CHAPTER 2

Technologies and Trends Driving Today's IT Innovation

The future belongs to those who believe in the beauty of their dreams.

—Eleanor Roosevelt1

Technologies that are driving innovation today are typically reflected in what organizations are spending their technology funds on—both in the current year and projected into the future. According to CIO magazine's “State of the CIO 2012” research report, larger companies are spending less as a measure of revenue at 3.7 percent. Small and medium-size organizations are spending between 4 and 6 percent of revenue (see Exhibit 2.1). Breaking down the numbers by industry, we see that high technology and utilities lead the way, with the highest percent of revenue spending at 7.6 percent. This year's average is 4.7 percent. Health care, manufacturing, and retail bring up the rear, with the lowest percentages of spending, at 4 percent, 2.6 percent, and 2 percent, respectively. As expected, the projects that teams are working on this year and into the next include business intelligence, mobility, and cloud computing, at 49 percent, 48 percent, and 40 percent, respectively.2

Exhibit 2.1 Your Spending

Follow the Money

I strongly believe that the money that CIOs around the globe are currently investing or planning to invest in the near future indicates the technical areas that CIOs and IT leaders need to focus on and, more important, be knowledgeable in. In the first edition, I examined a Robert Half technology poll of approximately 1,400 CIOs and found that the following areas were the focus of their spending and investments:

• Network security (35 percent)
• Database upgrade and installation (16 percent)
• Customer relationship management (CRM) systems (15 percent)
• Data storage and backup (13 percent)
• Wireless communications (10 percent)3

A CIO magazine survey of 231 respondents reported that the following four categories expected to increase in spending:

According to CIO magazine's “State of the CIO 2005” survey, the respondents indicated that the top technologies for innovation were redesigning IT architectures (73 percent), data access and warehousing (55 percent), and Web services (49 percent). From a global CIO priority perspective, CIOs in the United States, Japan, South Korea, Germany, Australia, and Canada indicated that the top three technical priorities in 2005 were to integrate and enhance systems and processes, ensure data security and integrity, and focus on external customer service and relationship management.5

Fast-forward to today. Forrester Research in Cambridge, Massachusetts, identified the IT spending trends listed next in 2012–2013 for the United States and globally.6

United States

On a currency-adjusted basis, the U.S. market was projected to grow by 7.1 percent in 2012 and 7.4 percent in 2013.

• Computers and peripherals increase from $103 billion in 2012 to $112 billion in 2013.
• Communications equipment increases from $92 billion in 2012 to $94 billion in 2013.
• Software increases from $232 billion in 2012 to $259 billion in 2013.
• IT consulting services increases from $190 billion in 2012 to $207 billion in 2013.
• IT outsourcing increases from $195 billion in 2012 to $207 billion in 2013.
• Telecommunication services increases from $212 billion in 2012 to $231 billion in 2013.
• IT staff spending increases from $241 billion in 2012 to $258 billion in 2013.

The numbers underlying these totals show where the real action will take place and are thus focal points for CIOs:

• Mobile applications and middleware (up 14 percent): 54 percent surveyed.
• Business intelligence (up 14 percent): 46 percent surveyed.
• Security software (up 8 percent): 38 percent surveyed.
• Collaboration software (up 5 percent): 35 percent surveyed.
• Enterprise application stores (up 6 percent): 35 percent surveyed.
• Industry-specific applications (up 9 percent): 34 percent surveyed.
• Software as a service total (up 15 percent): 25 percent blended surveyed.
• Enterprise social networking tools (up 4 percent): 27 percent surveyed.
• Big data solutions (up 6 percent): 20 percent surveyed.

Globally

On a currency-adjusted basis, the global technology market was projected to grow by 5.4 percent in 2012 and accelerate to 8 percent in U.S. dollars in 2013.7

Outsource spending was projected to grow consistently in 2012 and 2013, at 6.7 percent and 6.0 percent, respectively. After a good run up in 2010, the demand for communications equipment (e.g., routers, switches, video conferencing, broadcasting, and two-way radios) was projected to slow to approximately 3 percent, then run up to 4.6 percent, in 2012 and 2013.8

• Computers and peripherals increase from $438 billion in 2012 to $477 billion in 2013.
• Communication equipment increases from $342 billion in 2012 to $358 billion in 2013.
• Software increases from $529 billion in 2012 to $583 billion in 2013.
• IT consulting services increases from $427 billion in 2012 to $465 billion in 2013.
• IT outsourcing increases from $385 billion in 2012 to $408 billion in 2013.

The research shows that while overall IT spending increases, the actual strength will be determined in 2013 and based largely on the economic environment in the European Union, China, and the United States. The fastest growing IT markets are in the following countries:

• Brazil (15.1 percent)
• India (14.3 percent)
• Mexico (14.3 percent)
• China (13 percent)
• Australia (8.2 percent)
• United States (6.6 to 7.1 percent)9

According to Forrester Research, “Asia, the Americas, and emerging markets partially offset [the] shrinking European IT spend,” which is primarily due to the economic troubles in Europe. The forecast for IT growth in Europe as a whole is less than 2 percent. Italy and Spain are projected to have negative growth of 1.5 to 2 percent.10

According to the Washington Post, U.S. government spending on IT is projected to fall 0.75 percent, to $78.8 billion, in 2013. The U.S. government is one of the largest purchasers of goods and services worldwide, and just the Department of Homeland Security alone is expected to spend $729 million on IT in 2013. This is an increase of more than 20 percent from the cuts in 2012, because of cyber security research. Another $2.2 billion is expected to be spent in emerging technologies, $3 billion for education in science and technology, and $30.7 billion for appropriations in bioeconomy and medication research at the National Institutes of Health (NIH).11

Security and cloud computing are likely to be priorities for U.S. government spending in the near future. Since 2009, more than 35 agencies migrated to cloud computing environments, while another 30 or so are expected to make the leap in 2013.12 Migrating to the cloud will probably result in the shutdown and reduction of government-owned and government-operated data centers and potentially a loss of IT jobs servicing those data centers.

Workforce computing, PCs, servers, systems management, data centers, disk storage, maintenance on existing technologies, and the like consumed approximately 23 percent of the total IT hardware budget in 2011, with a projected decrease in the next two years as a result of Windows 7 rollout completion and the adoption of bring your own device (BYOD) to work. Forrester believes that “security and efficiency” will “trump user choice and experience” as a result of planned IT professionals prioritizing their spending. The research advisory firm suggests the following priorities:

• Significantly upgrade security.
• Roll out client virtualization technologies. These are well adopted in the server space to date.
• Add touch-screen tablets to end-computing options.
• Embrace BYOD programs.
• Finish migrating to Windows 7 in advance of planning to deploy Windows 8.13

The Major Technology Trends Driving Change

As indicated in the previous section, it's easy to see that what companies are spending their money on provides a window into the trends that are driving innovation. In a recent report, Forrester Research identified the following five technology trends to watch:

Cloud Computing

The following are some interesting statistics that support the adoption and innovative use of cloud computing:

• A billion monthly active users accessed Facebook's website at the end of September 2012, and 81 percent of them were outside the United States and Canada.15
• Twitter, a communications tool that's funded primarily by advertising, experienced an average of 340 million tweets per day.16
• The global private cloud market was $7.81 billion in 2011. It's predicted to reach $15.93 billion by 2015.17
• The software-as-a-service (SaaS) market represents the largest portion of the global cloud market, at $21.2 billion in total revenue in 2011.18

Mobile Applications and Devices

Consumer markets are shaping the use and adoption of mobile computing in corporations, academic institutions, and organizations around the globe at a rapid rate. The following are some interesting statistics that support the adoption and innovative use of mobile devices and applications:

• Simple message service (SMS) is still the most widely used application in the world, primarily as a result of the low technology entry point (cell phone or simple computing device) across the existing cell tower wireless transmission channels. In 2011, there were 8 trillion SMS messages sent per day, an increase of more than a billion from the previous year.19 That's 253,000 per second!
• About 29 billion smartphone applications were downloaded in 2011.20
• According to a new International Data Corporation (IDC) forecast, the market for mobile applications will continue to accelerate; the number of downloaded apps is expected to increase from 10.9 billion worldwide in 2010 to 76.9 billion in 2014.21
• Worldwide mobile apps revenues will experience similar growth, surpassing $35 billion in 2014.22
• YouTube received 25 percent of the traffic and 40 percent of the views from mobile devices in 2012.23
• Smartphone and tablet sales will surpass 1 billion in 2013.24
• Gartner Research predicted that 66 percent of mobile workers will own a smartphone in 2016.25

Social Media

Some recent findings released by Edison Research indicates the following trends in the use of social media:

• About 68 percent of Americans using social networks in 2011 indicated that none of the networks influenced their buying.
• In 2012, 47 percent indicated that Facebook had the greatest influence on purchasing behavior.
• Twitter users are 33 percent more likely to be Democrats.
• The fastest growing segment in social media is 45- to 54-year-olds.
• About 54 percent of Facebook users access the site via a mobile computing device, and 33 percent of the users access the site as their primary mechanism.26

Business Intelligence

Business intelligence (BI) tools and usage are evolving to focus on social media analytics. BI servers and data are moving to the cloud, and usage accessed by mobile devices (PDAs and tablets) is increasing every quarter. Consider the following:

• Twitter offers advertisers two layers of analytics that provide in-depth insights regarding paid and unpaid activity today.27
• BI tools are heading toward Web and cloud-based tools that are easier to use. A recent Information Week survey found that in organizations that used BI, only 25 percent of the employees had access to those tools, primarily because of the complexity of their use.28
• According to Gartner Research, operational and tactical BI is growing at a rate of 13 percent.29
• According to a 2011 survey of the BI Leadership Forum, more than 33 percent of organizations that use BI have purchased cloud-based BI. Of those organizations, 65 percent are planning to increase the use of cloud in the coming year.30
• Mobile BI is a trend of the future, and it's rapidly approaching. Gartner Research predicts that 33 percent of BI usage in 2013 will take place on a mobile device such as a PDA or tablet computer.31

Virtualization

Virtualization has matured in the data center, especially for servers, and is expanding for other network and security devices. Vendor dominance has come to two vendors: Microsoft and EMC/VMWare. Expansions for virtualization will take place on end-computing devices and compete directly with new end-computing operating systems. Consider the following:

• Gartner Research expected that 48 percent of all installed applications would be using EMC/VMWare virtualization software by the end of 2012.32
• About 58 million virtual machines were expected to be running by the end of 2012.33
• Virtualization has quickly moved beyond servers. Significant growth trends are predicted for the virtualization of switches, security appliances, storage with both cloud vendors, and customers who manage their own data centers.

Consumers are helping to shape the mobile and cloud markets. It's commonplace for businesses, staffs, students, researchers, retirees, and so on to leverage a mobile device and store more and more data in the cloud. The old days of losing the content on your smartphone or another mobile device are coming to an end. Devices like Apple's iPhone provide customers with an autosynchronization feature that automatically backs up their data to a secure cloud storage repository. According to Forrester Research, the mobile platform leaders by 2016 will be Apple, Google, and Microsoft, with a projected 91 percent share of the U.S. smartphone market and a 98 percent share of the tablet computing market. Private Wi-Fi hot spots are anticipated to grow to 648 million by 2015, while public Wi-Fi is anticipated to expand from 1.3 million to 5.8 million. Mobile applications will grow from a $6 billion industry in 2012 to $55.7 billion by 2015.34

These statistics and trends might not be seen in other industries—ever. Innovation in the technology market will continue to be a leader and drive company product innovation, significantly contribute to sales and profits, and shape the way that billions of people in the world communicate, collaborate, and buy goods and services.

A very cool article that I recently came across highlights an innovation that leverages technology from several of the technology trends mentioned earlier. According to CNN Money, the U.S. Food and Drug Administration (FDA) just approved the use of a “digital pill.”35 Patients ingest the digital pill whenever they take their medications, and it makes an electronic recording of the time that each medication was taken. This information is relayed through the skin to a patch worn on the body that in turn can send data to a mobile device, a tablet computer, or even the patient's physician or nurse, if authorized. The real-world practical applications for this type of innovation are amazing, especially as people age. It's common for a senior citizen to forget to take a medicine, which can be dangerous.

Another emerging trend that piggybacks on the transmission of personal data is the developing market for electronic personal data management via cloud technology. Forrester Research anticipates that this market is worth billions and could substantially increase in the coming few years.36 Imagine the smartphone of the future, with none of the content stored locally on the device, but read and written on the cloud. If this type of marketplace takes hold, it could greatly alter the existing mobile device landscape and vendor market share leaders—including Apple, Google, and Microsoft.

An article published in the Washington Post notes that the University of Maryland at College Park, my undergraduate school, is innovating with mobile application technology. The article describes a new Maryland program dubbed Escort-M that is installed on a smartphone and allows students walking home late at night to be virtually connected to campus security as their online escort.37 The system connects students with security professionals through an app, links to real-time cameras, and utilizes voice through the mobile device to improve public safety. This is very cool and definitely innovative. We are just scratching the surface with regard to what the future holds.

I asked my distinguished CIO and IT executive panel members their thoughts on the drivers that are affecting the role of the CIO and IT as an industry today. Their insightful answers are presented in the following CIO survey.

Predictions for the Future

So, what do today's drivers of technology, regional and global spending trends, and a paradigm shift in the way we support computing (some of it on the financial books, some end-computing devices) and deliver solutions from disruptive to mature technologies? What will technology and the role of the CIO be in the future? Five years from now? How about in 2020? According to a CIO magazine article, top CIOs predict the future four years from now—2017. The IT executive role of the CIO will still be needed in the future.

The technology drivers of today—cloud computing, mobile computing, social media, and the consumerization of IT—aren't likely to change the role of the CIO tomorrow. What could be the CIO's ability to “handle and spark major business shifts” may also determine the effectiveness of the role. This is the belief of Steve Rubinow, the former CIO of the New York Stock Exchange and the current CIO of FX Alliance. “CIOs should always understand the pace of technology change. Now, it's just smaller and smaller time frames” to make the right decisions.38

The CIO of 2017 may be the following:

• An entrepreneur who can inspire staff and persuade suppliers to collaborate.
• A connector who links people across the company and facilitates collaboration.
• A global talent scout as recruiting moves beyond the bounds of the company's home country.
• A futurist who can predict trends and the implications of those trends.
• A master of business metrics. Innovation will become a criterion worth measuring.39

What will the role look like even later, such as in 2020? The following are several predictions:

• Microsoft's reign may end. Heterogeneous client computing will be driven by iOS and Android.
• The IT department won't be physical and may move into the cloud as well.
• Hyperkinetic business collaboration will occur in the cloud and across organizations, making security that much harder.
• CIOs will manage fewer humans, especially for security, as a result of advances in artificial intelligence.
• End-users will not be in departmental groups but will be replaced by Facebook-like virtual networks.
• Cyber warfare will turn the CIO into a general, as the interconnectedness of companies and suppliers increases.
• BYOD will be the norm. CIOs will adapt or get run over by users and staffs.
• Outsourcing will use artificial intelligence to enhance speech recognition and change the delivery of services like the help desk.
• CIOs will affect the business direction and be involved in business decisions, not just be told about them after the fact, as is often the case today.
• Analytics and business intelligence will be increasingly important and probably run from the cloud.40

What Did I Do to Prepare?

Preparing for the future is a bit like trying to look inside a crystal ball, see exactly where you'll be in your career years from now, and have a road map to get you there. Unfortunately, that's not the case. As a result, what I do to prepare for the future is to stay educated and abreast of the latest IT and business trends so that I'm not reacting to them but adapting to them. Specifically, what I've done is not so much to prepare as to adapt to the changes in IT as well as the role of the CIO:

• I developed a cloud strategy in my organization two years ago, integrated it into the IT strategic plan, and set our organization on a path to a new enterprise architecture that includes the components of public and private clouds. We've rolled out two large enterprise applications that leverage the cloud in the past 15 months. So far, so good.
• Adopting cloud computing changes everything, especially integration strategy. I essentially started from scratch, researching the latest technologies and enterprise business solutions that offer cloud-to-cloud, cloud-to-premise, and premise-to-premise secure integration solutions with the sample tool set. My team has implemented several integration orchestrations between cloud products and some of our internal systems. Doing so has allowed us to improve our integration approach through smarter technology, implement batch and near real-time data exchanges, and better support the business. There are some good options out there. Check out Cast Iron (IBM), WebMethods (Software AG), Pervasive, and Boomi (Dell) cloud integration tools. Forrester and Gartner both have some great research on this topic.
• I adopted BYOD and have not looked back. It's here to stay and can actually help lower costs. I recently had a discussion in New York with a group of CISOs, and the topic of BYOD involved a large group of us. The CISO of a not-to-be-named top 10 financial services firm explained to me the elaborate legal and technical mechanism he went through to certify and support one device, the iPad. When I asked him whether the measures taken can totally protect the data on the personal devices, the answer, as I expected, was no. Given the plethora of backup mechanisms available to users for their personal devices, including automated cloud data synchronization, it's difficult to justify the cost and labor to lock them down. I recommend using data loss prevention (DLP) software to really know where your data is going.
• I'm rolling out a tablet pilot and engaging with vendors on VDI as I write this. If your workforce is mobile, you may have to wait just a little longer for offline virtualization on the client side, but it is coming.

Recommendations

My recommendations in this chapter are concise, because it's clearly harder to predict 10 years ahead. I look back and use trend extrapolation forecasting to remind myself of the tremendous rate of change that technology has gone through in the last two decades and, more important, the effects on society, individuals, and businesses. It's a bit humbling but still exciting to see what we've been part of. The following recommendations are intended to better prepare us all for the decade ahead:

• Leverage your existing and prospective customer base to learn about the business drivers and trends coming down the pike that will require IT innovation and services. Listening skills are just as important as technical skills.
• Make sure your network has the sufficient channels and links to individuals and groups who can educate and inform you. I find that vendors and cutting-edge companies who are innovating products and often creating new trends are the most informative. Just remember what our original reaction to MySpace was years back. Some thought it was a fad, others saw it a way to connect with friends, employers saw it as a distraction from work and a productivity hog, and advertisers saw it as the holy grail. Fast-forward to today—social media and networking are now integrated into the global society and affecting IT organizations around the world. Read the right journals and newspapers to stay abreast of the innovators in the world. I personally like the Wall Street Journal, the Harvard Review, Entrepreneur, Inc. magazine, Bloomberg business news online, Science magazine, and CNN.com.
• Keep up with IT advisory research firms and their reports and trends. I recommend Forrester, IDC, and Gartner.
• In addition to reading the fee-based research, keep current with the latest tools, product reviews, and blogs. My favorite online sites are eWeek.com, ComputerWorld.com, and CIO.com.
• Attend IT and business conferences and events. Network with vendors, customers, and companies to see what's in their pipelines. These events are great places to network for other purposes as well.
• Continue to feed your brain, and if you have the time and persistence, enroll in a certification program or advanced degree program that will augment your current experience and knowledge.
• Get engaged and drive cloud computing, institute social media initiatives (BI is a great one that can add value and help drive revenue for for-profit firms), pilot desktop virtualization, and launch tablet projects with mobile applications that integrate to your core applications and assist the mobile users.
• Adopt BYOD or die trying. I personally held out for as long as I could in my organization but recently succumbed to continuing end-user pressure and changed the IT policies supporting personal devices. According to the trends, research, and predictions for the future, it's here to stay, but it does come with risks that I'll further discuss in Chapter 8. Nothing is free.
• Don't ignore VDI. In addition to faster distribution of applications and potentially lower costs, it promises to improve the security of personal devices, including BYOD.

Notes

1. Eleanor Roosevelt, Inspirational Quotes, www.inspirational-quotes.info/dreams.html (accessed July 28, 2012).

2. “State of the CIO 2012,” CIO, January 2012, 36.

3. “Safety First,” Robert Half Technology press release, February 25, 2005, www.roberthalftechnology.com/PressRoom (accessed February 27, 2005).

4. “IT Spending Projections Rebound Slightly in February,” CIO, March 1, 2005.

5. Elana Varon and Lorraine Cosgrove Ware, “The State of the CIO around the World,” CIO May 1, 2005.

6. Andrew Bartels, “US Tech Market Outlook for 2012 to 2013,” Forrester Research, April 4, 2012.

7. Andrew Bartels, “Global Tech Market Outlook for 2012 and 2013,” Forrester Research, January 6, 2012.

8. Ibid.

9. Ibid.

10. Ibid.

11. “Government IT Spending Key to Job Growth?” Washington Post, May 20, 2012, H1.

12. Ibid.

13. David K. Johnson, “Determine Your Workforce Computing Hardware Budgets for 2012,” Forrester Research, February 23, 2012.

14. Ibid.

15. Facebook, Key Facts, newsroom.fb.com/content/default.aspx?newsAreaId=22 (accessed October 15, 2012).

16. Twitter, blog.twitter.com/2012/03/twitter-turns-six.html (accessed October 15, 2012).

17. Bartels, “Global Tech Market Outlook for 2012 and 2013.”

18. Ibid.

19. “SMS Growth in Decline But Still Crushes Mobile Messaging Apps,” Pingdom, November 8, 2011, royal.pingdom.com/2011/11/08/sms-growth-in-decline-but-still-crushes-mobile-messaging-apps (accessed November 11, 2012).

20. “29 Billion Smartphone Apps Are Downloaded in 2011,” Digital Lifescapes, November 3, 2011, blog.geoactivegroup.com/2011/11/29-billion-smartphone-apps-are.html (accessed November 11, 2012).

21. “IDC Forecasts Worldwide Mobile Applications Revenues to Experience More Than 60% Compound Annual Growth Through 2014,” International Data Corporation press release, December 13, 2012, www.idc.com/about/viewpressrelease.jsp?containerId=prUS22617910&sectionId=null&elementId=null&pageType=SYNOPSIS (accessed November 11, 2012).

22. Ibid.

23. Matt Swider, “Google Now Considers Itself a ‘Mobile First' Company as YouTube Soars,” TechRadar, November 10, 2012, www.techradar.com/news/internet/web/google-now-considers-itself-a-mobile-first-company-as-youtube-soars-1111545 (accessed November 11, 2012).

24. “Cynthia Harvey, “Gartner: Smartphone and Tablet Sales Will Top 1 Billion in 2013,” Datamation, November 7, 2012, www.datamation.com/news/gartner-smartphone-and-tablet-sales-will-top-1-billion-in-2013.html (accessed November 11, 2012).

25. Ibid.

26. Tom Webster, “Why Twitter Is Bigger Than You Think,” Edison Research, April 23, 2012, brandsavant.com/why-twitter-is-bigger-than-you-think/ (accessed August 23, 2012).

27. “Advertiser Analytics,” Twitter, https://business.twitter.com/en/advertise/analytics (accessed August 3, 2012).

28. Jonathan Taylor, “Business Intelligence Trends for 2012,” Klipfolio, www.klipfolio.com/ resources/business-intelligence-trends-2012 (accessed August 3, 2012).

29. Ibid.

30. Ibid.

31. Ibid.

32. “Virtualization Market Statistics and Predictions by Gartner,” Wordpress, eginnovations.wordpress.com/2010/06/18/virtualization-market-statistics-and-predictions-by-gartner (accessed August 3, 2012).

33. Ibid.

34. Ted Schadler and John C. McCarthy, “Mobile Is the New Face of Engagement,” Forrester Research, February 2012.

35. Erin Kim, “Digital Pill with Chip Inside Gets FDA Green Light,” CNN Money, August 3, 2012, money.cnn.com/2012/08/03/technology/startups/ingestible-sensor-proteus/index.htm? (accessed August 3, 2012).

36. Francesca Robin, “The Emerging Market That Could Kill the iPhone,” CNN Money, August 1, 2012, tech.fortune.cnn.com/2012/08/01/iphone/?iid=obnetwork (accessed August 3, 2012).

37. Matt Zapotosky, “At U-MD., Safer Walks Home via Cellphone,” Washington Post, May 28, 2012, B1.

38. Kim S. Nash, “Top CIOs Predict the Five-Year Future of the CIO,” CIO, May 1, 2012, www.cio.com/article/print/704050 (accessed July 20, 2012).

39. Ibid.

40. John Brandon, “10 Predictions for What the CIO Role Will Look Like in 2020,” CIO, May 3, 2012, www.cio.com/article/print/705599 (accessed July 20, 2012).