The System i community will face a complex set of economic and business trends this year that will make for interesting times.

As we stand at the leading edge of 2008, allow me to ask a less-than-philosophical question. What would this time of year be like without long-winded predictions from analysts such as yours truly about what the next 365 days will bring?

I hate to admit it, but I imagine that some of you are saying "better" right now. If you are, please bear with me as I enact this annual ritual. I promise that I will try to make this year's prognostications as useful as possible. With that promise in mind, here are eight predictions for 2008.

Prediction #1—Technology spending among mid-market companies will be sluggish but could pick up toward the end of the year. In an article that I wrote last August, I predicted that North American IT spending would grow by a mere 3 percent to 5 percent in 2008. While the big analyst firms took issue with my bleak predictions back then, they agree with me now. Last month, International Data Corporation estimated that IT spending in the U.S. will increase by 3 percent to 4 percent this year. On a similar note, Forrester Research reduced its domestic growth projection to 4.6 percent. The only firm that remains outside my range is Gartner Group, which is calling for a 5.7 percent boost.

I predict that many IT departments in the consumer discretionary, financial, manufacturing, and transportation sectors will receive no spending increases or face cutbacks in 2008. However, I still expect that overall domestic IT spending will increase by 3 percent to 5 percent. Much of this increase will come from companies that are in non-cyclical industries or have strong overseas demand for their products. There is also a good chance that the domestic economy will pick up toward the end of the year. That could lead some companies to loosen their purse strings during the fourth quarter.

Prediction #2—IBM will offer i5/OS on blade servers, but acceptance by rank-and-file System i users will take time. While Big Blue has taken longer than I expected to ship i5/OS on its BladeCenter, it will do so by this spring. When it does, the new offering will definitely grab the attention of the System i community. However, System i professionals will discover that managing blade-based i5/OS environments is a different experience than managing traditional systems. Those differences will require time to digest before many customers feel comfortable deploying i5/OS workloads on blades.

Prediction #3—Tighter IT budgets and the "green revolution" will convince many System i shops to embrace virtualization. With the economy slowing and energy prices rising, many mid-size companies will launch initiatives this year to cut their power usage. As a result, System i professionals will be asked to squeeze every drop of computing power out of the megawatts they consume. That should lead to the increased use of System i logical partitions in smaller companies that have previously avoided LPARs. It will also promote deployments of i5/OS on IBM's BladeCenter in IT departments that have experience managing blade server environments.

Prediction #4—Unified communications will gain a wider following among System i customers. For most mid-market firms, 2007 was a year to kick the tires on offerings that integrate voice mails, emails, instant messages, and other forms of communication with each other and with business applications. This year, many of those firms will start deploying unified communications offerings. This will represent an important growth opportunity for the System i as it hosts Voice over IP (VOIP) products from both 3COM and Nortel as well as unified communications software from IBM and other vendors. However, the System i will face stiff competition from Microsoft, which is heavily marketing its own UC platform.

Prediction #5—Growing numbers of mid-market companies will embrace alternatives to Microsoft Office. While Microsoft remains a formidable company, its Office franchise has cracks in its foundation. Now that customers face the prospect of learning Office 2007's radically different interface, many of them are considering cheaper alternatives. In 2008, I expect that millions of users and thousands of businesses will actually make the switch. They will embrace online options such as Google Docs, Live Documents, ThinkFree Online, and Zoho as well as on-premises products such as OpenOffice and Lotus Symphony. The latter product should get a particularly warm reception from System i customers because of their widespread use of Lotus Notes.

Prediction #6—Business managers will put more pressure on System i professionals to integrate business intelligence (BI) capabilities into their applications. For years, BI offerings have been evolving from specialized software used by analysts to general tools that managers and their employees can use on a daily basis. That evolution took a leap forward last year when IBM, Oracle, and SAP purchased Cognos, Hyperion, and Business Objects, respectively. Now, these vendors are trumpeting a new era in which BI will be an integral part of all core business applications. That message is ringing in the ears of mid-market business managers, and they will be asking System i professionals how they can make the new era a reality in their companies.

Prediction #7—Employees in mid-market companies will use a growing number of Web 2.0 applications, making their integration with business applications a hot topic. Forward-thinking employees in many companies have realized that Web 2.0—the convergence of advanced Web development technologies with social networking tools such as blogs and wikis—can help them build their businesses. Now, software vendors are getting on the bandwagon by helping companies integrate Web 2.0 technologies into their business applications. In mid-December, for instance, IBM announced the WebSphere Application Server Feature Pack for Web 2.0. The feature pack includes an AJAX Development Toolkit and connectors to link applications to Web services, RSS feeds, and various data services. The new feature pack runs on WebSphere Application Server 6.0 and above, including the i5/OS version, and can be downloaded for free by licensed users.

Prediction #8—IBM will announce a major new initiative to sell its systems and software into small and medium-size businesses (SMBs). Last July, IBM announced that it was splitting the System i product line between two divisions. The System i Models 570 and above went to the Power Systems Division (which also owns the System p) while the System i Models 550 and below went to the newly formed Business Systems Division (BSD). At the announcement, IBM stated that the BSD would not only be responsible for these System i models, but also develop offerings for the SMB market across IBM's product brands. Since that time, however, virtually no news has come out of the BSD about its plans for such cross-brand offerings.

That kind of silence is not typical for IBM, and I believe it means that something big is brewing inside the company. With that in mind, I predict that the BSD will announce a strategic cross-brand SMB initiative this year. While the System i will play a significant part in the initiative, other platforms will play key roles as well. Whatever IBM announces, I believe that it will take the company's SMB strategy—not to mention the System i—in surprising new directions.

There you have it…eight fresh predictions for 2008. In the spirit of the seventh prediction, I hope that you will use the newly redesigned MC Press Online site to discuss the predictions among yourselves and to let me know what you think 2008 will bring. My wish to you all is that the New Year will bring you many professional opportunities and satisfying achievements.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.

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