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Organic IT: Coming To A Data Centre Near You David Metcalfe, PhD Research Director Forrester Research Theme Organic IT will deliver business innovation Organic IT Computing infrastructure built on cheap, redundant components that automatically shares and manages enterprise computing resources -- software, processors, storage, and networks -- across applications. Agenda What are the key trends in corporate IT today? How does Organic IT help IT deliver value to the business? How are firms embarking on the Organic IT journey? Deep-seated trends impact IT High IT spending doesn’t translate into better financial performance High financial performers spend just 3.3% of revenue on IT Percent of revenue spent on IT 4.2% 2.6% 4.5% 3.3% Company financial performance Forrester Report October 2002 “Linking IT Spend To Business Results” Deep-seated trends impact IT High IT spending doesn’t translate into better financial performance Executives don’t think IT provides business innovation The IT organization plays a limited role in business innovation Forrester Report December 2002 “Putting Innovation Back In IT” Deep-seated trends impact IT High IT spending doesn’t translate into better financial performance Executives don’t think IT provides business innovation Centralization of IT organizations continues to grow In 2003, 74% of firms expect to have centralized IT organizations Forrester Report June 2003 “How Companies Govern Their IT Spending” Deep-seated trends impact IT High IT spending doesn’t translate into better financial performance Executives don’t think IT provides business innovation Centralization of IT organizations continues to grow… … even as European IT headcount continues to shrink European IT departments are still shrinking “Which one describes the status of your full-time IT staff?” Don't know 2% We're downsizing 34% We're hiring 21% We're holding staff flat 43% Base: 490 European IT decision-makers Deep-seated trends impact IT High IT spending doesn’t translate into better financial performance Executives don’t think IT provides business innovation Centralization of IT organizations continues to grow… … even as European IT headcount continues to shrink Cost reduction remains top of IT’s agenda. 45% of European IT managers focus on lowering operating costs “What is the top priority for IT to support?” Driving new offerings and business practices Acquiring and retaining customers Improving workforce productivity Improving product and process quality Lowering the company's operating costs 0% 10% 20% 30% 40% 50% Base: 490 European IT decision-makers Agenda What are the key trends in corporate IT today? How does Organic IT help IT deliver value to the business? How are firms embarking on the Organic IT journey? The problem: Fragmented infrastructure ERP Software: Monolithic code Processors: Single purpose servers Storage: Isolated disks SAP HP Hitachi Finance CRM Peoplesoft Siebel Dell Sun EMC NetApp Network: Fragmented LAN WAN Internet The solution: Organic IT ERP Software: Web services Processors: Computing fabric Finance • XML • SOAP Peoplesoft • WSDL • UDDI SAP Siebel CPU RAM CPU RAM • Computing nodes • High-bandwidth networks • Fabric OS Fabric switch Dell HP Net Storage: Shared pool Hitachi Network: Redundant array of Internet Links (RAIL) CRM LAN Fibre chan. • IP/FC- bridging • NAS • TCP offload EMC WAN Sun NetApp • VPN hardware • Route optimization Internet Dealing with today's IT infrastructure Scenario: Manager wants to share production data from inventory system w Steps Today's IT “I need to integrate with Acme’s SAP R/3” 1 2 “Uh oh, we use Baan. We'll need to hand 6 months/$$$$ code the integration.” 6m “Hmm, we'll have to build1amonth/$$ new server and OS image for that.” 1m “Ohhh. We'll research a Fibre RAID 2 Channel months/$$ array for reliability.” 2m “Well.... we need to pull6amonths/$$$ leased line and coordinate the carrier.” 6m Software guy Server guy 3 4 T Disk guy Network guy Total: Total: 6 m 8 months/$$$$$ Dealing with an array for reliability.” Disk guy 4 “Well.... we need to Organic IT infrastructure pull a leased line and Network guy coordinate the carrier.” Tota Organic IT “I“Ineed needtotointegrate integrate with SAP R/3.” withAcme's Acme’s SAP R/3” 1 Organic IT administrator “Ok, we'll use the fab industry XML spec to link the Web services interfaces. We've got processors, but we'll “How’s next Tuesday?” need to drop a new Tot disk in the pool. And we've got plenty of bandwidth. How does Tuesday sound?” Total: 1 week/$ Agenda What are the key trends in corporate IT today? How does Organic IT help IT deliver value to the business? How are firms embarking on the Organic IT journey? Awareness of IBM’s On Demand is growing 41% of IT execs think On Demand is a credible offering, 26% think its pure marketing Firms Can Prepare Now For Organic IT With Simple Steps Firms Should Move To Organic IT In Three Phases Choose the right Organic IT strategy Summary Business executives see IT as a costly barrier not as a cash generator Organic IT offers flexibility at lower cost increasing IT’s business value Selective investments in Organic IT are a reality today Thank you David Metcalfe, PhD +44 207 323 7684 [email protected] www.forrester.com Entire contents © 2003 Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc. All other trademarks are the property of their respective companies. All information provided by Forrester Research, Inc. is proprietary to Forrester and is protected by US and international copyright law and conventions. Except as set forth herein, direct or indirect reproduction of the information provided herein, in whole or in part, by any means, is prohibited without the express written consent of Forrester. Any slides that are delivered as part of a speech by Forrester employees may be shared only with those attending the speech. Forrester shall not be liable for any damages incurred by or arising as a result of reliance upon Forrester's information.