Wave Systems Corp. (fka WAVXQ)

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Predictions 2005 - choppy waves to ride
Stuart Kennedy
FEBRUARY 15, 2005

http://australianit.news.com.au/articles/0,7204,12225217%5E15382%5E%5Enbv%5E,00.html

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THE most influential voices in the Australian IT industry draw up the roadmap for 2005. more..
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IF the IT industry was a surfer, the years 2001 and 2002 were wipeouts, 2003 was spent on the beach waiting for swell and 2004 brought some small, choppy waves to ride.

There won't be many booming barrels for those surfing the industry in 2005, but the swell is rising and becoming a little cleaner.

Australia's chief information officers report that this year they have stable budgets, a steady stream of small, carefully costed projects to work on and staff rosters that will either remain constant or increase to handle extra work.

The IT governance lessons of the wild years of the Y2K and dotcom cons have been locked into the psyches of CIOs and their boardroom masters.

As a result, the big, glorious IT project is mostly out, and only in if it passes long and serious scrutiny. This careful atmosphere is here to stay.

CIOs have some hard, long-term yakka ahead of them as they continue the process of digitising and linking their supply chains, extracting value from data warehouses and data marts and exploring new technologies such as radio frequency identification tags and voice over internet protocol networks.

Craig Garvin, CIO for Arnott's, is one IT chief spending up on systems to give his food business an edge over the next five years.

In line with analyst predictions from the likes of Gartner's John Roberts and S2 Intelligence's Bruce McCabe, Garvin is in the process of arming Arnott's with the latest SAP enterprise resource planning system and building in business intelligence capabilities that will enliven and speed up reporting and give his line managers the most transparent view of the business.

Garvin is also revving up his biscuit company's business-to-business systems.

Over at betting agency Tabcorp, technical services general manager George Mackey is struggling to fill his roster with the right people.

During the next 12 months Mackey needs a bunch of business-savvy techs to help with a bunch of projects, including ERP consolidation and mobility.

If some of the country's top IT headhunters are to be believed, Mackey may find his recruitment drive a bit tougher than it would have been during the lean employment times of the past few years.

Michael Page Technology hi-tech manager Stuart Packham says churn is back, which could result in a "war for talent" in mid-2005.

Ambition Technology director Jane Bianchini says churn could extend to the top end of town as CIOs, who have been very loyal since the tech-wreck, eye off new roles from early in the second quarter. Both report a graduate shortage due to the tech crash spooking young people away from IT tertiary courses.

Candle ICT national manager Trevor Taylor has a different view, saying the recruitment market is only in for a moderate uptick in 2005.


Salaries will rise about 5 per cent, with increases of up to 15 per cent in hot skill areas such as Linux.

Taylor nominates banking and finance, telecommunications and government as the main recruitment sectors.

Analyst estimates of how much Australian businesses will spend on information technology through 2005 range from about $25 billion up to $40 billion, and are clouded by different tracking methodologies. There is rough consensus, however, on the IT industry growth rate, which is tipped to be in the 4-7 per cent range.

Some vendors, such as Hewlett-Packard Australia chief Paul Brandling are positively bullish about the year ahead.

Brandling says the big end of town cranked up spending from the middle of last year and he expects no let-up through 2005.

"The top end of town has been the big swinger in recent months," Brandling says. "At the beginning of last year we had been predicting that enterprise spending would take off after a prolonged slump.

"The market was still subdued in early 2004, but we've seen an upswing that will continue through 2005," he says.

IBM Australia chief executive, Phil Bullock, sees enterprise attitudes towards IT shifting from an emphasis on cost control to investment.

As healthy profits and revenues continue to roll in for Australian businesses, Bullock says, his customers "are looking to maintain growth and transform their organisations".

"In transformation, business process is central, and that is driven by IT."

While a legion of IBM Australia bosses reaching back to the 1950s have said much the same thing every year, Bullock says the big difference with today's IBM is the input from its acquisition of global consultancy PricewaterhouseCoopers.

In good news for young job hunters, Bullock says Big Blue will swallow a large intake of graduates this year.

Microsoft Australia boss Steve Vamos, who spent much of his early career at IBM, is also hoping that business transformation projects will bolster sales of Microsoft products.

"About a third of productivity gains in the past 10 years are attributable to IT, and that trend will increase," he says.

Vamos is optimistic about 2005 as investment continues to firm up.

Microsoft has copped much criticism in the past 18 months over security holes in its flagship Windows operating system and spent up big last year on improving its responses to cyber threats.

Vamos says security will occupy many CIO minds throughout this year.

"Security requires a broad response aimed at making sure the right management practices are in place from the board down to operational level, to protect information, infrastructure and assets," he says.

Players in sexier areas of IT sneer at "snorage", but selling enterprise-grade data storage keeps EMC managing director Steve Redman awake at night.

After racking up a growth rate for Australia and New Zealand of 37 per cent last year, Redman reckons he can push EMC along at a similar rate this year and will hire another 25 people to help.

Compliance and disaster recovery projects have pushed storage into boom times, he says, with smaller businesses now kicking the tyres of smaller versions of enterprise-grade storage systems.

"Commercial organisations used to think storage didn't matter but even for a smaller organisation if email goes down it's real problem. So much revolves around email," he says. "Your email is only as good as your infrastructure, and your customer database is only as good as your infrastructure."

Computer services giant EDS had a tough 2004, coming under fire in the US over problems with a US Navy contract, while in Australia it went through several senior management changes and had to cope with many of the big, monolithic outsourcing deals it struck during the early 1990s unravelling into smaller, contestable deals.

This year, however, EDS Australia managing director Chris Mitchell sees better times ahead, with a juicy chunk of work shaping in replacing what he calls "hairballs" of old code hanging around many big business systems. "That slows down the creation of new systems, and you end up with a huge proportion of IT budgets being taken up just to keep the lights on, rather than investing in innovation and growth," he says.

The IT soap opera of 2004 was Oracle's stalking of takeover target PeopleSoft.

Many thought Oracle chief Larry Ellison had no hope of getting his desire to own PeopleSoft past US antitrust regulators and the target's board. Late last year, however, Ellison's detractors were laughing on the other side of their faces when, finally, the PeopleSoft prize finally fell into Ellison's hands.

Oracle Asia-Pacific mergers and acquisitions vice-president Brian Mitchell faces a tricky time fusing the local PeopleSoft operation with Oracle, and redundancy and job-change pain is in store for a number of employees.

However, he still sees 2005 as "much better" than last year..

The oversupply of IT infrastructure from the Y2K and dotcom frenzy has finally been sopped up and demand is seeping back into the market.

"The gap has now closed between the deployed infrastructure and the active use of commercial transactions for that infrastructure," he says.

As more heat and excitement return to the IT market this year, the pressure on CIOs will change, IDC Australia-New Zealand IT management program director Catherin Bennett says.

"I'm talking to CIOs responsible for library records, information management and even office equipment and asset management," Bennett says. "Anything that touches IT is starting to be the CIO's responsibility, so in larger organisations the chief technology officer is starting to reappear. After all the staff reductions of previous years, CIOs this year will be swinging into staff retention."

These new pressures, at least, should be a change from the gloom, doom and inertia of the the first half of the decade.

Telecoms analyst Paul Budde says there's a triple whammy coming as 2.5 million broadband customer make the "triple-play" of voice, video and data services a realistic proposition. "We have the unmet demand of 2.5 million broadband users and that will fill rapidly," he says.

More bandwidth will also drive convergence of the online and broadcast media environments. Voice over IP has gone from being a gee-whiz technology in 2003 to just another application on corporate networks. Take-up will be strong, he says.

It looks like the surf's up in 2005.


The predictions
NINE CIOs, 12 suppliers and five analysts detail their plans and predictions for 2005.
more

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