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2006: The Year in Preview

Analysis of News Events
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While some of my fellow analysts may disagree with me, I believe that IT markets go through seasons in much the same way that nature does. There are sunny periods when the climate is ideal for breakthrough technologies to grow rapidly and gain widespread acceptance. In harsher seasons, new ideas go underground to germinate in research labs until customers are once again ready to embrace change.

If I were asked what season will best characterize the iSeries marketplace during 2006, I would say that we will be in the early and middle part of spring. Across the midrange community, new tools and solutions are beginning to take root in companies whose IT systems have lain dormant for years. At the same time, there is a note of caution in the air. If a late frost hits the economy or new technologies fail to live up to their promises, companies could declare that winter is not over and put their IT plans on hold once again.

With these thoughts in mind, allow me to offer my predictions for the coming year. As you will see, I expect 2006 to be a year of both promise and peril.

Prediction #1—The Lines Between Traditional Applications and Service-Oriented Software Will Begin to Blur.

Over the last several years, software vendors have been developing the technologies and standards needed to redesign applications as loosely coupled services. This year, those technologies and standards will find their way into the fabric of traditional applications, including those that run on the iSeries. Many vendors will announce reworked products that contain Web services and integrate with remote services. This will include highly visible vendors such as Oracle with its Fusion applications, SAP with its Enterprise Services Architecture, and Microsoft with its Office Live venture. In addition, many smaller vendors will ship products that are hybrids of traditional code and Web services that can be invoked on demand. This trend will make it increasingly difficult to categorize applications as onsite or hosted products. It will also spur many IT professionals to gain skills in Web services and service-oriented software design.

Prediction #2—Battles Between Vendors of Service-Oriented Middleware Platforms Will Escalate.

As developers migrate to service-oriented software design, the world's largest middleware vendors will fight to win them over to their tools and standards. Look for 2006 to be the year when BEA Systems, IBM, Microsoft, Oracle, SAP, and Sun Microsystems turn up the volume on their campaigns to depict their middleware stacks as superior to each other. In addition, these firms will acquire many smaller middleware vendors to gain market share and make their product lines more comprehensive. As cases in point, consider IBM's recent purchase of Bowstreet and BEA's buyout of Plumtree, two vendors whose tools make it easier to develop Web portals. Such acquisitions will lead to a consolidation of the middleware market that will equal the one taking place among enterprise application vendors.

Prediction #3—Open Source Products Will Gain Widespread Acceptance Across Most of the Software Stack.

The IT community is fast approaching the point at which it no longer thinks of open source middleware, development tools, and databases as risky experiments. These products now enjoy the sponsorship of first-tier vendors that are building their own solutions on open source stacks. This year, I expect many mid-market companies and iSeries users to embrace such solutions and deploy them on Linux servers and iSeries partitions. IBM recently did its part to encourage the embrace by forming strategic alliances with Red Hat and Novell that will integrate open source products on its servers.

Prediction #4—Mid-market Companies Will Increase Their Investments in Core Business Applications.

It has been six years since Year 2000 support issues forced companies to upgrade their enterprise applications at very high costs. Now, those applications are looking long in the tooth. This year, I expect that many firms will decide the economy is good enough and new product releases are attractive enough to upgrade their core business systems. Indeed, a recent study by AMR Research of nearly 300 small and medium-size businesses revealed that 71% of such firms plan to increase their budgets for enterprise resource planning (ERP) software in 2006. Moreover, the average ERP budget will increase by a surprising 14.6% over 2005 levels. Such an increase could put the spotlight on the iSeries, as the server acts as the central platform for ERP systems in many companies.

Prediction #5—Cost Containment Could, Once Again, Become a Top Priority.

While iSeries users are once again interested in adopting new technologies, economic sluggishness could put a damper on their enthusiasm. As I explained in an article two months ago, a possible downturn in consumer spending could hurt some industries during the second half of 2006. If that takes place, it could put off a springtime bloom of new IT projects until the recessionary clouds clear.

While iSeries users will find themselves dealing with these trends throughout 2006, IBM and the iSeries Division will be doing so as well. Indeed, I expect that many iSeries announcements will focus on these trends and try to harness them to the advantage of the server. Over the course of the year, IBM will increasingly position the iSeries as a platform that makes service-oriented software easier to develop, deploy, and manage. To support that positioning, the company will bring new WebSphere middleware products to the server and improve their integration with each other. The iSeries Division will also work more closely with enterprise application vendors to create solutions that meet the needs of vertical industries. In addition, IBM will keep promoting the iSeries as a consolidation platform that can reduce IT costs.

Looking Forward

These initiatives should serve the iSeries and its users well as they navigate the coming year. On a similar note, I wish you and your organization the best of luck with your 2006 initiatives. I look forward to sharing the journey with you and helping you reach your destination.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

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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