CIOs To Grapple With Increasing Consumerisation Of IT In 2011

Domestic demand will be the key driver for healthy medium-term prospects in India. The infrastructure building thrust by the government will also attract large investments in IT. According to Springboard Research, a number of fundamental changes are expected in the not-too-distant future. Perhaps the clearest sign of the changes to come can be found in a recent Springboard survey, where end-users pointed toward the cloud, software-as-a-service and managed services as major shifts they expect to see within their organisations.

The top 10 trends that will shape enterprise IT in India in 2011 are outlined below:

1. Mobile reporting services transforms “Business Intelligence”

Previously bundled as “Business Intelligence” (BI), reporting and analytics will begin to diverge in 2011, largely as a result of increased demand from end-users for mobile reporting services. With a strong initial focus on role-based report delivery, easy navigation, simple drilldown and basic user-driven interactivity, mobility will begin to move BI out of IT and into the hands (literally) of business decision makers. BI vendors will initially differentiate their offerings through “pre-packaged” mobile reporting solutions.

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Collaborative analytics will also begin to emerge in 2011 but will fail to gain widespread acceptance through 2015. Collaborative analytics is a mesh of reporting, analytics, workflow and collaboration services that aid knowledge workers’ decision productivity.

2. Cloud computing– From silver bullet to just another sourcing option

Throughout 2011, the cloud-related hype of 2009 and most of 2010 will steadily give way to a more sober, and realistic understanding of the relevance and applicability of cloud computing among CIOs and other senior IT decision makers. Far from expecting cloud computing to replace all other approaches to application deployment/service delivery, IT decision makers must determine the optimal sourcing option for various services based on criteria including usage scenario, scalability requirements, IT skills availability, and types of workloads being enabled.

The debate over public versus private versus hybrid approaches has led to further cloud-related market confusion over the past 12 months. Ironically, however, through 2011 this debate will actually serve to help organisations better understand and therefore position cloud-based approaches relative to existing IT initiatives. As IT (and many business) decision makers educate themselves on the distinction between internal versus external service deployments, and between dedicated and shared access, they will better understand how the various cloud approaches compare with other, existing approaches within their organisations. Over the next 12 months, we expect cloud computing to increasingly be considered alongside (and often compared to) other, related sourcing approaches, including those offered by more traditional outsourcing vendors and hosted service providers.

3. Managed services providers innovate to drive added value

The managed services market has transformed from body shopping contracts or facility management services to a process-oriented delivery model. One of the most important milestones in 2011 will be the expansion of managed services beyond basic infrastructure management to include more application-related services. As more organisations seek to reap the benefits of a better integrated approach to managed services, there will be a clear move toward application outsourcing that combines infrastructure and application management to yield better application performance at a lower cost. As this trend continues to gain strength, the lines between SaaS and managed services will increasingly blur.

Managed services will continue to be influenced by cloud computing throughout 2011. We expect to see further consolidation and commoditisation of IT managed services with services like monitoring, tracking, patching, and performance reporting increasingly delivered via the cloud. As these dynamics take hold, traditional IT managed services will morph toward the cloud and we will see a new set of market conditions. The Indian services market is relationship-based and requires a high touch point. Building the right ecosystem and partnerships will be the key for IT vendors when it comes to winning large, complex engagements.

4. Mobile banking triggers technology innovation in the banking sector

The key driver for technology innovation in the banking sector in the next few years will be modernising payment systems to connect every part of society through mobile banking. With mobile and smart phones quickly becoming feature-rich for an increased number of users, mobile banking is fast becoming an essential part of the Indian economy. Realising this, almost all major banks are adding more features to their mobile banking services to facilitate banking transactions at the touch of a button. They are also providing various utility services through mobile devices and are increasingly tying up with the mobile companies to enable service delivery.

In addition, last-mile connectivity, which is more difficult in rural areas means the mobile channel for banking will offer better reach to rural consumers. By reducing transaction costs, the use of technology has also provided new avenues to banks to expand their outreach, especially in remote and rural areas. The country’s wireless telecommunications infrastructure covers remote rural areas and appears to be a robust platform to deliver financial services to the geographically divided masses.

As the rural economy continues to grow, banks will use technology to further strengthen their presence in rural India, which will lead to greater technology consumption. However, IT vendors need to follow a more holistic approach to this opportunity: Partnering with governments as well as with regional rural and cooperative banks to build a more incremental sustainable business model through technology will help them reap long-term benefits through the development of the rural banking market.
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5. IT distribution channel partners accelerate the evolution of their business models

In 2011, regional system integrators (SIs), value-added resellers (VARs) and distributors will be forced to better develop specialties by vertical industry and business solution to deliver the customer value required to survive in a cloud-enabled market. Already being pushed by their vendor suppliers to invest in skills around high growth solutions, channel partners will need to elevate their customer intimacy and ability to deliver clear business value.

Springboard Research believes that channel partners will continue to play an important– but not a dominant– role in helping customers procure SaaS and cloud-based solutions. A recent Springboard survey revealed that Indian organisations place the highest value on cloud-related channel partners in the region, well above the regional average, as 59% of Indian organisations believe channel partners are helpful when buying cloud computing services/solutions. This trend is likely to accelerate in the coming years as a cloud channel further develops and SaaS vendors reach a ceiling on how much their direct sales force and the web can achieve.

6. “Single Window System for Integrated Services Delivery” to gain greater attention from state governments

The single window concept for government-related services is not new as the central government initiated the “State Service Delivery Gateway” project few years ago. However, due to poor coordination between state-level departments and lack of vision, the concept gained only limited attention across a few states.

Springboard believes that a vibrant single window citizen-services delivery platform with a win-win for all the stakeholders in the ecosystem will gain much more attention from state-level governments in 2011. This will result in greater spending on new hardware and other areas to meet compliance and integration standards. Nevertheless, in order to tap opportunities, IT vendors will have to be more innovative so that they can become an integral part of the state government initiatives to boost the economy. IT vendors who can successfully align their business goals with state as well as national priorities are more likely to gain from government spending than those who fail to do so.

7. Telcos embrace the cloud but are forced to prove their customer orientation

In 2011, telecommunications companies (telcos) of all sizes will formally embrace cloud computing.

Cloud “pure-play” vendors will also continue to grow, often by partnering with telcos to provide more complete and packaged solutions (e.g., offsite backup and more flexible capacity and performance options). Also, telcos plan to roll out location-based services and real-time solutions in India.

The goal for any cloud service provider during 2011 however, will be to prove assumptions about exploiting efficiencies, cost advantages and the ability to productise for a mass market on a cost-effective basis. These are generally key differentiators for telcos offering cloud-based services versus more traditional IT players, including enterprise application vendors, infrastructure vendors and more traditional hosted service providers. Nonetheless, telcos are significantly constrained by their own marketing vision, their ability to communicate that vision and the ability to execute it. This next year will be the time when these assumptions are tested in reality.

The upcoming year will test telco infrastructure and support services, including responsiveness to customer requests/issues, the ability to adequately address “unique” scenarios or requirements that fall outside standard offerings, and an overall ability to recognise and respond to the changing demands of small and medium-sized businesses in a timely manner.

8. New market opportunities to drive IT investments from enterprises

As the Indian economy continues to grow, enterprises will use technology to further strengthen their presence in tier 2 and 3 cities in a bid to target new market opportunities in the country. This will lead to greater technology consumption. The increased enterprise focus on expanding their presence in smaller cities is due to a number of reasons, including lower cost of operation, and increased competition in metros and tier 1 cities. In addition, increasing mobile and broadband penetration in tier 2 and 3 cities will lead to greater consumption of technology through real-time access and mobility solution development.

Enterprises will continue to expand their presence in smaller cities for business growth and they will leverage technology to increase reach and to provide value-added benefits for Indian consumers. In 2011, vendors will heavily promote “vertically integrated” stacks as a means of differentiation and in an attempt to address the requirement for simplification of the technology environment. Springboard Research believes that IT companies need a multi-dimensional customer-oriented approach that aims to identify new markets, enabling market penetration and increasing engagement with present customers. However, to achieve this multi-pronged goal, vendors need to understand the strategic value drivers that businesses look at while investing in IT.

9. Information security becomes a key priority for government and enterprises and sparks client virtualisation

In 2011, governments and large enterprises will invest far more in technologies, services and business processes to protect sensitive information assets. The increase in the sophistication of information threats in the country will propel adoption of advanced network security solutions.

Improved information security measures will bump up against and be challenged by a number of the strongest trends driving the IT industry in 2011:

• Providing Analytics for Mobile Workers: As previously noted, growing numbers of organisations will extend analytics content outside of boardrooms to a broader audience of decision makers, which will place a greater premium on effective information security.

• Pervasive Network Access: Growing numbers of users and devices accessing the network and its assets will raise the bar for organisations seeking better information security.

• New Social Media: As companies and employees increasingly embrace new social media channels such as Facebook and Twitter, the risk of the wrong information being released virally increase.

**10. The consumerisation of IT drives major changes in usage patterns and expectations
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Rapid growth in the usage of mobile devices combined with an explosion in social computing has already impacted the way end-users view IT. Over the next 12 months, this ongoing consumerisation of IT will have increasingly dramatic impact on the ways in which end-users access enterprise applications and data. While employees continue to access sensitive applications and data from secured, corporate networks, they are increasingly using web-based offerings and mobility devices for both work and personal reasons. This represents growing complexity for IT teams that are already wrestling with the need to embrace new technologies – but struggling to maintain management and control over older ones.

CIOs will face ever-increasing pressure to allow more consumer/personal devices into corporate networks, manage the influx of social computing habits of their employees and handle the increasing mobile security issues they present.

While CIOs continue to grapple with this situation, not all organisations are embracing the mobile device route. However, Springboard Research believes it will be a growing challenge to function effectively with traditional IT systems and policies.

Throughout 2011, it is the ability to avoid over-complicating the mobile application environment that will separate leaders from followers.