David Metcalfe, PhDResearch DirectorForrester Research

Organic IT: Coming To A Data Centre Near You

Theme

Organic IT will deliver business innovation

Organic ITComputing 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

3.3%4.5%4.2%Percent of

revenue spent on IT

Company financial performance

2.6%

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

Base: 490 European IT decision-makers

We're hiring21%

We're holding staff

flat43%

Don't know2%

We're downsizing

34%

“Which one describes the status of your full-time IT staff?”

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

0% 10% 20% 30% 40% 50%

Lowering the company's operatingcosts

Improving product and processquality

Improving workforce productivity

Acquiring and retaining customers

Driving new offerings and businesspractices

“What is the top priority for IT to support?”

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?

CRMERP

The problem: Fragmented infrastructureFinance

PeoplesoftSAP SiebelSoftware:Monolithiccode

SunHP DellHP

Processors:Singlepurposeservers

NetAppEMCHitachi

Storage:Isolateddisks

InternetWANLAN

Network:Fragmented

CRMERP

The solution: Organic ITFinance

PeoplesoftSAP Siebel

SunHP DellHP

NetAppEMCHitachi

InternetWANLAN

Software:

Processors:

Storage:

Network:

Webservices•XML•SOAP•WSDL•UDDI

Fabricswitch

CPU RAM CPU RAM

Net Fibrechan.

Computingfabric•Computing nodes•High-bandwidth networks•Fabric OS

Sharedpool•IP/FC- bridging•NAS•TCP offload

Redundant array of Internet Links (RAIL)

•VPN hardware•Route optimization

Time Cost

1 month

6 months

2 months

6 months

Time Cost

1 week

Scenario: Manager wants to share production data from inventory system with Acme, a supplier

Software guy

Server guy

Network guy

Disk guy

“I need to integratewith Acme's SAP R/3.”

Organic ITadministrator

Steps“Uh oh, we use Baan. We'll need to handcode the integration.”

“Hmm, we'll have to build a new server and OS image for that.”

“Ohhh. We'll research a Fibre Channel RAID array for reliability.”“Well.... we need topull a leased line and coordinate the carrier.”

“Ok, we'll use the fab industry XML spec to link the Web services interfaces. We've got processors, but we'll need to drop a new disk in the pool. And we've got plenty of bandwidth. Howdoes Tuesday sound?”

1

23

4

1

6 monthsTotal:

1 weekTotal:

Organic IT

Today's IT

$$$$

$$$$

$$

$$

$$$

$

$

“I need to integrate

with Acme’s SAP R/3”

Dealing with today's IT infrastructure

6 months/$$$$

1 month/$$

2 months/$$

6 months/$$$

8 months/$$$$$Total:

Dealing with an Organic IT infrastructure

1 week/$Total:

Time Cost

1 month

6 months

2 months

6 months

Time Cost

1 week

Scenario: Manager wants to share production data from inventory system with Acme, a supplier

Software guy

Server guy

Network guy

Disk guy

“I need to integratewith Acme's SAP R/3.”

Organic ITadministrator

Steps“Uh oh, we use Baan. We'll need to handcode the integration.”

“Hmm, we'll have to build a new server and OS image for that.”

“Ohhh. We'll research a Fibre Channel RAID array for reliability.”“Well.... we need topull a leased line and coordinate the carrier.”

“Ok, we'll use the fab industry XML spec to link the Web services interfaces. We've got processors, but we'll need to drop a new disk in the pool. And we've got plenty of bandwidth. Howdoes Tuesday sound?”

1

23

4

1

6 monthsTotal:

1 weekTotal:

Organic IT

Today's IT

$$$$

$$$$

$$

$$

$$$

$

$

“I need to integrate

with Acme’s SAP R/3” “How’s next Tuesday?”

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

David Metcalfe, PhD+44 207 323 7684dmetcalfe@forrester.com

www.forrester.com

Thank you

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