Choose Wisely: Top Four Trends to Look for in 2011 Technology Investments

13
Dec
2010

Chris Jutkiewicz

While many companies have scaled back on IT investments and focused strategies on driving down IT “total cost of ownership” during the last two years – thankfully, the evolution of enabling IT solutions has continued apace. For 2011, cost still dominates executive dialog, but in key areas, businesses are identifying IT investments that can drive profitable growth through accelerated and innovative product delivery. The ability for CIOs to articulate ROI will largely depend on their capability to understand business strategies, partner with their product organization and create a plan that shows IT investments enabling revenue generation year over year.

Make no mistake, for many companies, only a few hot technology trends will be “investment grade” in 2011, as others with longer ROI horizons will be put on the strategic back burner or targeted for proof-of-concept and R&D exercises. CIOs hope that a return to profitable growth can create investment bandwidth for the longer term, and fuel further innovation and investment “self funding.”

Given this focus on ROI and smart spending, here are the key technology trends that are front and center in 2011:

1. While primarily a cost driver, the inexorable push to server virtualization will remain top of mind in 2011.  This technology has seen explosive growth as offerings mature. As more and more data center production equipment is virtualized, savvy CIOs are quickly refocusing on security, high availability and proper environment management.
2. Of course, cloud computing has been rapidly evolving and will be a dominant strategic investment for many next year. Companies with initial cloud aspirations for line of business and customer-facing applications may feel more comfortable with the control provided by “Infrastructure-as-a-Service” (IaaS) with offerings such as Amazon EC2, Rackspace or the Virtual Machine Role for Microsoft Azure. Those that are willing to trade control for the flexibility of a “Platform-as-a-Service” cloud stack can enhance speed to market through integrated product solutioning, including OS, database and web development frameworks delivered by services from Azure, Google AppEngine, VMware, Salesforce and others. At the very least, companies with more traditional large-scale internal or third party hosting environments will invest in dynamic provisioning of IaaS and PaaS cloud resources (public or private) for testing, beta trials, production conversion runs and temporary peak processing power. Test environment “build up/tear down” speed and cost is usually a major product development cost, and often a bottleneck during execution of parallel projects.  Cloud-based test environments are a no-brainer for driving this agility, even for companies reticent about moving production systems in 2011.
3. With the iPad driving acceleration of tablet computing as a viable business tool, many companies are attempting to gain product differentiation, but the trick will be delivering value that customers are actually willing to pay for. Obviously, some product offerings (medical, legal, sales support, etc.) are compelling despite current functional limitations with some tablets, even as these limitations will be significantly reduced in 2011. For products serving less traditionally mobile workers, companies will need to truly understand current customer workflows and the value of extending (or redefining) these workflows with mobile constructs if investments are to provide a foundation for growth. Simply reformatting Software-as-a-Service (SaaS) offerings to mobile platforms may be a cost-effective strategy, but CIOs will need to limit development platform investments until a long-term business vision is established.
4. As software development often dominates IT spend, a nod should be given to the rapid evolution of agile development. In driving innovation, we can clearly see agile being embraced for even large-scale product developments. Providers of development platforms such as Microsoft (TFS 2010), Rails (open source), Outsystems and HP recognize that customers are looking for product development models that put an emphasis on heavy customer interaction and require course correction during the entire definition and build cycles. As such, these tools can help previously targeted agile processes scale effectively.

It is clear that in 2011 CIOs will be squeezed: From one direction, business expectations around how new technologies can fuel profitable growth; from the other, corporate investment restraint until clear economic and business trends emerge. Successful IT leaders must understand the ROI models of these technologies, participate in the business-level translation of strategy to reality and target 2011 investment for the highest growth opportunities.