Enterprise IT in 2011

by Mark Settle, CIO, BMC Software, December 27, 2010

Mark Settle, CIO, BMC Software, points to four centrifugal forces that are reshaping IT’s conventional ‘command and control’ approach to designing, building and operating business systems

2010 has been a mixed year for the IT industry.  While the force of the recession has been felt in all markets to varying degrees, the technology sector has played a leading role in the gradual recovery of the global economy and technology vendors – large and small – are beginning to experience growth in both revenues and margins.  The allure of ‘cloud computing’ has created something of a ‘wild west’ environment with vendors making major investments in IT infrastructure that can be offered to enterprises as ‘on demand’, variably priced services.  SaaS spending has also burgeoned, breaking the USD 10 billion mark for the first time.

At the beginning of every new calendar year, the IT industry engages in a ritual round of ‘hand wringing’ over the importance of aligning IT with the needs of the business.  While that requirement will never go away, it will be partially offset in 2011 by the need to align IT with the new range of services being offered by technology vendors.  IT shops learned long ago that it is difficult and expensive to build systems from scratch and operate them solely with internal resources.  As businesses try to respond to competitive challenges with increasing agility and IT seeks to cost-effectively expand into new markets and geographies, the IT management model will need to change as IT shops become brokers of services procured from a variety of sources.  

It is ironic that after years of adopting the principles of technology standardization and vendor consolidation, most IT shops will realize in 2011 that they need to deal with a wider variety of service providers. To an extent, they will face losing control of their technology blueprints in leveraging the ever-expanding catalog of software, infrastructure and support services that are emerging in the market.

Mark Settle, CIO at BMC Software, points to four centrifugal forces that are reshaping IT’s conventional ‘command and control’ approach to designing, building and operating business systems:
1. Mobility
The consumerization of IT is booming.  The use of iPhones, iPads and other personal devices is expanding rapidly in most enterprises, largely outside of IT’s control and/or knowledge.  It’s interesting to note that iPads are not necessarily replacing Blackberries, iPhones or laptops in the business environment – in many cases they are just one more channel for staying connected and being productive.  

Employees are building their own customized ‘productivity environments’, cobbling together a mixture of applications; accessing email, Sharepoint and other internal services; while still logging into conventional administrative applications.  In a good year, most IT shops may deliver one to two hundred major enhancements to existing applications or completely new business systems. But to put this in context, iPhone and Droid developers are routinely delivering over 10,000 applications to the marketplace per month.  Even though a majority of these apps have narrow functionality, Settle believes IT shops are fighting a losing battle trying to restrict the use of these new mobile tools.

2. Collaboration technology
Salesforce Chatter, Jive and SharePoint tools are all becoming increasingly popular as businesses look to technology to help them engage a greater range of stakeholders and audiences on a near real time basis. Settle argues that these cost-effective, open platforms will boom next year, although he cautions that what seems great on paper still requires significant management in order to ensure it delivers.  He claims that the ability to derive business benefits from these tools is not a technology issue but rather a governance issue in terms of how interest groups are created, focused and nurtured.
3. Cloud and virtualization
The hot IT topic of 2010 is now shifting from theoretical consideration to practical deployment. Interest in cloud computing in 2011 will no longer be ‘what?’ but ‘how?’ as companies look to introduce a mix of SaaS, virtualization technologies and public cloud providers into their infrastructures. For Settle there are still risks that early cloud adopters could fail to put in place disciplined strategies for agility and cost reduction, however he believes 2011 will see companies get smarter with IT financing and utilization levels in order to justify additional capacity procurement. Settle does not expect immediate acceptance of cloud however.  Business departments will resist the loss of asset ownership, network teams will face less visibility and control and storage must upscale to provision infrastructure. In addition, service delivery times will shrink rapidly and it is likely that IT will feel pressure from the business to deliver against increasingly demanding SLAs.
4. Information security
As businesses become increasingly data-dependent and interconnected, the potential threat and resulting impact of security breaches will be higher than ever.  Threats are becoming progressively more pervasive, sophisticated and global, intensifying an ongoing ‘chess game’ between IT security groups and ‘the bad guys’.  While this is nothing new in itself, the increased use of third party apps and unapproved technology assets in the environment means that for Settle, “nothing about this problem is getting better or easier.” IT management has seen security-related spending increase year over year, despite the recession.  IT executives are struggling to establish effective risk management strategies that can either stop or reverse this trend while still reducing their risk exposures.  Security expertise is difficult to afford, recruit and retain in most organizations which inevitably leads to greater dependence on third party services to ‘plug the holes’ in a company’s security infrastructure.

With these four areas becoming the top CIO priorities for 2011, Settle expects that cash-rich IT super-vendors are going to continue their spending sprees of 2010, looking for “bargain basement” buys and innovative technologies to add to their portfolios. Big companies willing to pay premium prices for strategic acquisitions still have large cash ‘war chests’ to invest in high potential markets such as cloud computing.  Settle is hopeful that VC spending on technology start-up companies will return to pre-recession levels – bottom up investment in the technology ‘food chain’ that could unlock the flood gates of post-recession innovation and acquisition in 2011.
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