While no single prioritization tool or method will be appropriate for all companies and situations, here are questions that help evaluate the efficacy of a prioritization method:

• Is it easy to understand and use?
• Does it elicit the right kind of input from users?
• Does it produce predictable, credible, defendable rankings of features?
• Does it realistically balance costs versus benefits, or does it lead to over-optimism that blindly leads toward high expectations?
• Do people—particularly management—follow the rankings, or do they overrule them within a few weeks?

Here are two methods we use to capture the preferences, characterize the politics, and weigh the priorities on CRM projects. The basic tools you need are nothing more than a laptop, a projector, and a spreadsheet. The magic comes from how the “priority votes” are collected and processed.

The Delphi Method

With traditional prioritization techniques, the larger the group, the more they are influenced by group-think and political sway. In extreme cases, the collective IQ of a group sinks to the lowest common denominator of its members. To counter this tendency, the RAND Corporation developed the Delphi Method, the original “wisdom of crowds” decision-making system.

One of the innovations of the Delphi Method is to ask for each of the participant’s “votes” in private, and to ask participants what level of confidence they have in their own vote. We’ve take it further, asking participants several “damping factors” about the priority they’re giving to a requirement:

• What’s their level in the organization (e.g., director) — in most requirements, higher in the organization means more weight, but in some it means a lower one.
• What’s their department.
• What’s their level of confidence in their vote.
• What’s their level of confidence in the business payoff (cost-benefit ratio) predicted for the requirement.
• To what degree will they personally use or benefit from the requirement.

Put all these into a spreadsheet (typically, one worksheet per participant) and create a summary worksheet using weighted-average formulas to process the individual votes.

The Betting Method

In this prioritization method, you do not attempt to collect or evaluate preferences from a large number of people. Instead, you ask just key executives to play an investment game, and then generate a weighted average of their responses. It’s moderately fun to play this game, and it can be done in as little as 10 minutes of an executive’s time.

The setup for this betting game is simple: each participant gets a list of projects and prices, and is given a hypothetical $100,000 (adjust this to be reasonable for your company and CRM size) to invest. Their CRM bets should be made to provide the best value for his or her group (or for each executive’s personal agenda). Each individual must invest the entire $100,000 in the CRM system, allocating it to those features that will make the best outcome, either by yielding the most benefit or avoiding the most pain. The twist: there are mandatory projects for infrastructure, maintenance, testing, and data hygiene that they must invest in, even though they don’t provide any visible “features.” The participants are encouraged to cooperate with other participants to fund those mandates. All of the bets are private.

After you’ve collected the input from the participants (there should be a separate spreadsheet or piece of paper for each person), ask them to do the exercise a second time, but this time to apportion their $100,000 according to what they believe the business impact would be for the company overall. Don’t let the executives see their old votes—give them a blank piece of paper. The instructions are along this line: “Suppose that investing in your CRM system will result in $1 million (adjust this for the size of your business) of additional profits over the next three years. If that were true, which features on the list below would be responsible for that profit increase? Apportion your $100,000 based on which line items caused the increased profit.” As before, there are mandatory “overhead” projects that have to be funded.

Typically, the answers from the two rounds of the game will be quite different. Once you have collected of the inputs, calculate a straight average to create the composite vote for the group.

Of course, neither of these scoring systems will make any decision, but they do provide insight into what the organization really thinks about the costs and benefits of each requirement. The scoring systems should be used as a starting point for negotiation, as they already incorporate both political and pragmatic considerations in a way that eliminates “noise” and de-stabilizing whim about what’s important.

Visiting soccer fans can now use Google and Twitter for location-based customer service and find the best services, accommodations, and attractions anytime, anywhere

SAN FRANCISCO, June 9, 2010 – Salesforce.com [NYSE: CRM] the enterprise cloud computing company, today announced that South African Tourism, the official customer service host for the world’s largest soccer tournament held every four years, has made social customer service available to more than 300,000 visitors from around the world with Service Cloud 2, salesforce.com’s customer service and support applications. Service Cloud 2 enables South African Tourism to provide real-time, location-based information on the hottest services, accommodations and attractions surrounding the world’s biggest sporting event of the year.

Comments on the News
• “While it hosts the world’s biggest sporting event of the year, hundreds of thousands of visitors from six continents will descend upon South Africa with millions of questions about where to stay, where to eat, what to do and what to see,” said Alex Dayon, executive vice president of CRM, salesforce.com. “South African Tourism has embraced the next cloud computing paradigm, Cloud 2, to deliver today’s world-class customer service with modern social features to global visitors in a way that is familiar and intuitive to them so that they can have the best travel experience possible while in South Africa.”
• “When the world comes here for the games, we want to create amazing, life-changing experiences,” said William Price, global manager of E-Marketing, South African Tourism. “With travel being a social experience unlike anything else, we want to provide amazing customer service with relevant, real-time, and easy-to-access information that helps people find the best there is to see and do in South Africa. Service Cloud 2 lets us not only leverage social media platforms to engage visitors in a way that is familiar to them, but also quickly reorients our organization and operations to meet that opportunity without the cost and complexity of software.”

Hosting World’s Largest Sporting Event Requires Modern Customer Service
• Prior to the Service Cloud 2, South African Tourism managed customer service using an in-house system based on Excel. South African Tourism recognized that it needed a contact center solution to support the immense scale of the event and meet the modern travel needs of visitors.
• Enterprise cloud computing was particularly attractive to South African Tourism because it would enable the organization to rapidly ramp up for the games and provide the flexibility needed to ramp down after the tournament without the ongoing burden of costly software, hardware and infrastructure maintenance, a key factor in its decision to deploy the Service Cloud 2 over offerings from Microsoft and Oracle.

With Service Cloud 2, Customer Service Goes Social at World’s Largest Sporting Event
• South African Tourism chose Service Cloud 2 for its ability to enable the world-class customer service experience international visitors expect. With the Service Cloud 2’s social and mobile features, South African Tourism can extend this experience to more visitors through popular consumer sites like Google and Twitter. For example, visitors can contact South African Tourism for local restaurant suggestions, hospitality advice and expert travel tips by tweeting their questions to @gotosouthafrica on Twitter and a South African Tourism agent will instantly see their questions and be able to respond to them within the Service Cloud 2.
• South African Tourism is also deploying Salesforce Ideas so it can gather visitor feedback on their stay in real time and crowd-source ideas for enhanced customer experiences. Salesforce Ideas replaces a paper-based survey, which South African Tourism used to audit the overall experience for visitors; however, now, with the social features of Service Cloud 2, South African Tourism can identify and address issues as they are reported vs. learning about them in a historical analysis.
• South African Tourism is integrating Salesforce Ideas with an iPhone app so visitors can quickly access pertinent information about games and stadiums and add to the collective community of knowledge available in the cloud. In addition, South African Tourism can now support languages most commonly spoken by visitors, including Dutch, English, French, German, Italian, Portuguese and Spanish.
• As a result, South Africa’s visitors from 32 nations who are expected to fill 120,000 hotel beds and eat hundreds of thousands of meals over the course of the games can now connect with the customer service host anytime and anywhere to find answers to questions such as “Where’s the best place to grab a late meal near Soccer City?” in Johannesburg or “Where’s the best nighttime hot spot near Ellis Park?” via Google and Twitter and on smart phones.

The move combines two leaders in separate elements of cloud computing — VMware’s virtualization and Salesforce’s software-as-a-service (SaaS) — into a more integrated cloud platform with direct appeal to enterprise Java programmers. By developing in the cloud, many deployment issues can be sidestepped by making the development and deployment environments the same thing.

“Java has emerged as the leading enterprise language of choice” for business applications, said Jerry Chen, manager of cloud strategy at VMware. The new development environment will have “all the productivity of Spring with all the availability of Force.com,” he added.

Force.com thus far has been a development platform primarily for existing Salesforce.com customers. Developers have been able to modify their standard SaaS applications using the VisualForce user interface components provided by Salesforce and the Apex business logic, a proprietary language from Salesforce.

Users of VMforce, however, will be able to get away from those restrictions and use their preferred Java tools and skills to produce the applications they want to run on Force.com.

The move represents VMware’s bid to become a larger player in the cloud after finding itself unwelcome at the largest supplier of cloud services so far: Amazon Web Services. AWS run virtual machines in EC2, but they are a variant of the open source Xen hypervisor. EC2 does not accept workloads based on VMware’s ESX hypervisor, at least not at this time.

The move also illustrates how the competition to supply cloud services is heating up. Application development is likely to be the next arena of competition as major vendors look for more cloud computing customers.

Microsoft is paving the way on that front with its Azure cloud services. It has begun to adapt Visual Studio and .Net technologies for ease of use and productive output inside Azure and supplies an Azure message bus and SQL Server-compatible database services in its cloud.

VMware, with its $362 million acquisition of the Spring Framework last August, gained the means to compete with Amazon and Microsoft on a new front. VMware estimates that the Spring Framework is used by an estimated two million Java developers for developing Java applications using less complex methods than the full Java Enterprise Edition approach. Spring applications are sometimes referred to as lightweight Java in the same way as PHP and MySQL are used for lighter weight Web applications.

By developing for the Force.com infrastructure, Java developers can produce applications “that are pre-connected to the Force.com database services, search, and analytics. They will be running on the Force.com platform with all its security provisions as trusted applications,” said Ariel Kelman, Salesforce.com VP of platform marketing.

The Force.com platform is primarily a development site for database-oriented applications, much like the Salesforce SaaS CRM applications that already run on it.

Despite being among the first to successfully and profitably implement cloud computing solutions, AWS officials said the company still has to constantly deal with questions about the reliability, security, cost, elasticity and other features of the cloud. In short, there are myths about cloud computing that persist despite increased industry adoption and thousands of successful cloud deployments. However, in an exclusive interview with eWEEK at Amazon’s headquarters in Seattle, Adam Selipsky, vice president of AWS, set out to shoot down some of the myths of the cloud. Specifically, Selipsky debunked five cloud myths.

“We’ve seen a lot of misperceptions about what cloud computing is,” he said.

Thus, the Cloud Computing Expo, as well as the virtual Cloud Lab and Cloud Slam events happening during the same week, provides a solid backdrop for Amazon’s myth busting.

Myth 1: The Cloud Is Not Reliable

Setting the tone for his argument, Selipsky first laid out the landscape. He noted that chief information officers (CIOs) in enterprise organizations have tough jobs and often are responsible for several thousand applications. They very much feel on the hook for the performance and security of these applications. And, when there are problems, they are used to walking down the hall or picking up a phone and choking their own person. There’s a certain comfort in knowing you can take some action if there is a problem. And, relinquishing that control and ability to scurry and take action is understandably difficult.

However, Selipsky says there are a few things customers should consider, and more and more customers are doing so as they adopt the cloud. One key thing to consider is that AWS’ operational performance is quite good. In addition, customers have full control over their data. Said Selipsky:

· They own the data, not us

· They choose which location to store the data and it doesn’t move unless the customer decides to move it

· They can encrypt their data at rest and in motion

· Regardless of whether customers choose to encrypt or not, we never look at the data

Moreover, Selipsky said, “We have very strong data durability — we’ve designed Amazon S3 (Simple Storage Service) for eleven 9’s of durability. We store multiple copies of each object across multiple locations.”

Selipsky also said AWS has a “Versioning” feature that allows customers to revert to the last version of any object they unintentionally delete or somehow lose due to application failure. And customers can ensure additional fault tolerant applications by deploying their applications in multiple Availability Zones or using AWS’ Load Balancing and Auto Scaling features.

“And, all that comes with no capex [capital expenditures] for companies, a low per unit cost where you only pay for what you consume, the ability to add or shed servers for your business (and balance sheet) in minutes, and the ability to focus engineers on unique incremental value for your business,” Selipsky said.

The origin of the reliability claims come from an illusion of control, he said. “People think if they can control it they have more say in how things go. It’s like being in a car versus an airplane, but you’re much safer in a plane.”

Myth 2: Security and Privacy Are Not Adequate in the Cloud

Security is an end-to-end process and companies need to build security at every level of the stack, Selipsky said. Examining Amazon’s cloud, you will see that the same security isolations are employed as would be found in a traditional data center, he said. These include physical data center security, separation of the network, isolation of the server hardware, and isolation of storage. On the physical data center side, well before Amazon launched its cloud services, data centers had already become a frequently shared infrastructure. Companies realized that they could benefit by renting space in a data facility rather than building it, added Selipsky. Indeed, citing security fundamentals, Selipsky said:

· Security could be maintained by providing badge-controlled access, guard stations, monitored security cameras, alarms, separate cages, and strictly audited procedures and processes.

· Amazon Web Services’ data center security is identical to the best practices employed in private data facilities today. It has the added physical security advantage that customers have no need to access to the servers and networking gear inside. Because of this, access to the datacenter is even more strictly controlled than traditional rented facilities.

· At the physical data center level, the Amazon cloud has equal or better isolation than could be expected from dedicated infrastructure.

Regarding the network, networks long ago ceased to be isolated physical islands, Selipsky noted. As companies found the need to connect to other companies, and then the Internet, their networks became connected with public infrastructure. They used special network functionality, such as firewalls and switch configurations, to prevent bad network traffic from getting in or important traffic from leaking out. As their network traffic increasingly passed over public infrastructure, companies began using additional isolation techniques, such as Multi-protocol Label Switching (MPLS) and encryption, to maintain the security of every packet on (or leaving) their network. Amazon’s approach to networking in its cloud is the same: maintain packet-level isolation of network traffic and support industry-standard encryption. Because Amazon Web Services’ Virtual Private Cloud allows a customer to establish their own IP address space, customers can use the same tools and software infrastructure they’re already familiar with to monitor and control their cloud networks. Finally, Amazon’s scale allows significantly more investment in security policing and countermeasures than almost any large company could afford.

“Our security is strong and dug in at the DNA level,” Selipsky said.

Meanwhile, on the hardware side, Amazon Web Services invests significantly in testing and validating the security of its virtual server and storage environment. According to Selipsky, these investments include:

· We wipe the server and storage clean after customers release these resources, so there is no possibility of leaving behind important data.

· Each instance has its own customer firewall to prevent intrusion from other running instances.

· For those wanting even more network isolation can use Amazon VPC (which allows you to bring your own IP address space to the cloud and your instances can only be accessed via those IP addresses that only you know)

· For those wanting to run on their own boxes (where no other instances are running), you can purchase extra large instances (an instance size that’s pretty typical for larger customers and workloads) where only that XL instance runs on that server.

Selipsky also argued that Amazon’s scale allows significantly more investment in security policing and countermeasures than almost any large company could afford themselves. “In fact, we often find that we can improve companies’ security posture when they use AWS,” he said.

“Take the example lots of CIOs worry about — the rogue server under a developer’s desk running something destructive or that the CIO doesn’t want running. Today, it’s really hard (if not impossible) for CIOs to know how many orphans there are and where they might be. With AWS, CIOs can make a single API call and see every system running in their VPC [Virtual Private Cloud]. No more hidden servers under the desk or anonymously placed servers in a rack and plugged into the corporate network.

Finally, AWS is SAS-70 certified; ISO 27001 and NIST are in process, Selipsky said.

Myth 3: I Can Get All the Benefits of the Cloud by Creating My Own In-house Cloud or Private Cloud

“There’s a lot of marketing going on about the concept of the ‘private cloud,’” Selipsky said. “We think there’s a bit of a misnomer here.”

In general, “we often see companies struggling to accurately measure the cost of infrastructure,” he said. “Scale and utilization are big advantages for AWS. In our opinion, a cloud has five key characteristics: It eliminates capex; allows you to pay for what you use; provides true elastic capacity to scale up and down; allows you to move very quickly and provision servers in minutes; and allows you to offload the undifferentiated heavy lifting of infrastructure so your engineers work on differentiating problems”

Moreover, Selipsky said what people are calling private clouds come with the following drawbacks, where the customer will:

· Still own the capex…and they’re very expensive (big fixed investments)

· Not pay for what you use

· Not have true elasticity…when groups relinquish their servers, the company still owns the datacenter space and servers…and will also find that managing this supply chain will present a dilemma…will either have to significantly overprovision which is wasteful or become really expert at managing just-in-time supply-chain so there are no long waits for servers…managing a supply chain like this is really hard and takes a lot of effort and refining and keeping the status quo of long time to market is not so appealing either

· Still own the headache of managing the undifferentiated heavy lifting

Getting a little deeper, Selipsky added, “With a private cloud you have to manage capacity very carefully…or you or your private cloud vendor will end up over-provisioning. So you’re going to have to either get very good at capacity management or you’re going to wind up overpaying.” And challenging the elasticity of private clouds, Selipsky said, “The cloud is shapeless. But if it has a tight box around it, it no longer feels very cloud-like.”

However, a key driver for AWS’ offerings is the company’s ability to save customers money and drive efficiency.

“In virtually every case we’ve seen, we’ve been able to save people a significant amount of money,” Selipsky said.

Some of the reasons for this are that as AWS’ business has grown dramatically over the past four years, the company has achieved enough scale to secure very low costs. Additionally, AWS has been able to aggregate hundreds of thousands of customers across every imaginable use case and various geographies to have very high utilization of its infrastructure — how well you utilize the infrastructure is a key economic driver because if you have high utilization, you can buy less servers to serve the same load somebody with low utilization has to serve with many more servers.

“In our conversations with customers we see that really good enterprises are in the 20-30 percent range on utilization — and that’s when they’re good…many are not that strong,” Selipsky said. “The cloud allows us to have several times that utilization. Finally, it’s worth looking at Amazon’s heritage and AWS’ history. We’re a company that works hard to lower its costs so that we can pass savings back to our customers. If you look at the history of AWS, that’s exactly what we’ve done (lowering price on EC2, S3, CloudFront, and AWS bandwidth multiple times already without any competitive pressure to do so).”

Myth 4: If I Can’t Move Everything at Once, the Cloud Isn’t for Me

“We believe this is nearly impossible and ill-advised,” Selipsky said. “We recommend picking a few apps to gain experience and comfort then build a migration plan. This is what we most often see companies doing.”

Moreover, added Selipsky, “Companies will be operating in hybrid environments for years to come. We see some companies putting some stuff on AWS and then keeping some stuff in-house. And I think that’s fine. It’s a perfectly prudent and legitimate way of proceeding.”

Myth 5: Cost Is the Biggest Driver of Cloud Adoption

“There is a big savings in capex and cost but what we find is that one of the main drivers of adoption is that time-to-market for ideas is much faster in the cloud because it lets you focus your engineering resources on what differentiates your businesses.”

Overall, regarding these myths, Selipsky said he believes “a lot of this revolves around psychology and fear of change, and human beings needing to gain comfort with new things. Years ago people swore they would never put their credit card information online, But that’s no longer the case. We’re seeing great momentum. We’re seeing, more and more, over time these barriers [to cloud adoption] are moving.”

The tablet, lauded by many as the next wave in education technology, is having difficulty being accepted at George Washington University and Princeton University because of network stability issues. Cornell University also says it is seeing connectivity problems with the device and is concerned about bandwidth overload.

The iPad isn’t having an easy time being admitted to some colleges, Melissa Korn says.

Such issues could be a blow to Apple, which has gone after the higher education market by highlighting the iPad’s portability and availability of electronic books. But students may not be willing to pay $499—or more, depending on the type of iPad—if they still need a desktop or laptop computer to check course assignments or email. Some higher education insiders also worry there isn’t enough educational content available via the iBookstore application to eliminate expensive physical textbooks.

George Washington said earlier this month its wireless network’s security features don’t support the iPad—or iPhone and iPod Touch, for that matter. Princeton on Wednesday said it has proactively blocked about 20% of the devices from its network after noticing malfunctions that can affect the entire school’s computer system. Princeton is working with Apple to resolve the issue, according to a statement on the school’s Web site.

Cornell’s information-technology director Steve Schuster said via email last week that the school is seeing networking and connectivity issues and is “working to ensure the iPad does not have devastating consequences to our network.” Mr. Schuster added that when the iPhone arrived on campus it overwhelmed the network’s bandwidth capabilities.

The colleges all say they are trying to find fixes to the problems. George Washington has said it could take until next spring before the iPad operating system is fully supported on its network.

Apple spokeswoman Teresa Brewer said she wasn’t familiar with the schools’ problems. The company sold more than 500,000 iPads the first week the product was in stores.

To be sure, many school networks are accepting iPads without problem. And some universities are even embracing the device. Seton Hill University in Greensburg, Pa., has promised free iPads and MacBooks to all incoming freshmen next fall, and Newberg, Ore.-based George Fox University will give students a choice between the two.

But even those schools acknowledge the device has its drawbacks. Most of Seton Hill’s 2,145 students will have to pay up to $800 a year in additional technology fees for an expanded wireless network and support system.

And Seton Hill says students may still need to buy textbooks. “We believe the iPad will make e-textbooks more viable to assign and use,” said Kary Coleman, media relations director for the school, in an emailed statement. Seventy faculty members are in training to learn how to incorporate the computer and tablet into the classroom, she said, but “some faculty may choose to continue to use physical textbooks for their courses.”

Walt Mossberg has been bombarded with questions about the iPad, from printing to keyboard alternatives.

Industry analysts and professors say schools won’t fully embrace iPads until textbook publishers offer more digital resources that go beyond electronic versions of hard copy books. Educational books can be more difficult than trade paperbacks to translate into e-books because they often include graphs, mathematical formulas and other non-standard-text material.

A Princeton pilot study last fall found that students were frustrated by the lack of a note-taking or highlighting function on Amazon.com Inc.’s Kindle e-reader. Apple’s iBookstore now offers books in a similar format, though third-party companies are working on alternatives.

Houghton Mifflin Co.’s Harcourt, Pearson PLC and McGraw-Hill Cos., among others, have formed partnerships with application developer ScrollMotion for interactive digital texts. But ScrollMotion has only one set of texts available for the iPhone so far: medical school entrance exam and licensing test study guides from Washington Post Co.’s Kaplan Publishing. It doesn’t yet provide any textbooks for the iPad.

ScrollMotion co-founder Josh Koppel says iPad offerings will be available within “several months” but wouldn’t provide further details, citing continuing talks with publishers. He said the products would allow for notations, audio notes and an interactive glossary. “We’re not just turning a book into a PDF,” Mr. Koppel said.

Source: Wall Street Journal

Source: Aberdeen

STAMFORD, Conn., June 26, 2008 —

Cloud computing heralds an evolution of business that is no less influential than e-business, according to Gartner Inc. Gartner maintains that the very confusion and contradiction that surrounds the term “cloud computing” signifies its potential to change the status quo in the IT market.

Gartner defines cloud computing as a style of computing where massively scalable IT-related capabilities are provided “as a service” using Internet technologies to multiple external customers.

“During the past 15 years, a continuing trend toward IT industrialization has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers,” said Daryl Plummer, managing vice president and Gartner Fellow. “This is due, in part to the commoditization and standardization of technologies, in part to virtualization and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet.”

Mr. Plummer said that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them. Essentially it will mean that users of IT-related services will be able to focus on what the service provides them rather than how the services are implemented or hosted. Gartner maintains that although names for this type of operation have come into vogue at different times — utility computing, software as a service (SaaS) and application service providers — none has garnered widespread acceptance as the central theme for how IT-related services can be delivered globally.

The types of IT services that can be provided through a cloud are wide-reaching. Compute facilities provide computational services so that users can use central processing unit (CPU) cycles without buying computers. Storage services provide a way to store data and documents without having to continually grow farms of storage networks and servers. SaaS companies offer CRM services through their multitenant shared facilities so clients can manage their customers without buying software. These represent only the beginning of options for delivering all kinds of complex capabilities to both businesses and individuals.

“The focus has moved up from the infrastructure implementations and onto the services that allow for access to the capabilities provided,” said David Mitchell Smith, vice president and Gartner Fellow. “Although many companies will argue how the cloud services are implemented, the ultimate measure of success will be how the services are consumed and whether that leads to new business opportunities.”

Gartner predicts that the impact of cloud computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change. “The vendors are at very different levels of maturity,” said David Cearley, vice president and Gartner Fellow. “The consumer-focused vendors are the most mature in delivering what Gartner calls a ‘cloud/Web platform’ from technology and community perspectives, but the business-focused vendors have rich business services and, at times, are very adept at selling business services.”

Branding is a powerful and revenue-generating asset for potential vendors. Gartner analysts cited Wal-Mart as an example of a company that has two brands — one with consumers for its low prices and one in the business world for its supply chain expertise, its core competency, which it capitalizes on to support its consumer-facing brand.

“Companies invest billions of dollars in building up their core competencies, much of which goes into IT,” Mr. Smith said. “If companies could lease their core competencies to other companies then they would capitalize on both brands, driving revenue both in the consumer-facing market and the business service market in the way that Amazon has done with technology.”

Gartner maintains that cloud computing is very much an evolving concept that will take many years to fully mature. It also underlined the fact that the cloud-computing model is not simply the next generation of the Internet.

“When organizations cross the threshold between the Internet as a communications channel and the deliberate delivery of service over the Internet, then we truly start to head for an economy based on consumption of everything from storage to computation to video to finance deduction management,” said Mr. Plummer.

STAMFORD, Conn., April 12, 2010 —

Worldwide IT spending is forecast to reach $3.4 trillion in 2010, a 5.3 percent increase from IT spending of $3.2 trillion in 2009, according to Gartner, Inc. The IT industry will continue to show steady growth with IT spending in 2011 projected to surpass $3.5 trillion, a 4.2 percent increase from 2010.

“Following strong fourth quarter sales, an unseasonably robust hardware supply chain in the first quarter of 2010, combined with continued improvement in the global economy, sets up 2010 for solid IT spending growth,” said Richard Gordon, research vice president at Gartner. “However, it’s important to note that nearly 4 percentage points of this growth will be the result of a projected decline in the value of the dollar relative to last year. IT spending in exchange-rate-adjusted dollars will still grow 1.6 percent this year, after declining 1.4 percent in 2009.”

Worldwide computing hardware spending is forecast to reach $353 billion in 2010, a 5.7 percent increase from 2009 (see Table 1). Robust consumer spending on mobile PCs will drive hardware spending in 2010. Enterprise hardware spending will grow again in 2010, but it will remain below its 2008 level through 2014. Spending on storage will enjoy the fastest growth in terms of enterprise spending as the volume of enterprise data that needs to be stored continues to increase. Near-term spending on servers will be concentrated on lower-end servers; longer-term, server spending will be curtailed by virtualization, consolidation and, potentially, cloud computing.

“Computing hardware suffered the steepest spending decline of the four major IT spending category segments in 2009. However, it is now forecast to enjoy the joint strongest rebound in 2010,” said George Shiffler, research director at Gartner. “Consumer PC spending will contribute nearly 4 percentage points of hardware spending growth in 2010, powered by strong consumer spending on mobile PCs. Additionally, professional PC spending will contribute just over 1 percentage point of spending growth in 2010 as organizations begin their migration to Windows 7 toward the end of the year.”

Table 1
Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Source: Gartner (April 2010)

Worldwide software spending is expected to total $232 billion in 2010, a 5.1 percent increase from last year. Gartner analysts said the impact of the recession on the software industry was tempered and not as dramatic as other IT markets. In 2010, the majority of enterprise software markets will see positive growth.

The infrastructure market, which includes all the software to build, run and manage an enterprise, is the largest segment in terms of revenue and the fastest-growing through the 2014. The hottest software segments through 2014 include virtualization, security, data integration/data quality and business intelligence. The applications market, which includes personal productivity and packaged enterprise applications, has some of the fastest-growth segments. Web conferencing, team collaboration and enterprise content management are forecast to have double-digit compound annual growth rates (CAGR), in the face of growing competition surrounding social networking and content.

“Cost optimization, and the shifts in spending form mega suites to the automation of processes will continue to benefit alternative software acquisition models as organizations will look for ways to shift spending from capital expenditures to operating expenditures,” said Joanne Correia, managing vice president at Gartner. “Because of this, vendors offering software as a service (SaaS), IT asset management, virtualization capabilities and that have a good open-source strategy will continue to benefit. We also see mobile-device support or applications, as well as cloud services driving new opportunities.”

The worldwide IT services industry is forecast to have spending reach $821 billion in 2010, up 5.7 percent from 2009. The industry experienced some growth in reported outsourcing revenue at the close of 2009, an encouraging sign for service providers, which Gartner analysts believe will spread to consulting and system integration in 2010.

“We continue to see a long-term recession ‘hangover’ as a more-cautious mind-set continues as the norm among a lot of buyers who keep looking for small, safe deals where cost take-out is a key factor, said Kathryn Hale, research vice president at Gartner. “In the face of that ongoing strong pressure to renegotiate contracts, and in the absence of equivalent pressure from stockholders, we believe vendors will generally choose to maintain margins over revenue growth.”

Worldwide telecom spending is on pace to total close to $2 trillion in 2010, a 5.1 percent increase from 2009. Between 2010 and 2014, the mobile device share of the telecom market is expected to increase from 11 percent to 14 percent, while the service share drops from 80 percent to 77 percent and the infrastructure share remains stable at 9 percent of the total market.

Worldwide enterprise network services spending is forecast to grow 2 percent in revenue in 2010, but Gartner analysts said this masks ongoing declines in Europe and many other mature markets as well as an essentially flat North American market.

“Longer term, the global enterprise network services market is expected to grow modestly, largely on the back of growth in Internet services, such as hosting,” said Peter Kjeldsen, research director at Gartner. “Ethernet services will also grow significantly, albeit at the expense of both legacy services and multiprotocol label switching (MPLS).”