will be a year in which executives focus on the 3Cs – cost, capital, and compliance – and, of course, revenues. This will result in

cancelled or deferred projects and containment of HCM expenses. This will be reminiscent of 2001, when executives remained very short-term focused and budgets were revisited at least monthly. IT executives can expect to see restrictions on hiring and training of personnel, along with a drive to cut staff and selectively outsource more functionality or utilize cloud computing capabilities. These workload balancing efforts will be ongoing through the year. Executives will conserve capital more judiciously and use it on a more targeted basis, mostly for revenue generating initiatives. This will constrain projects and upgrades, which will require IT executives to become more resourceful. IT executives will need to turn to use of self-funding projects and more reliance on vendor financing and sale/leaseback mechanisms. The decade of unfunded mandates not only continues but will get even more onerous in 2009. In sum, 2009 will be a very challenging year for IT executives, as they seek meet their objectives and align their efforts with the business needs while being constrained by the 3Cs. Overall 2009 Prediction: 2009 was a very challenging year and unfolded very much along the lines that were projected for the year. The 3Cs were critical for all firms as they tried to keep afloat in a tough environment. For most, long range planning was at best three months out and projects were deferred or delayed. IT staff took cuts along with other parts of the business. Conserving capital was a key objective. Even overdue investments in IT hardware were scrutinized carefully and monies spent only when deemed necessary. Creative executives did find ways to self-fund projects by combining energy conservation savings with creative financing. 2009 also proved to be a watershed year for many of the new technologies, as cloud computing, service-oriented architecture, software as a service and other concepts gained conceptual acceptance. IT executives devoted energies to understanding the options and determining how to reduce costs by employing them without compromising availability, performance, reliability and security. For IT executives that survived the year, it was a very demanding one across all dimensions.

Human Capital Management (HCM) 2009 Prediction 2009 will be a trying year for most organizations. The global economic turmoil will cause companies to revisit and adjust their plans on an ongoing basis, thereby making long range planning (in this case anything beyond three months) difficult. RFG does not expect this to improve before the second half of the year at the earliest. RFG expects to see projects delayed or cancelled, especially non-revenue generating ones, as well as staff cuts and greater use of contingent workers, outsourcing, and software as a service (SaaS) offerings. These constraints will aggravate IT's HCM priorities, making it more difficult to find and acquire the right skills, or fund the training or retraining existing staff. For some management will be forced to cut staff that may already be too thin. RFG believes HCM needs to be viewed as a risk management priority but expects management will be hard pressed to focus on it appropriately in 2009. In particular, RFG expects succession

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planning to fall by the wayside at many organizations and that this breakdown will come back to haunt these IT executives in 2010 when the economy and job markets become more hospitable. The HCM initiatives should be done on an enterprise-wide basis; however, RFG believes the initiatives will be implemented more on a local or unit basis, due to internal politics and differing economic constraints in each of the geographies. Alignment of staffing with business goals and objectives will improve but overall will remain an illusive goal. Performance management and HCM process improvements will occur, as executives become more focused on measurable metrics in all categories. A cross current to this will be the demands placed upon enterprises by new regulatory requirements from governments and oversight organizations. RFG predicts a flurry of new rules from a number of sources throughout 2009 will disrupt existing processes and performance measurements, which will hinder or set back some of the process improvements. Management at many enterprises is still multi-layered, and communications among strata is not effective and often riddled with corporate politics. While management at many enterprises realized this to be the case, efforts were not directed at resolving this. It appears with the economic collapse this may resolve itself in 2009, as it is likely the majority of managers who leave whether by their own accord or through attrition will not be replaced – hence flattening the organization. The overall demand for IT skills and talent will abate slightly but the market for architects, analysts, project managers, business intelligence, CRM/ERP specialists, and security professionals will remain tight. Companies will, however, look to thin out the number of senior and middle managers. Hence, in most categories salaries will stagnate or shrink. As a result of the market uncertainties and salary shifts, voluntary attrition will diminish. This phenomenon will be global, even in the stronger growth countries like China. HCM 2009 Reality: The economic picture RFG expected did evolve along the lines of RFG's predictions, making 2009 another trying year for most organizations. Long range planning was difficult and a majority of companies made adjustments monthly or quarterly. The second half of the year did turn out to be better than the first half, allowing management to work with a greater sense of stability. Projects were adjusted to deal with the funding and resource realities and companies did shrink IT staff as well as contingent workers, consultants, and outsourcing deals. In the latter case RFG saw deal sizes reduced or the prices sliced to meet budgetary constraints. HCM priorities, for most firms, were targeted on initiatives and projects that were primarily "must-do" efforts while discretionary spending was cut significantly (if not eliminated) at most organizations. This temporary refocusing did result in improved alignment of staffing with business goals and objectives but, in that this was driven by the economic climate and not an adjustment to business processes, these gains will disappear




as the economy improves. In addition, there was a limited investment in training over the past 12 months. Much of that investment was in on-the-job (OJT) or computer based training (CBT) or any other training (telepresence, etc.) that did not require travel, added expenses, or greatly impact the daily business routine. Another area that was disrupted was succession planning, which became a low priority at most firms. HCM and performance management process improvements were driven by an increase of executive focus upon measurable metrics. These gains will be long lasting and will drive further improvements in the future. However, as noted by the predictions, governments and oversight organizations are seeking new rules and requirements so that they can better micro-manage organizations. These changes, as they roll out, will further impede process improvements and weigh down an organization's ability to be responsive to changing business needs. A number of organizations thinned out their organizational structures and others utilized new social networking tools to improve internal communications. Those that did so did derive productivity savings as a result. At the technical level, companies did reduce IT headcount and, with it, some senior skills. The U.S. Department of Labor reported a net loss of 31,000 IT jobs over the first eight months of the year. Even though there were cutbacks in staff, the market for the areas identified did remain tight. Also as expected, salaries globally have stagnated (and in some cases shrank) and voluntary attrition slowed. The Bottom Line: Cost control, capital and compliance were the major drivers and critical success factors of 2009 for IT executives. It was a year where outside influences such as the economy and politics created huge uncertainties, requiring business executives to keep close reigns on all initiatives and spending. Short-term planning was the norm. Cash, funding, and innovation were the trump cards and executives that balanced them tackled the challenges and delivered on their commitments. 2009 was a very challenging year for IT executives; 2010 will be a little easier.




Predictions for 2009: Vendor Management & Outsourcing RFG believes 2009 will be a year in which executives focus on the 3Cs –

cost, capital, and compliance – and, of course, revenues. This will result in cancelled or deferred projects, outsourcing of non-core functions, and a push for better procurement deals. This will be reminiscent of 2001, when executives remained very short-term focused and budgets were revisited at least monthly. IT executives can expect to see restrictions on hiring and training of personnel, along with a drive to cut staff and selectively outsource more functionality or utilize cloud computing capabilities. These workload balancing efforts will be ongoing through the year. Executives will conserve capital more judiciously and use it on a more targeted basis, mostly for revenue generating initiatives. This will constrain projects and upgrades, which will require IT executives to become more resourceful. IT executives will need to turn to use of self-funding projects and more reliance on vendor financing and sale/leaseback mechanisms. The decade of unfunded mandates not only continues but will get even more onerous in 2009. In sum, 2009 will be a very challenging year for IT executives, as they seek meet their objectives and align their efforts with the business needs while being constrained by the 3Cs. Overall 2009 Prediction: 2009 was a very challenging year and unfolded very much along the lines that were projected for the year. The 3Cs were critical for all firms as they tried to keep afloat in a tough environment. For most, long range planning was at best three months out and projects were deferred or delayed. IT staff took cuts along with other parts of the business and outsourcing became more selective and targeted. Conserving capital was a key objective. Even overdue investments in IT hardware were scrutinized carefully and monies spent only when deemed necessary. Creative executives did find ways to self-fund projects by combining energy conservation savings with creative financing. 2009 also proved to be a watershed year for many of the new technologies, as cloud computing, service-oriented architecture, software as a service and other concepts gained conceptual acceptance. IT executives devoted energies to understanding the options and determining how to reduce costs by employing them without compromising availability, performance, reliability and security. For IT executives that survived the year, it was a very demanding one across all dimensions.

Outsourcing 2009 Prediction

The current economic climate will have a significant impact on how corporations view outsourcing. RFG expects that the value aspect that was previously touted will be replaced with a myopic view of how outsourcing can be used to save money. There will be a preference for outsourcing relationships that can be easily established and the cost benefits rapidly justified. While this is not a strategic view, RFG believes the stark budget shortfalls many companies will be facing will force a more pragmatic, near-term view. All focus will be on how companies can avoid spending money; outsourcing will be used where it can be demonstrated to directly contribute to this goal.

One of the main areas where outsourcing will be able to contribute is in consolidation efforts. Companies will be in the process of more aggressively consolidating applications, data, and data centers. Outsourcers that can act as the data center consolidation point will

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be well positioned in some circumstances to help with this consolidation. Also, Software as a Service (SaaS), as opposed to cloud computing, is likely to attract a good deal of attention as a way to help companies consolidate around specific business processes or applications, such as human capital management (HCM) and payroll processing (which has largely occurred already).

Data center management and operations will continue to attract outsourcing interest, especially where the service provider can demonstrate cost savings as a result of them taking over operations. IT executives should look at typical staffing ratios, and assess the cost per managed device against their own ratios to determine whether they will save money in the process.

RFG does not think security outsourcing will gain much traction, since companies are still concerned about managing their intellectual property themselves. Assistance will surely be sought from security consultants to implement new security models and software, but few large companies are likely to allow complete remote management of security policy enforcement.

RFG predicts that offshoring will experience a very bumpy 2009, as companies wrestle with the balance of saving money through offshoring versus keeping IT talent in house and on shore. RFG expects government-funded retraining programs of large scale IT staff are likely to be authorized and start in late 2009, but the availability of this new staff will not occur before 2010. This will give offshoring some legs in 2009, but RFG expects a fundamental shift in attitudes toward outsourcing to change the landscape dramatically in the end of 2009-2010. Outsourcers will make the most gains in areas of application-level outsourcing where the company can provide commoditized services without needing to extensively customize the application environment. India will continue to dominate application development and help desk work, with the majority of business process outsourcing remaining in the United States with U.S.-based corporations.

Outsourcing 2009 Reality: RFG accurately forecast the change in outsourcing relationships and deals that would result from the new economic climate. Budgetary constraints and the major mergers in the financial community (a major industry sector for outsourcing) caused executives to reexamine their views of outsourcing. In 2009 companies sought to cut costs in all areas, including outsourcing. This impacted the number of deals and the prices at which the deals closed. To maintain market share many of the major outsourcing providers reduced their basic and blended rates and contract terms in order to keep customers satisfied and loyal. The enterprise consolidation initiatives continued into and through 2009. Outsourcers that could assist with those efforts or act as SaaS, platform-as-a-service (PaaS) or infrastructure-as-a-service (IaaS) providers did make some gains. 2009 proved to be a year of confusion for IT executives as to what is cloud computing and how is that differentiated from SaaS, IaaS, and PaaS (all are forms of cloud computing). Moreover,




the variability in definitions for cloud computing as well as the range of offerings and types of offerings has not clarified the situation. While data center management and operations did attract interest, executives that did take advantage of such offerings were mostly driven by the desire for cost savings. SaaS vendors did pick up market share, as IT executives looked to find less expensive solutions. A few companies even experimented with IaaS and PaaS offerings as alternatives but these markets remained immature and concerns with privacy and security acted as inhibitors. Furthermore, security overall was a very big concern again in 2009 but it did not translate to a shift to outsourcing of security management. RFG was correct about this being a very bumpy year for offshoring. The Satyam fiasco weighed heavily on the market as did reports of security breaches elsewhere. In general, there was a reduction in offshoring over the year, as companies became nervous and chose to keep things close to the vest so that they could be more responsive to changes. RFG was wrong about large scale government funded retraining programs. The governments around the world invested heavily to stabilize their markets but their "investments" did not take the form of retraining programs. However, as expected, there was a fundamental shift in attitudes, which has resulted in many of the offshore firms creating or enlarging onshore units for outsourcing. The providers also moved more heavily into targeted areas such as application verticals, application development, business process outsourcing, and call centers/help desks to better differentiate themselves. India continued to dominate most areas of outsourcing, with business process outsourcing still dominated by U.S.-based corporations. RFG was wrong about EMC's ability to get RSA to work with VMware solutions. EMC was able to keep all its component businesses working together to solve customer solutions. The company has excellent processes in place that enable it to bring its varied divisions together. On the other hand, IBM did advance its security, management, and services offerings for all environments, including virtualization and has made a number of acquisitions to fill in gaps in its offerings. Security was and will continue to be a highly contested area and key component for companies offering cloud, SOA and virtualized solutions.

Vendor Relationship 2009 Prediction

RFG believes vendor management will continue to gain acceptance in mid-size to large enterprises, with more than 50 percent of companies having strategic procurement groups, vendor management offices (VMOs), and/or vendor management software in place. However, RFG does not feel that significant forward progress will be made in the advancement of procurement skills, as most efforts will consist of on the job training. Nonetheless, companies will make gains in their deal making but that will be due more to the troubled economy and the willingness of vendors to make deals than it is due to procurement prowess. Gains will mostly be on the tactical transactional side and not with strategic relationships or life cycle management, except at those organizations that already have these skills in place.




RFG expects to see vendors that have financing arms or relationships with financial organizations to leverage these associations to drive deals. IT executives should see more leasing and financing offers than previously as well as sale/leaseback proposals. Most enterprises have not managed their IT assets as efficiently as they could have and this will enable hardware and service providers to offer packages that include asset swaps and other financial incentives in addition to the underlying hardware, software, or service offerings. IBM Corp. through its IBM Global Finance (IGF) unit and Hewlett-Packard Co. using its HP Financial Services (HPFS) arm will be two of the leaders in these activities. IT executives can expect to see some new pricing structures in 2009, as suppliers look to find way to preserve and drive revenues. IT executives may see new entrants in the cloud computing space or a reduction of license fees with offsets of higher maintenance fees (more of a SaaS model), for example. The vendors that have cash will make additional acquisitions in 2009 and then leverage their install base to grow the acquired businesses. Vendor Relationship 2009 Reality: RFG's outlook for vendor management was on target. Vendor management made additional gains during the year but few companies made any progress in the advancement of procurement skills. One reason for the gains was the pressure by corporate management to cut costs and the recognition by vendors that they needed to cede concessions to remain in the game. For the most part the vendor moves were transactional responses and not part of a long-term relationship strategy. Even companies like SAP AG that publicly announced maintenance price increases had to defer them just to pacify their install base. The vendor financing arms and independent hardware financing companies did announce a number of offers to help companies out, as RFG predicted. The pendulum swung toward leasing over the course of the year due to technology improvements that rapidly obsolete IT hardware and the vendors offering zero financing and other low cost terms. Sale/leasebacks also saw an increase in activity. However, as noted, enterprises still need to improve their asset management capabilities so that they can take better advantage of the leasing offers. HPFS and IGF were aggressive in their development of creative offers – IBM even leveraged the U.S. government's economic stimulus act and the American Recovery and Reinvestment Act. But their parent companies did not make any major strides in tightly integrating leasing into their overall sales approach, leaving leasing as a trailing option (rather than an opening gambit). RFG was disappointed to see only a few new pricing structures. RFG expected more creativity to address the tough times but most vendors remained traditional in their approach to the business. Larry Ellison, CEO of Oracle Corp., did posit the biggest shift in pricing changes when he stated that his plan for new offerings coming from the pending Sun Microsystems Inc. merger. He expects to sell fully integrated solutions that encompassed the application, middleware, operating system, and hardware stack. His




model is the old IBM of the 1960s. Another new offering set came from the Cisco Systems Inc., EMC, and VMware virtual computing coalition. The joint Vblock solutions represent a new dimension of selling a virtualization platform. While pricing was not announced, when these offerings do finally become commoditized units, RFG does expect to see some unique pricing for the products and the services. Lastly, as predicted, vendors with cash made a number of acquisitions in order to extend their businesses into adjacent markets, acquire customers or leverage new products across an existing customer base. The Bottom Line: Cost control, capital and compliance were the major drivers and critical success factors of 2009 for IT executives. It was a year where outside influences such as the economy and politics created huge uncertainties, requiring business executives to keep close reigns on all initiatives and spending. Short-term planning was the norm. Cash, funding, and innovation were the trump cards and executives that balanced them tackled the challenges and delivered on their commitments. 2009 was a very challenging year for IT executives; 2010 will be a little easier.




Predictions for 2009 – How We Did (Process) RFG believes process gains will be greatest amongst companies that are well positioned to weather the financial storms, while other organizations will

tactically tackle those initiatives that will yield savings within the year. Metrics will play an even greater role in 2009, with new measurements and key indicators being created to deal with the new business environment – i.e., consolidation, energy efficiency, ITIL, outsourcing, SaaS, SOA, risk management, social responsibility, virtualization, and Web 2.0. All of these efforts will be done in the name of efficiency and corporate responsibility but companies will fail to predict all the impacts these actions will have on their operations. Not all the metrics and tools needed to manage the new world of operations will be available on the market and large enterprises will be forced to create their own. Collaboration will also gain ground while security will become better integrated within enterprise management to deal with the continued increase and complexity of attacks. Application rationalization and consolidation will become more prevalent, as will the use of prepackaged applications, especially those that use open standards. Overall, while there will be process improvements, it will be a trying time for executives to manage their processes and process change. Overall 2009 Prediction Review: 2009 unfolded very much as expected in the area of process management. Profitability and survival was a bigger focus for most enterprises than process management. However, for those entities that were well positioned financially, process improvement initiatives did not move to the back burner. As a result of this divergence, the better-off firms were able to improve their positioning so that they can leverage these advantages in future years. This will be a further problem for their competition, as the laggards will fall behind in implementation of best practices and efficiency/productivity capabilities. All companies focused on metrics – i.e., if it was deemed important, it was measured. While vendors pushed for various forms of IT changes such as energy management, ITIL, SOA and virtualization, they failed to deliver all of the necessary tools for process management, forcing companies to invest in development of their own tools. Collaboration made major advances this past year as employees (and management at some companies) recognized the value proposition of social networking, especially in the areas of communications, reuse and skills transfer. Security improvements were made as well but in that the attackers are getting more intelligent, significant security gaps remain. Application rationalization and consolidation did occur but not to the extent RFG expected. Overall, as predicted, it was a trying time for executives to address process management.

IT/Business Alignment 2009 Prediction The alignment of IT with the business, the associated issues, and tools. This category includes business alignment and performance measurement tools, such as the Balanced Scorecard (BSC), business process management (BPM), competency centers, IT project and project portfolio management (PPM), and service level management (SLM). Also included are collaboration solutions, as well as organizational matters, such as cultural issues, process changes, and silo politics. RFG believes IT/business alignment in 2009 will not be as expansive as it was this past year due to the economic pressures facing corporations. That said the corporate world will break down into two different universes: the haves and the have-nots. For those companies that have weathered the financial storms well and have decent profits and cash reserves, RFG sees these companies taking advantage of their positions and tackling

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strategic alignment initiatives to improve their competitive advantages. However, those companies that do not address process efficiency before alignment will end up spending more than expected and achieve limited success. For companies that will be struggling for funding, positioning, and/or survival the business alignment initiatives will be tactically focused. This traditional business as usual approach to alignment will have mixed results, as the efforts are not optimized and may actually be politically driven, rather than truly alignment driven. Once again, RFG expects executives will use benchmark data to determine where to improve or to outsource. While benchmarks are good, companies need to complete the development of their own key performance and risk indicators (KPIs and KRIs) and designation of core processes and core competencies. RFG expects a good number of executives at have-not enterprises will not do this and instead will be pressured to make process decisions that harm the company strategically over the long term. On the positive side 2009 will see a continuation of BPM, PPM, and SLM initiatives. Enough executives have recognized the benefits of these types of initiatives so that they will receive funding required (even if on a smaller scale) to move these projects forward. However, success in these efforts will require firms to tackle the entire processes holistically and not be driven by available tools or redesign of a unit's processes. Moreover, successful SLM efforts require the ability to identify, measure, and monitor the appropriate KPIs and KRIs that reflect IT efficiency, effectiveness and bottom-line results. Given past history and the financial constraints executives will be dealing with in the upcoming year, RFG does not foresee major breakthroughs for most firms. Collaboration will receive a lot of attention in the new year but RFG believes most executives will not see how to harness it effectively. Therefore, forward movement will be tied to elements that drive social responsibility or are grass roots driven. Similar to this year's efforts, executives will embrace collaboration tools that improve their green or sustainability initiatives by reducing corporate travel or carbon footprint. Meanwhile, RFG expects the younger generation to incorporate their personal collaboration tools into their business environment, and for the most part, to do it without regard to confidentiality, privacy, or security concerns. For a few firms, there will be repercussions to this that will become headline news. IT Alignment 2009 Reality: The realities in regards to IT alignment did evolve along the lines of RFG's predictions. Most companies in good financial positions did invest in improving IT alignment to improve their competitive advantages, efficiencies, and operations. While some of the have-nots did the same, the well-off enterprises were able to also address longer term initiatives. In many organizations internal and external politics played a role in alignment; in fact, RFG underestimated the role external politics would play in many industry sectors, as the level of government interference globally exceeded levels unseen in recent decades. RFG's belief that the business as usual approach and political




meddling would yield mixed results is still unfolding and will have negative ripple effects in future years. Executives did rely upon external benchmarks to a large degree in deciding on what paths to take. The shift to company specific KPIs and KRIs for core processes still needs to occur. Most companies still lack the ability to have high quality, real-time information that can be input to the decision-making process. Even though this information and these metrics were not in place universally, IT executives did make hard process decisions that will have impact strategically as well as tactically. The knowledge gap between those addressing this shortcoming and those unable or unwilling to will have a large impact on the quality of their decisions and therefore the profitability and success of their organizations. On the positive side, BPM, PPM and SLM initiatives did move forward in a number of companies, with a number of additional SLM projects receiving funding. This was good news in that key areas of process management are being recognized by management as having a positive payback. Collaboration made strong gains in 2009, mostly driven by employees as RFG expected. Additionally, key vendors also saw how collaboration could be a valuable add-on to their products, services and workflow management. In most instances, executive and IT management limited their embrace of collaboration to social responsibility initiatives, especially in regards to corporate travel. A number of companies were proud to point out how much money they saved by use of Web conferencing instead of travel. Some firms did demonstrate other gains through collaboration but, for the most part, senior executives remain uncomfortable with collaboration and social networking. As predicted, this was a point of contention between younger employees and management in 2009, although employee use of unauthorized collaboration and social networking tools did not result in major breaches and headline news articles. Enterprise Architecture 2009 Prediction Service-Oriented Architecture (SOA) development will increase more slowly than was predicted in 2008. The work in 2009 will be focused on incrementally adding capabilities of individual Web 2.0 capabilities, tying them into existing frameworks as opposed to generating a fundamentally new architectural construct. Software-as-a-Service (SaaS) will increase, as companies find ways to adopt new capabilities at the lowest possible cost. While the growth will be stronger than in the past, the focus will be on adding standard functions as opposed to customized features, since the main value of SaaS is in reusing standard applications for scale of cost and capabilities. Adoption of SaaS will be largely relegated to small and medium business (SMB) uses, and will not achieve mainstream use in the enterprise. Cloud computing hype will slow down dramatically, replaced by the pragmatic use of SaaS as noted above, along with more internal use of "clouds" by virtualization in the enterprise data center with continued server consolidation.




RFG believes there will be an increased focus on data as the key element of the business that needs to be designed for and preserved. Information lifecycle management (ILM) will grow in importance, and IT executives will insist that application architects build ILM into the architectural framework. The current economic situation will force companies to find ways to save money on application development. This will force more adoption of prepackaged applications and modification of business processes, where appropriate, to align with packages where that is seen as less expensive than customizing and maintaining business-specific applications. Less reliance on detailed customization will also bring about use of application architectures that are built on standard, open components. Enterprise Architecture 2009 Reality: Business agility continued to be a desired goal by business and IT executives. This kept the SOA initiatives moving forward and in some cases led to the alignment of BPM, SOA and business strategies. Some organizations also recognized that they needed to extend their enterprise architecture into their supply chain and use SOA to create an integrated value chain. In a similar vein, Web 2.0 efforts gained traction, as companies worked to assimilate these capabilities into existing frameworks. Hence, progress was made and, in fact, momentum improved a bit more than predicted. RFG underestimated the level of hype and business confusion that the various forms of cloud computing would cause. Instead of the drumbeat slowing down and efforts honing into a few select options like SaaS, cloud computing models evolved throughout 2009. RFG identified 10 different cloud models with variances in the models being offered by different vendors. The hype caused concern amongst a number of IT executives, causing IT to once again defend itself from business executives that have little understanding of IT and the new models such as infrastructure, platform, public, private, on-premise and hybrid cloud offerings. SaaS did gain market share in enterprises as well as in the SMB market. The Platform as a Service and Infrastructure as a Service models also made advances as Amazon.com Inc., EMC Corp., Google Inc. and Microsoft Corp. became public faces of alternative cloud computing models. RFG was correct in recognizing the added focus data and information governance and management would encounter during the year. The rapidly-changing economic environment made executives acutely aware of the importance of having high quality current information. This helped IT organizations to obtain funding to address data governance and quality issues. ILM received added impetus from government agencies concerned about archiving and retrieval of electronically stored information (ESI). In the area of application development, the economic environment did cause companies to reduce application development expenditures. Some projects were extended or delayed while others were killed or indefinitely suspended. While there was added movement to prepackaged applications, IT executives tended to limit purchases to specific applications and not suites. This shift in packaged application acquisition, along with less customization of acquired applications, cut into the revenues and profits of the major




application vendors. IT executives also fought back on the maintenance side as well, which kept prices contained. For example, the intensity of this pushback surprised SAP AG and forced it to meet user demands. This was an unusual show of strength by its user community.

Enterprise Information / Intellectual Property Management 2009 Prediction

Enterprise information management will be a prime focal point in most corporations in 2009 while IPLM will receive limited attention beyond the concern for fraud and theft. Executives have learned that they require good enterprise information management processes, tools, and techniques if they are to manage well in times of economic stress. However, for most companies these things do not exist on an efficient, automated, enterprise-wide basis. Most global enterprises do not have consistent data, governance, policies, processes, standards, and tools in place worldwide to enable rapid, informed executive decision making. RFG believes executives will seek to clean this up, where possible, over the course of the year.

Risk management, data governance, and master data management (MDM) projects will be funded so that corporate executive management objectives can be met. However, these initiatives deal more with culture, people, politics, and process than technology (although not all the tools will be available) and therefore, tend to run into pockets of resistance which hinder progress. Therefore, RFG believes only those projects driven by strong leadership at the top will achieve their desired goals. Others will have limited success or drag on without positive results. Thus, overall RFG does not expect to see great accomplishments in this area in 2009.

Separately business intelligence (BI) projects will make decent advances but will be narrowly focused. Vendors will proclaim that they have expanded their tools to address the top executive concerns relative to control points and risks; however, these will be point solutions.

Web 2.0 will make significant gains over the year, as companies finally grasp the advantages the new technology brings and as the tools begin to mature. RFG expects to see use of the Web 2.0 technical to appear more prevalently in areas beyond blogs, wikis, and social networking sites. But overall, use of Web 2.0 will not reach the knee of the adoption curve in enterprises in 2009.

EI/IP 2009 Reality:

Enterprise information management received less attention from management than RFG expected. Fraud, theft and other security concerns did remain top of mind for executives but other areas of enterprise-wide information management were viewed as less important. Thus, most global enterprises moved the ball forward only a little in terms of




standardizing data definitions, governance, policies, processes, standards and tools. As RFG has noted before, enterprise-wide standardization initiatives are long multi-year projects with limited near-term paybacks. For most, 2009 was not a year of global gains, and it looks like 2010 will follow suit.

Enterprise risk management, data governance and MDM projects followed the same path as enterprise information management overall. Funding varied by industry – some of which was driven by governmental agendas – but gains were limited primarily to those few companies that had deep pockets and were willing to commit to a long-term strategy. RFG's prediction that the initiatives would focus more on culture, people, politics and process than on technology proved correct.

The business intelligence market took a slightly different tack than RFG expected. While decent advances were made, 2009 saw a division of the BI market with the expansion into predictive analytics and real-time data streaming analytics. The traditional decision support market based upon historical analysis continued to grow but the newer markets, especially predictive analytics has picked up an early groundswell that will blossom rapidly over the next few years.

Web 2.0 moved into the mainstream in 2009, as RFG had expected. The variety of offerings and tools has helped make Web 2.0 more common in organizations. More and more companies utilize blogs, wikis and social networking sites; however, senior management at most non-technology firms is not sure how to take advantage of these tools and turn the technology into a competitive advantage. Nonetheless, additional tools that allow for more rapid development are constantly being developed, which will drive a higher adoption level in 2010.

Operations and Service Management 2009 Prediction

Operations and service management focus in 2009 will be on leveraging management tools and processes as a way to reduce operational costs. Tools will be reviewed by how they can reduce the number of staff needed to control the operational environment, with more consideration given to automating routine operational tasks. Consideration will be given to the service levels that are attained, with a potential lowering of standards for non-core internal systems in order to increase staffing ratios.

There will be an increased use of security integration within enterprise management. The dramatic (and unfortunately predicted) rise in the rate of security attacks will necessitate a tighter integration between security management and systems and network management. Work will be done to better share information between these management tiers, with information from systems and network management tools augmenting security event management and analysis to decrease the reaction time to security incidents and start the long process of more proactive security management.

The development and use of metrics that emphasize cost savings will become more mainstream. Standard measurements such as application response time and system




availability will still be measured, but more focus will be placed on deriving economic elements such as the cost per transaction, transactions per kilowatt energy consumed, and system utilization rates. This will lead to developing service levels that focus on efficiency metrics.

Managing virtualized environments will become a major issue in 2009. The rush to implementing virtual servers as a way for data center consolidation will continue in 2009, but there will be an increased realization that existing management (and security) tools are inadequate to handle the configuration, management, and security challenges of these environments. These tools will start out as silos, and IT managers will need to develop new skill sets to deal with these challenges.

Operations and Service Management 2009 Reality:

There were no big surprises in the unfolding of operations and service management for 2009. The focus was on improvement of tools for process automation, management and control. There were some gains in reducing the number of administrators needed to support the various network, server and storage environments but no major breakthroughs. There were a number of acquisitions by EMC Corp. and IBM Corp. aimed at rounding out their offerings so as to improve their service management capabilities. Both firms and Hewlett-Packard Co. expanded their energy management products and features. On the user front, ITIL and other ITSM processes gained greater traction this year, as users have come to accept that these process improvements can help contain operational inefficiencies, improve service levels and reduce costs .

Better security integration within enterprise management did occur. EMC worked to more tightly integrate its RSA products with its other product lines while IBM acquired additional software houses and leveraged acquired security-related products with its Tivoli software. HP incorporated security analyzer components into its operations manager as well. The major ISVs also made advances in integration of security with their system and network management software. As predicted, there were advances in security event management and analysis that helped to shorten the reaction time to incidents.

2009 did see a number of enterprises include metrics such as cost per transaction, cost per user, performance per watt, power usage effectiveness (PUE) and number of virtual servers per server into their primary measurement kit. In addition, quite a few companies took advantage of governmental agency and utility company energy conservation rebates. Sustainability arrived within the IT environment and it is influencing acquisition choices, asset management, financing operations, operations, and overall sourcing decision making. However, greater adoption is needed before this can be considered mainstream.

RFG's prediction of management of virtual environments becoming a major issue was on target. IT executives felt comfortable enough to move some production systems into virtual environments on their distributed servers. However, the management tools are still lacking in sufficient functionality to enable administrators to easily and rapidly




identify and troubleshoot problems or to make moves, adds and changes without difficulty. IT executives did realize that the management tools are inadequate to handle the configuration, management and security challenges as RFG predicted. Moreover, vendors ended the year trying to convince users to increase their ratio of virtual servers to physical by a factor of 10 even though users do not have the ability, skills or tools available to manage those environments. This will become one of the big 2010 challenges.

Application Management 2009 Prediction

RFG believes that IT executives will place a great deal of effort in 2009 in application rationalization and consolidation. There will continue to be mergers and acquisitions across different industry sectors, which will bring about duplicate applications for the same function that can be eliminated. Rationalization efforts will also include inventory of existing licenses to make sure dollars are only spent where they are absolutely needed.

There will be in increased use of prepackaged applications, and some companies will explore using open or free tools for non-critical business functions. RFG believes use of free tools will largely be limited to small and medium businesses, since large companies will still insist on all (certainly most) applications having vendor support.

Application management will start to include managing SaaS contracts and services. IT executives will grow to realize external application services will require staff support to verify service levels are being met and interface with SaaS providers to negotiate changes in functionality and service levels.

Performance metrics for applications will start to include information on cost metrics, such as time per transaction and cost per transaction. Virtualization of servers in the data center will complicate this issue, and most of the work on developing these metrics in virtualized environments will have to be derived from existing management tools, as vendors are not likely to have measurements for these metrics in virtualized environments before 2010.

Application developers will increasingly use development tools that have graphic-based integrated development environments (IDEs). While these have historically been the domain of proprietary application development tools, open source environments are developing very workable IDEs, such as Eclipse for Java and Anjuta for C and C++.

As open IDEs become easier to use, they will lead to an increased use of open application solutions. There will be a shift in 2009 from standardization to integration capability, as IT executives will see integration with existing application environments will provide more immediate cost savings.




Application Management 2009 Reality:

2009 was not a big year for mergers and acquisitions. Financing for these deals was limited, although there were government funds available for certain automobile and bank rescues. Nonetheless, in newly merged entities and more staid companies, application rationalization and consolidation efforts did receive attention, as IT executives attempted to lower costs. RFG still believes that companies can reduce the number of their applications by up to 75 percent if they have not yet rationalized their application sets. The maintenance and support savings from elimination of excess applications and licenses has yielded significant returns to those that undertook these efforts.

While more companies utilized prepackaged applications as well as open sourced applications, large enterprises mostly remained committed to their own custom applications for their mission critical applications or for those applications deemed to be a competitive differentiator. However, RFG did find large enterprises, along with the small and medium businesses, were willing to work with open source tools. Vendor support was required when IT executives felt the applications or tools were critical to the business.

The management of SaaS contracts and services on an enterprise basis gained traction in 2009. The movement of SaaS usage into the IT management arena has meant a greater focus on functionality and service levels. This is good news in that RFG has found the business units were not negotiating functional requirements, price or service levels. The consolidation of these SaaS services into a single sourcing point meant IT or procurement could leverage the scale of the purchase into better terms and service levels. However, RFG finds that this shift is only just beginning and there is a long way to go before companies learn how to effectively manage cloud offerings.

2009 was a year where performance metrics morphed to include better information on overall costs, transaction costs and performance costs. However, virtualization did make it more difficult to assign certain costs to individual applications. This complicated chargebacks and continues to make cost analysis an inexact science. Virtualization and infrastructure management vendors are working on solutions and expect to have initial versions available in 2010. This is another process area where most IT shops do not have mature processes in place.

There was a growing demand for graphical IDEs that enabled communications across different platforms as well as open source tools such as Eclipse tools. While RFG expected to see a significant shift from standardization to integration, this did not occur to the extent predicted. Vendors did deliver a number of new application toolkits to help facilitate this but the user community was slow to change.




The Bottom Line: 2009 was a watershed year for process improvements in that those companies that were able to invest in strategic process improvements will have set themselves apart from those that were unable to make a similar commitment. While the difference is not meaningfully measurable now, over time these efficiency and productivity gains will enable these companies to drive revenues more efficiently, lower their cost of operations, and improve margins. Moreover, the new metrics will enhance the decision making process and enable executives at these organizations to better govern and manage IT operations. Over time, this will help executives in their platform selection choices and thereby improve productivity and utilization rates. It will also assist IT executives in the development and use of private on-premise, hybrid and/or offsite clouds. IT executives will be able to leverage the lessons learned in 2009 into the next two to three years as they attempt to transform their data center operations and processes. For those IT executives that invested little into process improvements, the good news is that 2010 should be a better year and should afford them the opportunity to re-invest in the pursuit of best practices.


Copyright © 2004-2008 Experture and Robert Frances Group, all rights reserved 4 Jennings Ct, Westport, CT 06880; (203) 254-6088;


Predictions for 2009: Technology – Infrastructure Part 1 of 2 RFG believes 2009 will be a very tough year for enterprises, as they

attempt to balance their business goals and objectives against the ever increasing demands of IT. While lower energy prices have lessened the pressure for transforming data centers into more energy efficient consumers, there will be sufficient economic advantages to continue these efforts. Consolidation, environmental efficiency, and virtualization efforts will still be major initiatives in 2009 as well as expansion and better management of information and storage systems. Financially constrained firms will be forced to delay and/or reduce funding and extend project time lines for these projects as well as hunt for more creative ways to achieve their objectives. Blades, enterprise servers and mainframes will be processors of choice as consolidation/virtualization, and high performance and thin computing become more pervasive. Unified communications will start to become a reality, driven by advances in wireless interoperability and networking and voice and data consolidation, but it will move at a slow pace. Wireless networking will see significant changes, as new devices become available and LAN functionality and security evolves. Overall 2009 Prediction Review: 2009 unfolded very much as expected with most enterprises constraining their IT expenditures. Most organizations extended the life of installed equipment, where possible, and deferred any and all added hardware expenses that could be pushed back. Consolidation, energy conservation, and virtualization efforts were hot points during the year, as they were all seen as cost saving initiatives. Unified communications moved slowly forward while wireless networking demands increased due to the iPhone, wireless applications, and other advances. For the most part IT executives developed their 2010 budgets with the belief that the new year would be less constraining than 2009 and the technology refresh cycles will be back on track. Data Center Infrastructure 2009 Prediction

IT executives will undertake holistic data center planning and initiatives at most firms as executives recognize the need to address issues more globally. These efforts will be assisted as well as driven by efforts from vendors such as Hewlett Packard Co. (HP) and IBM Corp. where these initiatives are major programs. In particular, data center infrastructure initiatives that are self-funding within the fiscal year will be authorized and executed. RFG expects to see some IT executives use these programs to kick-start a number of needed infrastructure enhancements that leverage these initial initiatives without requiring additional capital expenditures.

Executives will continue with consolidation and virtualization programs. Advancements in virtualization management, security, and utilization software will enable more companies to put virtual environments into production. Cisco Systems Inc., EMC Corp.,

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HP, IBM, and Microsoft Corp. will drive major initiatives aimed at making virtualization of networks, service layers, servers, and storage mainstream in production environments.

RFG expects mainframe and high performance computing (HPC) to expand again in 2009. The growing demand for storage, which will remain in the double digits, will make database servers one of the killer HPC and mainframe applications. Storage growth will come from the traditional sources plus the adoption of video as a more mainstream communications method (including storing Webcam conversations), cell phone imaging, expanded regulatory demands, and the expanded use of video surveillance capture and analysis. Linux processing will also be a major growth application for mainframes. RFG predicts IBM will offer some advanced cell broadband technology for its mainframes that will make the server a more desirable graphics processor. Given these advances and demands, and the low power per workload demands from these processors, IT executives will move more workload to them.

The growth in storage systems will increase the demand for improvements in information lifecycle management (ILM) solutions. RFG expects increased demand for automation tools as well as archival, e-discovery and recovery tools. RFG also expects governments and their agencies to expand their regulatory oversight demands, which will put added pressure on corporations to implement new information risk management and e-discovery tools. Solid state storage offerings will become more pervasive in 2009, but will not gain broad adoption.

Thin computing and blade servers will continue to grow in demand as IT executives seek more control over endpoint computing resources so as to ease administrative control and increase efficiency. The increase in demand by users to be able to swap devices (between their office systems and BlackBerries, netbooks, smartphones, and other portable devices) will make the shift to thin computing more acceptable by users and desirable by IT executives and cyber security personnel. However, mainstream adoption is not likely to occur before mid-2010.

Infrastructure 2009 Reality:

IT executives attacked their data center infrastructure initiatives both globally and locally. This more balanced approach allowed for companies to better control IT expenses and move workloads to core computing facilities while closing down those that were less financially justifiable. The examples of gains that HP and IBM achieved helped executives in understanding the benefits achievable through consolidation and recentralization. As RFG predicted, IT executives sought and implemented projects that were self-funding during the fiscal year. This concept was new to most IT executives but can be expected to become a cornerstone for future initiative financing. Moreover, the explosion of the cloud computing delivery model has gotten IT executives to push for the cloud consumption model to be applied to standard infrastructure purchases as well as other pay-as-you-go usage models.




Consolidation and virtualization projects went on as planned for most companies, as they were considered cost cutting measures. However, the biggest shifts caused by consolidation and virtualization occurred in the vendor space. The move to virtualization and HP's virtual connect architecture impacted Cisco's business model to the extent that Cisco was forced to become a blade vendor. HP and IBM then introduced dense HPC blade solutions that will enable companies to reduce their costs of operations while improving operational agility. Cisco, EMC, and VMware Inc. responded by uniting to launch the virtual computing environment (VCE) coalition and new virtualization packages that will facilitate the consolidation of thousands of applications on a compact Intel Corp.-based infrastructure. Microsoft enhanced its virtualization solutions while VMware released is vSphere 4, a platform that RFG expects will become the baseline for large-scale virtualized production systems. EMC and IBM also announced new software designed to better manage virtualized networks, servers, storage and systems. As a result of all the advancements, 2009 did become the year in which virtualization matured enough to become mainstream in production environments, as predicted.

The mainframe and HPC markets did well in 2009. Storage continued to expand in double digits, driven by the traditional markets and the growth of imaging, messaging, video streaming, surveillance, and social networking. It also got a boost from the governments and regulators that want to ensure all data is captured and kept so that they can request and examine the data as desired. Linux processing on mainframes remained strong and is a killer application for the platform. RFG was wrong in its belief that IBM would offer advanced cell broadband technology for its mainframes. Instead, IBM is planning on a different hybrid technology strategy for its processors. Cell will be a part of it, where appropriate. IBM expects to lay out its hybrid strategy in 2010. Nonetheless, IBM is making mainframe workload gains even though the revenues shrank for the year.

On the storage front, RFG was correct about the advancements in ILM and automation tools. The vendors made significant improvements in their offerings, especially in the areas of archival and e-discovery. Governments and their agencies did up the pressure for more tools, although not as much as expected due to legislative and agency squabbles. RFG was partially correct on solid state storage. It did become more pervasive; however, the financial advantages of solid state devices were more quickly recognized and therefore, adoption was broader than expected.

Blade server demand remained strong and grew during the year but thin computing gains were less robust. Nonetheless, enterprises saw significant growth of BlackBerries, smartphones and other portable devices, which led to greater demands for application mapping to support the device characteristics, cyber security and support.

Data Center Environmental 2009 Prediction

Data center environmental focus will be a routine concern for most enterprises in 2009. Economic considerations will have IT executives focused on everything they can do to save money; investments in green technology will largely show direct return on




investment to lower operational costs. Budgets will be under intense pressure, and only green items that have immediate ROI (i.e., less than one year) are likely to be funded.

The focus in data center environmental issues will become more integrated in 2009, with environmental factors combining with other efficiency factors such as virtualization and data center consolidation. Environmental considerations will start to make their way into application development, with metrics starting to be considered such as energy costs per transaction.

There will be an increased focus in 2009 on relocating data centers to geographic areas that optimize energy efficiency and cost savings. The dramatic change in the real estate market will have IT executives working with facilities planners in finding the best combination of real estate costs, energy costs, and IT effectiveness. Improvements in data replication and network efficiency will add regions to consideration that previously would not be feasible technically.

All products that companies purchase in 2009 will have some aspect of energy efficiency as part of the sales proposition. Hardware will focus on Energy Star compliance, while management software will tout its ability to optimize use of resource. There will be an increase in attention to thin provisioning in storage area networks as a way to reduce floor space, disk purchases, and energy consumption. Solid state disks (SSDs) will be increasingly marketed by vendors, but they are not likely to make a major impact in 2009 due to their relative high cost.

There will be very few companies left in 2009 that have not already integrated environmental planning between facilities management and data center managers. Planning will shift from reactive changes to immediate data center power and cooling problems to long-range sustainability planning and designs for next-generation data centers. Requirements will be placed on all vendors that have equipment going into data centers to target increases in energy performance of all systems, with the focus shifting from servers, which have fully embraced efficiency metrics, to networking equipment, which will start to show significant improvements in efficiency in the second half of 2009.

Environmental 2009 Reality:

RFG's predictions for data center environmentals were quite accurate for 2009. IT executives and facilities management personnel were charged with saving monies associated with energy conservation. Green technology played a role in helping to demonstrate how refreshers or upgrades could yield ROIs in under a year. In fact, it became quite common to include energy factors into the cost/benefits analyses and the selection criteria. Environmental considerations flowed into the application development cycle as well, and energy usage metrics became recognized as valuable management tools. Additionally, vendors enhanced their offerings so that enterprises could better measure, manage and control real-time energy utilization of the data center and individual systems.




Energy efficiency and other efficiency components were included in the decision-making process for data center relocations. Also as predicted, the dramatic collapse of the real estate market became a factor in the facilities planning efforts along with energy costs and IT effectiveness and productivity. Enhanced tools in the areas of backup/recovery, data replication, deduplication, and synchronization along with bandwidth improvements gave executives additional options for site selection and consolidation. Companies included energy efficiency and other environmental criteria to their acquisition requirements and analyses. Green house gases, hazardous and material wastes, and water consumption also played a role in a growing number of companies. The Energy Star program became but one of many components that companies looked at when making acquisitions. Executives looked at optimization of all renewable resources when making hardware and software decisions. Thin provisioning gained attention and was included in a number of new offerings by storage and virtualization vendors. As stated above, SSDs achieved greater acceptance by users sooner than RFG expected. RFG was correct about greater integration of environmental planning between facilities management and data center management but there are still quite a few companies that have not achieved integration. Planning is shifting from reactive improvements to long-range sustainability; however, RFG overestimated the rate at which this is moving in organizations. It is becoming more mainstream amongst large enterprises and governments but still has a ways to go amongst the small and medium-sized companies. Vendors have already recognized the shift and are building environmental efficiencies and metrics into their new product and service offerings. As predicted, this is impacting networking equipment as well, and is already showing up as an advantage in some networking vendors' sales materials. Enterprise Networking 2009 Prediction Network design in the enterprise in 2009 will focus on facilitating data center consolidation, while improving security and quality of service (QoS). Network designs will look to consolidate the myriad of edge-network appliances that have accumulated over the last several years. Mainstream networking vendors will add more functionality into campus switches, while QoS vendors and security vendors will move to consolidate functionality in their suites. IT managers will not give all consolidated functions to the core network switch, preferring to minimize as opposed to eliminate edge-based network traffic shaping. Cisco will remain the dominant networking vendor in the enterprise, although alternatives to Cisco will be explored at specific network locations such as the data center to search for higher bandwidth, lower cost, energy efficient alternatives. Cisco will respond with a strong increase in focus on energy efficiency, along with its own assault on the data center with blade servers. This will re-ignite the debate on whether the network is the computer or the computer is the network, but extant server vendors will continue to win this battle in the near-term.




Network service providers will continue to expand their move for IT budget with moving up the stack with additional value-added services. Among the services to grow in 2009 will be cloud computing services, with a battle for dominance between server vendors such as Sun with Internet-based companies such as Google and Amazon.com. RFG believes network connectivity will become more important to these services than many enterprises realize today, which will provide an opportunity for traditional network service providers such as AT&T Corporation. and Verizon Communications Inc. to compete here. Voice and data consolidation will continue evolving, with unified messaging integrating with voice consolidation in a more integrated fashion. This integration will continue in a steady, but slower pace than 2008, with economics forcing IT shops to minimize investments in new technology unless there is a clear ROI of less than 12 months. As such, progression for voice data consolidation will occur largely where maintenance is forcing the replacement of legacy PBX systems, which are starting to hit the end of their useful life. Pure IP telephony services will continue to see poor performance, with at least one of the major pure play vendors seeking bankruptcy protection in 2009. Wireless networking will undergo the greatest degree of change in the network space in 2009, for two reasons. First, wireless LANs are expanding their functionality and security. Second, a plethora of new network devices are going to hit the market in an attempt to compete with the popular Apple iPhone as well as the new the new T-Mobile G1, based on Google's open Android technology. 802.11n will start to be deployed in 2009, but budget limitations will continue to delay broad acceptance before 2010. WiMAX will be deployed in 2009 in the United States, but user acceptance will be very slow. There will be a great hesitation to invest in any new technology in 2009, and chip manufacturers are likely to delay the time they are going to deploy WiMAX chipsets into laptops, which will further delay acceptance. As a result, Clearwire will be under extreme financial pressure by the end of 2009, which will likely cause them to significantly curtail the cities that it plans for deployment. Networking 2009 Reality: RFG was correct in predicting network design in the enterprise would focus on consolidation, QoS and security. HP's virtual connect architecture and Cisco's revised data center architecture became strong competing architectural designs that IT staff had to consider as they evaluated new target network architectures. Other key networking vendors such as Brocade Communications Systems Inc. and Juniper Networks Inc. also offered their visions. The shift to virtualization can result in up to 90 percent of edge-network appliances and NIC cards being virtualized. Thus, network architects needed to incorporate these key players' architectures and strategies into their planning. RFG was surprised (as were many IT executives) that IBM was not a major participant in architecting the next generation of data centers. This may prove to be a problem for IBM in 2010 if not corrected.




RFG's view of Cisco's approach to and domination of the market was spot on. Cisco aggressively responded to Brocade's and HP's assaults on its territory and fought back with newer products and marketing programs to address bandwidth, cost, and energy efficiency. It counterattacked HP by entering the market with blade servers and then with its vblock offerings, jointly developed with EMC and VMware. Interestingly, the debate has moved from network-is-the-computer / computer-is-the-network to clouds of all shapes and forms. The new cloud architectural model does play to the strengths of the existing server vendors. Whether Cisco or Dell Inc. (now that it has acquired Perot Systems) can successfully leverage their new business models near-term remains to be seen. On the other hand, Sun's success will depend upon the rapidity and effectiveness of the Oracle acquisition. Cloud computing services saw great hype but traction was slow while managed network services and other value-added services continued to grow in 2009. Amazon.com's cloud services had a number of notable failures during the year which made companies of all sizes recognize the importance of availability and network connectivity. The ongoing security issues of fraud and theft are also impacting the move to cloud services, which is providing a window of opportunity for the networking vendors. Voice and data consolidation is continuing and becoming the norm at most organizations although the pace slowed during the year due to financial constraints. As predicted, RFG is seeing few pure PBX replacements occurring. Users are shifting more to IP telephony services as part of their unified communications and cost savings efforts. However, companies are still experiencing problems, although the trauma that occurred in 2008 has disappeared. Wireless networking did see major changes during the year. The iPhone as well as the G1 and new Droid are pushing enterprises and users to 3G networks and placing greater pressure on vendors to offer more mobility applications, bandwidth, functionality and performance. The adoption of 802.11n has been greatest in the university campus environment, as students are proving to be the largest consumers of bandwidth. WiMax adoption, on the other hand, moved slowly in the United States; however, it did succeed in making gains in India, Japan and Korea. The Bottom Line: Reduced and constrained IT capital and operational budgets impinged on the ability of IT executives to acquire new technology solutions and forced many to delay, defer or extend initiatives. Self-funding projects became quite popular and IT executives drove staff and vendors to find ways to reshape their projects or offerings into a self-funding formula. In that regard, ROI became more important than total cost of ownership (TCO), although the latter still remained a valuable financial criterion. 2009 was a transformative year for IT technology and RFG expects to see these effects remain as a baseline for 2010.




Predictions for 2009: Technology - Applications Part 2 of 2 RFG believes 2009 will be a very tough year for enterprises, as they

attempt to balance their business goals and objectives against the ever increasing demands of IT. However advances in enterprise applications, especially in the areas of end-to-end-to-end processing, globalization, and standardization, will stagnate for most enterprises in 2009. Companies will view new and enhanced enterprise applications as "nice to have" and therefore put non-critical components on the back burner. New metrics, processes, and standards will be adopted in areas such as enterprise risk management but overall gains will be limited. Web 2.0 will remain a technology of interest in 2009 – leading edge firms and Web 2.0 providers will drive innovations in mashups and widgets but general acceptance remains at least a year away. Thin computing will gain ground in the architecture of client systems while netbooks will become desirable for certain use cases. Enterprises will seek ways to reduce the cost of acquisition, connection, maintenance, support, and disposal of these devices as well as improve the privacy and security of information. One result of this will be delays in PC refreshes. Microsoft Corp.'s Windows XP remains the preferred corporate platform over Windows Vista while advances in handheld devices strengthen the dominant players. Overall 2009 Prediction Review: 2009 unfolded very much as expected with most enterprises constraining their IT expenditures. Projects underwent the same scrutiny and IT executives sought ways to self-fund projects or extend the time lines or postpone phases in attempts to meet budgetary constraints. Financial creativity helped a number of IT executives meet their business goals. However, gains in enterprise applications, Web 2.0 and thin computing were minor due to the budgetary constraints most IT executives were under. Netbooks were initially well received but the novelty quickly wore off. PC refreshes slowed in 2009 but are expected to pick up as enterprises look to move from Windows XP to Windows 7. For the most part IT executives developed their 2010 budgets with the belief that the new year would be less constraining than 2009 and the technology refresh cycles will be back on track. Linux and Open Source 2009 Prediction Linux and open source solutions have gained mainstream acceptance in large enterprises, although there is still a hesitation to use them for business critical applications. Linux will see a large growth due to its ability to work with most virtualization platforms, including the mainframe, and Microsoft Corp. is likely to make changes to its Hyper-V hypervisor that will allow Linux to run on top of it as well, expanding support beyond its business relationship with Novell Inc. and Suse Linux.

Experture /RFG





Linux will continue to be the dominant operating system for appliances, with a strong growth in the cell phone/smart phone market. The Google Inc. Android system will gain popularity as a competitor to the Apple Inc. iPhone, with other Linux-based competitors to the T-Mobile USA Inc. G1 coming out in 2009. Security vendors will also continue to rely on Linux-based kernels for various security applications. The pressures of the economy will force IT executives to look more closely at open source solutions. Areas of adoption will start in areas of commoditized functionality, such as messaging and basic collaboration packages. IT management will look at management tools that can provide specific niche functionality for free, but large management suites are not in jeopardy of wholesale replacement. Open source will claim a larger share of the middleware market in 2009, with Java-based middleware continuing to compete strongly with proprietary vendor stacks such as IBM's WebSphere, although vendors such as IBM and TIBCO Software Inc. will continue to work aggressively in incorporating Java and other open software stacks into messaging subsystems. Red Hat Inc. will continue to work on building JBoss, with an open community still contributing to JBoss development. Sun Microsystems, Inc. will focus the majority of its marketing efforts and company research and development to the open source world. With the financial markets implosion, a major supporter of Sun hardware has gone to the wayside. This leaves open source as the main bet Sun has left to succeed in the marketplace. OpenSolaris will not gain the success Sun hoped for, so an increased emphasis will be placed on Java-based elements and My SQL. Linux and Open Source 2009 Reality: As predicted, Linux and open source continued to gain momentum in large enterprises and the barriers to acceptance have mostly disappeared. Microsoft also embraced the inevitable and enhanced Hyper-V with software called Hyper-V Linux Integration Components (LinuxIC). The new offerings go beyond support of Novell and embrace a number of other Linux partners, including Red Hat Inc. The vendor even surprised the Linux community by releasing LinuxIC under the GNU General Public License. In sum, 2009 became the milestone year when all the major hardware and software vendors offered Linux support. Linux still played a dominant role as an operating system for appliances. The Android system and associated offerings took longer to roll out than expected but acceptance is gaining ground. The Motorola Inc. Droid, which is the result of a collaborative effort amongst Google, Motorola and Verizon Communications Inc., was very well received and is being viewed as a strong competitor to the iPhone. The T-Mobile G1, like a number of other Android devices, is a nice product but lacks enterprise support. Nonetheless, Droid and other Android-based systems will gain momentum and will force enterprises to be more agnostic to the users' selection of smartphone appliance. One differentiator proved to the availability of decent mobile applications. These will play an even bigger role in 2010. Security vendors continued to rely on Linux-based kernels.




As expected, the economy did impact IT executives' decision-making criteria and enabled the selection of more open source solutions. Executives were more open to using open source solutions in the areas of tools and commoditized functions than to business or mission critical applications. Thus, open source was considered more attractive in 2009 than in previous years but still has a long way to go before most open source products gain enterprise acceptance. Java applications made progress as well, although some of the newer languages such as PHP and Ruby on Rails are beginning to take hold. Red Hat continued to drive its JBoss offerings and announced its JBoss Open Choice application platform strategy. The purpose is to enable customers to adopt and support the next generation of changes to Java for the enterprise. The world as it evolves around Sun took some much unexpected hits in 2009. First, IBM was going to acquire Sun, but that fell through and Oracle stepped into the breach. Then the European Commission halted the sale pending its review of the impact to the MySQL market. This logjam appears to be ending and Oracle will be able to finish its acquisition in 2010. All of this uncertainty further eroded Sun's hardware revenues and has put the value of the Oracle deal in question. However, CEO Ellison is holding to his views that it will be accretive and he can gain strong margins from the buyout. Oracle will focus on the high margin business and leave the rest to business partners. Whether this works remains to be seen. RFG does not believe OpenSolaris will be embraced going forward. How MySQL is handled also is up in the air, pending the decision of the court, although Oracle has said it would protect (and invest in) the product and its customers to meet EU objections. Enterprise Applications 2009 Prediction The enterprise applications environment will retrench in 2009. While the demand for end-to-end-to-end processing (straight through processing), globalization, and standardization remains strong, the need to execute will not be a high priority in a majority of companies, thereby slowing growth to a crawl. The exception to the rule will be in the business intelligence (BI) space, where the demand to know more sooner by corporate executives, will garner funding for these projects. However, RFG expects executives to demand integrated BI solutions that can be rapidly implemented without expensive services contracts. This could impact SAP AG, in that it has yet to fully integrate its Business Objects offerings. Enterprises applications vendors will also have to contend with software as a service (SaaS) alternatives, as more economical solutions are vetted. In the small to medium-sized businesses (SMBs), the big three (Microsoft, Oracle Corp., and SAP) will see more aggressive competition from mid-tier and SaaS providers. All this will result in the big three players re-examining their business and pricing models. Business and IT executives will be looking for agile enterprise application solutions that address the business workflow on a straight through processing basis (e.g., order to cash to business performance). Additionally, they will need to implement enhanced management controls and metrics so that they can be responsive to changes in their




financial picture and regulatory requirements. There will be a push to integrate key risk indicators (KRIs) with key performance indicators (KPIs), especially in the finance and automotive sectors. However, the desire for automated solutions will exceed IT's and vendor's ability to deliver through most of the year. For those companies focused on strategic alignment, RFG predicts they will invest in enhanced human capital management (HCM) tools that help them better balance and manage their internal resource needs as well as that of their external contingent workforce including outsourcers. Application modernization and rationalization initiatives will follow the same path as the server consolidation efforts. Success in these efforts will enable those firms that complete these initiatives in 2009 to leverage them for business competitive gains. However, for most firms these gains will be within geographic business units, in that for most companies, these efforts still need to be completed globally and across business units. Collaboration and Web-enablement initiatives to improve productivity and reduce travel expenses will receive funding, as RFG believes these projects will be able to demonstrate near-term and sustainable long-term savings. Web 2.0 innovations in the areas of mashups and widgets will be limited to leading edge companies and Web 2.0 providers. It will take at least another 18 months before Web 2.0 initiatives become mainstream. Governance, risk management, and compliance (GRC) initiatives will be a top concern for business and IT executives throughout the year. However, will all the gains mentioned above, RFG does not see 2009 as the year global enterprises standardize their GRC policies, processes and standards worldwide. Changing financial winds and regulatory demands as well as internal politics will result in limited progress. Privacy and security will remain on the front burner and RFG expects to see decent advancements occur worldwide in global organizations, as they seek to address the onslaught of threats. Business – IT alignment will follow the path set in late 2008. Firms with strong management and deep pockets will address both tactical and strategic alignment while the majority of companies will only focus on near-term objectives. Cost, environmentals, productivity, quality, and time to market will be the primary requirements to be tackled. Applications 2009 Reality: RFG's prediction of slow growth in the enterprise application space was realized in 2009. Most executives viewed the need for application upgrades or new functions as discretionary, except where mandated or tied to revenue generation or demonstrable cost savings. The fact that most enterprise application implementations take three months or longer and tend to have a negative impact on operations also impeded the growth of the market. BI was the exception that proved the rule. However, the BI applications that got the most attention were those that were for predictive or real-time analytics. SAP got burnt four ways in 2009: fewer new licenses overall, purchase of point products versus suites, rollback of the planned maintenance price increases, and problems with the adoption and development of its SaaS product set, SAP Business ByDesign. As predicted,




Microsoft, Oracle and SAP is finding aggressive competition from the mid-tier and SaaS providers. Companies such as Agresso, Epicor Software Corp., Netsuite Inc., Salesforce.com Inc. and Syspro Impact Software Inc. are gaining market share and taking accounts away from the major players. While these gains did not yet result in new pricing models for the big three in 2009, the models are under review and RFG does expect to see changes in 2010. Business and IT executives had agility on their list of requirements in 2009 but cost containment had a higher priority. Nonetheless, enterprises did desire enterprise applications that had good workflow management solutions. RFG's expectation for workflow to expand to include business performance was only partially attained due to financial constraints. Executives did strive to refine their management controls and metrics will limited success – mostly in the areas of cost control, governance, performance, and productivity. Gains in HCM tools were not as widespread as predicted for similar financial reasons, while executives did do a better job with management of contingent workforce and outsourcers. Executives were more selective in their outsourcing and many did get price reductions from their providers – who, in turn, were doing all they could to retain customers. Application modernization and rationalization did follow the same path as server consolidation and were amongst some of the major initiatives at large enterprises. Where progress was made, for the most part, it was locally and not globally, as RFG expected. RFG was also on target in its predictions for collaboration and Web-enablement. Web 2.0 did get activity but the biggest play was in the collaboration and social networking space, driven by the younger generations. GRC progress was mixed, along the lines RFG foresaw. This remains a disappointment for RFG in that, from a risk management standpoint, GRC initiatives are critical to the corporate image and ultimate survival but because it is tough to justify the expenses, the projects frequently fail to make the cut for funding. Similarly, privacy and security are front burner items but do not always get the funding needed unless a major breach occurred. Business – IT alignment continued to be high on the list of issues for executives to address in 2009. However, for a number of companies, this took more of a tactical turn while those with deep pockets remained focused on the strategic components as well. Cost, environmentals, productivity, quality and speed to market were critical consideration criteria used by executives when evaluating the alternatives. Client Systems 2009 Prediction This will be a tough year for PC manufacturers as the economic downturn will force many corporations to delay their refresh cycles. Enterprises that choose to refresh will do so because they are firmly committed to an existing refresh cycle because of leasing or are otherwise experiencing significant pains from equipment that is well past its prime. Capital funds will remain extremely tight throughout the majority of 2009, thus requiring IT executives to tap forms of funding that extend beyond existing credit lines. Leasing




will be a popular tool for overcoming funding barriers in all forms of IT asset acquisitions, and RFG expects for leasing rates to increase in the 10 percent range. While environmental and green initiatives will remain essential "must haves" in PC decision process, RFG expects for enterprises to focus on hardware cost more than any other single or combined set of elements. The split between desktops and notebooks should remain around 60 percent to 40 percent respectively, though businesses will be interested in acquiring mainstream systems that are at the lower end of the cost spectrum primarily. Luxury and top-end systems will remain the realm of upper-level executives and high-end power users where expenditures can more easily be justified via objective productivity gains. Budgets during the beginning of 2009 will likely be among the worst on record as corporations aim to contain costs to either cope with or prepare for undesirable market shifts. If budgets are to free up during the year, it is possible that some relief may come during the second half of 2009 as world economies begin to exit the recession and spending on IT begins to free. IT executives should expect for banks and captive funding vendors to increasingly introduce programs with incentives that encourage IT spending to help move hardware and encourage software upgrades and services implementations. The most forward-thinking enterprises and IT executives will revisit the definition of "essential" in determining which projects receive funding, and invest in architectural areas that deliver short- and long-term benefits across the enterprise. Windows XP will remain the prevailing enterprise desktop and notebook platform for the majority of corporations. Most IT executives have selected to hold off on Windows Vista and will wait for Windows 7 to prove itself before committing to that platform. Based on early versions of Windows 7, RFG believes that the operating system will have little to offer enterprises Windows XP besides some additional window dressing and compatibility approaching that of Windows XP. Without any prevailing need to adopt the new platform, enterprises will choose to hold fast on Windows XP for the foreseeable future. Windows XP will continue to run faster and offer the same level of security as Windows Vista and Windows 7, as Microsoft will continue to release the patches necessary to ward off potential threats. Mainstream notebooks will be the primary computing device used by mobile workers, though the low cost of netbooks will force corporations to increasingly consider solutions for occasionally disconnected workers that employ desktops as their primary devices. RFG predicts that a myriad of new netbooks from a multitude of vendors will launch this year, with prices pushing down towards $300 for the lowest end of offerings. Though netbooks will never be targeted directly at enterprises due to their low cost, lower performance, and Windows XP Home operating system, corporations will find the price/performance capabilities of these devices difficult to ignore as acceptable laptop pool solutions. Though solid state drives in these products offer far less space than their conventional counterparts, IT executives will find that eight gigabytes (GB) of space is more than sufficient for the users that employ these products.




While Microsoft and Research in Motion, Ltd. will remain the preferred handheld device operating platforms in 2009, others options will push their way into the enterprise. IT executives will find it difficult to fight off the Apple iPhone given its attractiveness to end users and ability to synchronize with enterprise collaboration systems either natively or with third-party applications. RFG expects Apple to release a revised version of the iPhone later this year for Global System for Mobile (GSM) networks, and greater enterprise integration with asset management technologies is likely. Palm Inc. will finally release one or more handheld devices in 2009 using its much-delayed new operating platform. While backward compatibility with previous applications and ease-of-use should be excellent, Palm will likely find that it has squandered too much time to make a meaningful dent in the market. Palm may need to hook up with another vendor if it intends to remain a consequential player in the market, and Motorola Inc. may prove to be a potential suitor. Application stores will be a major attraction for handheld device purchasers as they look to easily add customized applications to their smartphones, and all major vendors will have numerous attractive offerings in their folds. RIM will continue to gain ground as several new handhelds make their way to market in the middle or late next year, though the touchscreen-only Storm will likely prove a flop given the lukewarm reception it has already received. Client Systems 2009 Reality: 2009 unfolded for enterprise PC market very much as RFG forecast. Executives found it very easy to delay PC refeshes and therefore, those with financial constraints on hardware purchases did delay their upgrades and refreshes. Capital funding remained constrained throughout the year and, where possible and feasible, IT executives tapped other forms of funding such as leasing from IT vendors or equipment leasors. HP's HPFS and IBM's IGF leasing units offered aggressive leasing programs designed to move more products and build customer loyalty through leasing. HPFS offered zero percent leases while IBM countered with competitive zero percent leasing programs, "in the box" financing, project financing and stimulus financing. Leasing did gain ground although overall it fell short of increasing a full 10 percent. Environmental and green initiatives became more popular but did not usurp cost as the major factor. 2009 saw an unexpected shift in the split between desktops and notebooks. For the first time notebooks and other portable PCs exceeded 50 percent of the market, garnering about 55 percent of the overall unit sales. Two factors for this are the continuing narrowing of the price gap between system types and the increased mobility of the workforce. Executives also worked to minimize the number of system options, including limiting the use of luxury and top-end systems to those that can justify them. An interesting dichotomy is beginning to unfold. Enterprises are starting to offer employees the right to acquire any client system they choose. The difference here is that the company funds a fixed amount toward the acquisition of the client system and any additional costs belong to the employee. Thus, cost containment is achieved through the fixed capital expenditure offered to the employee and not through limitation of system options.




Windows XP remained the prevalent desktop and notebook platform. Microsoft informed customers that there will be no more extensions to XP support and then began a campaign to get companies to think of migrating to Windows 7. So while RFG predicted enterprises would hold fast to XP for the foreseeable future, it now looks like Microsoft has a goodly number of them now evaluating an upgrade or planning to upgrade to Windows 7 over the next few years. Notebooks have become the primary mobile PC device. Netbooks appears to have had a fleeting fame but its flame is rapidly fading. This is due to the continued drop in price of notebooks, thinner, lighter notebooks (like the Apple MacBook Air) and the slow performance of netbooks. RIM remained the preferred provider of handhelds; however, the iPhone is making tremendous headway. The G1 did not sell as well due to lack of support and the Droid has not been on the market long enough to have an impact. The Palm Pixi got off to a slow start while Palm's other units were handily beaten by Apple and RIM in the high-end smartphone space. Palm's future as an independent player still remains questionable. Mobility applications are becoming almost as important as the device itself, which could become a problem for RIM in 2010. The iPhone's Internet download capabilities runs rings around RIM's Storm and until RIM fixes this, the device will continue to struggle. The Bottom Line: Reduced and constrained IT capital and operational budgets impinged on the ability of IT executives to acquire new technology solutions and forced many to delay, defer or extend initiatives. Self-funding projects became quite popular and IT executives drove staff and vendors to find ways to reshape their projects or offerings into a self-funding formula. In that regard, ROI became more important than total cost of ownership (TCO), although the latter still remained a valuable financial criterion. Cloud computing created new technology delivery and consumption models, which IT executives expect to become normative across all of what vendors deliver in the future. 2009 was a transformative year for IT technology and RFG expects to see these effects remain as a baseline for 2010.

experture predictions for 2009: grc and security /rfg · infrastructure library (itil ... tinkered...

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