Eight Trends that Are Redefining IT

September 2007

The relentless advance of technological change means that enterprises must make difficult and judicious choices when it comes to embracing new technologies. Too quick to embrace a loser, and you waste valuable time and money, or you get stuck with legacy technology for years to come. Too late to embrace a winner, and you lose market share to competitors and new entrants.

To be sure, not all technologies are created equal. But why do some succeed and thrive while others atrophy and die? Looking at the history of information technology (see sidebar), it becomes clear that the growth and nurturing of a technology requires not only invention and innovation; it also needs a supportive and conducive technology ecosystem.

Too often, however, companies take a buyer-centric view of technology, and look for a magic bullet to solve a specific business problem or a failsafe specific business opportunity to pursue. Although isolated technologies can have dramatic niche impact, high-level decision makers—including non-technologists—can get a glimpse of the next business wave and the changing face of competition by looking at converging technology trends that define the next ecosystem.

The Invisible Hand
From a market standpoint, a mature ecosystem is a complex and expensive proposition requiring investment across different technologies by many different vendors. To orchestrate and sustain these investments requires an invisible hand—the potential to address broad business problems create broad business opportunities for the market as a whole.

By looking at this development holistically, decision makers can discern the invisible hand that's shaping the emerging ecosystem, its capabilities and possibilities, and the competitive landscape that might emerge. Drawing on the whole ecosystem for guidance and support, they can confidently create and execute a first-mover strategy without the risk of technology obsolescence.

Based on extensive analysis of technology and market trends, combined with the informed opinions of more than 700 of its executives working with leading organizations worldwide, Accenture believes that eight interrelated trends are converging to create a new technology ecosystem that will redefine IT and make enterprise agility the next basis of competition.

True, many of the past technology waves have also contributed to enterprise agility—through better worker productivity (PCs and client servers); faster communication with customers, suppliers and other business partners (the Internet); and faster cycle times through the standardization and rationalization of business processes (ERP systems). In each case, however, the increased agility was a by-product of a larger technological transformation and confined to one or more isolated enterprise functions.

What's new about the emerging ecosystem is that it will accelerate systemic, enterprisewide agility of unprecedented scale and scope by addressing a wide range of enterprise concerns: hardware infrastructure; technical architecture; business processes; corporate and external data; worker collaboration; innovation; support for mobile workers; and a disciplined, industrialized approach to systems development.

Why does this add up to a new and robust technology ecosystem? Because there is significant reinforcement and synergy across the different trends and indications of early adoption.

Architecture, Applications and Infrastructure
When you can withdraw Ethiopian birrs from your US bank account at an ATM in Addis Ababa or make a travel reservation on Air Vanuatu from home through Travelocity, it's difficult not to be amazed by technology. But most technology executives know—and business executives are beginning to realize—that corporate and government IT rests on fragile foundations built for a different era. Although CIOs continue to respond valiantly to specific IT challenges, each such response leads to still more patchwork on an already overstretched IT infrastructure, making the next response even harder, more expensive and more time consuming.

Historically, enterprise IT systems were designed as applications that executed discrete business processes and ran on particular hardware platforms. There are three problems with this approach.

• When two applications needed to interoperate—either to exchange data or to share common functions—the only option was to make ad hoc breaches in both applications. Over time, this point-to-point integration approach resulted in hundreds of application "stovepipes," making it progressively more expensive, time consuming and difficult to maintain this electronic house of cards. Even simple modifications to these systems require extreme care and skill.

• The purpose of every enterprise IT system is to execute some business process. But in today's systems, business processes are deeply embedded or hardwired inside the system. As a result, processes are opaque, difficult to change or impossible to reuse. In some companies (financial services in particular), the situation is so bad that they do not have a record of some of their most unique and differentiating processes; these are buried within undocumented legacy systems from a bygone era. Need to change your process? Forget it! Simple survival is hard enough.

• Finally, today's IT applications are tightly integrated with the hardware infrastructure on which they run. This "box-per-application" approach means that hardware capacity is inelastic; even as one application starves for hardware resources, other applications swim in resources they grossly underutilize. To avoid nail biting during peak usage periods, many enterprises have created a fixed-cost, overprovisioned infrastructure with the result that less than 10 percent of the servers ever utilize more than 10 percent of their capacity.

To bring agility to IT at the architecture, application and infrastructure levels, Accenture believes that three of the following interrelated technology trends are emerging in unison.

Trend 1: Seamless Interoperability
Technical integration standards—widely known as web services—provide a new approach for interoperability across IT components. With this approach, monolithic IT applications would be broken down into modular business services that expose standardized interfaces (WSDL) and interoperate by exchanging messages in a standardized language (SOAP, XML). Interoperability no longer requires a static, hardwired stovepipe that takes months to build; instead, it is accomplished on the fly by exchanging standards-based messages across different applications.

To understand the difference between the old approach and the new, imagine a telephone network. In the old approach, every household would string a wire to every other household it's ever likely to call and use its own idiosyncratic signaling mechanism to create a connection. In contrast, the new standards-based approach is akin to a modern telephone network: Each phone (service) has a unique number (address) and is connected to a common network (an enterprise service bus inside an enterprise or just the good old Internet across enterprises); web services messaging standards act as the common signaling mechanism, enabling any business service to call any other business service on the network—inside or outside the enterprise.

Trend 2: Process-centric IT
While the previous trend provides a new approach for integration, process-centric IT provides a new approach for executing complex business processes. The combination of these two trends—called service-oriented architecture (SOA)—is leading to a new computing paradigm in which business processes are extricated from IT systems and represented formally in a business language.

The process is "executed" by composing various modular business services (which may be sourced from multiple applications or even from third parties) that interoperate by exchanging messages. Since process change no longer requires digging deep into IT systems, business units can respond quickly to market conditions by directly changing the (explicitly represented) processes. (For a related article on service-oriented architecture, see "SOA: Tailwind for IT investments," Outlook, May 2007.)

As a simple and accessible example of these two trends, consider Pipes, a new graphics tool provided by Yahoo through its website that enables end users to create their own "applications" by composing modular, standards-based third-party services. Although Pipes does not support complex business processes, transactions or other enterprise-grade IT functions, it illustrates how agility is achieved when applications are built through the composition of standard, interoperable services.

Trend 3: Virtualized Infrastructure Unlike the traditional, box-per-application hardware infrastructure, a virtualized infrastructure is assembled from commodity hardware, and shared across applications. Computational resources (processing power, storage and network bandwidth) are dynamically allocated to different applications depending on their needs and changing requirements. Further, a new approach called predictive provisioning aims to make hardware infrastructure even more agile and responsive by using historical data to "predict" an application's computational need so it can be fulfilled even before the need manifests itself.

As an example of this trend, consider the Amazon Elastic Compute Cloud (Amazon EC2), a service that enables you to buy a data center over the Internet and run your applications remotely. As your transaction volume fluctuates, Amazon EC2 expands or contracts as needed, charging you only for the resources you use.

While these three trends aim to bring agility to IT architecture, applications and infrastructure, a fourth trend aims to bring agility to the system development process itself.

Trend 4: Industrialization of Systems Development Processes
Many studies over the past two decades have shown that the failure rate of large IT projects remains high. These days, software development is further complicated by onshore–offshore teams that work across long distances and time zones.

In response, a more disciplined and industrialized approach to software development is emerging, with an emphasis on tightly integrating development tools with team support (as exemplified by Microsoft Visual Studio Team System), formal and rigorous development processes (capability maturity model integration, for example) and increasing automation through model-driven development.

To respond quickly to requirement changes, many IT shops are experimenting with so-called agile methodologies for system development to replace the traditional waterfall (or phase-by-phase) methodology. Accenture has reasons to believe that agile methodologies may be especially suited for building SOA-based systems (Trends 1 and 2).

In combination, these four trends are poised to create a new IT ecosystem that is agile at all levels: an architecture capable of responding to integration challenges and business process change; a hardware infrastructure capable of responding to fluctuating demands; and a development approach capable of delivering IT systems faster and with more reliability.

Accenture believes that a fifth trend, based on data, has been maturing for several years in various small niches and is now poised to explode.

Trend 5: Adaptive Enterprise Intelligence The modern enterprise has access to enormous quantities of data capable of providing significant visibility into many factors that affect its business performance. ERP data provide visibility into enterprise operations ranging from finance to supply chain; sensor data provide visibility into equipment, facilities, factories and other physical operations; structured and unstructured data from the Internet provide visibility into customer and competitor behavior.

In spite of this information deluge, today's so-called business intelligence applications are analytical silos operating on narrow domains of information, generating reports that await management action. Why? First, different types of data sit in different systems that typically do not interoperate. Second, as noted above, business processes deeply embedded in IT systems are difficult and time consuming to modify, so that whatever "intelligence" was obtained from the data could not be put to good use.

As a result, meaningful and actionable analysis of ERP data has been rare, despite massive data warehouses and the growing sophistication of analytics. Today, ERP systems provide more sophisticated extract, transform and load capabilities that make data much more accessible, while web service standards enable the extraction of sensor and Internet data.

Simultaneously, process-centric IT can now reduce the cycle time it takes to translate business intelligence from data into business action. As this trend in data analysis matures and converges with trends in systems development, infrastructure and process execution, these forces will imbue enterprises with adaptive agility—the ability to quickly adapt one's business processes in response to patterns detected in data.

Consider DoubleClick, which inserts banner advertisements into various third-party websites. Advertisers create several different versions of an ad as part of a marketing campaign. DoubleClick randomly inserts different versions into different websites; it then monitors which of the versions are clicked on more often by website users and automatically adapts the frequency with which each version is distributed to different websites. Over time, a small number of versions survive, which become the core of the marketing campaign. (For more on analytics and the strategic use of data, see "Winning with analytics," Outlook, May 2007.)

Sometimes, it is difficult to imagine how businesses ever functioned before e-mail and mobile phones. The ability of far-flung workers to communicate and collaborate—in the office, at home, on the go—has had a dramatic impact on business by making offshore operations, business process outsourcing and large-scale telecommuting possible.

However, as relatively immature and nascent capabilities on which enterprises have come to depend, collaboration and mobility hold the most potential to provide enterprises with operational agility by enabling both office workers and field workers—and are already evident in two trends.

Trend 6: Fluid Collaboration
Communication is a means, not an end. Collaboration is a process, not a technology. Obvious as this may seem, much of today's so-called collaboration technologies—e-mail, instant messaging, bulletin boards, screen sharing—are generic communication technologies with neither an end nor a process in mind. As a result, enterprise workers today are overwhelmed by communications directed at them through various discrete channels—from fax and voicemail to e-mail and instant messages—that are uncoordinated and divorced from the business processes they execute.

Recognizing this, technology vendors are responding with a new generation of collaboration tools. Of particular importance are three distinct types of collaboration technologies that target three distinct types of corporate workers.

At the top end, very high-fidelity videoconferencing is making a comeback (the HP Halo from the Hewlett-Packard Development Company, for example, and Cisco Systems' TelePresence), aimed at effective C-level communication.

A second set of technologies (exemplified by Microsoft Office Live Communications Server), aimed at mid-level managers, has a strong focus on coordination through the integration of multiple communication channels with task management and meeting scheduling.

Perhaps the most significant development in this area is the emergence of true collaboration platforms aimed at specific, large-scale collaborative business processes. Design and software development platforms exemplify this trend: They embed tools, synchronous and asynchronous communication, document management, and information access within the design or software development process, thereby improving visibility into the process, as well as creating traceable records of redactions, redactors and the reasons for those changes.

With communication and collaboration integrated into business processes at all levels of an enterprise, this trend is positioned to improve operational agility significantly throughout the company.

Trend 7: Enterprise Mobility
An increasingly mobile workforce and the growing adoption of mobile consumer applications are driving employee demand for mobile enterprise applications. Today, the best an enterprise employee can hope for is mobile e-mail. But two parallel advances suggest that newer enterprise capabilities will soon become available for the mobile worker.

On the device end, the combination of expanding device capabilities, low-latency networks and the emergence of new technologies such as rich Internet applications can support enterprise applications ranging from access to corporate data to training on the go. On the back end, process-centric IT (see Trend 3) can deliver and orchestrate enterprise processes across multiple platforms and devices.

With enablers at both ends, Accenture believes that mobile enterprise applications will evolve from e-mail and browser-based interfaces to customized applications tailored to specific workforces, including sales, delivery and customer support. (For more on rich Internet applications, see "RIAs: Enabling the next-generation web," Outlook, September 2006.)

For an example of this trend, take the sales support devices being developed by a major US retailer. Plagued by high employee turnover, the retailer is aiming to simultaneously educate its employees and its customers within the context of a sales situation. When a customer has a question about a product on the shelf, the device provides appropriate information—including audio and video—to describe the product features. This not only provides customer satisfaction, it also provides employees with on-the-job, on-demand training.

Trend 8: Web 2.0 Far from the days when the Web was primarily a publishing medium for large organizations, the latest generation of Web 2.0 innovation features a set of global interactive communities and forums with the voices of millions of individual participants.

User-created content is generating mainstream traffic through blogs, wikis, podcasting, folksonomies, RSS and social network services. At the same time, the emergence of technologies like Ajax, Ruby on Rails and Flash/Flex has enabled a new class of rich Internet applications. The convergence of these trends is leading to user-created situational applications using Web widgets, mashups, and open APIs and web services.

Although it is not yet clear how Web 2.0 will affect work inside the enterprise, Accenture sees organizations being enriched by these powerful external drivers of innovation. Early adopters are already leveraging consumer-generated creativity to enhance their own innovation agility.

Check out the InnoCentive marketplace for R&D challenges, where "seekers," including Boeing, the Dow Chemical Company, Novartis and Procter & Gamble, anonymously post problems in search of solutions. Any one of 110,000 registered "solvers" in more than 175 countries can vie for rewards ranging from $10,000 to $100,000. Operators of the site claim a success rate of more than 30 percent. Or watch the way marketers are already shifting tens of millions of dollars in ad expenditures from conventional to new digital channels.

Technologies do not grow or succeed in isolation. They need a supportive ecosystem that minimizes adoption risk; that, in turn, leads to large-scale adoption, industry transformation and a new basis for business competition. Accenture believes that eight technology trends are shaping a new technology ecosystem that will make systemic enterprise agility the next basis of business competition.

By looking at the ecosystem holistically and understanding its business implications, decision makers can craft a first mover strategy that fully exploits its potential to achieve high business performance.

About the Author
Kishore S. Swaminathan is Accenture's chief scientist and the global director of Accenture Technology Labs' systems integration research. He is responsible for defining the company's vision for the future of technology and setting its research and development agenda. Based in Chicago, Dr. Swaminathan has spent his Accenture career researching cutting-edge technologies. Winner of the 2000 Computerworld Smithsonian award for the best application of IT, Dr. Swaminathan has worked on more than a dozen research projects and has as many patents to his credit.

Sidebar
Technology ecosystems of the past

Desktop days. Personal computers proliferated in the early 1990s to support specialized tasks: spreadsheets for financial analysis, computer-aided design, project management, graphic design—whatever could not run centrally on large mainframes. By itself, the desktop workstation was an isolated development. But as productivity became the basis of competition, a new ecosystem emerged around local area networks, client-server architecture and new collaboration tools.

Dot-com days. The Internet has been around since the 1960s, and the Web since the early 1990s, when the Mosaic browser provided an easy-to-use interface. By themselves, these too may have remained isolated innovations, except that falling prices had already put more PCs and laptops in homes; most had modems for accessing e-mail. With client-server architecture well entrenched, companies built websites to reach consumers; expansion, growth and market share became the next basis for competition. A new ecosystem evolved around wide area networks, search engines, and sophisticated web software packages and services.

Consolidation. Global economic recession and the increasing cost of managing heterogeneous technologies built at breakneck speed during the dot-com days led to significant consolidation over the past several years. Cost cutting became the norm, forcing IT to consolidate at all levels: IP at the network level; XML at the messaging level; Linux and Windows at the OS level; Java and .Net at the programming platform level; and SAP and Oracle applications at the application platform level.

To Top