Meta Group Quarterly: The five most important trends for CIOs

In a new series of articles for silicon.com leading analyst house Meta Group will take a big step back and present its quarterly snapshot of the major trends in information technology - and how they are affecting businesses. As the year's first quarter closes, Meta Group senior VP Luis Leamus says there are five areas where investments are being made...

Applying IT to gain business advantage is a key responsibility of the CIO. Everyone knows that. But what does that take? It means understanding key IT trends, their business impact on both tactical operations and strategic goals, and how to maximise that impact if the CIO is to achieve success in aligning business and IT.

The five most important technology trends for the CIO are reflected in those areas where enterprises are spending their money. Investments are being made in web services, application servers, portals, business intelligence and security. Enterprises, like investors, need to allocate capital wisely. Investing appropriately in these areas will separate the winners from the losers.

Leading CIOs take an integrated, holistic approach to driving optimal business advantage from these key technology trend areas. From Meta Group's perspective:

1. Web services is the technology that is most likely to reaccelerate IT spending. It promises a new computing paradigm that enables broader use of classic applications. Enterprises, typically within lines of business rather than IT, are already spending on web services applications and deployments, even before standards are firm or complete.

Web services is the true integration technology behind B2B, B2E and B2C transactions. Acceptance of these services typically occurs in phases, with the first phase happening inside organisations via integrating applications within the business, and further phases linking applications outside the organisation. Leading CIOs are creating their web services skill base and deriving business value by applying web Services technology to improving business processes via internal application integration.

2. The application server market is a battleground. The core application server is a free or nearly free commodity. The tools, features and plug-ins differentiate the vendors. Meta Group believes success or failure in the application server market presages results in web services.

The integrated development environment (IDE) technology of .Net and J2EE is poised to become a widespread application development platform that promises increased development productivity. As the typical development infrastructure for web services, this technology will underpin the new capabilities of these services. IBM's WebSphere, BEA's WebLogic and Sun Microsystems' ONE Middleware Developer (formerly iPlanet) are currently the most widespread of these toolsets.

CIOs need to focus on the impact of these products on training needs and the management of vendor hype (i.e. understanding what is really available from vendors, and when).

Leading CIOs in large IT organisations will deploy both .Net and J2EE as a hedge against relying on only one integrated development environment toolset, judiciously ensuring that the appropriate environment is used for a given application.

3. Portals provide major leverage to enterprises and represent a high-growth market in an otherwise consolidating information technology world.

Portal technology continues to evolve, from a technology perspective, and is also becoming more focused on being a solution to the real business need of ensuring that portal investments are well-justified, which is a current key CIO issue. Portals are all about getting the right information to the right people, at the right time, and at the right cost - or near enough.

Designing from the business down, and implementing from the technology infrastructure upwards, is the most effective overall approach for CIOs seeking to deploy best practices in portal strategy. To achieve this, CIOs will need to:

be able to list the target audience(s) for the portal (customers, employees, investors, suppliers, the press, employment candidates);

demonstrate the specific benefit for each target audience (i.e. the issue described most readily as the most important thing the audience will be able to do with the portal, and why that is valuable);

ensure deployment of technologies that result in success, focusing on specific business benefits to ensure appropriate tradeoffs occur as part of the functions/features discussion (e.g. trading off 'coolness' (fancy layouts) for the benefit of making the right information available).

Best practices in the use of the leading technology trends of web services and portals integrate them with .Net/J2EE as the development infrastructure, with web services as the key connection infrastructure to implement portals.

4. Business Intelligence (BI) is another leveraging application. While BI has long been part of the IT landscape, the scale up of ERP, CRM and supply chain applications has created massive data factories, making analytical and BI tools even more useful.

These technologies have evolved to be able to provide information that is more real time and comprehensive than before as cycle times diminish. They provide the ability to generate significant business ROI in customer data mining, channel optimisation, unstructured knowledge retention and increased commercial and government portal effectiveness.

Business intelligence, data integration and analytics tools are evolving into more information-focused tools, concentrating on providing business value rather than technological prowess. By 2003-04, comprehensive - integrated - information delivery and analysis architectures will become available, delivering both unstructured and structured information through enterprise portals.

Through 2006, further integration - including business application vendors embedding tools such as analytic engines into their products - will enable optimisation of customer-related business processes and data quality, thereby reducing 'information sprawl' and yielding substantial business ROI.

The ongoing challenge, therefore, is to ensure high quality of data and information. The creation of a performance culture via collaboration between the CIO and the CFO is paramount. This will enable consideration of the short-cycle-time, 'real time' enterprise, with the concomitant benefits of high agility, short reaction time and potential cost savings. Major drawbacks that CIOs and CFOs need to consider, however, are business-process-based, requiring often-significant culture change and process re-engineering.

5. Security is a never-ending battle. While enterprises continue to purchase from the many point products—firewalls, intrusion detection and anti-virus—management frameworks are needed.

The pervasive nature of effective information security (behaviour, culture, process, awareness, etc.) leads to establishing strategic information security programmes including appropriate risk management (RM) processes. These will be managed via dedicated programme offices and budgets and led by a chief security officer or equivalent. However, internal politics will continue to play a negative role and the associated allocation of process ownership will at first be subject to and hampered by the same political and credibility challenges that initially face current consolidated security teams.

Currently, less than 5 per cent of Global 2000 (G2000) organisations have integrated their security programmes into a holistic, companywide risk-management programme. Although most organisations have some form of risk/security programme in place, it is typically not yet consistent companywide and technology-focused.

By 2005, more than 40 per cent of G2000 firms will have adopted risk management and a balanced risk/reward reporting process, improving portfolio investment decisions (e.g. build, buy, retire, table, postpone) based on defined and accepted RM analyses.

Meta Group is a leading provider of information technology research, advisory services and strategic consulting. Visit metagroup.com for more details or call +44 (0)1252 819494.

Luis Leamus is senior vice president International at META Group. He is an acknowledged authority on the IT organisation, business value of IT, adaptive infrastructure and integration & middleware. Luis has more than 20 years experience in the global IT industry in business development, marketing, financial analysis and strategic planning.