Previous Intellect Event 2008

Reviews

Richard Holway, Analyst from Holway's HotView

I was at the Regent Conference last week. I appeared on the panel at the end of the day and was grilled by Jeremy Paxman. I think this is my 11th appearance at a Regent Conference and my 7th encounter with Paxman. I'm even starting to enjoy it now! Ian Spence gives his own views on the conference on Megatrends from the Regent Conference. I will make reference to several of the presentations in the next few weeks.

I guess the presentation that bugged me most was from Brad Holmes, VP at Forrester, and his prediction that US IT spend would be back to double digit growth in 2009 and 2010 after slipping from 6.2% in 2007 to 2.8% in 2008. In itself, the 2.8% growth in 2008 is half what Forrester was forecasting just a few months ago. (Read Apprehesion grips leading tech players in Friday's FT for a good/disturbing view of the woes hitting even the major tech companies in 2008) I very publically challenged both Brad, and anyone else in the audience, to a bet that double digit IT growth would NOT occur in 2009/10. Nobody was prepared to take my bet.

I did an internet search on Forrester's US IT predictions and it seems that Forrester has been highly consistent....they seem to make habit of predicting a return to double-digit growth in one or two years time. EG in 2002 it was is "double-digit growth will resume in 2003". The actuality was 3%. They then predicted it would resume in 2004. That didn't come to pass either. It is also worth looking at the forecasts they made in the late 1990s for growth in the early years of the new millennium.

But, in that regard, I'm not just picking on Forrester. I could include IDC, Gartner etal. I know this only too well because I seemed to be in open warfare with these firms when I turned 'bearish' in 1998 with my Y2K Lockdown forecasts for 1999, in 1999 for my "The headache will not go away with the Alka Selzers on 1st Jan 00" and again in 2002 with my "IT's all over?" speech and paper.

For the record, since the late 1990s, I have believed that IT growth in US and the "Western World" will NEVER return to double-digit growth. (The only exception would be if we have such a steep recession, such a steep decline in IT spend, that there was then a year or two of 'catch-up') I could list all the reasons for this but, bluntly, I've repeated them so often that you must be getting bored with them by now.


John Riley, Consultant
Until February 2008 he was Managing Editor, Computer Weekly

The overall message for 2008 from this year’s Intellect Regent Conference was positive, but with a potential cloud or two on the horizon. Keynote speaker Peter Rowell, managing director of Regent Associates, expressed this scenario as 2008 being a year of “Four Weddings and a Funeral.”

On the plus side, he said, there is a lot of cash around, especially through the hedge fund route, and small and medium sized businesses are set to grow at around 8-10%. There is also huge scope in China, and the demand for storage is rising steeply. Moreover, maturing technologies, such as nanotechnology, mobile search, and location identification applications will make their mark this year.

“We are just beginning to see things emerge in nanotechnology with a series of breakthroughs in materials and health care. Therefore 2008 is the year of nanotechnology,” he said.

The clouds on the horizon, said Rowell, include: US presidential policy, the sub-prime situation, the economy and terrorism. “If we do go into recession it will be in phases,” he said, “first will be hardware, followed by the software industry about two quarters later, and the third area to be affected will be services".

Another optimistic forecast came from Brad Holmes, VP Technology Industry Research at analyst Forrester Research. He anticipates a new IT boom from 2008-2012, including some spots of double-digit growth, driven by Service Oriented Architecture, Web 2.0 and new applications.

Responding, analyst Richard Holway contended that he believes that there will be no return to double digit growth. “The trend in technology spend is to reduce budgets and do more,” he said.

When it comes to mobile communications expect to see more blurring of boundaries between home, work and remote usage, said another speaker, Nigel Clifford, CEO of Symbian. He added that we should expect to see an accelerating transition from the desk to the hand.

The challenges for mobile, he said, included rising expectations, and the need for hardware and software solutions to optimise mobile devices. A fundamental challenge, he added, is battery power. “Battery performance is rising 6-7% a year, but the power demand is rising 20% and more,” he said.

The Indian service companies have taken a stock market hit, said analyst Anthony Miller of Arete, due to two main factors: a weakening US dollar, in which they report their revenues; and an appreciating rupee which has brought extra costs in paying local wages.

Miller also pointed out that Indian companies have changed the rules of the game in off-shore service delivery. “The service process industrialisation breaks down service activities, which they then take offshore within Asia, and then bring back to India to reconstruct."

“Off-shore delivery is the only area that India has an advantage,” he said. “Apart from that there is nothing our UK industry can’t do that India can.”

For the Indians to really succeed long term they need to move up to consultancy,  he added. They could do this by adopting a similar model to that used in service process industrialisation described above. They could deconstruct the consultancy process, deskill it and then offshore it, and then knit it back together again, he added.

“That will strip away the mystique of consultants and will therefore get pushback,” he said.