This year, corporations once again began spending on IT. But although the spend has increased, the purse strings have arguably remained tight in all but a very few organisations.
IDC last year predicted the world's IT spend would lift in 2004 as companies began refreshing their pre-Y2K hardware and refocusing technology directly on business needs. People talked all year about utility computing, Wi-Fi hotspots, offshoring, RFID, and open standards-based server hardware and system software.
IT spend has increased, as has adoption of utility computing, Wi-Fi, RFID, offshoring and open standards.
But none of these trends has reached a peak. Most, at best, have remained in the background – as symptomatic of certain themes: the need to do more with less and do it more efficiently, for example.
Utility computing has continued its snail's pace course. RFID is a long way from broad adoption, although US department store chain Wal-Mart has started pushing all its suppliers to comply with its RFID systems by 2005.
Wi-Fi isn't expected now to go anywhere. The only prediction that has really held its own thus far is offshoring.
Resellers and vendors are pretty bullish about next year, though. Offshoring isn't the only way to do more with less on the pointy end of industry IT.
David Finn, managing director at Kyocera Mita Australia, says the way users buy hardware is changing. 'Users are becoming more focused on 'whole of life' cost of ownership than in the past. Customers are expecting suppliers to provide complete solutions rather than just 'boxes',' he says.
Lowering running costs, reducing waste and, to some extent, environmental issues will be key drivers and offer 'great opportunities' for resellers in 2005 as massive growth for high end colour copies and multifunction devices continues, he says.
'Everything points to a buoyant year,' Finn says. 'The challenge for the reseller channel is to develop the marketing infrastructure that solves user problems and capitalises on the sales opportunities that accompany this growth.'
Damon Carley, managing director at South Australia-based software distributor 4D Australasia, agrees. He expects strong sales growth in 2005 as SMBs embrace 'simple' technology to integrate business systems across multiple sites.
'The software may not have the latest fad features but delivers real business benefits,' he says.
4D already sees such demand from multi-site organisations using Citrix and Microsoft Terminal Services to access a central database. 'This integration is great for management data analysis and for maintaining financial control across multiple locations,' he says.
Next year should present good opportunities to partner developers to deliver business applications, Carley says.
Meanwhile, Robin Guy, general manager at South Australian network integrator ADC, expects three main features to affect the networking services sector in 2005. 'An increased focus on the need to address security issues, the 'virtual office' and companies focusing on their core business and using IT as an enabling tool,' Guy says.
ADC – just acquired by national integrator CSM Technology – expects a big year focusing on these areas. The company's new ownership offers better support for business growth and development both nationally and internationally, Guy says.
So far everyone seems pretty optimistic. Not least Ross Chiswell, CEO of wireless distributor Integrity Data Systems, who expects the local wireless market to more than double in 2005 as health, education and corporations begin widespread deployments. 'I think a number of things have come together in terms of understanding the technical capabilities of wireless and issues relating to security,' he says.
Wireless, Chiswell says, has moved beyond a 'one size fits all' model. In-demand systems for 2005 will include those that manage the limited wireless bandwidth resource and allocate different levels of security required, track Wi-Fi 'tagged' assets that trigger alarms or cameras if moved beyond a pre-set boundary and operate plant and equipment via Wi-Fi-enabled sensors.
'We will see large-scale deployments of wireless for broadband delivery in 2005 for rural and regional locations,' he says. And 'real WiMax', he believes, will appear on the market for the first time, targeting outdoor wireless.
While WiMax also has limitations, the initial offerings will be priced right and the market is ready. 'So it's all green to go,' Chiswell says.
Ettore Alterisio, product marketing manager at mobility distributor Brightpoint, says the big chances will come from mobility, corporate and enterprise sales. New products such as the Treo 650, Nokia 9500, Exchange 2003 and Blackberry are 'filtering through' to the market along with converged devices, software platforms and applications to drive wireless email, wireless broadband and VoIP.
'These are solutions-based products with high average selling prices which should enable the reseller channel to secure stronger margins,' he says.
And don't forget flash memory, which segues neatly with the effervescent storage and security markets. 'With the growing need for storage in imaging, video and audio devices, the demand for flash memory is rapidly increasing,' Alterisio says.
Matt Sanderson, product director at Ingram Micro, says enterprises and SMBs will soon embrace security offerings equally strongly. Security as a market will mature in 2005, partly as a result of this top-down growth.
Meanwhile, price drops in low-end wireless and routers have generated still more sales and Ingram expects those sales to multiply faster in 2005.
'Resellers looking to fully capitalise on [the security] trend will need to develop a dedicated security team within their business that can effectively cater for the needs of this sector, as the potential for profit is huge,' Sanderson stresses. Wireless, security, mobility. The fourth piece of that puzzle - greater than the sum of its parts - is broadband.
Simon Hackett, CEO at Adelaide ISP Internode, reckons 2005 will be a fightback year for ISPs with a 'good broadband story', especially if they add services to the mix like voice over broadband and fixed price voice and data plans.
'The legacy telcos have bundled services for some time, but in 2005, the well formed ISPs will start to fight back, bundling differentiated services to offset the effects of commoditisation, which pushes down prices,' he says.
Internode has more than 100 employees, and Hackett expects that to grow by 25 percent next year. 'The only cloud on the horizon is the risk of the further botching of the regulatory landscape consequent to the sale of Telstra,' Hackett says.
John Biviano, managing director at Macromedia, points to online video and rich internet applications as strong and regular revenue streams for many of its resellers and developers in 2005, due to broadband access and affordability.
Online video and rich internet provide a better user interface for internet users. 'Content is king. There are thousands of applications that can be turned on for the web and endless megabytes of video waiting for an audience to be able to view,' he argues.
Users are looking for convenient and fast ways to view content on their computer, mobile phone or any device that they use to connect to the web,' Biviano says.
And what about Linux? When will Linux hit prime time? God knows resellers have been talking about it long enough.
Hosi Stankovic, CEO at Linux services provider OpenEra, says the Adelaide-based company expects a further ramp-up in demand for open systems services next year.
'We've just won a contract to roll out wall to wall Linux in an accountant's office,' Stankovic says. 'When risk-averse professions like accountancy decide open source offers a safer solution, you know it has hit primetime.'
More businesses will turn their backs on Microsoft next year, he claims.
'Our single biggest opportunity is the widespread concern about the security issues and vulnerabilities in Microsoft's Windows platform,' he says. 'You just need to look at demand for Firefox browsers to see that trend.'
However, Kerstin Baxter, partner group director at Microsoft, says the software giant is seeing not only increased demand but greater reseller opportunities. Microsoft will be working with other vendors, and potential sales will be seeded via partnerships of system integrators, ISVs and other resellers.
Further, the long awaited IT refresh may be nearly here. Security, infrastructure for mobility, IT consolidation and desktop upgrades are all likely sources for sales, she says.
'We'll continue to have positive momentum around the platform, around underlying infrastructure,' she says. 'The most important thing customers are seeking is integrated value focused solutions.'
Horizontal and vertical offerings are getting bigger too. Microsoft CRM will want yet more partner bolt-ons – perhaps portal-based - to inspire horizontal and vertical deployments in the coming year, Baxter suggests.
Microsoft did 100 percent growth in the small business sector this year, and fully expects to do 150 percent in 2005.
But it's steady as she goes, with Microsoft continuing to tweak its partner offerings and licensing next year rather than scheduling major upheaval, she says.
However, although resellers seem bullish and it's an exciting time technologically, customers are seeking certainty and partners that can articulate and provide that will be valued increasingly next year and beyond, she suggests. 'We have seen customers asking more and more for certification,' Baxter says.
Daniel Lee, managing director of Sydney distributor Lan 1, says security appliances are going to get hotter, especially when they combine VPN with firewalling, anti-virus and anti-spam and gateway functionality in one box.
That could provide good opportunities for resellers but will also mean more investment in technical education, he adds. 'From a reseller viewpoint, the more that's built into appliances, the more complex it gets. So at the end of the day, the vendors will have to supply [more] training,' he says.
Like Ross Chiswell, Lee argues that security will spark opportunities in wireless broadband. He points to wireless ISPs and new deals signed by players like Motorola as examples. 'There's a lot of opportunity in that area and obviously we see that as very important growth for us as a company,' Lee says.
Many wonder if 2005 will be the year of IP telephony. Ian Poole, CEO at integrator Integ Communications, says 'yes, probably', since concerns about quality of service and security are shrinking as answers to those challenges arise. 'In the last 12 months, we've seen a few pure TDM (Time Division Multiplexing) deployments,' he says. 'But very few.'
Next year Poole expects almost none. IP telephony has hurdled the early adopter phase and will move to wide scale deployment. Meanwhile, wireless security standards such as 802.11i and technologies like SSL VPN will come into their own in the data and cabling arena, he says.
However, in point to point WAN, Integ predicts a rise in free space optics. Companies with fibre, for example, can put laser drives on their rooves and get 1Gb/s or more line of sight more cost effectively. 'That's becoming very hot now in campus environments,' Poole says.
Non-line of sight is also coming, he adds, with a few products and deployments already appearing. There are also things like digital call recording, that aren't much talked about yet but are driven by governance changes such as privacy legislation.
'[Also] voice self-service and voice portals will really start to take off in the next 12 months,' Poole predicts. 'And voice portals using text-to-speech, we see that as being hotter than traditional speech recognition.'
Bill Marlow, managing director at service provider TalkIP, tips telephony on demand and managed telephony services as a coming thing. '2004-05 will be a year of technology expansion,' he says.
Marlow points to the last four or five months' rise in managed services and hosted IP services as proof. SMBs are joining enterprises in seeking to outsource non-core processes and IP telephony is generating interest for such offerings. 'Logistical and clearing house operations will be a growing market,' he says.
Companies like Telstra have moved away from their core businesses, meaning that traditional telecommunications delivery is no longer offering the margins desired, Marlow suggests.
Michael dal Maso, information business solutions manager at Alphawest, says business process management and services around .NET and web services in particular will drive channel growth next year.
Companies will need to integrate more applications and reduce data duplication. Everything else that's hot – mobility, wireless, security and storage – will centre on those needs, he says.
'Holistic management of storage requirements for applications must incorporate factors such as access, need and risk mitigation,' dal Maso adds.
Philip Parton, managing director at AttainIT, says he's seeing a shift away from an 'ambulance-chasing' channel that runs after the big ERP implementations. Instead, server demand was increasing, he claimed. 'They are going to have to work harder to find the point solutions. There may be more focus on verticals,' he agrees.
EAI, hub and spoke architectures and single sign-on security are features of that development, as are servers and databases, Parton says.
Cornel Ung, managing director at box-builder Optima, sees the digital home and convergence as fuelling hardware sales – and a strong consumer electronics market - in 2005.
'Having created a whole new platform for the digital home market, the media centre PC will prompt the development of new products that enable people to extend and share its multimedia capabilities,' he says.
Consumers can look forward to MP4 players by 2006. MP4 products will give media centre users more ways to download and access music and movies, Ung says.
Nick Verykios, marketing director at Firewall Systems, has a way of bringing blue sky forecasts back to earth with a thump. His answer: the main security threats in this young industry won't even have been thought of, so it's a big ask to predict them.
'Think Pearl Harbour. What do you do, [other than] continually watch your back when you can't even see the threats coming?' he says.
Of course, black sky forecasts mean sunshine for security specialists. The sector is changing rapidly. Customers can't 'keep a lid' on myriad diverse keyloggers, phish, trojans, viruses, snoopers, spammers and hackers, he says.
'Yankee Group predicts virtually all big companies will outsource security by 2010. This is the largest opportunity for the Australian IT channel to maximise managed service income,' Verykios argues.
Customers will need to replace scanning as time allows with continuous discovery and monitoring of all security threats.
He quotes Kipling to conclude: 'If you want a secure new year - then partner. It's the law of the security jungle. 'For the strength of the pack is the wolf, and the strength of the wolf is the pack'.'
Beyond the ever-so-slightly self-serving predictions of channel players and vendors, even market research firm Gartner touches on similar themes when speculating on next year's IT opportunities.
Network convergence, wireless email, wireless broadband, software licensing changes, virtualisation and utility computing are the technologies and trends to watch in coming years.
As that happens, in-between offerings such as SMS – as well as Wi-Fi -- might well die out in a business sense along the way, analysts suggested at Gartner's Symposium conference in Sydney this year.
'Network convergence is much bigger than IP telephony,' says Canada-based Gartner analyst Bob Hafner. 'We're seeing a wealth of convergence offerings across very different lines of networking.'
A host of technologies and personal computing are converging with each other and with business computing on LAN and WAN. And that means consolidation, he says.
'All this on a single network is going to cannabilise existing services,' Hafner says. 'Some service providers are not going to be able to change quickly enough. Some aren't going to be around in a few years. There's definitely going to be some change in this market.'
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