The future of Enterprise IT

Team members

• Giorgos Roussakis
  
• Reyner Karnali
  
• Christian Wittenberg
  
• Adi Kentch

The Future of Enterprise IT

1. What is Enterprise IT? o IT Solutions to solve an enterprise problem (rather than a departmental problem) and often written using Enterprise Software Architecture. Generally, enterprise IT models the entire business enterprise and is the core IT system of governing the enterprise and the core of communication with the enterprise.

o Generally an IT group within the organization implements these solutions. An alternative model is On-demand software (IBM), or Software as a Service.

This ‘on-demand’ model of enterprise software is made possible through the widespread distribution of broadband access to the Internet. Software as a Service vendors maintain enterprise software on servers within their own enterprise data center and then provide access to the software to their enterprise customers via the Internet.

o As many business enterprises have similar departments and systems, enterprise software is often available as a suite of programs that have attached enterprise development tools to modify the common programs for the specific enterprise. Generally, these development tools are complex enterprise programming tools that require specialist capabilities (SAP, Oracle specialists etc).

o The ultimate Goal: Achieve process excellence and improve business goals by effectively leveraging IT solutions to support (or realize) the business process.

o In practice, the term ‘enterprise’ is applied much more often to larger organizations than smaller ones. Often the term is used to mean virtually anything, by virtue of its having become the latest corporate-speak buzzword

o Characteristics of Enterprise IT Software • Fundamental requirements of Enterprise IT software: • Good Performance • Flexible Scalability • Absolute Robustness.

• Enterprise software typically has interfaces to other enterprise software (for example LDAP to directory services) and is centrally managed by dashboards.

• It is frequently hosted on servers and simultaneously provides services to a large number of enterprises, typically over a computer network. This is in contrast to the more common single-user software applications which run on a user's own local computer and serve only one user at a time. Useful references: http://en.wikipedia.org/wiki/Enterprise_software http://en.wikipedia.org/wiki/Enterprise_2.0

2. How does Enterprise IT affect the organization? o Usually, the following disciplines are involved in enterprise-wide software: • Manufacturing (ERP, SCM, Demand Management, Transportation Management) • Production (Product Lifecycle Management, Product Development and Portfolio Management, Product Information Management) • Accounting and Finance • Customer Services (CRM system) • Human resources (HRM system, Incentive and Compensation Management, Learning Management System) • Sales and Marketing (Enterprise Marketing Management) • Retail system (Merchandising System, Point of Sales (POS) system) • Project (Project Portfolio Management, Content Management System) • Management (Business Intelligence, Business Process Management)

o Enterprise IT concerns ‘specialist applications’ that perform individual business functions such as: • Accounting • Production scheduling • Customer information management • Bank account maintenance, etc.

Useful references: http://en.wikipedia.org/wiki/Enterprise_software http://softwarefinder.mbtmag.com/
3. How do you categorize/classify them? Enterprise software is often categorized by the business function that it automates - such as accounting software or sales force automation software. Similarly for industries - for example, there are enterprise systems devised for the health care industry, or for manufacturing enterprises. Naming few quickly, CRM, ERP, Product Lifecycle, Supply Chain management, Supplier Relaitonship management, Business Intelligence, Quality management.

http://en.wikipedia.org/wiki/Enterprise_software#Types_of_enterprise_software
4. What are legacy systems? Definition: “A legacy system is old hard- or software that continues to be used, typically because it still functions for the users' needs, even though newer technology is available. "Legacy" may have little to do with the size or age of the system — mainframes run 64-bit Linux and Java alongside 1960s vintage code.”

Generally, legacy enterprise software is an application that processes large or complex data. The application is becoming cumbersome and hard to maintain. Legacy systems are by definition hard to modify or update.

Enterprise IT & Legacy -- The dangers:

o Increasing Complexity While enterprise IT has obviously accelerated the pace, reach and agility of business, it has also introduced a huge amount of complexity into enterprise fabrics. Typically, roughly 80% of an IT budget is spent on maintenance and development of existing enterprise systems while 10% percent of the entire workforce is devoted to IT operations

According to Gartner: 'Many enterprises have little desire to open a 'Pandora's Box' of legacy systems'. Current trends indicate that most prefer non-invasive extension approaches such as service-oriented architectures. It provides immediate, short term and low risk resolution to e-business demands'. However, as Gartner point out, this approach is tactically useful but strategically dangerous, as it increases the complexity of an already complex system!

Reasons why Legacy systems exist:

Organizations apparently have compelling reasons for keeping a legacy system, because: • The system works satisfactorily, and the owner sees no reason for changing it. • The costs of redesigning or replacing the system are prohibitive because it is large, monolithic, and/or complex. • Retraining on a new system would be costly in lost time and money, compared to the anticipated appreciable benefits of replacing it (which may be zero). • The system requires close to 100 percent availability, so it cannot be taken out of service, and the cost of designing a new system with a similar availability level is high. Examples include systems to handle customers' accounts in banks, computer reservation systems, air traffic control, energy distribution (power grids), nuclear power plants, military defense installations, and systems such as the TOPS database. • The way that the system works is not well understood. Such a situation can occur when the designers of the system have left the organization, and the system has either not been fully documented or documentation has been lost. • The user expects that the system can easily be replaced when this becomes necessary.

Useful references: http://www.acm.org/ubiquity/views/k_delic_1.html http://en.wikipedia.org/wiki/Legacy_system http://www.nccmembership.co.uk/pooled/articles/BF_WEBART/view.asp?Q=BF_WEBART_218555
5. What is the GDP market for enterprise IT?

2009: As enterprises face a challenging economic environment, IT spending budgets will be essentially flat with a planned increase of 0.16 percent in 2009, according to results from the CIO survey by Gartner Executive Programs (EXP).

General economic forecast (which is correlated to Enterprise IT expenditures): The Organization for Economic Cooperation and Development is forecasting that U.S. GDP will shrink by 0.9% next year, Japan’s by 0.1%, and the euro zone’s by 0.5% Equipment & Software GDP (billions of dollars) 2008: 999,0 2007: 1023,5

Generally speaking, the Enterprise IT business is characterized by large licenses (annual) maintenance contracts. The threat of new entrants is small because “the big get bigger and the little guys disappear”.

Useful references: http://www.gartner.com/it/page.jsp?id=855612 http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=2002&LastYear=2008&3Place=N&Update=Update&JavaBox=no#Mid
6. Who are dominating the Enterprise IT industry? Industry incumbent Enterprise products Company type 2008 (mln) 2008 employees Competitors JBoss Application Server Subsidiary of Red Hat $5.5 57 IBM, Oracle, Sun SAP ERP, BI, CRM, SCM Main HQ Germany $14,957 58,610 IBM, Oracle, Microsoft Microsoft ERP, CRM, O/S Main HQ U.S.A. Redmond $60,420 91,000 IBM, Oracle, Google Sun Microsys. App. server, Java, Chips, Servers, O/S Main HQ U.S.A. Santa Clara $13,880 34,900 IBM, HP, Microsoft Oracle CRM, BI, ERP, SCM Main HQ U.S.A. Redwood $22,430 84,233 IBM, SAP, Microsoft Hewlett Packard BI, Storage, Servers, Networking eq.... Main HQ U.S.A. Palo Alto $118,364 321,000 IBM, Canon, Dell IBM BI, Storage, servers Main HQ U.S.A. $103,630 426,900 Microsoft, HP

A great deal of enterprise software is now available through the free software movement, notably operating systems, web servers and databases.

Many other types of enterprise software are also being introduced, such as application servers, portal servers, and even productivity software that is well suited for large-scale adoption by enterprises. While most open source software is available freely for use and further development, several companies provide enterprises with open source enterprise software for free and charge for software maintenance, modifications, support and additional functionality.

Useful resources: http://www.hoovers.com/free/search/simple/xmillion/index.xhtml?query_string=sap&which=company&page=1&search_x=0&search_y=0
7. What are relevant trends that influence the future of enterprise IT? Useful references: ...To be completed...
8. What are known solutions to solve Legacy problems in Enterprise IT? o SOA o Cloud computing o Infrastructure Optimization (Server, database, intranet management) o Data Center Automation o Application Performance Management o Service Management (SLA, ITIL)

9. What are their SCAs? ...
10. Who are the PTMs? Due to the cost of building what is often proprietary software, only large enterprises (e.g., a corporation with thousands of employees) attempt to build such enterprise software that models the entire business enterprise and is the core IT system of governing the enterprise and the core of communication within the enterprise. http://en.wikipedia.org/wiki/Enterprise_software

62% are from North America and Asia Pacific http://www.panorama-consulting.com/PressKit/PCG_Topline_Results_FINAL.pdf

11. How would Emerging markets affect Enterprise IT?

12. What is the average cost that firms pay for implementing Enterprise IT (in this case, ERP)?

The costs of installation, implementation, and data migration generally run about three to four times the original cost of the packaged ERP software. For example, if your software costs $2 million, you can expect to pay an additional $6 million to $8 million for consulting services to get the system into production. TechRepublic members shared general cost information in a recent survey. (See Figure below)

However, The total cost of ERP ownership includes the costs of packaged software, hardware, professional services (for ongoing maintenance, upgrades and optimization) and internal costs. Based on the ERP survey conducted by Meta Group in 2002, the average cost of ERP ownership was $15 million ranging from half millions to $300 millions. The average cost per user per year could be as high as $20,000.

Costs of Software The cost of packaged ERP software depends on the scope of implementation (the # of ERP modules and the number of end users), complexity of software and ERP vendors. ERP software that involves the integration with external business entities generally costs more. ERP vendors offer discount for organizations who invest in a suite of ERP software systems. Mid-sized organizations typically commit a few million dollars to packaged ERP software. Costs of Hardware Implementation of ERP systems routinely requires purchase of new computer hardware, systems software, network equipment and security software. The costs of hardware varies in a wide range dependent on the scope of implementation and platforms. The hardware typically costs about half million dollars for mid-sized organizations that implements ERP systems. Costs of Professional Services Customization The big chunk of costs of Professional Services is customization. The cost of customization can easily out-run the cost of packaged ERP software, but it is the customization of ERP software that makes an ERP a success or a failure. Integration ERP systems won't demonstrate its full potentials unless they are properly integrated with other enterprise software application: • the integration of various functional ERP modules, • the integration of ERP with other e-business software applications, and • the integration of ERP with legacy systems. Data Conversion The cost of data conversion depends on the format and the media that store the historical data. Data conversion from legacy systems to RDBMS is a time-consuming process. Data conversion may lead to further data gathering to fill the missing links in data requirements. Testing ERP systems are thoroughly tested before they go into production. ERP testing includes unit testing, component testing, regression testing, performance testing and user acceptance testing. Training Workflow and UI design in ERP software are more complex than average business software. ERP training is expensive because workers almost invariably have to learn a new set of processes of doing their daily tasks besides learning how to use the ERP software. To reduce the cost of ERP training and to ease the transitions from old processes to new, organizations often seek the help from training companies which are specialized in coaching workers on using ERP software from particular vendors.

http://www.sysoptima.com/erp/cost_of_erp.php http://articles.techrepublic.com.com/5100-10878_11-1054263.html

13. How long does it take for firms to implement these solutions (e.g. ERP system)? An ERP consultant, Panorama, specializes in consulting to the SME sector which its defines as companies turning over less than $500 million. Its research in that segment says that: • Average ERP duration is 19 months • Implementation cost is $8.5 million • Represents 9% cost of sales and • Delivers 39% of potential benefits

http://blogs.zdnet.com/Howlett/?p=595 http://it.toolbox.com/blogs/erp-roi/ten-reasons-to-implement-erp-during-the-economic-downturn-29577 http://www.panorama-consulting.com/PressKit/PCG_Topline_Results_FINAL.pdf

14. What is the utilization of these systems?
15. Problems of current Enterprise IT? Most business applications are too inflexible to keep pace with the businesses they support. Today’s applications force people to figure out how to map isolated pools of information and functions to their tasks and processes, and they force IT pros to spend too much budget to keep up with evolving markets, policies, regulations, and business models. IT’s primary goal during the next five years should be to invent a new generation of enterprise software that adapts to the business and its work and evolve with it. Forrester calls this new generation Dynamic Business Applications, emphasizing close alignment with business processes and work (design for people) and adaptability to business change (build for change). At this stage, the requirements for Dynamic Business Applications are clearer than the design practices needed to create them. But the tools are at hand, and pioneers in service-oriented architecture (SOA), business process management (BPM), and business rules — including independent software vendors (ISVs) — have begun showing us the way.

16. Are there any legislations/regulations on the privacy of data?
17. Does user experience matter in Enterprise software? What are the caveats? User Experience does matter. In any organization user experience plays a very important role, especially nowadays. Companies therefore put a lot of effort in enhancing user experience and make it favorable. Without positive user experience productivity decreases or users simply fail to see advantages of the new system and go against adopting the software solution. Usually this is triggered by not having enough attention paid by software developers on the wants and needs of the user groups or because enterprises don’t spend enough time on learning ability, usability and efficiency. Sources: http://uxmatters.com/mt/archives/2009/03/the-user-experience-of-enterprise-software-matters-part-2-strategic-user-experience.php http://www.uxmatters.com/mt/archives/2008/12/the-user-experience-of-enterprise-software-matters.php

18. How does the emergence of virtualization impact Enterprise IT? What could virtualization mean for an enterprise IT system but interoperability? By employing virtualization there is separation of the 1-on-1 relationship between OS and HW. Therefore one HW can have many OSes. On top of that, any OS can have many DBMS’s, CRM’s or any other software critical for the company. Extending that path, with virtualization there is no critical server failure. Losing the functionality of HW now means fewer resources for the virtualized instances to run, not critical failure. Virtualization therefore, enables companies to utilize more their HW resources while having a centralized virtualization management point. This very important technology, can be applied for Legacy application re-hosting or infrastructure provisioning and business continuity. Financially speaking, virtualization lower IT costs significally, approximately by 20-30% per application.

Sources: http://www.ecommercetimes.com/story/66624.html

19. What are the Impacts of Internet in the future development of Enterprise IT? Internet developments continuously have an impact both on businesses and on IT. Nowadays the evolution of the World Wide Web towards a mature Web 2.0 and later towards the expected still theoretical Web 3.0 change the way businesses organize and operate. Enterprise 2.0 became a concept of its own, shaped by the emergence of Web 2.0 concepts and standards, including Cloud Computing, Everything-as-a-Service and the Semantic Web. Furthermore, the evolution of mobile technology, whose course is set to enrich internet capabilities, going from 3G towards a still conceptual 4G having full VoIP and WiMAX wireless broadband, makes the already popular prediction regarding the convergence of the PC industry with the Mobile industry a fact for the near-future. Wireless broadband in itself is a great step towards internet mobility opening new opportunities for businesses. In parallel with mobile internet development, the developments in the area of open-source mobile OS boost the potential of mobile applications opening new opportunities for Business IT. All such developments therefore continuously influence the way businesses operate and allow brand new Enterprise IT solutions to emerge.

Internet as a global infrastructure will mature mainly having an optical fiber at OSI Level 1 and still use IPv6 as a standard protocol. Moreover 3G and Wi-Fi should merge to one greater technology. What we see today is that information takes more time to be processed from a core2Duo laptop than to download from the Internet. This eventually will converge but it is an indicator of the quality of Internet and the lack of efficiency at using computing power. So far, Internet was a mere ‘upload’ of silo-ed data. What seems to drive the next era is the scheme of interconnected data. For example, we can use linked data in order to create manage and visualize relations. A possible Google search would produce not a mere list of web pages but linked data, probably sorted by relevance or by trustworthiness of source. Enterprise IT should tame this potential by allowing isolated datacenters to be able to share and extend valuable information. Moreover, new Internet – oriented / dependent products shall emerge making a new internetworked market, that will require management and innovation. With the emergence of Web 3.0, which means having applications relatively small, peaces together, data in the cloud, pc or phone , fast and customizable apps. Low barrier entry

20. Any common global standard for Enterprise IT?

Enterprise Architecture Good Practice Guide First International Open Standard in EA January 2009 The purpose of this First International adapted is to provide guidance to organization's in initiating, developing, using, and maintaining their enterprise architecture (EA) practice. This Open Standard guide offers a set of Enterprise Architecture Good Practices that have proven their benefits to organizations and that addresses an end-to-end process to initiate, implement, and sustain an EA program, and describes the necessary roles and associated responsibilities for a successful EA program.

Enterprise Architecture is a complete expression of the enterprise; a master plan which “acts as a collaboration force” between aspects of business planning such as goals, visions, strategies and governance principles; aspects of business operations such as business terms, organization structures, processes and data; aspects of automation such as information systems and databases; and the enabling technological infrastructure of the business such as computers, operating systems and networks.

While EA frameworks and models provide valuable guidance on the content of enterprise architectures, there is literally no guidance how to successfully manage the process of creating, changing, and using Enterprise Architecture.

http://www.enterprise-architecture.info/EA_Standards.htm

Examples of standards for a specific system, the ERP can be found here http://www.army.mil/ArmyBTKC/focus/sa/erp_standards.htm

21. How can consolidation of solutions be beneficial? o How would it be beneficial if all the various enterprise IT can communicate together (Interoperability)
22. What are interesting technologies for improving the way Enterprise IT is applied o Automated Content Distribution change the way business contacts o How can Semantic search be beneficial in enterprise IT Most near-future technologies related to Enterprise IT are to a great extent also related to Enterprise 2.0 and adjacent standards. Improvements to existing Enterprise IT therefore include social enhancements such as blogs, wikis, RSS, podcasting, social networking and bookmarking, all representing a system of web-based technologies part of the Web 2.0 standards that are meant to provide rapid and agile collaboration, information sharing, emergence and integration capabilities. The Semantic Web extension to the World Wide Web provides further aid and development by its powerful methods to enhance relationships and collaborative working groups. Furthermore, developments in Cloud Computing and Service-Oriented Architecture aim towards the concept of Everything-as-a-Service that includes software, communication, infrastructure and platforms, turning the Internet into a broad and rich solution for all enterprise needs. Developments in Mobile (Internet) Technology have a significant impact too, by adding mobility features and solutions to enterprise. http://www.aiim.org/What-is-Enterprise-2.0-E2.0.aspx http://www.aiim.org/images/WhatIs/E20_Tools.jpg http://en.wikipedia.org/wiki/Everything_as_a_service

23. How will Outsourcing of Enterprise IT will develop in time?

Why to Outsource Bring in expertise where it matters Better system design than you could ever do Better system maintenance than you could ever do it in-house Lower the risk of ownership Keep pace with technology changes. Allow staff to focus on managing the system, not building and maintaining the system.

Benefits of Outsourcing Seamless integration Huge cost savings – No duplicate data – No manual consolidating of data for reports – System automation of routine business logic – System automation of some complex tasks (registration, scheduling, etc) Improved Quality of your operations – Real-time access to data for all staff and constituents. – High data quality and integrity. – More time for learning! Better Work Environment - Lower Operational Stress! – Lower risks in many areas – data loss, upgrade issues, viruses, etc. – Manual data entry and “grunt work” is largely a thing of the past – People like their jobs better because “the system works like it should”

http://jobfunctions.bnet.com/abstract.aspx?docid=147911&tag=content;col1 http://www.asbindia.info:8081/drupal/ASB_Un-plugged/files/Enterprise%20Solutions%20and%20School%20Administration%20Veracross.pdf

24. What measurements (IT matrices) are there in Enterprise IT?
25. How catastrophic will the future development of programming language will be for Enterprise IT (Impact of it)? Programming language has been in continuous development, from the military software Fortran/Cobol towards C/C++, Java/C# and PHP/Python/.NET or Ajax. The problem with programming languages is that while they continue developing with each generation, continuity with older code is broken as current developers cannot understand older languages. Moreover, as enterprise solutions become more and more complex and programming tends to be simplified, software nowadays reached major limitations. It is difficult to predict how catastrophic the consequences of software limitations and broken continuity will be, but there are indeed some alarm signals. Looking at the history of programming languages, however, it is better assumed that the natural course of development will always discover a solution for any emerging need. Hopefully, knowing that the trend towards internet-based solutions is certain, and basing future development on learning from past experiences, programming will embrace clearly defined standards and software development will reach the required level of maturity and stability. http://cplus.about.com/od/introductiontoprogramming/a/2008.htm http://www.redcanary.ca/view/top-10-programming

26. Artificial Intelligence with Enterprise IT?v Artificial Intelligence represented a myth in the early days of computer developments, a belief that one day computers will be able to think for themselves. Since, AI development took a different approach and search for more tangible applications such as knowledge-based systems or enterprise decision management. Nowadays AI in Enterprise IT is represented by Business Intelligence and the emerging Business Intelligence 2.0. The concept behind BI 2.0 is that it is a more proactive form of analyzing data and understanding facts useful to businesses. It is strongly based on the development of Semantic Web, linking data and finding relationships, and plays an important role in the development of Service-Oriented Architectures, therefore being predicted to have a great impact on the future of Enterprise IT. Artificial Intelligence in its conceptual way may still be far from achievement, but Business Intelligence is already tangible. http://en.wikipedia.org/wiki/Business_Intelligence http://en.wikipedia.org/wiki/Business_Intelligence_2.0 http://www.intelligententerprise.com/showArticle.jhtml?articleID=197002610 http://www.edmblog.com/weblog/2006/10/business_intell.html

27. Why is the Hardware keeps on improving rapidly, while software not? What is fundamentally different? Hardware development reached a higher maturity level than software did. Hardware was always a step ahead of software and this can easily be seen throughout recent history. Examples such as multi-touch technology are straight forward. By nature, software follows hardware, but, as explained already, software takes more time to develop, encounters difficulties in maturity, standards and continuity, whereas hardware does not encounter such problems. Also, hardware is physical, opposing the virtual nature of software, and humans still value something physical more. It is more likely that someone spends money on buying hardware than software, often acquiring the required software through other means. Therefore in general hardware presents a higher business success and hence hardware R&D is better supported by financial resources than software.

28. What is the most viable future of Enterprise 2.0 ? enterprise spending on Web 2.0 technologies is going to increase dramatically over the next five years. This increase will include more spending on social networking tools, mashups, and RSS, with the end result being a global enterprise market of $4.6 billion by the year 2013. This change is not without its challenges. Although there is money to be made in the industry by vendors, Web 2.0 tools by their very nature are defined by commoditization; as is much of the new social media industry, a topic we touched on briefly here, when discussing how content has become a commodity. For vendors specifically, there are 3 main challenges to becoming successful in this new industry, including: 1I.T. shops being wary of what they perceive as "consumer-grade" technology 2Ad-supported web tools generally have "free" as the starting point 3Web 2.0 tools will have to now compete in a space currently dominated by legacy enterprise software investments

http://www.readwriteweb.com/archives/enterprise_20_to_become_a_46_billion_industry.php http://browse.workliteracy.com/enterprise-2.0 http://www.e2conf.com/conference/by-track.php http://www.futureexploration.net/ http://www.rossdawsonblog.com/extinction_timeline.pdf