Top Ten IT Predictions for 2007

2007 will be a year of “hyperdisruption,” says a veteran forecaster. Plus: SOA, SaaS, software mash-ups, virtualization, YouTube, and more.
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Frank Gens is used to peering into a crystal ball. As a senior vice president at research firm IDC, Gens taps into a font of data from vendors, enterprises, and IDC’s legion of analysts. As seen on his blog, Gens takes this information and turns it into portrait of what’s to come – as much as that’s possible in the ever-changing world of IT.

Gens spoke with Datamation about IDC’s top ten IT predictions for 2007, adding his own take on developments still in the making.

1) Worldwide IT Spending: Turbulence Remains Under a "Boring" Surface

IDC forecasts a slight bump in global IT spending in ’07, moving to 6.6% from last year’s 6.3%. But this steady-as-she-goes overall growth pattern masks churning growth rates in emerging markets, the so-called BRIC countries (Brazil, Russia, India and China) and beyond.

For example, Gens forecasts a breathless 24% growth in India, and a robust 14% growth in Africa.

“Another area of turbulence is small and medium business, relative to the large enterprise,” he says, “with SMB having about 2% faster growth than the overall IT market growth.”

This fast SMB growth creates an opportunity for vendors. “The IT industry has really under-penetrated the small and medium business because of the very costly channel structure,” Gens says. Many vendors, aware of this, are using to the Internet to go direct to these smaller buyers, a development that accelerates the software as a service (SaaS) model.

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Certainly this isn’t a new concept – salesforce.com and Netsuite are pioneers – “but we’ll see in 2007 a much larger step forward from the big software vendors.”

2) Regional IT Outlook: Mature Markets Recover a Little, Emerging Brake a Little

Today’s IT market is truly global. The companies that will survive into the future will benefit from selling to buyers not just domestically but worldwide. The leading vendors will ride buying cycles in both mature and emerging markets, tapping budgets worldwide.

Clearly, the big boys – like IBM and SAP – are already doing this. “But I think the big question is, ‘How does a $10 million [market cap] software vendor, or a $100 million [market cap] services vendor really capture the opportunity in these emerging, hyper-growth markets?,” Gens says. “Because if they can’t answer that question, they’re stuck in the low growth end of the cycle.”

3) Growth of Contenders Aiming to "Out-BRIC" BRIC

As noted, the emerging markets are growing at a galloping pace. There are a number of good-sized IT vendors in, for example, China, notably Lenovo and Huaweh, that are reaching out for a bigger piece of the global pie.

The most positive effect of these emerging markets (for vendors) is that they have become not just places to outsource labor to, but they are now buyers. “These are almost green field markets,” Gens says. “Granted, they’re small. [But] if you think about Pakistan, and Thailand, and Vietnam, and Indonesia, and the Philippines, collectively there’s a lot of growth there.” In Latin America, he points to Argentina as a high growth market.

“Basically it’s an expanding pool of new customers and new budgets.”

4) "SMB Long Tail" Will Drive New Models, Attract New Disrupters

In 2007, large IT vendors, attempting to penetrate the still-growing SMB market, will start rolling out “scaled down” versions of their enterprise products to cater to smaller buyers.

But these mega-cap IT vendors will need to shift more than the size of the products; to reach SMBs they’ll need to transform their corporate culture.

“The business model for those [big] companies traditionally is a relatively small number of very big deals,” Gens says. “And to now change your approach, and your operations, and your strategies, is quite a culture shift and a business shift. We’ll see how they do.”

“History has shown that it’s much easier for the small guys to scale up than for the large guys to scale down.”


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