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October 01, 2011

CIO Insights and Trends: How IT Will Change in 2012

This article originally appeared in the Oct. 2011 issue of InfoTECH

The evolution of social media, the challenges of virtualization and the rise of cloud computing in the enterprise are just a few of the advancements in IT that are changing the face of today’s businesses – and the function of the chief information officer. With the alignment of business and IT becoming increasingly more relevant and critical in what continues to be an uncertain economy comes the delicate balancing act of discretionary versus non-discretionary funds; CIOs must reinvent their IT mission to compete and succeed.

Cloud computing, mobile applications and tablets, social communications and video rank among the most critical technologies that have been strategic to organizations in 2011, based on recent findings from IT researcher Gartner. While organizations may not integrate all of these technologies, or need to, others will heavily invest in certain areas in 2012 and become more aggressive in deployments with potential for significant market disruption.

As companies continue to be under cost containment pressure, IT faces increased scrutiny by stakeholders, according to Gartner’s “Top IT Predictions for 2011-2015” report issued earlier this year.

“With costs still under pressure, growth opportunities limited and the tolerance to bear risk low, IT faces increased levels of scrutiny from stakeholders both internal and external,” says managing vice president and Gartner fellow Darryl Plummer. “As organizations plan for the years ahead, our predictions focus on the impact this scrutiny will have on outcomes, operations, users and reporting. All parties expect greater transparency, and meeting this demand will require that IT become more tightly coupled to the levers of business control.”

Gartner analysts say the predictions highlight the significant changes in the roles played by technology and IT organizations in business, the global economy and the lives of individual users. “Gartner’s top predictions showcase the trends and disruptive events that will reshape the nature of business for the next year and beyond,” says vice president and Gartner fellow Brian Gammage.

“Selected from across our research areas as the most compelling and critical predictions, the developments and topics they address this year focus on changes in the roles that technologies and IT organizations play: in the lives of workers, the performance of businesses and the wider world,” adds Gammage.

In an interview with Gary Curtis, chief technology strategist at Accenture, he points out most businesses today are global in some capacity – intentionally or not – and that universal landscape will shape how CIOs need to plan for the future. Curtis, who is responsible for Accenture’s global technology consulting business and works with several of the world’s largest financial institutions and investment banks, told InfoTech Spotlight IT is intertwined with the globalization of business.

Whether it’s a medium-sized business or a large enterprise, “being able to work effectively in a global market is a significant challenge for IT,” Curtis explains. “IT has grown up with a domestic flavor from a time when companies were mostly domestically focused.”

For American businesses, the global market is a relatively new phenomenon, Curtis says. But to succeed, they need to be effective global players across the entire industrial landscape.

“Every major business today, they’re global in some way. Accenture has employees in almost 100 countries. Most major businesses today all want to have a bigger global footprint,” says Curtis.

Across the globe, business strategies are shifting toward revenue growth, with money-making replacing cost-cutting to drive profit. InfoTech Spotlight has spoke with industry leaders who are paving the way for new innovations and reshaping IT priorities, and identified the trends that will continue to change the face of IT in 2012 and beyond.

Consumerization of IT and Security Rank High on CIO’s Agenda

The consumerization of IT trend along with cloud computing truly have the potential to change business over the next year and beyond, according to Markus Nispel, vice president of solutions architecture at Enterasys (News - Alert) Networks. 

If you lined up all the problems that CIOs face five, six or more years ago, in order of priority, and you did it today, those lists would be radically different. Consumerization of IT was not on the top of the list or even on the list seven years ago, according to Curtis. Fast-forward to 2011-2012 and virtualization of infrastructure, exploiting social media and the consumerization of IT rank high on the CIO’s agenda.

“One of the challenges IT faces today, is to try to accelerate the consumerization of IT – it’s a real opportunity and challenging part of managing IT in an enterprise today,” says Curtis. “So businesses can exploit those and continue to develop more and better products.”

Smartphones and smart devices are an example of where IT has an unlimited opportunity to grow into new markets and compete more effectively has become most apparent in the last five to six years.

“Smart devices are penetrating every market. You see every company working against this challenge and asking what is the art of the possible. Traditional application tools to the newer technologies that come with small computers, smartphones, mobile applications and how do I transition my workforce?” explains Curtis. “Almost all of the impact of major improvements – networks, application environments that are user-friendly, show up in consumer markets before they show up in enterprises. The consumer side is much bigger than the business side. We are all part of that; it’s an enormous market.”

New developments such as iPads, iPods, smartphones went into that market first, however, enterprises have more security, confidentiality concerns than consumers and are also tasked with integrating a new technology into an enterprise form and then they have to protect the data, which is another priority in and of itself.

The growing pressure for transparency, within IT and of the organization as a whole, is generating new streams of information, which is adding to the sea of data many organizations are already drowning in. As such, data security ranks among the highest of priorities for CIOs today.

“One of the things that’s happened in the Internet era. It has become much easier to lose control, either through poor practices or not understanding the threat. It’s easy to underestimate the potential for loss,” says Curtis. “In the last few years, CIOs are acutely aware of being ahead of the problem to the extent that is humanly possible.”

“Significant losses of data, consumer and otherwise, are routine. As the security guys that work in this industry face the threat – constant attempts to acquire data from mal-intended people – it’s very difficult to have a 100 percent impenetrable barrier around all the data. It’s a huge challenge for CIOs – definitely at the very top of the list.”

Netronome’s (News - Alert) CTO Gavin Stark says that the IT landscape in 2012 will look the same as it did in 2011, with the need for greater security measures and growth in cloud service provider acceptance.

“First and foremost, next year is more of the same; particularly that security needs continue, and the security risks are not in decline. For example, the growth of applications such as Facebook and Gmail/Google (News - Alert)+ lead to more potential sources of security holes from within an enterprise, and catching these means implementing network monitoring inside the SSL connections that these form,” says Stark. “There will be (continuing) growth in cloud service provider acceptance for medium enterprises; this comes tempered by the security aspects, and the risk of data loss through hacking of CSPs. This risk will be mitigated by better security permeating the CSPs, as for their business model this is do-or-die.”

According to HP’s Senior Vice President of Worldwide Marketing Dave Shirk, the issue is being able to harness that data and exploit it.

“CEOs and their public sector counterparts are asking their IT departments to glean better insights from the mass of data to drive revenue growth, greater customer/citizen personalization and deliver better services. Analytics is key, and a big reason why HP acquired Vertica – for the ability to quickly process both structured and unstructured data to glean meaningful insights,” says Shirk, referring to the company’s recent acquisition of the data analytics firm.

To give this greater perspective, we need to ask, how big is the data explosion? Here are a couple stats to consider:

  • In 2005 estimates are that mankind created 150 exabytes of digital data. In 2010: it will create 8x more (Economist 2010).
  • Failure to control data can be costly. Reactive legal discovery costs are estimated at approximately $1.8 million per terabyte of data (HP and HP Client analysis)

But as Accenture’s Curtis points out, there is no such thing as watertight IT security – the “fortress mentality” is outdated, and no longer realistic or practical. He predicts automation will quickly become a “must-have” component in the overall security strategy of every IT organization.

Cloud Computing

As adoption rates slowly move forward, the mindset around cloud computing will shift from obvious but non-differentiating benefits such as cost reduction through cloud infrastructure to where the cloud will have its real impact: in areas such as Software-as-a-Service (SaaS (News - Alert)) and Platform-as-a-Service (PaaS). Together, these cloud categories will enable IT to create value through a combination of cost reduction, speed to market, agility and the ability to gracefully integrate business processes with partners and suppliers, according to Accenture’s Technology Vision 2011 report.

It’s safe to say CIOs in every major business are very strongly focused on understanding on what the opportunities they can exploit are in cloud computing, Curtis adds. A cloud model offers obvious benefits: cheaper pay-as-you-go delivery methods, less operational complexity and fewer, if any, servers to manage.

“In general, almost every major business is trying to migrate its internal infrastructure to more of a cloud architecture internally,” he explains, noting however, “It’s a journey, it’s not a switch you flip. Infrastructure has to be virtualized and thus made very common. It’s the art of the possible, not the art of the immediate.”

As Curtis points out, thought, it’s more difficult for older legacy applications to move into a cloud environment than it is for SOA applications, for example.

“CIOs are faced with an important opportunity that improves flexibility, and automation. Because they are so enormously scaled, the costs are far lower – most CIOs can see the future that is a very promising with respect to lowering the N/D costs, make it faster and easier to bring up new applications because of the high level of standardization in the cloud environment. It’s about getting on the journey and finding a way to point A t o point B,” continues Curtis. “Every CIO sees cloud computing as the future, whether it’s going to take months or years and should be asking ‘where are we on the moving from point A to point B?’ I don’t think you’ll find a CIO today that doesn’t believe cloud computing is a very important part of the operating paradigm.”

The demand for cloud is anything but an IT fad; it is coming from a host of business functions. According to Gartner research, 8 percent of U.S. corporations had implemented a cloud service at the end of 2010, and Gartner expects that number to jump to over 50 per cent by the end of 2012.

“Businesses migrating to the cloud are starting from different points – it’s getting your arms around taking this journey and making plans to build as much as new application demand as possible,” Curtis advises. “At some point you have to decide the business case from moving from legacy to cloud or not or let nature takes its course. There’s no two answers that are identical, but the goal is very similar.”

One of the questions most CIOs are grappling is whether to build their own cloud, or to utilize a public cloud like Amazon? Curtis says the market for external clouds is not diverse enough today simply because there are not enough suppliers.

“So you don’t necessarily don’t want to get locked in to one supplier. Push the clock ahead four to five years, and you’ll see a much more robust list of public cloud suppliers,” predicts Curtis.

Many supply chain companies, for example, will look toward the public cloud, but could be holding off because they are waiting for that diversity and eventually, better cost competition.

“To some degree, businesses are asking ‘when do I want to land in this cloud? Do I wait until better diversity?’ It’s complicated business,” says Curtis.

The diversity of starting points and questions about, how far along do you want the cloud to mature…do more investment in the public cloud. I think CIOs are pursuing this. Good business people want to do the right thing for the company at the right time and to understand where one is going are key variables.

“The question is now where are we on the spectrum of migrating to a more cost-effective cloud environment, and they ought to be able to answer that,” says Curtis.

But Accenture expects hybrid clouds – mixing public and one or more private services

– to emerge as the dominant model in most enterprises. As data and services 10 are spread across a variety of service providers, hybrid models will provide the best balance of flexibility while managing risk. In such an environment, IT will focus on orchestrating the business process while treating everything else as a service, according to Accenture’s Technology Vision 2011 report.

 

In an interview with HP’s Senior Vice President of Worldwide Marketing Dave Shirk, he explains how cloud is a key priority for HP and its long track-record of helping clients consume, build, manage and secure cloud services, using both public and private models.

“HP sees cloud computing at the heart of a connected world, one that HP will lead with services, solutions and technologies. As such, HP offers services for both models, serving the needs of the line of business and developers, all the way through the largest enterprise companies. We believe a close collaboration with developer communities, combined with HP’s global portfolio, is crucial for delivering seamless and secure cloud services to our customers,” explains Shirk.

For example, HP has built and hosted seven of the top 10 Cloud xSPs, 4 of 5 of the world’s largest search engines, eight out of 10 of the world’s most trafficked websites, so HP is already hosting and building private clouds. 

“We will expand our efforts by offering public clouds along with our private and hosted clouds, which will serve consumers and businesses alike,” says Shirk.

Over the next 12 to 18 months, the biggest drivers of change in the cloud ecosystem, he says, will be mobility, open source, open and transparent APIs, the customer’s desire for lack of vendor lock-in, the shift to PaaS and increasing industry consolidation.

“We must keep in mind that the ultimate end game is a much more efficient enterprise that has the flexibility to make choices based on what is important to them,” says Shirk.

Netronome's Stark says that while pre-recession plans are still relevant, the landscape has been evolving fairly quickly, with a need for evolution of the plans.

“This can pull in more than one way: it may seem that it encourages the migration to the cloud, as this can reduce costs in the long term, while providing for the flexibility of businesses that may not remain the same size. On the flipside, there is a cost to migrating to the cloud, and for some this cost is something that is readily postponed. The balance will probably be a slightly faster shift out to the cloud, but it is interesting to watch.

Social Media

The evolution of social media will continue to disrupt the way companies do business, posing new challenges to IT as it attempts to harness social media in the enterprise, says Accenture’s Curtis.

Social media has become a key resource in any IT function, Curtis says, requiring companies to employ IT people with talent. “You need to have people on the company payroll and trusted suppliers. Today social media is a major factor in people’s lives – and we are seeing more business penetration in the social world.”

Twitter’s service generates billions of tweets per month and, as Curtis points out, more than half of Americans are on Facebook today. In addition, almost 80 percent of people of all ages are on Facebook or other social media, and as another example of the consumerization of IT, companies today are trying to build their own social media fabric.

“It’s a human phenomenon, it’s part of the fabric of people’s lives. Companies make sure they allow their employees, as part of their work life, to access social media. Today it’s increasingly rare for companies to restrict [access],” says Curtis. “More companies are becoming more accepting of societal media – today, you do run into companies that restrict access, but I think those will entirely go away.”

Today, businesses are using their own social networks to exploit the benefits that social media has brought to market. Accenture, for examples, utilizes Yammer (News - Alert), a platform that connects employees in a more social nature than IM or email built for workplace conversations.

“There are many people who believe that generations that have grown up without technology were more effective. Their concept of a team is different. Most millennial generations have a different idea of what they think a team is. You will get definitions that are much broader,” says Curtis.

One dynamic that has changed in the past decade is the concept of communally solving a problem, which is everyday for millennials, but relatively new to older generations.

“You can see that change happening whether you like it or not,” says Curtis. “Today, we are very different how we work, how we solve problems, and how we form professional relationships. This is the forcible shape of the force of the future.”

In 2012, businesses will discover greater value that social media can bring to the table.

“From our perspective, social media will move from a pure marketing engine to a business productivity enabler,” says Netronome’s Stark.

Within and outside of the enterprise, social media facilitates instant connections to ideas and collaboration, as HP’s Shirk points out.

“It can quickly provide feedback and involve the customer in the evolution of a product or service.  It can help individuals connect and create new innovations,” says Shirk. “Social media’s adoption is also being driven by demand where a set of self selected technology tools will be used in the work environment, as today’s workforce expects to be able to use what technologies/devices they prefer. This personalization will challenge the traditional role of IT as a supplier and evolve it into the role of broker of services.”

As both Curtis and Shirk point out, the entry of the Net Gen and Gen-X employees into the workforce brings a new way of looking at problems. 

“This generation is used to looking at everything they consume as a service. For them, the ‘not invented here syndrome’ is a foreign concept and, as they follow the Baby Boomers, who will retire in massive numbers over the next 10 years, these younger entrants in the workforce will be promoted more rapidly,” says Shirk.

IT Driving Business Results

So if it’s not enough that IT is faced with challenges in the consumerization of IT, virtualizing infrastructure, exploiting social media and securing a mass amount of data, consider the mounting expectation that companies must also ensure that IT drives business results and supports revenue growth.

As Curtis points out, there is “considerable variance as to how that happens. There are two major angles – first and foremost, IT is a significant cost space. Largely and generally there is a growing cost of business especially as we move to a mostly digital economy,” explains Curtis. “IT has to control and CIOs must ensure that it understands its cost structure is in two major components: non-discretionary/discretionary.”

HP’s Shirk says technology is playing an increasingly pivotal role in driving business results, helping enterprises gain competitive advantage and secure overall growth.

He points to HP’s Instant-On Enterprise vision, which helps business and governments achieve differentiated competitive or service advantage by embedding technology in all points of the value chain to customers and citizens.

Looking out across the IT horizon, HP sees some significant trends that are shaping the next generation of successful businesses and governments, says Shirk.

“The first is disruptive business models which occur when technology combines with extreme market conditions, new business models evolve.  Technology often drives new buying patterns for goods, lower barriers to entry for markets, or leap frogs over an entire generation of business models,” he explains.

For example, emerging countries around the world have skipped land-line communications and brick- and-mortar banking systems, Shirk adds.

“Instead they leapfrogged to the next generation of wireless communications, which also became the foundation for electronic financial transactions.  So, technology is a fundamental enabler of innovation and it has been reinventing bricks-and-mortar industries and government services across many waves of computing,” he says.

HP is also seeing fundamental shifts in technology, particularly with mobile and cloud computing as they are reshaping the expectations and role of IT in the enterprise.

Analysts predict that 130 million enterprise users will be using mobile cloud by 2014 and mobile applications worldwide downloads will surpass 21.6 billion by 2013.

As a result this mobile and cloud connectivity will build new virtual industries that deliver a new class of aggregated services globally that enterprises can adopt. This will act as an accelerant to its adoption.

As Netronome’s Stark points out, the list of potential disruptors is long: higher bandwidths continue to arrive with packet optical networks; server power consumption per CPU cycle continues to drop; the OpenFlow network standards drive pushes performance with flexibility within the cloud; and as ever, security attack vectors seem to be constant only in their increase.

Starks concludes: “The benefits of the cloud continue to grow. CIOs need to be aware of the very real benefits of cloud service provisioning but keeping firmly on the security of their network and data within the CSP; understanding the security aspects, and how attacks can be mitigated, is as much the CIO’s job as the CSP.”

 


Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TMCnet, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Stefania Viscusi