GFC didn't cause tech industry downturn: Analyst

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GFC didn't cause tech industry downturn: Analyst

IT industry was on its own cyclical path.

A new study by Longhaus analyst Sam Higgins has suggested that the global financial crisis only exacerbated what was already a downward trend in the IT industry.

Higgins, presenting a study on the past and future of computing in Sydney today, mapped out waves of growth and decline in the IT industry in a pattern he suggests was set into motion by the Y2K update.

Referring to a survey of enterprise technology buyers - specifically ~100 customers of Australian software developer Technology One - Higgins said Y2K and the introduction of the GST forced 73 percent of Australian organisations to overhaul their ICT infrastructure.

This led to an infrastructure refresh cycle - with peaks in renewal years in 2004 and 2007. Higgins expects the industry will never see a peak as large as 2007, as customers embrace the cloud computing model within the next five years.

"We will never see a period of infrastructure growth like we did in 2007," he said.

"If you need to replace systems in 2012, would you really spend capital on it if infrastructure-as-a-service has matured? I doubt you would."

Some 57 percent of Technology One customers expected their applications to be hosted via the SaaS or some other hosted model in the next two to five years, according to the survey.

Blending the results of the Technology One survey with other economic indicators, Higgins surmised that the IT industry was already well into a path of decline in 2008, some twelve months before the global economic crisis hit.

"There were declines in CIO confidence, in jobs growth, in purchasing," he said. "The GFC made the situation worse, but it certainly wasn't the cause of the downward turn in the industry."

The future of software

Higgins used the same methodology in an attempt to chart the future of enterprise software.

Major software vendors, he said - with a thinly-veiled reference to Oracle - have been on a five to seven year journey of attempting to integrate discrete software packages from smaller software vendors they had acquired.

This suggests to Higgins that custom software development will become a thing of the past in the enterprise.

"If it takes the experts this long to integrate packaged software they bought to create the next generation business application, imagine how long it will take you," he said.

Instead, Higgins expected the next generation business application to be:

  • Packaged and vertically-aligned
  • Distributed, highly available and scalable
  • Based on SOA (service orientated architecture) - featuring re-usable functionality for integration with other software.
  • Highly configurable rather than customised
  • Available on a "near-zero client footprint" web browser - which is either 'rich' unto itself or easily integrated with a richer desktop version.
  • Loaded with business intelligence tools.
  • Able to be delivered in-premise, hosted or delivered as-a-service without requiring a change in code base.
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