10 Mega-Trends for IT in 2008

Research firm IDC’s annual predictions for the year ahead, including software, hardware, services, the Internet, possible acquisitions, and more.
Posted December 12, 2007

James Maguire

James Maguire

(Page 1 of 3)

In 2008, forces in the IT industry that were once seen as disruptions will be embraced as the new status quo; yesterday’s rebels will be next year's leaders. So says research firm IDC in its forecast of the mega-trends that will shape the tech market in 2008.

These great forces of change, which IDC calls “hyper-disruptions,” spring from the following:

Global emerging markets. The rapid growth of developing nations will significantly influence IT vendors.

Online delivery. Chiefly SaaS, but the effects will spread.

Proliferation and influence of communities. Web 2.0 will rule.

Solutions packaging. The desire for rapid adoption, including modular design and standards, will shift how tech vendors offer products.

Businesses that fail to ride the wave of change created by these forces do so at their own peril, in IDC’s view. “More market share is certain to shift in the next five years – as a result of these new approaches – than we saw in the last ten,” the firm wrote in its report.

To make its forecasts, IDC held a virtual brainstorming session among its nearly 1,000 IDC analysts. It synthesized these forward-looking thoughts into the following global trends for the year ahead:

1) Lower Worldwide IT Spending

In contrast to 2007’s healthy 6.9 percent growth in global IT spending, 2008 will see 5.5 to 6 percent growth – or lower.

“Driving the significant drop in worldwide growth is certainly, in part, downside risk that’s building from the worsening U.S economic forecast,” says IDC senior VP Frank Gens. Indeed, U.S. IT spending could fall from 6 to 3-4 percent, IDC predicts. Hardware will fall first, with software taking a hit over the next two quarters, and Services seeing a more gradual downward impact.

2) IT Vendors will ‘Double Down” on their investments in the emerging markets

IDC sees a group of hyper-growth economies enjoying a breathless growth rate of 16 percent in 2008, collectively. Big IT vendors, fearing slower growth, will investing still more aggressively in these financial racehorses in hopes of keeping their bottom lines healthy as a slowdown looms.

IDC points to a group of emerging economies it calls “BRIC+9.” This is the classic BRIC group (Brazil, Russia, India, China) along with Mexico, Poland, Turkey, Argentina, Columbia, Saudi Arabia, Thailand, UAE, and Vietnam.

Additionally, vendors will announce initiatives in the SMB sector in both the developing and developed market, resulting in 8-10 percent greater spending worldwide. “Virtually all the large IT vendors have made big SMB plays this year, and 2008 is when they need to execute,” Gens says.

3) The IT market will jump feet-first into “everything as a service”

2008 will be the year of SaaS. “The industry’s big market markers, notably IBM and Microsoft but many others as well, will move major parts of their offerings online, after years of just dabbling in software as a service and online delivery,” Gens says. Cisco and Google will also be pushing this trend.

Gens concedes that IDC predicted last year that 2007 would see larger moves in SaaS from IBM and Google, “but it hasn’t happened yet. But we say ‘better late than never,’ and we’re sticking with our predictions for both companies in 2008.”

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Other players will help accelerate the shift toward “everything as a service”: HP and Sun will expand their access to flexible, online computing resources, IDC predicts; business intelligence as a service will also see increases, as will storage as a service. Customers are getting used to the idea of corporate data outside the firewall, though are perhaps still not comfortable with the idea, Gens says.

4) “Application Appliances” will go mainstream

It’s not very easy for SMB’s to get value from servers without a lot of work. To counter this, server vendors will take a page from the Apple iPod playbook, Gens says. That is, they’ll simplify and add value to an existing product the way the iPod did to the MP3 player market.

Players like Dell, HP, IBM, and Sun will ship servers as “business application appliances.” Translated: they will pre-load these boxes with applications and ship them Web-enabled for easy download of additional software and services. Pure-play SaaS vendors will partner with traditional software vendors to facilitate this trend, IDC predicts.

IDC calls this effort to pre-load boxes for the SMB market a form of “solutionization.” In other words, the server makers see selling a fully loaded box as a way to de-commoditize their business: It’s not just a box, it’s a solution.

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