Content & Collaboration Strategies: META Trends 2004/05

META Trends 2004/05
Content & Collaboration Strategies

1. During 2004, progressive IT organizations will pursue a unified knowledge worker infrastructure (KWI) that reduces
complexity and lowers costs, while enabling greater business flexibility and organizational productivity. KWI efforts will
require cross-functional teams to ensure alignment among business, architecture, and infrastructure strategies. KWI
services will largely remain portal-centric through 2005. Modeling, composition, and delivery of KWI services will be driven
by business process management tools via Web services-based components by 2008.
2. Throughout 2004, organizational productivity strategies will drive the integration of knowledge and human capital
management efforts into a holistic program to improve workplace performance and innovation (WPI). Focusing on the
connections of people to teams, communities, process, and information in evolving workplaces will become a vital
discipline for adaptive organizations by 2005. Knowledge management methods and practices will become critical for
blending business processes and social networks to maximize enterprise productivity and drive competitive advantage
through 2008.
3. Through 2005, organizations will be forced to expand their definitions of what content requires formal management,
due to increasing compliance and legal risk (e.g., e-mail and collaborative interactions). By 2007, most Global 2000
organizations will take a Web services-based infrastructure approach capable of addressing all forms of digital content
through their life cycles. This will result in greater overlap with storage and relational database vendors for strategic
G2000 deployments that will increasingly blur data and content management. G2000 tactical and small/mid-market
opportunities will remain dominated by solution-oriented vendors and their partners.
4. Competitive, regulatory, and aging workforce pressures will prompt organizations to improve business agility and
competencies of employees by expanding enterprise learning management strategies in 2004. Adoption of learning
management technologies will see moderate growth as organizations consolidate departmental efforts into broader
enterprise platforms, integrating HR, content, collaboration, and portal frameworks through 2006. Delivery of learning
services will become ingrained in workforce management efforts and knowledge worker infrastructure by 2008.
5. Through 2004, organizations will rein in tactical collaboration products (instant messaging, teamware, and Web
conferencing) for companywide deployments, driven by architecture needs, product standardization benefits, and
shared infrastructure flexibility. By 2008, “contextual collaboration” — enabling organizations to embed collaboration
into production applications — will span customers, employees, and partners, creating time-to-market, problem
resolution, and travel displacement efficiencies as part of an overall service-oriented architecture-based knowledge
worker infrastructure strategy.
6. As ad hoc electronic communication grows in importance (e.g., e-mail, instant messaging, Web conferencing),
organizations will be challenged to create a hygienic and low-cost infrastructure. Through 2006, special attention will be
focused on spam blocking and policy enforcement (e.g., regulatory compliance). By 2007, rising electronic communication
volumes will frustrate users coping with information overload and drive organizations to employ common filters, queuing
services, and categorization engines to ease communication burdens.
7. Information overload will continue driving organizations to invest in content intelligence services (information
categorization, delivery, discovery, retrieval, mapping), versus generic enterprise search. By 2007, most organizations will
upgrade or replace current search-centric technologies with Web services-based alternatives from comprehensive vendor
suites or lower-cost, technologically competent alternatives from megavendors or hosted services.
8. In 2004, XML will be employed as both a content format and content wrapper to enable roundtripping according to
various XML schemas defined by vendors, industry/enterprise standards, and end users. Support for XML and Web
services within office productivity desktop publishing software (including viable non-Microsoft alternatives) will enable
productivity tools to become better integrated with document services and business processes by 2005. Through 2010,
XML-based documents will slowly evolve to attain a semantic level of intelligence containing content, audit history,
access/security rights, and contextual process information.
9. Through 2006, specific digital rights management (DRM) technologies will be pursued by content producers and rich
media distributors; however, corporate users will continue to experience mixed success, with most deploying DRM for
specific business uses and in controlled environments. New solutions will emerge by 2007/08, based on the evolution of
trusted, virtualized multidevice platforms, resulting in a rationalization of niche DRM technologies as natural market
consolidation and legal claims over patents both accelerate.
10. Corporate interest in rich media beyond public-facing Web sites and more visual user interfaces will slowly expand as
organizations seek to improve information exchange and collaboration. Through 2006, maturing tools, techniques,
infrastructure, and automation will enable rich media to extend beyond niche applications and into core line-of-business
processes. By 2008, user interaction models will include broadcast-quality visualization/communication services and IT
architectural support of rich media.
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META Trends 2004/05
Energy Information Strategies
1. Energy utility IT organizations in 2004 will continue to be under pressure to control costs and provide value to the
business. However, we expect an overall average increase in IT spending of 5%, driven by regulatory compliance (e.g.,
Sarbanes-Oxley), security, grid reliability, and wholesale market operations. Further modest increases are projected for
2005-08 as the global economy returns to growth and industry restructuring regains momentum.
2. During 2004/05, continuing pressure to achieve operational efficiency, adoption of the asset management model, and
a regulatory environment favoring the purchase of services versus internal provisioning will drive significant increases in
outsourcing. Emphasis will initially remain on tactical/transactional outsourcing, but will eventually migrate to
strategic/business process outsourcing, with a strong emphasis on customer service and billing.
3. The uneven pace of energy market restructuring will continue as Europe and Asia Pacific proceed with retail
contestability, while in North America, particularly in the US, retail contestability will remain sidelined as the focus shifts to
wholesale market normalization. Jurisdictional battles between the US federal government and the states will continue in
2004/05, though large commercial and industrial customers will gain access to the wholesale market. By 2006-08,
wholesale markets will normalize and retail contestability will re-emerge.
4. After several years’ hiatus, mergers and acquisitions (M&As) will re-emerge during 2004-06 as private equity firms
and energy companies — bolstered by improved bottom lines, anticipated PUHCA repeal, and economic revitalization —
seek to further improve balance sheets and market position through growth. At the same time, M&As by energy IT
solution vendors will accelerate as providers attempt to expand their footprint, looking for the “sweet spot” across energy
delivery, wholesale market operations, and customer/retail domains.
5. The drive for operational excellence and improved financial performance will force energy companies to integrate and
optimize business processes across functional areas while using existing legacy applications. Leveraging Web services,
emerging composite application architectures, and efforts to define common semantics across energy domains, business
performance management — with its inherent capabilities to integrate, orchestrate, and optimize complex business
processes — will start transforming energy companies’ legacy applications into service-oriented architecture
environments.
6. As the worlds of physical and financial energy continue to converge through 2004, generation-heavy companies must:
1) increase output; 2) sell/hedge production; and 3) improve productivity. During 2004/05, generators will complete
upgrades of plant systems. By 2005/06, increased intelligence delivered in risk management, asset management,
resource planning, fuel management, operation planning, environment, and safety/training will shift the importance from
plants to the portfolio of plants to the enterprise.
7. Needs for tighter integration of resources in generation and transmission, better management of contract risk, more
accurate forecasting of demand, increasing and more complex data exchange, and development of new processes for
bidding, scheduling, and settlement will drive increased investment (2004/05) in “market operations” and help promote
market normalization. Longer term (2006-08), interorganizational (RTO) data exchange will be facilitated by standards-
based technical architecture, infrastructure, and protocols.
8. In response to recent blackouts, and driven by government proposals to restructure wholesale power markets, electric
transmission in 2004/05 will continue to be unbundled from generation and distribution, and will require increased
investments in assets and technology. Technology investments will include metering, EMS/SCADA, work and asset
management, business analytics, security, and information-intensive energy technologies (e.g., FACTS, energy storage).
During 2006/07, mergers and acquisitions will create national/super-regional grid companies.
9. The energy industry’s distribution segment will continue to focus on operational efficiency and regulatory compliance
during 2004/05, pushing business functions out of the office to field staff, contractors, customers, and government
agencies. This will drive investments in work and asset management, mobile computing, business analytics, and resource
optimization. During 2006-08, focus will shift to real-time network management, driving investments in new analysis,
monitoring, and control technologies.
10. CRM initiatives in energy will mirror the industry’s bifurcation into energy and asset value chains. Predominantly
regulated energy markets will continue to make tactical investments in operational and collaborative CRM components to
support service improvement and cost reduction initiatives. Fully contestable retail markets will invest in comprehensive
CRM solutions with increased analytical capability to support customer acquisition/retention and reduce energy
commodity risk management.
META Trends 2004/05
Enterprise Analytics Strategies
1. Business process instrumentation (facilitating business performance management) will become common in 2004/05,
and industry-standardized metrics will be broadly adopted by 2006. During this time, visualization of the instrumentation
will be incorporated into core analytic solutions, with sophisticated data mining/correlation and pattern matching
technologies applied to this data.
2. Data management will increasingly be viewed as a part of overall integration architectures and designs (2004/05).
This will cause organizations to consolidate these efforts organizationally (i.e., COE for integration services), to take
advantage of common technologies and skills. Distinct data integration technologies (e.g., EII, ETL, EAI) will converge
(2007), ultimately surviving only as various subsets of intermediary capabilities in the service-oriented architecture (2009).
3. During 2004/05, enterprises of all sizes will increasingly turn to vendor solutions in the build-versus-buy decision for
master data management. Certain solutions will initially support primarily internal information (customers, employees), but
such frameworks will extend beyond the enterprise to partners and suppliers by 2005/06. Relentless evolution of
middleware will continue as developments in federated query processing, the XML Query (XQuery) standard, and the
business need for convergence of unstructured and structured information stores force more consolidation within the
middleware vendor ranks (2005/06). By 2007/08, the continued decline in memory and CPU prices will foster a new set of
in-memory database capabilities suitable for aggregating diverse information sources in real time as a standard feature
found in the mainstream database oligopoly (IBM, Microsoft, and Oracle). By this juncture, both the mega application suite
vendors and the specialty middleware vendors (EAI, ETL, CDI/EII) will have evolved to industry-specific configurations.
4. During 2004/05, as next-generation application packages (e.g., ERP, CRM) become Web services-enabled, data
mining vendors will make the same architectural shift to exploit “plug-in” data mining for service-oriented architectures. By
2005/06, industry standards (JDM, PMML, SQL/MM data mining) will greatly ease interoperability of algorithms and
models. By 2007/08, data mining will permeate all application areas due to dominant industry standards, Microsoft’s
entrance with commoditized product, and Web services rearchitectures.
5. During 2004/05, mega application package vendors’ data warehouse (DW) infrastructures will continue to coexist on
their own merits as insular solutions (e.g., Oracle EW, PeopleSoft EW, SAP BW). Concurrently, market-leading business
intelligence (BI) tools will thrive as the user interface for both megavendor-centric and heterogeneous environments. By
2005/06, Microsoft’s commoditized DW infrastructure will attract small and medium enterprises and concurrently drive
down BI and related infrastructure prices for Global 3000 enterprises. By 2007/08, mega application package vendors will
successfully besiege the market for BI suites as standalone solutions for non-package-centric solutions.
6. In 2004, BI, ERP, and financial analytics vendors will increase BPM footprints to enable business application-
integrated performance management and compliance with regulations (e.g., Sarbanes-Oxley). By 2005/06, firms will
gravitate toward integrated analytical suites to leverage common metadata and ensure consistency. During this time, BPM
principles will be applied to other business areas (e.g., HR, CRM), integrating these processes into the financial business
plan. By 2007/08, most multi-unit/global organizations will have deployed a cohesive BPM solution critically linked to
enterprise scorecards and external benchmarks.
7. During 2004, enterprises will pursue business intelligence (BI) standards — enterprise reporting, ad hoc
query/analysis, online analytical processing, and analytical dashboards — to increase consistency, promote reuse, and
reduce costs. By 2005/06, standard BI tools will be linked to comprehensive BPM strategies enabling drill-through
reporting and tighter management of business processes with key performance indicators. By 2007/08, organizations
will incorporate BI platforms into comprehensive information delivery architectures, delivered through portals to a
broader user constituency.
8. During 2004, Global 3000 organizations will attempt to reconcile their mélange of fragmented customer analytic
initiatives. Initially, these efforts will be impeded by lack of integration across myriad point solutions (e.g., campaign
management, customer profitability, sales pipeline analysis). By 2006/07, IT organizations will be compelled to deliver a
common (if not industry-standard) data model that defines a pan-organizational customer. This common data model will
help unify the disparate snapshots of a customer and deliver a more comprehensive view across all channels (e.g., Web
sites, call centers, direct sales) and with business partners (2007/08).
9. During 2004/05, most enterprises will finally accept that enterprisewide metadata initiatives are too challenging and
costly when weighed against their benefit and the overt disinterest of application vendors. Instead, the core focus will
remain on project-oriented and technology-centric metadata management. A dramatic increase in information sprawl
through 2006/07 will precipitate a move toward introspected metadata, in which data profiling tools are used to
automatically discover and relate data sources (and other IT portfolio components). By 2008/09, introspected metadata
will be used universally to generate data quality logic, dynamically adjust data integration logic, gauge information
management policies, and tag information with owner/quality/usage/privacy indicators.
META Trends 2004/05
Enterprise Analytics Strategies (cont.)
10. Through 2004/05, enterprises will continue to find ways to consolidate analytic initiatives and architectures — or at
least thwart rogue efforts. Concurrently, realities about advantages and limitations of enterprise information integration
(EII) become well understood — EII is predominantly used to streamline general application development efforts, not just
extend data warehouses or replace operational data stores. By 2006/07, real-time and scalability hype will give way to the
more pressing issue of information variety, in which data integration solutions tackle the breadth of packaged applications,
tap unstructured data sources, and adapt readily to unforeseen environmental changes (if not altered data formats and
data streams). Through 2008/09, data integration solution providers will turn their attention away from technical
differentiators and toward incorporating conduits for the burgeoning range of commercially available data.
11. In 2004/05, tactical and operational decision making will be bolstered by the increased availability and accessibility of
subtransactional data (i.e., granular activity between discernible business events). Although query and reporting tools will
reach the masses through 2006/07, business applications themselves are quickly becoming the primary consumer of
analytic output. By 2008/09, information service organizations will emerge to offload the banalities of information
management — enabling organizations to refocus on core business capabilities. At the same time, information accounting
(borrowing liberally from financial and material asset management practices) will become popular and standardized.
12. During 2004, Global 3000 organizations will continue to stay in reactive mode to fix data quality issues, though the
visibility of problems caused by dirty data (not limited to name-and-address data) will increase within the organization.
Originally focusing mostly on address data, the data quality aspect will widen to include process, product, and financial
data. By 2005/06, data profiling and data quality will gradually become enterprisewide initiatives, with new job roles and
an appropriate organization driving it. Market consolidation will continue, with point solutions getting acquired by larger BI
platform vendors. By 2007/08, data quality will be a strategic initiative for most G3000 organizations, including a
metadata-driven approach to integrating disparate data sources, as well as data enrichment through external sources.
META Trends 2004/05
Enterprise Application Strategies
1. During 2004/05, lack of perceived value resulting from technology overinvestment will drive organizations to realign
their CRM initiatives with their business strategies. Concurrently, legacy applications nearing end-of-life will motivate
organizations to upgrade to next-generation CRM architectures. By 2006, CRM transformation will become strategic for
mainstream organizations, supported by industry-specific products, service-oriented architectures, integration frameworks,
and articulated value propositions. Concurrently, 15% of Global 2000 organizations will approach end-state CRM, having
succeeded in imbuing customer life-cycle management into their business practices.
2. During 2004/05, Tier 1 ERP vendors (e.g., Oracle, PeopleSoft, SAP) will focus on building comprehensive application
infrastructure for commercial sale, albeit with limited appeal to non-ERP shops. On the other hand, standalone/emerging
vendors (e.g., CRM, SCM) will leverage commercial infrastructure (e.g., BEA, IBM, Microsoft) to facilitate application
integration. Through 2007, vendors will evolve to service-oriented architectures. Concurrently, proprietary development
environments will merge with ubiquitous tools (e.g., Eclipse, Visual Studio .Net) to support new application development.
3. During 2004/05, organizations will upgrade aging sell-side capabilities, enabling Web storefronts to become the
primary multi-channel customer interface integrating all points of interaction. By 2006/07, these capabilities will enable the
delivery of a single branded experience that is specific to the customer type (B2B vs. B2C) and business model,
supporting extended relationships where best practices and processes from all constituent relationships (employees,
channel partners, suppliers, and customers) are leveraged and common technology components are reused.
4. By 2005, product life-cycle management (PLM) will evolve into an enterprise-level strategy for addressing product-
related intellectual capital from an inter-enterprise process and data model perspective. By 2006, PLM solutions will
become the product-related data and information backbone to support other critical applications (e.g., SCM, SRM, CRM,
BI). By 2007, niche project portfolio management vendors will begin to merge with PLM vendors.
5. Through 2004/05, CIOs will quantify the business value of IT by constructing the enterprise application portfolio (EAP) as
a “lens” over the application, with direct links to its enabling technology (e.g., operations, infrastructure). CIOs must develop a
common grammar to describe IT in a value-based application context and repeatable processes (i.e., EAP management). By
2006, EAP management (including application auditing and consolidation) will require renewed emphasis on the IT/line-of-
business partnership, business-oriented metrics, and associated business measurement program.
6. During 2004/05, post-“go live” ERP organizations will focus on total cost of ownership, value delivery, usability,
continuous business improvement, and targeted extensions (e.g., supplier relationship management, channel management).
ERP vendors will offer enhanced post-implementation services to maturing ERP customers. During 2004-07, ERP vendors
will redouble their efforts to penetrate the midmarket, competing more aggressively with Microsoft and a shrinking set of
small ERP vendors. By 2007, ERP vendors will embrace Web services to support inter-enterprise integration.
7. During 2004/05, Global 2000 firms will significantly improve enterprise financial management by deploying integrated
solutions from ERP, BI, and niche vendors for financial value chain, compliance (e.g., Sarbanes-Oxley), and business
performance management (BPM) functions. By 2006, 35% of large companies will consolidate standalone BI
infrastructures that support reporting/disconnected analytics into consistent enterprise BPM frameworks. By 2007, 60% of
firms will outsource at least one transactional financial component (e.g., expense management) to reduce costs.
8. In 2004, Global 2000 firms will significantly improve workforce performance management processes (e.g., periodic
appraisals, multi-rater feedback, development planning) by deploying packaged solutions. By 2005/06, industry leaders
(25%) will strengthen the integration of performance and compensation solutions to support business performance
management, and broadly deploy role-based workforce information management tools (e.g., metrics dashboards,
scorecards). By 2007, 90% of G2000 firms will outsource at least one HR administrative component, and 15% will
outsource all HR transactions.
9. During 2004/05, external pressures to leverage new technologies (e.g., RFID, UCCnet), provide customized services,
and improve visibility will drive companies to upgrade supply chain execution applications (e.g., warehousing,
transportation, manufacturing). Concurrently, international trade, security, and compliance pressures will motivate
companies to upgrade global trade, health/safety, and contingency planning solutions. Through 2008, companies will
merge information processes among CRM, SCM, and PLM applications to holistically scrutinize demand/revenue flows
across customer and product life cycles.
10. Through 2004/05, organizations will consolidate disparate sourcing and procurement groups to exploit economies of
scale through demand aggregation and improve process execution through business-to-business integration. Spreading
business risk across trading partners will command the need to consistently ensure supplier compliance rather than
simply monitor transaction results. Supplier relationship management (SRM) strategy will emerge as an IT imperative by
2005/06, forcing the integration of sourcing, procurement, and supplier management applications into an SRM
architecture by 2006/07.
META Trends 2004/05
Enterprise Planning & Architecture Strategies
1. By 2007, 50% of Global 2000 enterprises will move beyond a pure technology architecture focus to include enterprise
business architecture, enterprise information architecture, and enterprise solution architecture. Architecture teams that fail
to move beyond the technical focus will come under increasing pressure to demonstrate business value.
2. Enterprises will adopt an enterprise portfolio management approach to strategically and tactically deliver business
value, optimize all enterprise investments, and lay the groundwork for a technologically sophisticated business strategy.
Integrated enterprise-level strategy/planning, architecture, and program management will become key competencies
supporting enterprise portfolio management in 50% of the Global 2000 by 2006.
3. By 2005, a focus on service-oriented architectures (SOAs) will dramatically increase, though implementations will be
achieved in only 10% of Global 2000 organizations. By 2007, 40% of Global 2000 organizations will have deployed SOAs
to improve the interoperability of technical, business process, and information services. The enterprise architecture group
will use holistic EA and portfolio management techniques to guide this paradigm shift.
4. Enterprise architecture (EA) success will be determined by the extent to which corporate and line-of-business
managers comprehend, support, and enforce the architecture. By 2006, 10% of EA core teams will move out from under
the IT organization’s management structure, with direct reporting relationships to either corporate strategy or corporate
change management functions. By 2008, 40% of enterprise architects will have primary expertise in business strategy or
process engineering.
5. Through 2008, infrastructure asset reuse will continue to be the joint responsibility of enterprise architecture and
infrastructure development groups. Infrastructure developers will concentrate on exploiting near-term emerging standards
for tactical, project-focused efforts, while enterprise architects will monitor long-term efforts to create common business
and information models that exploit industry standards.
6. By 2008, unified management and governed evolution of the enterprise architecture will become dominant best
practices in 70% of Global 2000 enterprises, even where asset ownership is federated. Federated architectures will focus
on supporting common business infrastructure initiatives across semi-autonomous business units.
7. Vendor-supplied modeling tools and techniques will continue evolving and better support the development of logically
connected models for enterprise business processes, related information, solutions, and technical environments.
Technical models will be married with more business-oriented approaches to graphically narrow the business/IT alignment
divide. Model extension to machine-executable instruction will become commonplace by 2005/06, leveraging pi calculus-
based modeling languages. Although no industry standard is apparent, the logical outcome will be a merged standard to
be developed in 2004, which will gain traction as a standard in 2005.
8. The need to derive business value from information assets will force information architecture to mature within 60% of
Global 2000 organizations by 2006, up from the current 40%. Information architects will formally articulate principles and
actionable models that enable the CIO to focus on custodianship and stewardship of information, thus improving the
enterprise’s discovery of real opportunities to save time and money.
9. Enterprise program management (EPM) will become a core discipline outside of IT organizations for coordinating
program and project resources (e.g., expense, capital, human) in 15% of Global 2000 organizations by 2007, increasing
from the current 5%. Half of all Global 2000 organizations will use EPM within the IT organization alone to coordinate
enterprise value investments, implementing enterprise solutions as well as underlying technical architecture and
infrastructure. By 2005, senior management in 25% of Global 2000 organizations will demonstrate formal commitments to
EPM by investing in supporting financial, general management, organizational, and governance tools and disciplines.
10. By 2006, 20% of Global 2000 organizations will integrate holistic enterprise architecture, enterprise program management,
enterprise strategy/planning, and IT portfolio management into a common set of IT management processes under the auspices
of the CIO’s office. Ten percent will operate these integrated management disciplines outside the IT organization.
11. In 2004/05, IT organizations (ITOs) will continue to refine their infrastructure planning processes while linking them
more explicitly with other IT constituencies: application development, project management, operations, and architecture.
Gradually (2004-09), project delivery will become more integrated; different groups will work with standardized
deliverables, while further integrating with operations service request management, change management, and other
activities. As this refinement takes place, more ITOs will establish center-of-excellence or organizational groupings to
distinguish the infrastructure planning discipline (particularly per-project design) and the infrastructure planner role as
separate from, yet related to, architecture and engineering.
12. During 2004-06, driven by server consolidation, application development standardization, and technology innovation,
leading ITOs will reinforce their enterprise technical architecture (ETA) models with more applied infrastructure patterns
and technical services that enable a more service-oriented architecture (SOA). Simultaneously, ITOs will push these
models beyond conceptual into logical and physical details within standards, including costs. Longer term (2006-09),
stronger emphasis on shared services with operations resources will drive this service-oriented infrastructure (SOI)
approach, including more explicit service-level definition, cost clarity, and chargeback solutions.
META Trends 2004/05
Executive Directions
1. CIOs continue to struggle in consistently aligning, measuring, and maturing IT processes. Through purposeful
developments, by 2006, 50% of firms will move beyond basic efficiency to effective partnerships through dynamic
planning, operations excellence, and business relationship management. By 2008, world-class IT shops (less than 2% of
Global 2000 firms) will rigorously integrate their policies, people, platforms, and processes to fulfill their composite
objectives, encompassing investment, risk, speed, quality, timing, and business alignment.
2. Implementing an IT value management process (communicating the captured and categorized value of IT) is crucial
to optimizing corporate investments. After mastering the basics through 2006, 60%+ of firms will combine value, IT
portfolio, and business relationship management into their core practices. By 2008, 25%+ of firms will inculcate
relationship attractiveness profiling and adaptive infrastructures into their high-performance teams and leaders.
3. Leading Global 2000 organizations dominate their markets through engaged, active governance (e.g., senior
management participation versus policy lists), process, and architecture (business, information, application, and services).
Through 2005, such enterprises’ growth rates and cash flows will increase faster than market averages. By 2007,
innovative leaders will have enviable track records gained by implementing tightly linked, yet loosely coupled, horizontal
integrating processes, enterprise information management, and collaborative cultures.
4. Supply/demand imbalances of critical IT skills (e.g., database, network, architecture, infrastructure, security) will result
in 40%+ of IT personnel being externally sourced by 2006 in conjunction with established human capital and vendor
relationship management processes. Global markets are pressuring CIOs to develop agile sourcing partnerships, moving
strategic sourcing to a top-three CIO issue. By 2008, 25%+ of firms will dynamically assemble, restructure, and dissolve
teams (virtual and far-flung) as needed.
5. Portfolio management (PfM) has become the premier IT-business communication tool for optimizing IT investments.
Leading IT portfolios will have project, asset, application, information, infrastructure, people, and process subportfolios.
Through 2006, 50%+ of firms will exploit IT PfM, balancing transformational, growth, and maintenance resources. By
2010, however, because of imperfect execution, only 6% will achieve consistent enterprisewide IT PfM that judiciously
balances performance investment approaches.
6. Planning and reporting are evolving from the traditional, yearly big-bang approach toward a dynamic continuous
process, with modular components based on mature portfolio, asset, project, value, and risk management concepts. By
2005, 25% of firms will achieve such maturity. Through 2009, only 15%+ of firms will have technology signposts, pilots,
applied research, and early-warning systems for intelligence gathering and transparency.
7. Through 2006, CIOs will build on their IT strengths in pattern recognition, process creation, teamwork, and analytics to
gain a seat at the business strategy table. Horizontal integration successes (e.g., mergers/acquisitions, joint ventures) will
result in most CIOs reporting to CEOs by 2008, with some gaining additional procurement, contracting, and facility
management duties. As CIO duties change through 2010, so will their IT organizations, lieutenants, centers of excellence,
and staff positions. Executive education complexity, however, will not lessen as markets and customers rapidly change.
8. Increased system failures, fraud, and regulations will drive higher levels of executive control via well-known, industry-
standard practices such as COBIT, ITIL, CRAMM, ANSI, and ISO. By 2006, 40%+ of firms will establish tightly audited
hierarchies with well-defined risk, security, and privacy metrics. Through 2009, however, less than 15% will mature
system life-cycle processes to be capable of handling large losses, exposures, or disasters.
META Trends 2004/05
Government Strategies
1. Collaborative planning will become increasingly formalized during 2004/05 in an effort to drive accountability for IT
investments among CFOs, civil servants, elected officials, policymakers, and CIOs. As part of this collaborative process,
policymakers and elected officials will continue to explore e-democracy, e-rule making, and blogs as vehicles to better
understand and communicate with constituents. As a result of IT investment strategies, by 2007/08, e-democracy and
e-government will serve as vehicles to align constituent needs with jurisdictional cultures.
2. During 2004/05, public policy will impact IT investment decisions like never before, requiring CIOs to continually align
IT investments and management with policymaker priorities (a.k.a. the brand). By 2007/08, jurisdictions will formally
articulate the brand to provide an anchor for aligning all investment decisions; delivering consistent, effective government
services by leveraging investments; and prioritizing future initiatives.
3. During 2004/05, homeland security initiatives will be a prerequisite on public policy agendas, with the need to
demonstrate significant advances in public safety supported by budget and grant opportunities. By 2005/06, investments
will continue to be at the project level, with limited opportunities for cross-jurisdictional collaboration and analysis, as well
as insufficient infrastructures to provide proactive diagnosis. By 2007/08, early initiatives and investments and the
development of cross-jurisdictional decision-making structures will increase analytical capabilities.
4. During 2004/05, early alternative funding experiments will drive down costs for jurisdictions and establish public-sector
business-case development discipline. By 2005/06, early efforts in alternative funding projects in which vendors develop
business cases and internalize risks will provide progressive CIOs with tools to develop business cases internally,
providing cost-effective processes to drive down costs in traditional funding approaches.
5. Deployment of analytics and business intelligence tools will continue to accelerate in 2004, with the focus on
aggregation of data sources to monitor/report on existing business processes. These data warehousing and BI initiatives
will fail to deliver broader ROI to program executives due to a lack of strategic analysis, providing the opportunity for
program transformation. By 2007/08, investments in strategic planning and communication methodologies will provide the
vision necessary to deliver enterprise analytical capabilities that are aligned with the jurisdiction’s brand, delivering a full
suite of analytical functionality to IT executives, program partners, and elected officials.
6. In 2004/05, human capital will continue to represent a significant public-sector risk as the economy begins to rebound,
while an increasing percentage of public employees become eligible for retirement or flexible work arrangements. Initial
efforts to address the human capital risk will focus on skill-set assessments by mapping current skills and exposures to
future needs. By 2006/07, early skill-set assessments will serve as the basis for sourcing strategies, e-employee
initiatives, and enterprise architecture decisions.
7. There will be greater interest and inquiry in current government procurement processes and timetables as jurisdictions
increasingly rely on private-sector partners to deliver government solutions. Jurisdictions will move toward procurement
processes that balance the need for agility with alignment of corporate cultures, strategies, and public/private
partnerships. Progressive jurisdictions will continually incorporate corporate culture and account growth strategies as part
of the project evaluation process. By 2007/08, review of vendor strategies will serve as a major element in identifying
long-term partners for jurisdictions.
8. Privacy statutes will continue to govern integrated service delivery during 2004/05. Savvy CIOs will create flexible
architectures to eliminate technical barriers to information sharing as the privacy debate winds its way through the courts
and legislature. By 2007/08, pressure from CIOs, legislature, citizens, and vendors looking for direction regarding the
interpretation of the USA PATRIOT Act and similar government privacy versus information-sharing statutes will create
pressure on courts to provide direction regarding the extent of information-sharing capabilities in a given jurisdiction.
9. Commercial off-the-shelf (COTS) software will serve as a default design point for business process rationalization and
standardization. By 2006/07, leveraging COTS offerings, jurisdictions will extend investments across the enterprise,
enabling IT to assist in the reinvention of government service delivery by providing a prototype (i.e., COTS package) to
standardize and leverage current investments.
10. Relationship management (both internal and external) will increase as a critical discipline during 2004. Internally,
business relationship management (BRM) will focus on continual alignment of IT strategy with public policy, and
constituent relationship management will help jurisdictions mitigate risk by providing a process for mapping the various
channels and handoffs involved in delivering government services to constituents. By 2007/08, early pilots will evolve into
full implementations, with 55% of jurisdictions creating formalized BRM positions and initiating processes to identify
external risks and exposures.
META Trends 2004/05
Infrastructure Strategies
1. During 2004, infrastructure budgets will free up slightly, but all expenditures must have strong business justification,
forcing closer alignment of infrastructure planners and business units. Infrastructure decisions will become increasingly
centralized. Communications budgets will adjust slightly upward, though carrier pricing will further decline. Through 2005,
spending will increase in security infrastructure and operations, storage, database administration, virtual private networks
(VPNs), convergence, and high-availability networking.
2. Through 2006, non-mainframe infrastructure consolidation will be driven by value-based portfolio management
principles, but will be hampered by tool immaturity, premium-priced high-end servers, inflexible software pricing, and
chargeback politics. Infrastructure co-location and networked storage consolidation will become standard by 2004/05.
Best-practice infrastructure cost-efficiency will be defined by effective software asset and vendor management, support
cost containment, and extension of server and storage refresh cycles. However, maturing server partitioning and
integrated workload management will have minimal impact on staffing and total cost of ownership. When coupled with
exorbitant high-end server pricing, these issues will inhibit “big box” consolidation.
3. Through 2007, widening annual platform price/performance improvements (z/OS at 10%-15%, Unix/RISC at 30%-
35%, and Wintel/Lintel at 35%-40%) will increasingly drive server market segmentation. Linux’s rapid maturation will
initially be at the expense of Unix (2004/05), but will eventually challenge Windows (2005/06). By 2005/06, Unix will
continue to recede to back-end, legacy status, driven by distributed n-tier server architectures and compelling Intel
performance and volume economics. By 2007, z/OS’s high software costs and anemic annual hardware
price/performance improvement will slow zSeries’ annual net capacity growth to 10%. Increasingly stable, cost-
optimized legacy platforms (e.g., z/OS, OS/400) will become attractive outsourcing candidates through 2005/06.
4. Storage management automation, standards, and process will remain immature through 2006. Net annual storage
growth will average 35%-40% for enterprise (monolithic), 45%-50% for midrange (modular), and 80%-85% for capacity-
based (SATA/ATA). Like-for-like price/capacity will improve 35%/year. Through 2007, storage hardware will be
rendered a tiered commodity by software-based information life-cycle functionality (e.g., storage resource
management, data protection/recoverability, integration, data movement, interoperability), which will become the
primary enterprise storage differentiators.
5. Through 2006, as database management systems become more self-managed and self-healing, DBA skill sets must
evolve to higher-value data management functions (integrity, consolidation, archiving, integration) and new technologies
(e.g., document management, Web services). Through 2007, operationally focused tasks (e.g., monitoring, maintenance)
will be outsourced to remote DBA providers. In addition, as the focus of processing moves toward complex analytic
processing — with transaction processing becoming commoditized, open source, or lower cost — stripped-down
proprietary solutions will begin to supplant proprietary enterprise database software for basic OLTP processing by 2008.
6. Windows-based PCs will remain the dominant access device for corporate and consumer users through 2008, though
non-traditional desktops (e.g., Linux systems, blade PCs, small form-factor devices, thin clients) will grow to service more
than 15% of corporate end users in that period. Increased mobility, improved wireless access, changing lifestyle
situations, work needs, and personal preferences will drive a greater variety of devices. By 2007/08, a continued need to
balance cost-effectiveness with increased user agility, coupled with a renewed focus on improved user experiences, will
increase the importance of end-user platforms.
7. IP-based wide-area networks will proliferate, with a mix of private MPLS services and public Internet-based transport
dominating the mix. Best-practice organizations will adopt a life-cycle approach to telecommunications management.
Strong IP VPN price reductions will displace frame relay during 2004-07. Deployment of quality-of-experience
mechanisms (QoS, compression, caching) will accelerate, and carrier peering of private IP VPN services will be limited
through 2007. Managed network service providers will create new blended services combining various aspects of wireline,
wireless, data, voice, Internet, mobile, remote access, broadband, and security.
8. Mobile wireless (cellular) initiatives will focus on cost containment and usage refinement in 2004, with the emphasis
on voice services. Cellular expenses will continue to increase due to consumption, despite annual price declines of 10%-
20% and 20%-40% for data service through 2005. Basic coverage areas of major regional carriers will become similar
during 2004/05, but coverage quality differences will exist until 2006. Higher-speed data services will improve, but
enterprise adoption will be slow. Customers will centralize cellular procurement and seek to combine contracts with
wireline services, emphasizing price, customer care, and services. Wireless will increasingly become the primary voice
service for mobile workers during 2004-07.
9. Through 2005/06, 2/4Gb Fibre Channel (FC) will remain the dominant storage-area network (SAN) topology for Global
2000 data centers, driving 25%+ storage utilization improvements versus direct-attached solutions. Beginning in 2004,
iSCSI, IP, and emerging 10Gb Ethernet will interconnect and coexist with FC in SAN backbones. By 2006, maturing
network storage management tools will enable 4x+ improvements in storage administrator efficiencies (e.g., from current
2TB/administrator to >8TB). By 2005/06, SAN and NAS device functionality will merge, enabling block versus file hosting
to be a provisioning rather than an architectural decision.
META Trends 2004/05
Infrastructure Strategies (cont.)
10. Through 2006, voice will be increasingly virtualized over the data network, allowing for more cost-effective
centralization of services. Discrete application infrastructure components (e.g., call servers, bridges, gateways) will be
distributed throughout the IP backbone, supporting telephony and collaboration services (e.g., conferencing, messaging).
All network staff, whether focused on data or voice, will need expertise in IP networking. Managed services (e.g., IP
Centrex) will continue to suffer low adoption through 2007. By 2005, 50% of large enterprises will rely on IP as transport
for videoconferencing due to improved quality and lower cost for campus and regional networks.
11. Enterprises will renew spending on campus LAN initiatives in 2004, with new allocations to voice and data
convergence, wireless LANs, network security, and high availability. Large enterprises will further consolidate spending
with one or two strategic providers. By YE05, Gigabit Ethernet to the desktop will become the preferred choice as pricing
nears that of Fast Ethernet. Wireless LAN security and quality-of-service standards will be ratified, shifting the emphasis
to management across wired and wireless domains.
12. By 2008, 45% of Global 2000 users will utilize two data centers to deliver continuous availability; of these, 25% will
support real-time recovery. By 2006, more than 60% of G2000 data centers will utilize capacity on demand to satisfy less
critical recovery services. Through 2008, more than 50% of G2000 users will utilize a single “hardened” data center
augmented by third-party services to deliver traditional, cost-effective disaster recovery services (48- to 72-hour recovery).
13. By 2005/06, best-practice business continuity (BC) architecture will be a three-way team effort: 1) IT architects and
business leaders will establish objectives and business impact; 2) infrastructure and engineering teams will manage
availability (planning and building the infrastructure to meet BC requirements); and 3) operations command-and-control
groups will run/test and monitor/report on disaster recovery preparedness.
14. Customer contact center emphasis will be on cost containment, shifting from outsourcing as a cost-reduction strategy
to investments in self-service and agent productivity. Customer interaction center (CIC) vendors will enhance suite-centric
offerings, but enterprises will continue to prioritize best-of-breed components with suites applied toward non-core or price-
sensitive activities. Reporting will improve, but extension via business intelligence applications will be required to deliver
needed analytics through 2007. IP telephony will remain niche in the CIC until reliability and integration issues are
resolved (through at least 2005).
META Trends 2004/05
Insurance Information Strategies
1. Insurance organizations in all segments (property/casualty, life, annuity, and healthcare) will continue to be under
pressure in 2004 to control costs and provide greater value to the business. However, we expect overall IT spending to
remain at 4%, driven by regulatory compliance (e.g., Sarbanes-Oxley, HIPAA) and renovation of dated core domain
application suites (e.g., policy administration, claims). Further modest increases are projected for 2005/06, as the
domestic economy returns to growth and industry profitability regains momentum.
2. Federal (e.g., HIPAA, Sarbanes-Oxley, USA PATRIOT Act) and state privacy/identity regulations will converge and
evolve in 2004. This will present insurers with opportunities to aggregate and integrate compliance activities across lines
of business (LOBs) and question the fundamental business processes they affect through 2005/06. Insurers should make
conscious tradeoffs (business as well as IT management) as to when using an LOB approach (for expediency of
implementation and execution) might be preferable to an enterprise approach (for consistency and greater probability of
staying in compliance) and leverage the investment by improving the underlying business domain/process.
3. In 2004, insurers will need to create ways of maintaining investments in security structures, process, and architectures
that were developed in preparation for compliance of with Sarbanes-Oxley, USA PATRIOT Act, and HIPAA security
regulations. In addition, offshore outsourcing will come under increased scrutiny around privacy and security issues,
despite a growing global economy. Insurers will increasingly follow security best practices as a model for extending
investments in security architecture through 2005.
4. In 2004, all segments of the insurance industry will continuously extend their business process capabilities to
prospects, policyholders, third parties, and their distribution channels (direct, agent, broker, trading networks, etc.).
Focusing on the functions or domains they consider to be their centers of excellence, leading companies will increase
investments in building out skills (business process management and improvement) and capabilities (infrastructure and
technology) to capitalize on increased business simplification.
5. Insurance organizations will continue to investigate and adopt services-based application architectures in 2004,
enabling rationalization of legacy platforms and business products/processes as well as creation of normalized business
information/process domains. This renewed investment in business and IT architecture will support business models that
focus on business direction, successful insurance products, and appropriate customer segments.
6. In 2004, leading insurance IT application vendors will continue to exploit Web services using ACORD XML standards,
architected to support business rules and workflow frameworks to provide a common insurance framework for business
process as well as vocabulary for data and transaction types. This will enable customers (insurers) to reduce the
complexity and expense of data interchange, business process/domains, and application interoperability.
7. Insurers will continue to benefit from business process outsourcing in 2004, feeling continuing pressure to achieve
operational efficiency through adoption of the asset management model for process and technology, which will drive
significant increases in outsourcing during 2004/05. Initially, the emphasis will remain on tactical/transactional
outsourcing, but will eventually migrate to strategic/business process outsourcing and business transformation
outsourcing, with a strong emphasis on product administration, claims, customer service, and billing.
8. Through 2004/05, the drive for operational excellence and improved financial performance will force insurance
companies to develop time and unit-cost measures for business processes, and integrate and optimize business
processes across functional areas while using existing legacy applications. Insurers and vendors will exploit Web services
and industry standards (ACORD XML standards) as key levers to define common semantics across the significant
business processes (mega-processes).
9. In 2004, insurers will significantly increase emphasis on system and process rationalization to reduce operating cost
and achieve the scale necessary for continued growth. This will pressure traditional insurance application vendors to
address best-in-class business process capabilities. By 2005/06, new vendors, including ERP players and strategic
vendor partnerships, will have developed core functions (e.g., customer, claims, policy administration) for
multicompany/multifunction application offerings for the industry.
10. Through 2004-06, business performance management — with its inherent capabilities to integrate, orchestrate, and
optimize the two or three complex business processes (mega-processes) — will start transforming insurance companies’
legacy applications into service-oriented architecture.
META Trends 2004/05
Integration & Development Strategies
1. In 2004/05, enterprise portal governance will be a critical issue for Global 2000 organizations reconciling multiple
portal frameworks (from ERP systems, content management tools, e-commerce packages, etc.) and declaring the
principles under which federation will take place. By 2005, large vendors will finalize the ties and positioning of portals to
the rest of their product portfolios, while small, independent vendors capitalize on market opportunities around new
technologies, verticals, and Sarbanes-Oxley. By 2006, portal frameworks will become a key delivery point for process
automation involving human-oriented workflow. By 2007, portal and composite application frameworks will have merged
and become indistinguishable; in addition, we expect the overall portal project failure rate to decrease to 10% (from 30%
in 2003) due to product maturity and institutionalization of best practices.
2. Through 2004/05, the enterprise application integration (EAI) market will grow, though limited-scope projects will
remain the norm. Requirements will continue to shift from standalone integration projects to consolidated software
frameworks that enable composition of internally and externally facing service-oriented applications. By 2006/07, users
will routinely evaluate integration frameworks based on their participation in heterogeneous service-oriented architectures.
3. The number of vendors providing a credible software infrastructure services stack to build, integrate, deploy, and
manage enterprise applications will stabilize through 2005/06. To reduce risk, organizations will evaluate a broader
platform (covering Web services, application development, enterprise application integration [EAI], business process
automation, portals, security, data management, and content management). Delivering this platform will be critical to the
vendors’ attempts to expand their footprints within strategic accounts during 2004-06, and will cause cross-category
competition in areas where vendors provide functional overlap.
4. Through 2012, Web services will be in production in virtually all Global 2000 organizations. By 2005, Web services
standardization will expand in scope to encompass the entire software environment and life cycle, from infrastructure (grid
standards) to business process semantic standards, including some development/life-cycle and tool standards, to system
and service management standards. Applications of service-oriented architectures using these standards will grow rapidly
during 2004-07.
5. By 2005, a new set of meta-architectural principles, currently referred to as “service-oriented architecture” (SOA), will be
broadly diffused throughout the IT environment in the form of service-oriented business architecture, service-oriented
security architecture, service-oriented management architecture, etc. By 2006, SOA will be widely understood and treated as
a metadata (or model) interoperability architecture, given its emphasis on interoperable identifiers (namespace metadata),
formats (information models), and protocols (process models). By 2007, composite applications will be based on the SOA
principles of dynamic, extensible, federated interoperability and enabled by XML-based technologies such as Web services.
6. Business process models will become the central point of organization for many systems (operational management, IT
portfolio, resource, etc.). The sophistication of these models will increase during 2004-07, but a true shift to a process
(versus functionally) organized business will take decades. Mismatches between process-oriented technologies and
methods in IT and functionally organized businesses will be a significant cause of project failure during 2004-07 and beyond.
7. Business process instrumentation (facilitating business performance management) will become commonplace in
2004/05, with industry-standardized metrics developed and adopted by 2006. During this time, visualization of the
instrumentation will be incorporated into business intelligence systems, and sophisticated data mining/correlation and
pattern matching technologies will be applied to this data.
8. Data management will increasingly be viewed as a part of overall integration architectures and designs (2004/05).
This will cause organizations to consolidate these efforts (i.e., center of excellence for integration services). Enterprise
information integration, ETL, and enterprise application integration will ultimately disappear as distinct categories
(2008/09), surviving only as various subsets of capabilities in the service-oriented architecture (2009).
9. The developer toolset will continue to exhibit more process characteristics, and overlap with standalone life-cycle
capabilities (2004/05). During this time, modeling will increase in importance and scope (both breadth and depth). Beyond
life-cycle, team collaboration capabilities (2006), tools to enable reuse (2008) and ties to project metrics (2005) will
increase. Investments in life-cycle automation and changes in internal system methods will accelerate, due to outsourcing
and continued budget limitations. Ultimately, the developer tool frameworks will extend to include common event, error,
process, and message technologies; most Global 2000 organizations will have substantially reoriented their internal
development communities; and many will be experimenting with process-oriented organizational models.
10. Rapid application development tools will grow in popularity as users attempt to implement complex service-oriented
systems during 2004-06. However, standardized patterns and pattern languages will enable sophisticated pattern reuse
among toolsets and enable more traditional 3GLs to rival the productivity improvements in some areas (2008).
11. During 2004/05, the project portfolio management market will consolidate around ERP and enterprise project
management players, while enterprise portfolio analysis vendors evolve or are acquired and life-cycle vendors augment
their suite offerings to include these capabilities. By 2005-07, most standalone players will be merged into suites and/or
life-cycle development environment offerings, reflecting changes in process and organizational strategies. By 2007/08,
70% of Global 2000 organizations will run IT as an adaptive business by implementing technologies to concurrently
manage resources, projects, and assets.
META Trends 2004/05
Operations Strategies
1. Through 2006, IT customers will increasingly demand evidence of technology performance/ROI from internal and
external IT suppliers. Through 2008, the evolution of true IT product/service catalogs, combined with business-relevant
performance reporting and associated cost-recovery methods, will unite IT performance perspectives, facilitated by the
evolution of business relationship management. Although less than 15% of IT organizations currently have a product/service
catalog, more than 70% will by 2008, driven by increasing market competition and attention to real-time service-level
management (SLM). SLM (as a process) will coalesce within the customer advocacy center (2005/06), supporting business
relationship managers, but it will be 2007/08 before technologies are sufficiently mature and can provide automated
correlation (XML-based) and data integration.
2. Although 80% of IT service desks will reach maturity as full-service centers in 2004, adoption of multiple interaction
channels will continue to evolve slowly, with the implementation of important alternative service and support channels
occurring in less than 10% of desks. Through 2005/06, however, support demands will continue to grow (20% annually),
driven by common infrastructure and application support, embracing larger business process support requirements.
Sustained growth and requirements for low-cost resources (best-shore outsourcing) will drive IT service and support centers
to embrace and evolve delivery processes and methods, leveraging automation and service-enabled infrastructures by 2007.
3. By 2008, 50% of Global 2000 users will support multiple data centers for high-availability requirements, using a
combination of asynchronous and synchronous data transfer techniques and models to satisfy expanding SLA offerings.
Maturing disaster recovery processes and discovery tools will enable organizations to relate recoverability horizons to
specific business functions and better manage costs and expectations for increasingly complex application portfolios. Driven
by costs, risk aversion, and needed business flexibility, there will be an increasing shift through 2008 to internal recoverability
architectures, with selective outsourcing used to fill functional gaps.
4. During 2004/05, 80% of IT groups will re-evaluate continuity plans to ensure alignment with business-impact statements.
Risk management and liability exposures will play an increasingly important role in plan definition. By 2008, best-practice
business continuity (BC) architecture will be a three-way team effort: 1) IT architects and business leaders will establish
objectives and business impact; 2) infrastructure and engineering teams will manage availability (planning and building the
infrastructure to meet BC requirements); and 3) operations command-and-control groups will run/test and monitor/report on
disaster recovery preparedness.
5. Through 2007, IT organizations will continue to centralize critical financial processes in an enterprise asset center of
excellence (A-COE), ensuring effective portfolio management, improved cost transparency, business-user accountability,
and ultimately rationalization of business demand. Increasing broad-scale financial interactions will result in preparatory
steps toward adaptive organization financial modeling, facilitating rational and rapid deployments while optimizing costs.
Through enterprise views of asset procurement, deployment, configuration, ownership, and financial impact analysis, the
A-COE will run the business of IT, building business credibility, and help drive best-of-breed cost advantages (25%+ unit-
cost reductions over three to five years).
6. Through 2008, IT operations groups seeking to effectively develop and enhance their operational processes will
formalize their efforts, focusing on process definitions, performance measurement, and analysis of potential refinements —
ultimately creating a culture that embraces continuous improvement. Although most IT operations groups’ efforts are still in
their infancy, significant gains will be made by leveraging the process refinement practices experienced by both IT (e.g., ITIL)
and non-IT oriented (e.g., Six Sigma) organizations.
7. During 2004/05, influence from non-IT personnel on infrastructure and application management purchases and priorities
(e.g., business views, user response time, service-level management) will accelerate. By 2005, desire for data-level
integration will spur added demand for XML as the management data exchange layer, but true mass standards adoption will
not occur before 2007.
8. During 2004/05, new infrastructure and application architectures (e.g., Web services, virtualization, utility computing) and
budgetary restrictions will drive additional focus on capacity planning and meta-management efforts (e.g., status
aggregation, business views), leading to more integrated meta-management tools (2007). Through 2006, continued cross-
boundary management demands (e.g., organizational, informational, technical) will drive process, sourcing, and
instrumentation changes.
9. Through 2005, users will seek to minimize the number of infrastructure and application management vendors for similar
technology (e.g., one monitoring vendor). Through 2006, new infrastructure and service pricing models (e.g., subscription,
usage, term), continuing capacity- and version-driven cost increases, and expiring enterprise agreements will cause buyers
to reassess procurement efforts. The focus will be on more function-specific, loosely coupled, “good enough” suites built
around Web services protocols.
10. Sticking to a regimen of continuous process and infrastructure rationalization through 2008, operations (build and run
sections) will drive service and product optimization, providing 5%-10% annual unit-cost improvements via improved
hardware utilization, along with maturing operational process and asset management. Moreover, maturing virtualization plus
workload management and partitioning — coupled with requisite provisioning and infrastructure/application management
software and driven in part by rational consolidation — will enable platform utilization to more than double during the next five
years, providing needed flexibility for expanded adaptive service delivery. For the 70% of the Global 2000 that are successful
at transforming to “flexible manufacturing,” strong process and improved infrastructure ROI will propel operations toward the
role of an agile, trusted partner.
META Trends 2004/05
Outsourcing & Service Provider Strategies
1. During 2004/05, outsourcing markets will further divide into commodity and transformational services. Infrastructure
services will mirror grid-computing structures and develop consumption-based pricing (a.k.a. “on-demand”). Through
2006/07, transformational services (e.g., application development maintenance, business process outsourcing) will
segment along horizontal (function commonality) and vertical (specialized) business process/services functions. While
vendors will attempt to bundle infrastructure with “value” services, clients will demand “line item” pricing by 2008/09 and
expect continuous price declines.
2. During 2004, on-demand (or utility outsourcing) services will focus on packaging and pricing structures. Beginning in
2005, on-demand will represent standard technology solutions, and large vendors will introduce “integrated” offerings
based on their own technology offerings (from servers to software). By 2008/09, on-demand services will adopt standard
operational processes and project methodologies to offer clients even greater cost savings. The adoption of on-demand
solutions will be driven by increasing cost savings over traditional outsourcing services.
3. During 2004/05, vendor governance will become a critical competency offering long-term career paths to IT
professionals and further centralize procurement and vendor management functions in large organizations. Governance
will evolve from tactical relationship monitoring/management to strategic issues such as IT/business alignment and
business process enhancement. During 2005/06, multisourced environments will extend vendor governance models to
enable the management of outsourcing vendors as a portfolio of service providers. By 2007/08, IT organizations will
benchmark governance efficiency and effectiveness against industry best practices.
4. Benchmarking will remain the dominant method for aligning price/quality to the market through 2006. By 2005, price
and peer group benchmarking will be recognized as the optimal methodology in an increasingly standardized market.
Industry pricing services will begin to appear in 2005/06 (though not become common until 2008), offering standard
pricing and service quality indicators — starting with infrastructure solutions. Benchmarking will extend into full life-cycle
management services (e.g., telecom). Circa 2006/07, common application components (building blocks) will enable
benchmarking to effectively enter the application services market, but standard pricing will not follow before 2009/10.
5. Infrastructure services will become increasingly standardized. During 2004-06, desktop, help desk, data center, and
network services will use benchmarking to drive comparable price/quality offerings among vendors. Further industry
specialization will appear as low-margin solutions (e.g., procurement, field services) consolidate to a handful of specialists
(and will force incumbent telcos to aggressively fight against full-service outsourcing alternatives). While technology
advancements and incremental process enhancements will increase overall solution quality, the impact on the business of
infrastructure outsourcing (e.g., packaging, pricing, integration) will surpass that of technology changes.
6. Security at all levels (e.g., physical, technological) will increasingly dominate outsourcing discussions through
2007/08. Customers will increasingly demand a holistic, end-to-end view of security. During 2004/05, clients will require
that rigid security policies and procedures, including audits, be built into contracts and, by 2005/06, into SLAs with
penalties for security breaches. By 2008/09, 25% of IT organizations will turn over security policy administration (not
policy definition) to third parties to drive increased enterprise compliance and satisfy external security audits.
7. Application outsourcing services (legacy, packaged, e-commerce, etc.) will remain highly customized through
2004/05. Circa 2006/07, common building blocks will emerge and application services will become a horizontal (functional
building blocks) rather than vertical (industry) specialization. During 2006-09, vendors will attempt to differentiate
application services by integrating applications into business process transformation and business process outsourcing.
8. Through 2005, offshore outsourcing will remain a distinct outsourcing market dominated by pure-play offshore firms,
with increasing market penetration by domestic firms. Vendors will increasingly emphasize operational functions such as
command/control centers, and network operating centers will increasingly move offshore. During 2005/06, regulatory labor
restrictions will compel pure-play offshore vendors to adopt new operating models and shift to domestic citizens for on-site
work. By 2007/08, global resourcing (a.k.a. leveraging an array of nearshore and offshore capabilities) will be a delivery
model and not a distinct outsourcing industry.
9. Through 2005, business transformation outsourcing (BTO) will remain more rhetoric than reality, with deals looking
like traditional business process outsourcing (BPO) with some transformation messages and cost-cutting initiatives.
During 2005/06, leading BTO providers (e.g., IBM, Accenture, CGE&Y) will improve business process skills and vertical
domain expertise. By 2007/08, BTO and BPO will become synonymous, with process transformation guarantees
embedded in most process outsourcing efforts.
10. Through 2005/06, business process outsourcing (BPO) will fracture into discrete horizontal (financial services, call
centers, etc.) and vertical (industry-specific) segments. By 2007/08, BPO will evolve into “process” outsourcing to
encompass the broad range of technical, vertical, and specialty services. While the vast majority of process outsourcing
will be defined as business services (i.e., commodity components such as payroll), leading vendors will provide broader
process solutions to enable new business models or integrate across multiple providers within industries or supply chains.
META Trends 2004/05
Professional Services Strategies
1. In 2004, public firms will accelerate business and IT projects to ensure they are in compliance with Sarbanes-Oxley
(SOX) and other regulatory edicts (IAS, Basel II). During 2005/06, firms will consolidate global compliance initiatives within
a corporate governance office. Firms will seek to optimize compliance processes through IT infrastructure (e.g., business
applications, security), and many will also improve business efficiency by using the compliance justification. By 2007,
global compliance will raise control expectations for all multinational firms.
2. During 2004-06, the growing regulatory compliance umbrella (e.g., Sarbanes-Oxley, HIPAA) will extend de facto to
cover business and IT services beyond traditionally regulated services like audit. Most heavily affected will be IT and
business process outsourcing, with compliance concerns dampening user demand (2004/05) and complicating
provisioning efforts; however, longer term (2005+), compliance complexity and overhead will spur outsourcing demand.
3. Demand for business process outsourcing (BPO) services will continue to grow in 2004, though supply will still
outstrip demand. Providers, especially Indian-based firms, will continue to struggle (2004/05) to gain and profitably employ
adequate horizontal business and vertical industry domain expertise. The inclusion of transformation elements in BPO
efforts will prove elusive and complex through 2005, though BPO and business transformation outsourcing (BTO) will
ultimately become synonymous.
4. Throughout 2004-06, the boundary will continue to blur between “domestic” and “offshore” business and IT service
providers. Through acquisition and organic growth, the line between the two camps will largely disappear by 2006/07. The
main challenge to all providers, however, will remain evolving into true global (vs. multinational) service providers with
global delivery, operating, and resource management models. Geopolitical and protectionist backlash issues will grow and
nip at offshore services, but overall do little to slow services globalization.
5. The required services footprint for what constitutes a leading services provisioning model will continue to expand
during 2004-06. Business and IT outsourcing capabilities will require strong complementary business consulting and IT
systems integration capabilities. Increasingly, risk and compliance capabilities will become requisites to support complex
business and IT environment requirements. Rather than having broad but shallow “full service” models, leading service
providers must possess strong horizontal process and vertical industry domain expertise as well as best-practice
knowledge.
6. ERP vendors will begin to step forward in 2004 with services targeted to their struggling installed bases, as the
demand for competency centers or ERP centers of excellence continues to rise in both frequency and volume. In parallel,
major systems integrators will continue to push application management outsourcing, which will not take hold in the
market until late 2005 at the earliest, as delivery and pricing models remain largely immature.
7. Measurable business value (of IT) will continue to drive new business for the IT service providers that feature this
element not only in marketing claims but also in delivery methodologies and market approach. Therefore, measurement-
oriented pricing methods such as gain-sharing will be deployed ever more frequently. Through 2005, service providers
that cannot demonstrate measurable business value will become increasingly irrelevant as more and more IT services
purchases are influenced by business leaders rather than just IT.
8. In 2004, ERP vendor services and their alliance partners will continue to fail to capture a significant percentage of
midmarket clients. This will stem from their chronic inability to provide a systems integration model that is affordable and
from a parallel inability to provide demonstrable ROI.
9. Systems integration for ERP that employs the onshore/offshore model to reduce consulting costs will take root by
3Q04 as clients begin to understand the approach. By late 2005, this model will completely supplant traditional, cost-
laden, on-site methods and lead to great success in the high midmarket ($600M-$1B in annual revenues). Current leaders
Wipro and Infosys will be joined by US-based global providers such as IBM BCS and Accenture in 2005.
10. First movers in deploying radio frequency identification (RFID) technology for enterprise applications will not realize
the benefits of such differentiation through 2004. However, they may leverage their lead in this regard to great effect
beginning in 2Q05, as client adoption curves rise dramatically when the technology is better understood. Only at this point
will IT service providers begin to see inward demand for RFID components within their services.
META Trends 2004/05
Security & Risk Strategies
1. The strategic approach to information security will continue to transform from a set of ad hoc activities to a
coordinated approach of principles, behaviors, and adaptive solutions that map to business requirements (2004-06). This
will result in the establishment of strategic programs with dedicated budgets (60% of Global 2000 organizations by
2004/05, 80% by 2006/07). Organizations that address regulatory compliance with a comprehensive program (aligned
with the security strategy) will increase to 40% by 2005.
2. Privacy regulation will continue to focus attention on encryption of information at the data, file, database, and transport
levels through 2005/06 (for transactional and collaborative applications, wireline and wireless). By 2005/06, the maturity
and transparency of PKI components (i.e., embedded in the NOS, directories, and file systems) will accelerate
widespread use of encryption, particularly at the DBMS layer (2005-08).
3. Security organizational strategies will emphasize the establishment of clear accountabilities and separation of duties
(2004/05). Security teams will increasingly move out of the IT organization and into corporate risk and compliance teams,
and security governance will vest in business-controlled bodies (2004-06). Average security investment will peak at 8%-
12% of IT budgets (US: 2005/06, EMEA/Asia Pacific: 2006/07), later stabilizing at 5%-8% (US: 2007/08, EMEA/Asia
Pacific: 2008/09).
4. Driven by compliance and cost, organizations will focus on identity as a business asset. Identity management will
continue to confuse, but grow, as more organizations spawn projects around identity infrastructure (e.g., enterprise
directories, Web SSO) and user life-cycle management. Web services (2005/06) will expand identity to non-person users
and exacerbate the need for identity solutions. Identity infrastructure will be incorporated into application infrastructure
“stacks,” incorporating finer-grained authorization (2004-06), and cease as a standalone market (2006/07). User life-cycle
management will draw closer to other operations functions (2006/07).
5. Threat and vulnerability management integration will accelerate through 2004. While most organizations still focus on
technology problems of intrusion control and count on improved detection, correlation, and prevention capabilities,
advanced organizations pursue a more process-oriented approach (introducing a business perspective), which will evolve
into comprehensive vulnerability life-cycle management in 2006/07. Demand for managed security services of various
types (e.g., security monitoring, customized alerts) will increase, but despite vendor consolidation, maturity will lag for
many disciplines through 2005.
6. Physical and logical security will be integrated at all levels, beginning with governance and risk assessment and
informal team coordination (2004). Formalized processes will emerge later, encompassing user training/awareness
(2005), monitoring/response/audit (2006), and enforcement mechanisms (2007). Holistic management of risk in
combination with an examination of security as a systems-level problem will necessitate the coordination of currently
separate teams, driving organizations to a common reporting and management structure (2006/07).
7. Content security investments will focus on e-mail hygiene (e.g., content/spam filtering), secure messaging/collaboration,
and antivirus management and policy enforcement (2004/05). Best-of-breed solutions will dominate early (tactical)
deployments. By 2005, Microsoft’s involvement will accelerate both market consolidation and the formation and quality of
comprehensive content security suites (i.e., all content forms, all communication channels: 2005-07).
8. Application securability concerns (i.e., secure coding, integration, infrastructure) will increase during 2004-06, due to
multiple application architectures (e.g., mainframe, client/server, Web application, Web services). Web services security
needs will escalate gradually (2004-06) as Web services go external. Web services security standards conflicts (2005/06)
and performance bottlenecks (2005-08) will increase as mobile access (2004+) and grid computing (2005+) needs for
dynamic end-to-end authentication and authorization grow.
9. SSL-based virtual private network (VPN) solutions will become a consolidation point for reverse proxies, transactional
application security gateways, and Web single sign-on capability. Beyond becoming the dominant approach for remote
access (2004), SSL VPNs will anchor extranets and Web commerce deployments (2005/06). Demilitarized zone designs
will increasingly be challenged to better account for access to applications by both external and internal users (2004/05),
Web services (2005/06), use of multifunction security appliances (2005/06), and the ubiquity of internal isolation/security
implementations (2006-08).
10. Investment in strategic security processes will focus on formalizing risk (2004/05) and trust (2005-07), with increasing
attention to awareness/communication and policy. Demand for formal certification of security resources (internal,
professional/managed services) will continue to rise through 2007. Statutory (privacy, cybercrime, critical infrastructure)
and business requirements (corporate governance, mitigation of technology risk) will drive maturation of internal
compliance programs until at least 2008, varying somewhat in time frame due to national/regional diversity.

Content & Collaboration Strategies: META Trends 2004/05

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