January 1, 2003

The Top 10 Trends For 2003

Latent patterns in the fabric of strategic IT

Still waters run deep, they say. Despite the global recession in IT spending, which will probably continue for most, if not all, of 2003, new trends are clearly visible beneath the surface of our superficially "quiet" industry. Here are some of the patterns we've spotted thus far (not necessarily in order):

1. Sunlight: The Best Disinfectant

The Sarbanes-Oxley Act may turn out to be the biggest influence on business intelligence (BI) technology purchasing patterns in years. Thanks to heightened vigilance from customers, shareholders, partners, and board members alike, business organizations are already racing to apply the principles of collaboration and transparency to their financial management systems. The BI solutions community couldn't be happier: Their application footprints should expand appreciably within customer organizations (although expecting many new customers could be unrealistic). For pure-play business performance management (BPM) companies, new business opportunities will be plentiful — if they can compete.

2. Goodbye, Innovation

National venture capital spending sank to a four-year low in Q3 2002, with venture investing shrinking to $3.9 billion — half the level it was during the same period in 2001 (source: Ernst & Young/VentureOne Venture Capital Survey, Oct. 25, 2002). With bright, new companies being hard-pressed to get the funding they need, established strategic software vendors will be under even less pressure to innovate in 2003. That's not good news for customers.

3. Method to the Madness

"It's not just having the data; it's what you do with it" will be the performance management mantra for 2003. Instead of passively gathering BI and imprisoning it in the ivory tower of executive management, intelligent enterprises will increasingly look toward frameworks such as Six Sigma, Balanced Scorecard, and Malcolm Baldridge, in which performance goals are not only monitored and compared against benchmarks but applied enterprisewide and at every organizational level. Metrics and methodologies will be all the rage this year.

4. The Power of Teamwork

From Business Objects' Sundance project to the "analysis sessions" envisioned by Spotfire Inc., BI and analytics solution providers are working feverishly to add workgroup collaboration functionality to their product lines. Similarly, the recent introduction of shared, centralized KPI repositories, such as those offered in Brio Metrics Builder and Cognos Metrics Manager, reflect the influence of collaborative budgeting and planning solutions in the broadening BPM market. In 2003, BI collaboration services will become standard features in more and more BI suites.

5. Embedded Analytics

As making BI accessible across the enterprise becomes increasingly important, embedding analytics into enterprise applications — as SAP AG, Siebel Systems Inc., and PeopleSoft Inc. have already done or are working to do — is gaining popularity. With a broader audience, the need for more detailed intelligence will drive analytics that are targeted not only at specific vertical industries, but at specific departments and roles. Industry observers, however, point to the dangers of creating more analytic silos, stressing the need to ensure that business rules and metadata remain consistent across all applications.

6. Intelligent Infrastructure

As the economic downturn has illustrated, business survival depends on an infrastructure that can adapt to changing market conditions. With companies focused on leveraging existing resources and increasing efficiency, infrastructure is no longer just an operational cost of doing business. Meta Group predicts "infrastructure development will be a key strategic IT discipline through 2005" with special emphasis on adaptability, robustness, and affordability.

Solution providers are paying attention to this growing need for intelligent infrastructure, with companies such as Network Appliance Inc. and WebMethods Inc. partnering with BI vendors to bring new abilities to their solutions, such as storage analytics and business activity monitoring, that can help companies realize the full potential of their resources.

7. The HIPAA Factor

Healthcare and insurance companies (and the vendors they do business with) are increasingly realizing the inadequacy of current legacy systems to comply with the legal requirements of efficiency, security, and privacy of the Health Insurance Portability and Accountability Act (HIPAA). Integration software companies — many of which are struggling — are chomping at the bit.

Decisions about whether to upgrade these systems or invest in new technology, and whether to perform gradual or wholesale implementations, will have long-term strategic implications in 2003. A November 2001 Gartner Group HIPAA survey found that 89 percent of the panel would use an integration broker in their HIPAA remediation strategies, with more attention being placed on those vendors that offer healthcare-specific solutions, such as those available from Vitria Inc., Tibco Software Inc., SeeBeyond, and Microsoft.

8. The Whole Picture: Product Life Cycle Management

Current manufacturing challenges are tough: Along with greater expectations for shorter cycles and mass customization, there's the pressure to reduce costs — and all the while, supply chains are becoming more complex than ever.

Product life cycle management (PLM) erupted as an IT category in 2001 and outperformed most others. Growth continued in 2002. So-called PLM vendors are from diverse backgrounds, such as computer-aided design, product data management, purchasing, and CRM (to name just some), so no single PLM vendor can offer a total PLM package yet. Active development and mergers are rapidly moving in that direction, however.

9. ETL-EAI Convergence

The requirements of real-time B2B integration (including cross-enterprise process automation) and real-time embedded analytics (such as transaction-triggered analysis and alerts) have led to solutions that employ the strengths of both extract, transform, and load (ETL) tools and enterprise application integration (EAI) systems. The convergence of ETL and EAI has been progressing out of the realm of homegrown solutions and technology partnerships toward more prepackaged combinations, such as in Informatica's PowerCenterRT and Embarcadero Technologies Inc.'s DT/Studio.

10. The Intelligent SME

Conventional wisdom says small-to-midsize enterprises (SMEs) don't delve much into BI. But BI vendors are bucking tradition in favor of revenue. First of all, Moore's Law has made BI-enabling platforms more accessible: Think Windows on the 64-bit Itanium processor. Microsoft struck first by distributing Analysis Services and Data Transformation Services for free with SQL Server 2000. Now other BI vendors recognize the potential in SMEs. IBM, for instance, began including BI consulting in its Start Now program aimed at SMEs and is extending its partnership with Crystal Decisions beyond its mainframe environments. ERP vendors that serve SMEs are bolstering their products with BI capabilities. And BI software that's easier to implement, maintain, and use, such as QlikTech's QlikView, is emerging.

— Jeanette Burriesci, Justin Kestelyn, & Michelle M. Young

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