Report: Challenging IT in 2005

IDC Research this week published a white paper that reveals the trends
expected to impact IT spending next year.

The paper, sponsored by automated software quality (ASQ) vendor Mercury
Interactive but featuring independent IDC research
conducted throughout the year, focuses on the three areas many enterprises
will be addressing next year: deploying and managing complex, critical
business applications; compliance with government regulations; and
outsourcing.

IT is again becoming the “strategic weapon” it once was back in
the days before the dot-com bubble burst, the report illustrates, which caused
companies to rein in spending to focus on cost-cutting.

“Recent IDC research confirms this shift back to a more strategic role for
IT, but its role is strategic only to the extent that IT successfully aligns
itself with the priorities of the business, and delivers applications that
enable new business value,” the paper states. “Overall, business is looking to IT
to ensure the reliability of business processes, enable the success of new
products and services and help generate cost savings for the business.”

Outsourcing on the Rise

The biggest trend will likely be outsourcing, a topic that
weighed heavily in this year’s presidential elections. The most publicized
outsourcing cases have been offshore outsourcing to Asian countries.

IDC surveyed 100 companies and found 50.3 percent
were planning on outsourcing some of its IT work this year. The main reason
for the shift in responsibilities is to cut down on costs, but includes
allowing the company to concentrate on their core competencies.

The duties that most companies will likely send overseas include legacy application maintenance (50
percent), Web application development (47 percent), packaged application
implementation (41 percent) and legacy/custom application development (41
percent).

According to Melissa Webster, an IDC analyst and one of the authors of the report,
the challenge and one of the top concerns for offshore outsourcing is in the
management of the contracts. Performance metrics,
escalation procedures and change management processes top the list of
concerns for companies shipping their work overseas.

“Some of them, of course, touch on communication, collaboration and
visibility of the project status and completion, because that’s where
quality issues frequently arrive,” Webster told internetnews.com. “Those time zone
differences, language barriers, cultural differences — all those new
obstacles that you have with geographically separated development — need to be
managed or else poor quality can be the result.”

While outsourcing is a big concern going forward, activities closer to home
are going to have just as much of an impact in the near future.

Merging Business Needs with IT Performance

An IT department’s effectiveness is going to be judged on the
contributions it makes to business operations, according to the report, even though its budget is
not getting a significant boost.

IDC asked C-level executives what they expected from their IT departments. Reliability (20 percent) and success
of new solutions (17.7 percent) ranked highest in the responses, with
simplicity (9 percent), security (8.6 percent) and better technology than
competitors (6.4 percent) lagging far behind.

In today’s world of Web services , service-oriented
architectures and globally distributed networks, getting a handle on
reliability can be difficult. This is true especially when, according to the IDC
report, companies are beginning to emphasize new projects developed in .NET
and Java, while still maintaining their legacy applications
written in languages like COBOL.

Roughly half of those surveyed say they
are currently working on modernizing their legacy systems.

To reduce application failure, IDC suggests employing better project management processes and tools to improve
IT and business collaboration; application management;
and better processes and tools for application performance and testing.

Webster said the merger between the business needs and IT is going to
require strong business processes be implemented before turning to software
tools to make improvements.

“If you have weak processes, throwing software at a weak process gives you
an automated weak process,” she said. “But if you leverage best practices
to put good processes in place and then you enforce and reinforce those
through automation, now not only do you have good processes but a reliable,
repeatable application development lifecycle and application management
structure.”

Compliance Makes Almost Perfect

For those that already have good practices in place, software automation
tools make the third concern for IT easier: compliance.

Compliance with government regulations, such as Sarbanes-Oxley, HIPAA and SEC 17A-4,
has been in full swing.

These regulations are forcing many organizations to
reevaluate their business practices, the report states, with companies responsible
for controlling the information contained within the business and making it
transparent.

Compliance initiatives are IT
initiatives, and this is the one area where
companies are willing to spend a little money, though only 15.3 percent of
those surveyed by IDC said they did as much. Most of the compliance
solutions are coming from new applications (44.1 percent) or enhancing
existing ones (27.9 percent) through in-house development.

“If anything, compliance has shined the light on the importance of having
best practices and strong processes,” Webster said.

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