Report: Challenging IT in 2005

IDC Research this week published a white paper that reveals the trends expected to impact IT spending next year.

The paper, sponsored by automated software quality (ASQ) vendor Mercury Interactive but featuring independent IDC research conducted throughout the year, focuses on the three areas many enterprises will be addressing next year: deploying and managing complex, critical business applications; compliance with government regulations; and outsourcing.

IT is again becoming the "strategic weapon" it once was back in the days before the dot-com bubble burst, the report illustrates, which caused companies to rein in spending to focus on cost-cutting.

"Recent IDC research confirms this shift back to a more strategic role for IT, but its role is strategic only to the extent that IT successfully aligns itself with the priorities of the business, and delivers applications that enable new business value," the paper states. "Overall, business is looking to IT to ensure the reliability of business processes, enable the success of new products and services and help generate cost savings for the business."

The biggest trend will likely be outsourcing, a topic that weighed heavily in this year's presidential elections. The most publicized outsourcing cases have been offshore outsourcing to Asian countries.

IDC surveyed 100 companies and found 50.3 percent were planning on outsourcing some of its IT work this year. The main reason for the shift in responsibilities is to cut down on costs, but includes allowing the company to concentrate on their core competencies.

The duties that most companies will likely send overseas include legacy application maintenance (50 percent), Web application development (47 percent), packaged application implementation (41 percent) and legacy/custom application development (41 percent).

According to Melissa Webster, an IDC analyst and one of the authors of the report, the challenge and one of the top concerns for offshore outsourcing is in the management of the contracts. Performance metrics, escalation procedures and change management processes top the list of concerns for companies shipping their work overseas.

While outsourcing is a big concern going forward, activities closer to home are going to have just as much of an impact in the near future.

Merging Business Needs with IT Performance

An IT department's effectiveness is going to be judged on the contributions it makes to business operations, according to the report, even though its budget is not getting a significant boost.

IDC asked C-level executives what they expected from their IT departments. Reliability (20 percent) and success of new solutions (17.7 percent) ranked highest in the responses, with simplicity (9 percent), security (8.6 percent) and better technology than competitors (6.4 percent) lagging far behind.

In today's world of Web services (define), service-oriented architectures (define) and globally distributed networks, getting a handle on reliability can be difficult. This is true especially when, according to the IDC report, companies are beginning to emphasize new projects developed in .NET (define) and Java, while still maintaining their legacy applications written in languages like COBOL.

Roughly half of those surveyed say they are currently working on modernizing their legacy systems.

To reduce application failure, IDC suggests employing better project management processes and tools to improve IT and business collaboration; application management; and better processes and tools for application performance and testing.

Webster said the merger between the business needs and IT is going to require strong business processes be implemented before turning to software tools to make improvements.

"If you have weak processes, throwing software at a weak process gives you an automated weak process," she said. "But if you leverage best practices to put good processes in place and then you enforce and reinforce those through automation, now not only do you have good processes but a reliable, repeatable application development lifecycle and application management structure."

Compliance Makes Almost Perfect

For those that already have good practices in place, software automation tools make the third concern for IT easier: compliance.

Compliance with government regulations, such as Sarbanes-Oxley, HIPAA and SEC 17A-4, has been in full swing.

These regulations are forcing many organizations to reevaluate their business practices, the report states, with companies responsible for controlling the information contained within the business and making it transparent.

Compliance initiatives are IT initiatives, and this is the one area where companies are willing to spend a little money, though only 15.3 percent of those surveyed by IDC said they did as much. Most of the compliance solutions are coming from new applications (44.1 percent) or enhancing existing ones (27.9 percent) through in-house development.

"If anything, compliance has shined the light on the importance of having best practices and strong processes," Webster said.


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