A recent series of more than 50 reports from Forrester Research, Inc. (Nasdaq: FORR) reveals the top IT trends for 2004 and technology predictions across a number of industries. According to Forrester, this year will see continued growth for Linux and offshore outsourcing, an increased focus on technology to measure corporate performance, and early signs of recovery in the telecom industry. In 2004, technology investments will increase in a number of industries, including healthcare, travel, and consumer packed goods.
IT Trends 2004
Forrester recently spoke with 528 IT decision-makers about their 2004 plans for adopting key infrastructure and integration technologies. According to our survey, momentum will continue to build in wireless networking, voice over IP technologies, and building portals with single sign-on. RFID adoption will remain limited to niche verticals. Additional research revealed the following.
- Linux will cement its place in the data center. Linux reached a new level of maturity with the latest version, maturing distributors, and increased application support from larger vendors. Forrester anticipates that by the end of 2004, close to 10 percent of Global 2,000 companies will have migrated from Windows servers to Linux for their basic Network Operating System (NOS) infrastructure.
- Offshore outsourcing continues. More companies than ever before will use remote programming and business processing resources to support their corporate goals. The Indian IT services market will grow at least 30 percent during 2004. A notable component of this trend: Offshore customer service and technical support will focus even more resources on accent neutralization, English language proficiency, and both product and customer service training to eliminate service complaints by customers.
- Ongoing pressure for IT/business alignment. This pressure will lead to a focus on everything from value-based metrics and portfolio management to relationship managers as a key to organizational effectiveness and business-savvy CIOs. Business intelligence will be used to measure corporate performance as companies align data assets and analytics with business processes.
- Improving global telecom services. 2004 is the last year that enterprises should expect to be in fairly strong positions to negotiate with providers. By the third quarter of 2004, customers with relatively stable networks should consider signing one- or two-year contract extensions with long-term favored providers.
- CRM will stay flat. Although attracting, retaining, and serving customers continues to be a major priority (and a major challenge) for companies in today’s economy, CRM licensed revenues were down roughly 20 percent in 2003 and will grow only modestly — 5 percent to 10 percent — through 2005.
- Service orientation becomes mainstream. Application architectures are moving toward a service-based model that will enable faster, more flexible changes in response to business needs. However, application architects should retain a tactical, low-investment stance about secure Web services throughout 2004; the view into industry standards and practices will not be clear until at least 2005.
Industry Predictions 2004
Technology adoption will accelerate in health plans, care providers, and life science firms; change the way travel companies solve business problems; and grow in consumer packed goods companies because of Wal-Mart’s RFID mandate. In addition, broadband growth and device proliferation will create clear winners and losers in the consumer devices market.
- IT’s importance in healthcare. From clinical quality to drug development to consumer-driven plan design, IT is becoming increasingly important to healthcare stakeholders. In 2004, IT will be spared in the looming downsizing of pharma firms, health plans will shift claims processing offshore, and clinical software will take hold as the next hot application for healthcare providers.
- Travel industry change. This year will bring a whirlwind of change to travel supplier/agency relationships, distribution policy, and the way that travel companies use IT to solve business problems. Continued sniping between Web travel agencies and suppliers will continue as suppliers seek to improve distribution efficiency, reduced associated costs, and grow direct sales. Deregulation of global distribution systems (GDSs) is also expected, which will grant airlines the ability to file fares as they wish in any distribution system.
- Consumer packaged goods (CPG) technology predictions. Wal-Mart’s RFID mandate and global data synchronization efforts will boost CPG technology investments in 2004. Wal-Mart will get what it wants with RFID, but widespread adoption of RFID requires a more explicit business case for manufacturers to achieve ROI. Merchandise optimization projects will gain interest but will get little funding, while product life-cycle management and advertising get a boost.
- Turbulence for consumer devices and media companies. PC prices will continue to plunge, as major brands like Dell, HP, and Gateway slice already thin margins to kick-start device sales in the consumer electronics market. ISPs like AOL, MSN, and EarthLink will see their dial-up base fall 10 percent or more, just as broadband adoption grows. Amid the turmoil, cable operators’ revenue per subscriber will jump in 2004. Cable will take back satellite wins with unique advantages like video on-demand, bundling with broadband Internet access, and local HDTV channels — none of which satellite can match.
The “2004 Industry Prediction” reports and “2004 Technology Adoption Plans” survey mentioned in this press release are available to Forrester WholeView™ clients and can be found through www.forrester.com. The “IT Trends 2004” reports are available to Giga Advisory clients and can be found through www.gigaweb.com.com.