On the shortlist

For most of today’s IT organisations, there is a set of core technologies that is proving instrumental in their delivery of high-impact business services.

As the survey data behind this Information Age Research Report shows virtualisation, enterprise resource planning (ERP) and business intelligence stand out as three of the top elements in the modern IT-in-business arsenal. And IT industry analyst predict strong and sustained demand for these technologies.

According to analysts at Gartner, virtualisation will be “the most important technology in IT infrastructures and operations up to 2010, dramatically changing how IT departments manage, buy, deploy, plan and charge for their services.”

The analyst group expects the total number of virtual machines deployed worldwide to grow from the 540,000 that existed at the end of 2006 to more than 4 million by 2009, but “this is still only a fraction of the potential market.”

“Several things will make virtualisation critical to most enterprises in the next few years: the need to consolidate space, power, installation and integration, and providing server resources which are capable of responding to unpredictable workloads,” says analyst Thomas Bittman.

One consequence is that organisations will buy fewer servers. “Every virtual server has the potential to take another physical server off the market,” says Bittman. “Today more than 90% of users deploying virtual machines are doing so specifically to reduce x86 server, space and energy costs. We believe that virtualisation reduced the x86 server market by 4% in 2006, and by 2009 it will have a far greater impact.”

While virtualisation is not a technology that business users come into contact with directly, most interact in some fashion with another central plank of most organisation’s technology strategy: business intelligence.

“BI is at the top of many CIO priority lists and we expect it to remain so for the next five years as the amount and heterogeneity of information in organisations continues to increase,” says IDC analyst Alys Woodward.

Organisations spent $19.3 billion on business analytics software in 2006 – both BI tools and applications – 11.2% more than during the previous year, says IDC. And that demand is expected to continue at a healthy compound annual growth rate of 10.3% over the next five years.

The perception of the importance of BI is echoed at Gartner. “BI has become a strategic initiative and is now recognised by CIOs and business leaders as instrumental in driving business effectiveness and innovation,” says analyst Andreas Bitterer.

Gartner’s annual survey of 1,400 CIOs worldwide shows that BI is the number one technology priority in 2007 – for the second year running.

In recent years business intelligence has become a target area  for vendors of enterprise resource planning applications. But demand for ERP itself is still spectacularly strong – especially among mid-sized companies. According to AMR Research, in 2006 total ERP sector revenue grew by 14% to $29 billion, with software licence revenue surging 18%.

The ERP market continues to benefit from a widespread acceptance of the idea that businesses must have integrated information systems to be competitive, says AMR. Its survey data indicates that over 2007 ERP budgets will have grown by an average of 12.3% at large and mid-sized US companies.

“[2007] will experience levels of ERP investment that we haven’t seen since the late 1990s,” analyst Jim Shepherd has calculated.

As that might indicate, users have clearly identified what works for business and what doesn’t, and are voting with their wallets.

More from this research report

Measuring the gap
The new generation of virtualisation technology presents a compelling proposition.

From barriers to benefits
Survey of IT executives reveals a professional class committed to realising business value, but shackled by technical and business constraints.

Further reading

Agility applied at Standard Life
Standard Life has emerged as one of the star performers of the UK’s life and pensions sector. And its bold adoption of agile IT techniques is credited as key to that elevation.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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