Adam Gifford: Big software shakeout looms

In its end-of-year summary of the state of IT, analysis heavyweight Gartner says the tough time the industry is having is self-inflicted.

IT costs too much, says Gartner Asia Pacific research head Dion Wiggins. Infrastructure is too fragile, complex and expensive, the risks of IT investment have been overlooked or underestimated, financial returns are elusive and too many vendors are selling the same thing.

Wiggins predicts massive vendor consolidation in the next two years. There are more than 2300 publicly traded software companies - about 50 to 60 per cent too many.

So expect an "oligopoly" of a few big vendors dominating the market.

And what will they be selling? This is the interesting bit. Wiggins argues that the e-business hype cycle has about worked its way through what Gartner calls "the peak of inflated expectations" and "the trough of disillusionment", and "true" e-business is now emerging.

Central to that are new ways of putting together software, where applications are assembled out of small software programs which can live on different places on the network and on different operating systems and platforms.

This comes down to what the industry calls architecture - at its heart, where is the information processed. Do you collect up all the data you need to solve a problem and send it back to a big mainframe or central server or can you do some of the work on your desktop PC or your mobile phone? Is there other information in other systems or on the internet you want to pull in? What standards do you need for that?

Wiggins says distributed architectures are reaching maturity, which will bring dramatic changes to doing business. He calls it the most fundamental change since the net.

Indeed, the way software is written for large organisations is changing. Out go the legions of programmers. In comes "business process fusion", where small teams of analysts define what the business needs, and sophisticated parameter-driven tools spit out the program.

The major vendors, the oligarchs, are saying similar things.

IBM plans to shake up its US$13 billion software business, reorganising it to provide "business solutions" to specific industries.

Another hardware giant, Hewlett-Packard, is also talking software, flying journalists from the region to Singapore last week to hear about "adaptive management", the "adaptive enterprise" and "virtualisation".

As with most IT industry marketing campaigns, there is something old, something new, something borrowed and something to counter Big Blue.

Under the Adaptive Enterprise banner come more than 40 new management services and software products which HP claims can help customers to cut IT operating costs by 30 per cent.

Much of the strategy is built around HP's long-standing OpenView tool for managing large systems, augmented with software which came with the Compaq acquisition and other pieces built or bought over the past year. And of course a sprinkle of high-priced consulting on top.

To demonstrate what is possible, HP has built what it calls utility data centres at its Palo Alto and Bristol labs. Instead of the expensive midrange servers usually found in such data centres, thousands of cheaper servers with Intel processors fill the racks. Robots prowl the aisles, looking for hot spots, while smarter software allows fewer staff to manage more machines.

Even more critical is what HP clunkily calls "virtualisation", which involves treating all servers, switches and storage as if they were part of a single large machine.

This contrasts with the traditional approach, where different applications and business processes are assigned their own servers and storage. In most data centres only 10 to 20 per cent of expensive processor capacity is ever in use, but demand is so uneven some servers are working close to capacity and others barely working up a sweat.

Under virtualisation, the way everything is wired together when it is first installed means processing resources can be reassigned where needed, without anyone having to go in and move plugs round.

As the IT becomes invisible, the technologists will be able to concentrate on meeting the ever-changing needs of business - the adaptive enterprise bit - rather than just keeping their systems up.

HP IT service management guru Chris Halliday says organisations cannot expect to become "adaptive" overnight, as it involves not just technology but changing thinking and processes.

He says more than 70 per cent of organisations are still focused on stability, trying to keep the mail servers working, the network up, and watching whether there are red lights or green lights flashing on the front of their boxes.

A further 15 per cent are looking at how they can manage IT efficiently so they can bring costs down. This tends to be driven by industry competition, with sectors like financial services leading the way.

The remaining 5 to 10 per cent are now looking at what it means to be "agile", able to quickly respond to business needs and, in effect, offer IT as a service to business.

He says the place to start is with some measurement tools and methodologies: "What you can't measure you can't manage".

HP is addressing many of the issues Gartner has flagged - cost, complexity, risk, finding new business processes, consolidating the market.

But as yet there is no zing in its message - no "Think different", no "Just do it!"

In a sceptical market which has seen too many promises and too little delivery, organisations may need something more inspirational before they move.

* Email Adam Gifford