Top Ten IT Predictions for 2005

As predicted, 2004 was a banner year for leverage, integration, and
Linux and in some cases, 2005 will be more of the same. Here
are Nucleus Research’s top ten technology predictions for 2005:


With ERP vendors clamoring for customers, adding value to their
platforms will be the carrot they hope lures in new customers.

As BI first emerged as a solution for wrestling data out of ERP
systems, ERP vendors will move to reclaim lost ground and offer
expanded BI capabilities to provide one stop shopping. The result
will be a shake-up with the current pure play vendors, and some
interesting dynamics as BI vendors and their ERP partners learn
some new steps in the co-opetition dance.


The merger activity in the software market is based on buying new
customer bases and adding more lucrative maintenance fees to the
vendor’s coffers. Discounting among competitors is already fierce,
but those maintenance fees aren’t being reduced much. That will
change as customers are tired of paying for upgrades they may
never need, licenses they rarely use, and will now get tougher on
negotiating fees.

Vendors don’t want to give up the attractive profit
margin, but they may have little choice if customers have no
qualms to turn to competitors for a better price.


Although the hosted model works in some situations, if it’s simply a
static sales management system it can quickly reach a break-even

One of the key selling points of hosted CRM has also been its
simplicity; however, if ongoing functionality enhancements and
additions are needed to justify the ongoing revenue stream, the
cost-benefit equation will continue to shift.

Many hosted CRM vendors are also public companies as well,
requiring them to standardize pricing and manage sales for
effective revenue forecasting making ongoing customer
management just as important as new customer wins and “special
offers” more difficult to pull off.

Faced with steady benefits but potentially-increasing subscription fees without clear additional benefit, companies will begin to reconsider the ongoing cost of
hosted CRM agreements and look at hybrid and other models that
they can use in maturity without paying for in perpetuity.


More and more companies will look to outsource their e-tail channel
instead of maintaining and updating costly on-premise e-commerce
and catalog applications.

Just as companies looked to replace
costly and difficult-to-maintain CRM with other more cost-effective
solutions, companies that invested heavily in e-commerce platforms
in the 90s will re-evaluate their ongoing software maintenance,
support, and content management costs and consider hosted

As we learned from the “dot com” crash, the Internet is just
another channel. Companies looking to manage costs and increase
profitability across their different sales channels shouldn’t ignore
their e-commerce Web site.

Dynamic pricing models, fidelity
groups, targeted promotions, and other sophisticated sales tactics
— as well as integration with the rest of the supply chain —
shouldn’t take a team of sales support people. Hosted e-commerce
offers a flexible, cost-effective, scalable alternative.


Not yet on the desktop, but despite a healthy investment by
Microsoft in “independent” analyst white papers, Open Source
continues to gain ground in the minds and infrastructures of IT

Look to continued focus on open source and a growth of
developers and applications that exploit its strengths as well as
more vendors such as SAP quietly touting the cost effectiveness
and performance of mySQL.


Companies are undergoing infrastructure audits to identify and
clean out redundant or unnecessary IT assets. They are looking at
ways to standardize systems across the company and will spend to
replace disparate systems with a single unified system.

The payoff
can be substantial with big hit returns from system retirement, and
attractive ongoing returns through lower IT support costs. The
payoffs will be big for systems auditing and analysis tool providers
as well.

Seeking savings doesn’t necessarily mean outsourcing, however.
With the true costs of outsourcing being presented as a contrast to
the projected returns that drove IT outsourcing’s growth,
companies are finding the benefits less than stellar.

While some
aspects of outsourcing tasks can be viewed as IT piece work,
separating the business context from applications development
results in the same classic disconnect that most companies are
trying to avoid. Managing the relationship with the offshore
provider can also eat into the potential savings, as does training,
bug fixing, and ongoing project communication costs with the
programming team.

It’s not just a simple case of comparing the
hourly wage of the local versus the remote IT worker.


Until Microsoft gets better at keeping it out, those clever spammers
will keep sending it out.

Enterprises will see an increase in spam
due to the growing intelligence of spammers. Most organizations,
if they haven’t already, will need to deploy robust spam filtering
solutions that are offered by a number of vendors; the key is in
deciding which solution is most appropriate for your enterprise from
the list of vendors including Proofpoint, Frontbridge, CipherTrust,
MX Logic, IronPort, and Symantec Brightmail.

These technologies
can help your organization decrease spam and viruses and increase
overall employee productivity.


Back to the good old days of cell phones, when you needed
different phones for coverage in different areas. Expect a new
round of software apps that help road warriors share the wireless
wealth — whether they know it or not.

On the ROI side, companies
with a lot of road warriors should not be taking wireless access on a
case-by-case expense report basis. Evaluating the available
options and giving power users a cost-effective standard plan will
save money in the long run while reducing the time users spend
subscribing and searching for service.


Although these decisions are being made cautiously, they are being
made and will result in revenues for software and services
vendors in 2005.

The recent deadlines to regulatory compliance
acts such as Health Insurance Portability and Accountability Act
(HIPAA), Gramm Leach Bliley Act (GLBA) and Sarbanes-Oxley
(SOX) put significant pressure on executive management in
organizations to implement appropriate regulatory compliance
software in place.

Organizations have no choice but to invest into such solutions to
maintain the appropriate level of control over their data and comply
with the law or to show how what they already have in place
does the job effectively.

If they haven’t already, the CIO and the IT
department will need to identify and evaluate compliance
technologies that will provide control over the network, messaging,
and records and content floating around the enterprise.


The morning after, we often have regrets — like getting tagged, for
instance. It will still take us some time to get tags right; after all,
it’s not about cost, it’s about reliability.

The benefits of RFID are
clear, but ROI will only come to those who put benefits before

Those who rushed to get in right in 2005 will continue to pay as the
technology improves and good tags get cheaper and more reliable.
Those who let the designated drivers go first and took a measured
approach are better positioned.

Better technology, more vendor
and user experience, more mature supporting software, and
emerging best practices will help make the RFID party train ride
smoother in 2005.

As Vice President of Research, Rebecca Wettemann responsible for directing and managing Nucleus’ research team. She has written and presented extensively on the subject of
enterprise applications, CRM, collaboration, and integration
technology and its impact on business. She is an expert on the financial analysis of technology and is the author of numerous return on investment (ROI) studies and reports.