IDC 2008: It's Post Disruption, the Aftermath of Webification

Published: January 8, 2008

by Timothy Prickett Morgan

Art had post modern. Politics and economics had post history. Naturalist Euell Gibbons had Post Grape Nuts, at least until he died in 1975, when he became, like all of us, compost. And now information technology in 2008 appears to have something that the propellerheads at IDC are labeling post disruption. This seems to be another way of saying cleaning up the loose ends in Web-style computing, which is what IDC expects for IT vendors and IT buyers to worry about this year.

Usually, the key IT industry analysts make bold proclamations about the coming year as another spending binge comes to a close, but in 2007, most of the analysts were unusually quiet. Back in October 2007, Gartner analysts did put out a report suggesting that IT managers prepare two budgets--one assuming the economy does OK and another assuming that it does not. But Gartner has not, as yet, publicly said much about what 2008 holds in store. Ditto for Forrester Research, Aberdeen Group, and Yankee Group, who have not put out to the public or the press any reports on IT spending expectations for 2008; the analysts at brokerage house Goldman Sachs will eventually put out some numbers, but thus far a report released back in October suggests that there is a possibility that IT spending could, based on its survey of 100 chief information officers in August, decline by 1 percent compared to 2007's levels, with capital spending on hardware and software dropping by 1.5 percent.

Just as 2007 was coming to a close, IDC jumped into the cold waters of 2008 first and put together a list of the key factors that would shape the IT market this year, which were pulled from a larger report called IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root. The basic thesis that IDC is putting forth in this analysis is that in the past several years, the IT market has been shaped by the push and pull of various technology, business practice, and social innovations--the three are getting harder and harder to separate--and we are now in a "post-disruption marketplace" for IT products and services. Online delivery of applications and services (such as archiving), community-driven application development, chasing emerging markets where legacy IT applications do not exist or where whole new business models have sprung into being (driving new IT approaches), and the desire by customers to buy solutions to problems, not IT piece parts, are some of the pressures and pulls IDC cites in its report. And now, software as a service, so-called Web 2.0-style applications, open models for application development, and alternative "free IT" funding models are now going mainstream after being on the fringes in 2005, 2006, and 2007.

"Disruptive technologies have been a persistent theme in IDC's predictions over the past several years," explained Frank Gens, senior vice president of research at the company, who has traditionally given the presentation that goes through the annual predictions that IDC puts together. "These technologies have been creeping into everything from enterprise software and hardware to consumer gadgets and telecom services, forcing vendors to rethink their offerings. In 2008, the era of experimentation will end as industry leaders get serious about transforming their products and services to take advantage of--and meet the challenges posed by--these new technologies and business models. The status quo is about to change."

The first prediction, and basically the only macro-level one, that IDC made is that global IT spending will slow in 2008. Specifically, IDC's analysts said that "economic uncertainties and downside risk" will curtail IT spending in the United States and in other regions this year, and the initial prediction IDC is making about IT spending growth is that it would between 5.5 percent and 6 percent higher than 2007's levels. Depending on where it ends up, that could be nervously lower than the 6.9 percent IT spending growth in 2007 compared to 2006 spending levels. While this is a cooling of the IT market (when measured in aggregate, like the temperature of a gas, which is merely a means of expressing the average kinetic energy of the molecules in the gas), even 5.5 percent growth is far better than the 2.3 percent growth in global IT spending in 2003, or the 2.3 percent decline in 2002, when the soap from the dot-com bubble was still in our eyes and the economies of the world were still in shock from the 9/11 terrorist attacks.

Things could be worse as we stare down 2008. But, of course, with the subprime mortgage mess causing a credit crunch that might in turn curb consumer spending and therefore manufacturing and retailing, things have plenty of room to get worse. And, if the banks clean up their balance sheets and people start feeling optimistic about their jobs and therefore spending, despite $100 barrels of oil, there is lots of room for the economy, and therefore IT spending, to get better.

Basically, you can't tell, and any prediction is a best guess based on a lot of gut checks and spreadsheet models.

As part of its prediction list for 2008, IDC tossed itself a few softballs to hit. The biggest one, which someone who is blindfolded couldn't miss, is that IT suppliers will "double-down" on fast-growing and emerging markets and the small and medium business sector. Like, no kidding. The analysts putting together the 2008 prognostications invented a new term--BRIC+9, meaning the markets in Brazil, Russia, India, China and the nine next important emerging markets. For the past several years, IT spending in the SMB space has been growing at twice the rate of the enterprise space, and that comes as no surprise considering how many of us have started businesses in the past several decades and how much computerization we have yet to do compared to larger, more established companies.

In terms of the kind of information technology that will take hold in 2008, IDC expects that application appliances--which means a virtualized software appliance shipped in a virtual machine container as well as a dedicated piece of hardware with a locked-down application running on it--will go mainstream. And the analysts are similarly projecting that all kinds of IT products will go virtual and online, including core and business intelligence applications as well as raw server, storage, imaging, and printing capacity. Such services will be particularly appealing to SMBs, who can rarely afford to buy, much less manage, sophisticated applications that could transform their IT operations and therefore their companies. IDC is also expecting that a new wave of "Web gadgets" will come to the market (Apple's iPhone and Amazon's Kindle gadgets were cited as examples) and push the envelope on applications such as location-based services. IDC further expects that the telecom and other service provider companies and the makers of Web gadgets will have to open up their networks and devices for open development and more open access. Tying a device to applications or a network is going to get increasingly difficult this year. And finally, IDC is predicting the development of a new class of software, which it dubs Eureka 2.0, that will be able to comb the unstructured data of social networks and Web sites to turn the "cacophony of crowds" into the "wisdom of crowds."

Isn't that supposed to be politics?

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