First, happy New Year It's the time of the year again where people come out with their predictions, so I took a stab at it. This year I focused on "cloud", how could you guess. So, if you want to know what I see in the tea leaves, just read and stay tuned. By the way feedback is more than welcome.
Just a year ago, for the first time, I established my own 10 predictions for 2009. Before doing the same exercise this year, I decided to go back and review how they had pan out. I leave you as the ultimate judge, but feel I did not do too badly. The challenge now is to do at least as well this year.
I have participated in several conferences where the uptake of the economy was discussed. Whether it is already there, or will appear during 2010 is still open, however 2010 should be a better year than the previous one. Not difficult you will argue. So, with that in mind, let me propose my predictions. As last year, I have five that are business related and another five technology. Let's start with the business ones:
- As the economy takes up, many companies will have difficulty to manage their supply chains. Indeed, in reducing costs to a minimum, many have reduced safety buffers, making them more dependent of suppliers. I am not sure they already recognize that, but as demand picks up, the ecosystem will be stress tested. In particular, because the variability will remain in the system as long as there are uncertainties left. As the US and Asia pick up faster than Europe, imbalances will appear in the supply chains, making their management challenging.
- Towards the end of 2009, we have seen a number of mergers and acquisitions. That trend will continue as some companies are still sitting on large piles of cash, and as the stock market is still reasonably cheap. Companies will continue taking advantage of the situation to complement their portfolio and improve their competitive advantage. The high tech industry, in particular, should be subject to further consolidation as the go-to market mechanisms change.
- Recovery will be slow with growth rates under the 3%, resulting in further cost cutting throughout the year. Redundancies will continue at least through the summer as companies try to get their costs in line with Wallstreet expectations.
- Outsourcing will continue, but the list of target countries will increase. Environmental and logistics cost considerations should favour countries closer to the EU and the US, while the increase in costs in China and India make other countries more competitive. The concept of "right sourcing" is becoming increasingly popular.
- Despite the failure of the Copenhagen conference, the environmental efforts are there to stay. There are at least three reasons for this, first reducing energy consumption reduces cost, second, moving to greener energy reduces dependency from oil, and third, an increasing amount of countries realize that pushing for cleaner technologies foster innovation and the creation of new business opportunities.
Let me now focus on the technology related trends.
- To improve operations of their leaner supply chains, companies will increase collaboration with their suppliers and customers alike. Using unified communication and collaboration, business exchange services or community clouds, they will build closer links with the partners in their ecosystems, linking them in an integrated community. This could be one of the first enterprise applications of cloud technology.
- Although the Cloud is there to stay, the hype will diminish as issues become more visible. A major security breach is likely in 2010 as hackers turn their attention to this new technology. The official start of Microsoft Azure will be a bright spot. Seeing how the platform differs from Amazon and Google will indicate where cloud computing is going as this is the first platform solely architected for cloud.
- Enterprises are increasingly intrigued by the concept of cloud, but where SMB is moving to the public cloud, enterprises will migrate to private clouds, which can be on-premise or located in service providers datacenters. The concepts of utility computing and private cloud should merge over the year. The more advanced may "spill over" in the public cloud to source peak capacity needs, hence create what is getting known as "hybrid cloud".
- Manufacturing Execution Systems are back on the picture, and their integration with ERP is on the agenda. As companies continue streamlining their operations, the integration of the factory and the supply chain becomes mandatory. A new term, Manufacturing Operations Management, will start appearing in 2010 and take an increasing importance as companies increasingly look at their operations in a holistic manner.
- Last but not least, business intelligence will continue to be on the agenda of IT departments, but it will increasingly be focused around addressing specific business problems, and may as such take many names. Supply Chain Visibility, Product Track & Trace, Warranty/Quality Management and internet monitoring are some of the names that will be used. Increasingly information will come from outside the companies boundaries, being it suppliers, customers or the net itself. In that process, social networking will move up on the radar screen of companies with a strong brand.
I do not have a crystal ball unfortunately, so my predictions are worth what they are. They are mine, and do in no way reflect HP's ideas. Tell me what you think, do you agree with me, or do you see others?
On a different note, let me wish you a Merry Christmas and Happy New Year as 2009 is winding down. May 2010 bring you a lot of satisfaction, and I do hope to count you as a reader next year again.
As 2008 winds down, many people are attempting to predict what will happen in 2009. One common element is that the year will be difficult from an economical perspective. Whether the crisis will last 6, 9 or 12 months is open for debate, but there is a crisis and it will hit hard. Let me in turn share with you my views from a business and technology perspective.
Let's first start with five business related predictions:
- 1. As business slows down, cost cutting will continue to be at the top of CEO's agendas. This will result in less travel, little celebration and the cutting of all non essential costs. Unfortunately a number of companies will have lay-offs to trim their workforce to the available business, but that will be the last resort as many companies believe the crisis to be deep but short, and do not want to remove essential capabilities
- 2. The business world will be divided in two. On the one side, cash rich companies that will take advantage of the crisis to acquire additional assets cheaply, and on the other, cash poor companies that are the prime targets for these acquisitions. So, we should see a number of acquisitions taking place over the next couple months, making the cash rich companies stronger. Cash poor companies without a strong value proposition are the ones that will suffer most during the crisis as they do not interest anybody.
- 3. Variability is still very much in the system. The fluctuation of the US$/Euro value, to take an example, is there to stay. The oil price will also move up quickly once the economy recovers. So, companies will be forced to include this variability in their medium to long term plans. This will need to an increased understanding of the sensitivity of companies to external factors.
- 4. Outsourcing is there to stay. However, outsourcing will no longer automatically mean China. Near-sourcing will increasingly take a more prominent role while companies search for new logistics routes, in particular between Asia and Europe. Selected jobs may be coming back, but they will not create a substantial amount of work as the labor cost differential is still too high. Through spreading out manufacturing facilities, companies will however have to deal with more complex supply chains
- 5. Social and environmental focus is there to stay. As companies figure out how this can help them reduce costs and mitigate risks, the focus will increase drastically. Some companies will try to get away with buying carbon credits, but most will look at how they can decrease the environmental impact of their operations, while working with suppliers to improve working conditions in low cost countries.
How will technology help address the above:
- 1. To improve their operations, reduce costs and mitigate risks, companies will require more information on what happens within their own operations and throughout their supply chain. To achieve this, increased visibility and business intelligence is required. This will result in the launching of enterprise data warehouse, business intelligence and supply chain visibility projects despite the reduction of IT budgets. Company dashboards will become common in boardrooms.
- 2. As business travel reduces, companies will have to increase their level of remote collaboration. Collaboration tools, going from instant messaging to telepresence will become more common around enterprises. Companies should increasingly look at Web 2.0 tools for inspiration on how to work remotely together. Telepresence tools managed on integrated networks (such as HP's HALO room), will allow companies to work collaboratively with their suppliers and customers, maintaining a close working relationship at a lower cost. Integrated web based environments such as Windows Live can serve as a collaboration backbone if Microsoft can demonstrate an appropriate level of security is in place for cross enterprise collaboration.
- 3. As ERP systems become mature and only provide a snapshot view of the company, the integration of those with business intelligence and a variety of planning, simulation and analysis tools will have to be achieved to provide companies the information they require. Master Data Management will have to be put in place to ensure consistency of the information across the company and its eco-system.
- 4. With a number of safety threats behind us, the need for improved product track & trace is becoming increasingly apparent. Technologies such as RFID and smart labeling have achieved a maturity level that makes them prime candidates to become the basic tools for such traceability. Information backbones will be developed to collect the data and provide companies with information quickly and efficiently, resulting in fewer, faster and smaller recalls in the future.
- 5. New, hyped technologies will continue to appear. Cloud Computing will continue being at the center of many conversations, although it only covers e-mail and a small number of collaboration applications at this moment in time. But in the mean time leading companies are implementing Service Oriented Architecture (SOA) environments to increase their responsiveness and agility. In doing so, they are preparing themselves to be able to take advantage of cloud based services the day those become available
Predicting the future is always difficult. So, this is my trial and I hope you enjoyed it. On a very different note, may I wish you all the best for 2009, both on a professional and private basis. It has been a pleasure for me to contribute to this blog and hope to continue doing this in 2009.