Virtual, Mobile, Social Endeavors Drive IT in 2011

Caution still pervades the economic forecasts, but it's not deterring IT executives from aggressively expanding their virtualization efforts, extending mobility initiatives, and tackling newer priorities such as cloud computing and enterprise social media adoption.

Caution still pervades the economic forecasts, but it's not deterring IT executives from aggressively expanding their virtualization efforts, extending mobility initiatives, and tackling newer priorities such as cloud computing and enterprise social media adoption.

Emerging Tech: Business Intelligence Apps Go Mobile

"If it's out there and if it can help us, we're looking at it," says Ron Smith, director of IT at logistics provider Transplace, which plans to upgrade to 10G Ethernet, overhaul its intrusion-prevention systems, and invest in cutting-edge storage gear, among other 2011 IT projects. "We're thrifty in the way we spend our money, but we go after the best."

2011 tech priorities: Are you ready to shake things up?

Capital budgets came back strong in 2010, and the U.S. tech sector grew about twice as fast as the overall U.S. economy, says Andrew Bartels, vice president and principal analyst at Forrester Research. "In 2009, companies hoarded cash. In 2010, profits were surprisingly strong. So in many cases, companies were actually sitting on excess capital. One of the ways they deployed that capital was to acquire equipment and software."

While the budget-slashing of 2008 and 2009 has given way to more stable IT spending - projected to rise 7.4% in 2011, according to Forrester -- buyers are still behaving prudently given the global economic environment. "We are in a recovery, but it's a very weak recovery. It's going to be a slow slog," Bartels says.

IDC is slightly less bullish on the 2011 outlook, predicting worldwide IT spending will grow 5.7% to reach $1.6 trillion. "Overall growth is still lagging behind pre-recession levels, but the recovery of 2010 will broadly continue and the industry will ultimately outpace the rest of the economy," IDC concludes.

Both firms agree a rebound in software and services spending will drive 2011 gains while hardware spending - the primary driver of 2010 gains, thanks to overdue equipment and infrastructure upgrades - will slow.


As we enter 2011 it is clear we're at an interesting juncture in IT, with new business demands and a raft of new technical opportunities stretching out before us. In fact, some say there has never been a better time to be in IT.

Trends such as cloud computing, social computing and mobility have the potential to dramatically improve efficiencies - without breaking the bank, says Mark White, a principal at Deloitte Consulting. "The CIO now can become a source of continuing innovation and value as opposed to saying 'fund me for three years and after 36 months I'll give you something good'."

The timing is ideal. "The business needs disruption, and the disruptive technologies exist to really change our financial model and our cost structure in a way that for once, is actually consistent with what the business wants -- which is more wood behind the arrow and less wood focused on operations," says Mark McDonald, group vice president for executive programs at Gartner.

IT leaders see tremendous potential, saying "we have not had this opportunity to redefine who we are, and what our role is in the enterprise, since we moved from mainframe to client server," McDonald recounts.

Donna LaSala echoes that sentiment, though with a slightly different perspective as a cash-strapped public sector IT leader. She sees a more positive attitude toward technology from city officials and department stakeholders.

"There's an increasingly higher level of respect," says LaSala, director of IT for the city of Berkeley, Calif. "We are really valued right now as IT professionals and CIOs. We worked for so many years to get a seat at the table, and when we did we focused on selling the need for IT. Now we're past that, and we've become strategic partners, figuring out how to get things done better."

That translates into less effort spent trying to convey the usefulness of automation and process improvement - everyone gets it. "I can skip that step and get right to the business of trying to identify funds for a project," she says.

That's not easy given the city's IT budget is still shrinking: LaSala is being asked to cut 3% for fiscal 2012 and again for 2013. "But that's a lot better than the 10% cut I was faced with two years ago," she notes. Another positive sign: The city's 2-year-old hiring freeze was lifted six months ago.

The public sector has "about a two-year lag time in recovery," LaSala says. That's partly because most public sector institutions -- including the city of Berkeley -- are tied to a two-year legislated budget cycle that leaves them less capable of changing course as economic conditions change.

IT projects that rise to the top of Berkeley's to-do list tend to be those that align with city council priorities, have a clear ROI, and can benefit more than just a single department. "We're working on an automation project for our payroll systems that's long overdue. That one rose to the top because it met our council priorities to make internal operations more efficient and because each department has something to gain from it, since it's payroll for the entire city," LaSala says.

In general, LaSala is most excited about the city's foray into business analytics. Bringing together data from disparate systems can uncover correlations among metrics that might not have an obvious connection -- such as the effect of registrations for after-school soccer programs on police call volume and graffiti cleanup operations.

"I firmly predict we're going to see a two-fold, three-fold and four-fold increase in the next year or two in the attention on good, solid data dashboards, data analytics and business intelligence. We've finally gotten there," she says.

Analytic endeavors

Business analytics rise to the top of many industry watchers' hot lists.

In particular, Forrester expects a heavy focus on analytical solutions with industry-specific gains. Utility companies want better intelligence about what's happening in their power grids and how to better manage assets such as generation and distribution equipment. Hospitals want electronic medical records and tools for tracking physical assets and determining optimum resource levels. "A lot of the demand for technology will take the form of vertical solutions," Bartels says.

IT is ubiquitous, "so it's no longer a game of how do I build and what do I build," adds Gartner's McDonald. "Instead it's a game of how do I get a yield on the IT assets I have. It's a different game and a much more exciting game."

Lighter weight technologies such as software-as-a-service, infrastructure-as-a-service, social media and business intelligence services are all creating opportunities that didn't exist before, McDonald says.

IT leaders have high expectations for moving to Internet-based service models, and some anticipate cutting their infrastructure and operations costs by 35% to 50% as they do so, according to Gartner's research. "CIOs that we've been surveying predict that by 2014, half of their transactions will be executed in the cloud," McDonald says. "It's not going to be easy, but the opportunity is there."

IDC is likewise predicting 80% of new software offerings will be available as cloud services in 2011, and by 2014, more than one-third of software purchases will be via the cloud. In the big picture, public and private clouds will drive 15% of IT spending in 2011, growing at four to five times the rate of the overall IT market, IDC projects.

The idea of variable-cost IT services is appealing to many companies that struggled to cut costs in 2009 and were hampered by fixed-cost assets and licensing/maintenance agreements. "Certainly a post-recession attitude is to make IT costs more flexible, so that companies don't have to struggle to cut costs as they did before," Forrester's Bartels says.

But there's another side to the cloud coin. While variable-cost services are attractive when revenue is falling, companies in growth mode find fixed-cost assets can offer greater leverage and an opportunity to invest excess cash when revenue is climbing, Bartels says. "The attitudes towards fixed vs. variable are very much dependent upon where you are in the economic cycle."

With regards to staffing, cloud adoption is having an impact on today's infrastructure and operations teams, who must sharpen skills and rethink benchmarks as they reconcile deployments of cloud-based services with traditional owner-operated technologies and networks. (See also: Will there be a jobless recovery for IT in 2011?

"[Infrastructure and operations teams] are better versed at service management, and they're better versed at vendor and supplier management. They're managing the infrastructure for quality of service and results, rather than just managing it for costs," McDonald says. "It's a real opportunity for leaders to emerge."

Where's the money?

In addition to cloud, mobility is a pressing priority as IT teams try to keep up with changing workforce habits and enable employees to work from anywhere, using any device, and collaborate on the fly. (See also: The complicated new face of personal computing.) 

Tablets, for example, are invading the enterprise. Among business IT buyers surveyed by ChangeWave, 7% say their company currently deploys tablets and 14% say their company will buy tablets in the first quarter of 2011.

Use of social media, too, is seeing growing corporate acceptance, putting pressure on IT to secure these communications channels. According to Gartner, 20% of business users will use social networks as their primary means of business communications by 2014.

And enterprises, of course, continue to plug away at virtualization and consolidation projects as they look to increase utilization rates and become more agile.

Smith at Transplace says the company has been working on virtualization for three years and now has 95% of its servers running on VMware ESX hosts. The effort continues as the company embarks on related projects to increase network bandwidth and storage performance to capitalize on greater efficiencies from its virtual server infrastructure.

On the network front, Transplace is implementing Cisco's 10G Ethernet Nexus switches. "Since we're consolidating onto fewer servers, we needed a lot of bandwidth to each of those ESX hosts, and we didn't want to make it more complicated from a cabling perspective," says Scott Engel, director of IT infrastructure. "We went the 10 Gig route to make it easier to support and to provide the necessary bandwidth."

(See Gauging the volume to learn more about what to expect in data storage and network traffic growth.)

Transplace is also upgrading its F5 Networks application delivery gear to the latest hardware to improve performance, planning tiered storage investments for performance gains, and doing a complete overhaul of its intrusion-prevention system (IPS). "Technology has changed a lot in the IPS world in the last three-and-a-half years, and it's time for a refresh," Engel says.

These purchases were included in the company's long-range spending plans, inked in the past few years, and the budget has remained intact. "We haven't been crunched at all. We're spending what we thought we were going to spend, and we weren't asked to cut it," Smith says.

Not all companies' IT teams have fared so well, and the trick for those with fewer-than-anticipated funds is finding the dough to pursue new opportunities. IT departments can't expect to be handed supplemental funds to pursue innovative projects - they have to find the money elsewhere.

"In years past, if you saved a dollar, you'd have to give it back to the finance guy," Gartner's McDonald says of the IT pros he talks to. "Now, some of that money - in some cases all of it -- is being redirected inside of IT rather that just returned to the corporate coffers. That's definitely a big change. Money for innovation is the fruit of cost management."

Read more about data center in Network World's Data Center section.

This story, "Virtual, Mobile, Social Endeavors Drive IT in 2011" was originally published by Network World.

Copyright © 2011 IDG Communications, Inc.

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