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A storm gathers

A storm gathers

CIOs will need to be prepared for a flood of queries about why their charges are so much higher than those in the cloud.

I was asked to present on IT Trends at an AIIA event in Melbourne last month, and it was interesting to organise my thoughts on the 'trends' in the IT industry in 2009. Climate change

The change in the public sector IT climate can be characterised by what is 'out' and what is 'in' for 2009:

Out: e-Government. In: Fixing the core systems and IT plumbing.

Out: IT as a change agent. In: IT as a necessary, but risky, activity and a cost to be minimised.

Out: Recurrent budget growth. In: Budget cuts.

Out: If it adds value, let's do it. In: How will it cut costs?

Out: Agency-by-agency IT infrastructure. In: Shared IT infrastructure.

Out: 1,000 flowers and local procurement. In: Consolidation, rationalisation and aggregated procurement.

Out: Best in class. In: Good enough.

Out: Applications customised to diverse processes. In: Standardised applications, period.

The string of over-budget, over-time, and under-whelming projects has led some to observe that Governments and senior public sector executives are 'over IT' – which there may be some truth in. There is certainly a growing weariness, and consequential wariness, about IT investments.

I think the point, however, is that Ministers and executives are more aware than ever of their reliance on good IT to achieve their policy and service delivery objectives. The problem is they are losing confidence in their ability to manage IT projects. Ergo: buy it, don't build it. Fit the process to the application not visa versa. If another agency already has it then share it. Keep things simple… less equals more.

Local IT storms

What storms are playing out in the IT industry in response to, or in parallel to, this climate change? Well, in truth, the dominant theme is everyone just trying to work harder to ensure that they deliver last year's products and services to client and customer expectations… and survive. Beyond this unappealing truth, however, we can see eight storms developing:

Innovative financial models: The arrogant days of take-it-or-leave it contract terms, up-front payment and software maintenance stand-over tactics are reaching their use-by date. Think financing, risk/reward deals and pay-as-you-go arrangements like software-as-a-service.

Rethinking outsourcing/offshoring: Contracting out work will remain a viable way to obtain skills and economies of scale, but risk/reward dynamics are shifting in response to changes in vendor's financial circumstances, the emerging new politics of global trade policy and softening of the local labour market.

Vendor consolidation: Financial distress is accelerating the consolidation of industry players, while innovation continues to be driven by new entrants. Seeing the wood for the trees in the shifting ecosystems of vendors has never been more difficult, or more essential.

Cloud computing: The rise of pay-as-you-go IT infrastructure services delivered via the internet is transforming the economics of computing and the shape of both the industry and of organisation's IT departments.

Green IT: Energy efficient production, operation and use of IT has become both politically and financially correct. Ignoring the energy ins and outs has become 'career limiting'.

Collaboration and content management: Empowering the knowledge worker with better, more integrated, tools for creating, storing and sharing information is now seen as a key driver of the creativity and innovation needed to both cut costs and create growth.

Enterprise 2.0: Social computing and new web-centric office productivity platforms are making the transition from the consumer to the enterprise realms, breaking down internal hierarchies and organisational borders.

Virtualisation: Server virtualisation is picking up speed as an operational best practice in datacentresand the v-word is now being extended to the desktop. Virtual desktop infrastructure and thin client devices (yes, really!) are starting to become viable alternatives to the thick client PC.

Turn your cloud radar on

For me, cloud computing is the most significant storm on the horizon this year, and is something that CIOs will need to keep a weather eye on. Why? Because cloud services like Amazon and Google, amongst many others, will provide brutally transparent exposure of IT costs to the business. Over time, as they mature, cloud services will set the benchmark for standard applications — this is already true for CRM — web services architectures and the various cost elements of IT infrastructure.

The public sector will never be an early adopter of the likes of Amazon Web Services for its core systems for many quite legitimate reasons. The cloud story (when told quickly and with passion) is, however, quite compelling. CIOs will need to be prepared for a flood of queries from business executives about why their charges are so much higher than those in the cloud. And anyway, why can't the public sector have a cloud of its own?

Dr Steve Hodgkinson is research director, public sector, for Ovum in Melbourne.

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