Is this you? Gartner analyst predicts many companies will scrap internal IT operations and be using many more hosted applications by 2012

(Jan 19 2010) ERP Blog

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Technologies: Cloud Computing, CRM, CRM Blog, ERP, ERP Blog, Green IT, on-demand, SaaS, web-based
  1. Is this you? Gartner analyst predicts many companies will scrap internal IT operations and be using many more hosted applications by 2012

    She predicts that 20% of businesses will cut out their physical IT infrastructure in favor of hosted IT.  Should you be thinking about this?

     

    By Todd R. Weiss


    Talk about turning your whole IT world upside down.

    First, the buzzwords in IT in the last several years have included virtualization, server consolidation and cloud computing. Those were enough to already make your head spin from all the new concepts, technologies and IT teething problems that they could introduce.

    Now, Leslie Fiering, an industry analyst with Stamford, Conn.-based research firm Gartner Inc., has launched what could be called the ICBM of recent IT predictions for IT shops just like yours: "By 2012, 20% of businesses will own no IT assets."

    As I read it the first time, I was shocked.

    How could that be?

    The prediction was just one of 10 made as part of "Gartner's Top Predictions for IT Organizations and Users, 2010 and Beyond: A New Balance," a report issued at the end of December.

    The other nine Gartner predictions were tame compared to this one – things like mobile phones will overtake PCs as the most common Web access devices worldwide by 2013, and that Facebook will become the hub for social network integration and Web socialization by 2012.

    Those aren't far out at all compared to the notion that 20% of the business IT operations out there won't own any IT assets just two short years from now.

    So of course, I called Fiering right away to ask her what in the world she is thinking.

    Actually, she said, it's really not so far-fetched.

    "The thing behind that is that multiple forces, multiple drivers are coming," Fiering said, such as ever-tighter corporate IT budgets and corporate mindsets that are starting to really look at IT hardware and software as never-ending expense categories that need to be reined in.

    "They're looking at the amount of capital being tied up in PCs and 'why do we have to do this?'" she said. "They're also looking at the related security and control issues, and at the need for standardization."

    Progress in several related IT arenas, include PC virtualization are also fueling such predictions, she said. "PC virtualization is a huge piece" that could help such predictions come true. "It's not ready yet, but it's under development. And not just hosted desktops, but offline virtualization as well."

    What businesses are figuring out, she said, is that no one really needs to care what the underlying IT infrastructure is to get the work done. And it also doesn't have to matter if your own IT department supports the IT infrastructure or if that's done by some third-party provider, either for less money or for the same money without all the hands-on hassles, according to Fiering.

    What this could do, she said, in unleash workers from specific hardware platforms and allow them to do their work with whatever they want to use, be it a Netbook, a laptop, a desktop PC, a smartphone or whatever else they adopt. "Younger workers who want to use their own personal equipment" could do so, while improved security technologies could be brought in to protect corporate data and assets over any devices and systems.

    The spread of cloud computing and hosted applications are making all of these possibilities possible, Fiering said. "There are companies out there that are learning how to get huge economies of scale with server farms, while others are learning to provide scalable services" to their users without having their own expensive, complicated and labor-intensive IT infrastructures. "It's getting to a point where we can find the technology and finances to start to deliver them. If you are a mid-sized company, do you want to make investments in more capital expenses and buy more equipment or do you want to go to cloud technologies? Even if you don’t save money, you can save on labor tasks. There is a demand to move to this kind of service, to get out from under the yoke of capital expenses."

    A few highlights from Fiering's report:

    "Virtualization is making underlying hardware (and its ownership) nonstrategic. While security and compliance issues are still relevant, virtualization tools are increasingly able to isolate critical corporate data assets sufficiently to allow running them on third-party hardware. Cloud-enabled services are becoming increasingly viable. The attraction is scalability, pay-as-you-go and freedom from infrastructure build-out. The cloud is likely to accelerate the transfer of ownership for other assets as well, from servers to whole data centers. The assets to provide the services will still have to be paid for in some form, but ownership will be in other hands. Between 2008 and 2013, cloud-based computing services are forecast to grow from $0.66 billion to $6.8 billion for a compound annual growth rate of 59.5%."

    This trend won't fit every company, she wrote. "Not every organization will be in a position to give up any IT hardware ownership, due to security or compliance restrictions. Defense agencies, financial institutions and manufacturers may not be willing to give up full control of their digital assets. By 2012, most large organizations will have just started or will be in the early stages of IT hardware divestiture. Because smaller organizations tend to have less hardware infrastructure, they are likely to fully divest their IT hardware assets sooner than large enterprises."

    Oy, that's a lot of food for thought.

    So where does this leave you and your IT plans? Where does it leave your continuing CRM and ERP projects and investments?

    At this point, I'd say don't panic. Instead, it's one more thing to add to your list of interesting possibilities for the future.

    First, it's just a prediction. Maybe some of it will come true and some won't. Maybe we will revisit the prediction in hindsight in about 2014 and say, "that was a crazy idea."

    But my suggestion: at least keep it in mind. Crazier things have happened in IT. Maybe this is something crazy, but maybe there are some pieces that could help your IT operations in the future.

    I still remember back in 1993, when I told my late father-in-law, Gene Bloomfield, that I didn't get why he spent thousands of dollars to buy a brand new Macintosh LCIII computer to be able to communicate with fellow members of the group, Veterans for Peace, using phone lines and gizmos he called modems. "Pop, why in the world do you need a computer at home?" I asked him incredulously.

    Two years later, I knew why he had bought the Mac. That's when I went and bought my first PC, a Micron Pentium 90, a rocket ship for its day.

    Crazy things are always happening. And you never know what's going to happen next.

    So, 20% of businesses will get rid of their IT assets and go to the cloud and hosted applications by 2012?

    Sure, maybe that's insane.

    But if not, remember, you read it about it here first and began contemplating the possibilities. Go out there and see where it all takes you.

     

    Todd R. Weiss is an award-winning technology journalist and freelance writer who worked as a staff reporter for Computerworld.com from 2000 to 2008. He spends his spare time working on a book about an unheralded member of the 1957 Milwaukee Braves and watching classic Humphrey Bogart movies. Follow him on Twitter @TechManTalking.

     

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