Predictions: Tech Trends – part 1 – 2014

RFG Perspective: The global economic headwinds in 2014, which constrain IT budgets, will force IT executives to question certain basic assumptions and reexamine current and target technology solutions. There are new waves of next-generation technologies emerging and maturing that challenge the existing status quo and deserve IT executive attention. These technologies will improve business outcomes as well as spark innovation and drive down the cost of IT services and solutions. IT executives will have to work with business executives fund the next-generation technologies or find self-funding approaches to implementing them. IT executives will also have to provide the leadership needed for properly selecting and implementing cloud solutions or control will be assumed by business executives that usually lack all the appropriate skills for tackling outsourced IT solutions.

As mentioned in the RFG blog "IT and the Global Economy – 2014" the global economic environment may not be as strong as expected, thereby keeping IT budgets contained or shrinking. Therefore, IT executives will need to invest in next-generation technology to contain costs, minimize risks, improve resource utilization, and deliver the desired business outcomes. Below are a few key areas that RFG believes will be the major technology initiatives that will get the most attention.

Source: RFG
Analytics – In 2014, look for analytics service and solution providers to boost usability of their products to encompass the average non-technical knowledge worker by moving closer to a "Google-like" search and inquiry experience in order to broaden opportunities and increase market share.

Big Data – Big Data integration services and solutions will grab the spotlight this year as organizations continue to ratchet up the volume, variety and velocity of data while seeking increased visibility, veracity and insight from their Big Data sources.

Cloud – Infrastructure as a Service (IaaS) will continue to dominate as a cloud solution over Platform as a Service (PaaS), although the latter is expected to gain momentum and market share. Nonetheless, Software as a Service (SaaS) will remain the cloud revenue leader with Salesforce.com the dominant player. Amazon Web Services will retain its overall leadership of IaaS/PaaS providers with Google, IBM, and Microsoft Azure holding onto the next set of slots. Rackspace and Oracle have a struggle ahead to gain market share, even as OpenStack (an open cloud architecture) gains momentum.

Cloud Service Providers (CSPs) – CSPs will face stiffer competition and pricing pressures as larger players acquire or build new capabilities and new, innovative open-source based solutions enter the new year with momentum as large, influential organizations look to build and share their own private and public cloud standards and APIs to lower infrastructure costs.

Consolidation – Data center consolidation will continue as users move applications and services to the cloud and standardized internal platforms that are intended to become cloud-like. Advancements in cloud offerings along with a diminished concern for security (more of a false hope than reality) will lead to more small and mid-sized businesses (SMBs) to shift processing to the cloud and operate fewer internal data center sites. Large enterprises will look to utilize clouds and colocation sites for development/test environments and handling spikes in capacity rather than open or grow in-house sites.

Containerization – Containerization (or modularization) is gaining acceptance by many leading-edge companies, like Google and Microsoft, but overall adoption is slow, as IT executives have yet to figure out how to deal with the technology. It is worth noting that the power usage effectiveness (PUE) of these solutions is excellent and has been known to be as low as 1.05 (whereas the average remains around 1.90).

Data center transformation – In order to achieve the levels of operational efficiency required, IT executives will have to increase their commitment to data center transformation. The productivity improvements will be achieved through the use of the shift from standalone vertical stack management to horizontal layer management, relationship management, and use of cloud technologies. One of the biggest effects of this shift is an actual reduction in operations headcount and reorientation of skills and talents to the new processes. IT executives should look for the transformation to be a minimum of a three year process. However, IT operations executives should not expect clear sailing as development shops will push back to prevent loss of control of their application environments.

3-D printing – 2014 will see the beginning of 3-D printing taking hold. Over time the use of 3-D printing will revolutionize the way companies produce materials and provide support services. Leading-edge companies will be the first to apply the technology this year and thereby gain a competitive advantage.

Energy efficiency/sustainability – While this is not new news in 2014, IT executives should be making it a part of other initiatives and a procurement requirement. RFG studies find that energy savings is just the tip of the iceberg (about 10 percent) that can be achieved when taking advantage of newer technologies. RFG studies show that in many cases the energy savings from removing hardware kept more than 40 months can usually pay for new better utilized equipment. Or, as an Intel study found, servers more than four years old accounted for four percent of the relative performance capacity yet consumed 60 percent of the power.

Hyperscale computing (HPC) – RFG views hyperscale computing as the next wave of computing that will replace the low end of the traditional x86 server market. The space is still in its infancy, with the primary players Advanced Micro Devices (AMD) SeaMicro solutions and Hewlett-Packard's (HP's) Moonshot server line. While penetration will be low in 2014, the value proposition for HPC solutions should be come evident.

Integrated systems – Integrated systems is a poorly defined computing technology that encompasses converged architecture, expert systems, and partially integrated systems as well as expert integrated systems. The major players in this space are Cisco, EMC, Dell, HP, IBM, and Oracle. While these systems have been on the market for more than a year now, revenues are still limited (depending upon whom one talks to, revenues may now exceed $1 billion globally) and adoption moving slowly. Truly integrated systems do result in productivity, time and cost savings and IT executives should be piloting them in 2014 to determine the role and value they can play in the corporate data centers.

Internet of things – More and more sensors are being employed and imbedded in appliances and other products, which will automate and improve life in IT and in the physical world. From an data center information management (DCIM), these sensors will enable IT operations staff to better monitor and manage system capacity and utilization. 2014 will see further advancements and inroads made in this area.

Linux/open source – The trend toward Linux and open source technologies continues with both picking up market share as IT shops find the costs are lower and they no longer need to be dependent upon vendor-provided support. Linux and other open technologies are now accepted because they provide agility, choice, and interoperability. According to a recent survey, a majority of users are now running Linux in their server environments, with more than 40 percent using Linux as either their primary server operating system or as one of their top server platforms. (Microsoft still has the advantage in the x86 platform space and will for some time to come.) OpenStack and the KVM hypervisor will continue to acquire supporting vendors and solutions as players look for solutions that do not lock them into proprietary offerings with limited ways forward. A Red Hat survey of 200 U.S. enterprise decision makers found that internal development of private cloud platforms has left organizations with numerous challenges such as application management, IT management, and resource management. To address these issues, organizations are moving or planning a move to OpenStack for private cloud initiatives, respondents claimed. Additionally, a recent OpenStack user survey indicated that 62 percent of OpenStack deployments use KVM as the hypervisor of choice.

Outsourcing – IT executives will be looking for more ways to improve outsourcing transparency and cost control in 2014. Outsourcers will have to step up to the SLA challenge (mentioned in the People and Process Trends 2014 blog) as well as provide better visibility into change management, incident management, projects, and project management. Correspondingly, with better visibility there will be a shift away from fixed priced engagements to ones with fixed and variable funding pools. Additionally, IT executives will be pushing for more contract flexibility, including payment terms. Application hosting displaced application development in 2013 as the most frequently outsourced function and 2014 will see the trend continue. The outsourcing of ecommerce operations and disaster recovery will be seen as having strong value propositions when compared to performing the work in-house. However, one cannot assume outsourcing is less expensive than handling the tasks internally.

Software defined x – Software defined networks, storage, data centers, etc. are all the latest hype. The trouble with all new technologies of this type is that the initial hype will not match reality. The new software defined market is quite immature and all the needed functionality will not be out in the early releases. Therefore, one can expect 2014 to be a year of disappointments for software defined solutions. However, over the next three to five years it will mature and start to become a usable reality.

Storage - Flash SSD et al – Storage is once again going through revolutionary changes. Flash, solid state drives (SSD), thin provisioning, tiering, and virtualization are advancing at a rapid pace as are the densities and power consumption curves. Tier one to tier four storage has been expanded to a number of different tier zero options – from storage inside the computer to PCIe cards to all flash solutions. 2014 will see more of the same with adoption of the newer technologies gaining speed. Most data centers are heavily loaded with hard disk drives (HDDs), a good number of which are short stroked. IT executives need to experiment with the myriad of storage choices and understand the different rationales for each. RFG expects the tighter integration of storage and servers to begin to take hold in a number of organizations as executives find the closer placement of the two will improve performance at a reasonable cost point.

RFG POV: 2014 will likely be a less daunting year for IT executives but keeping pace with technology advances will have to be part of any IT strategy if executives hope to achieve their goals for the year and keep their companies competitive. This will require IT to understand the rate of technology change and adapt a data center transformation plan that incorporates the new technologies at the appropriate pace. Additionally, IT executives will need to invest annually in new technologies to help contain costs, minimize risks, and improve resource utilization. IT executives should consider a turnover plan that upgrades (and transforms) a third of the data center each year. IT executives should collaborate with business and financial executives so that IT budgets and plans are integrated with the business and remain so throughout the year.

Disruptive Changes

Lead Analyst: Cal Braunstein

Amazon Inc. and Microsoft Corp. lowered their pricing for certain cloud offerings in attempts to maintain leadership and/or preserve customers. Similarly, Hewlett-Packard Co. (HP) launched its next-generation Moonshot hyperscale servers. Meanwhile, IDG Connect, the demand generation division of International Data Group (IDG), released its survey findings that show there may be a skills shortage when it comes to the soft skills required when communicating beyond the IT walls.

Focal Points:

• Earlier this month Amazon price reduced the prices it charged for its Windows on-demand servers by up to 26 percent. This brought its pricings within pennies of Microsoft's Windows Azure cloud fees. The price reductions apply across Amazon's standard (m1), second-generation standard (m3), high-memory (m2), and high-CPU (c1) instance families. CEO Jeff Bezos stated in the Amazon annual report the strategy of cutting prices before the company needs to, and developing technologies before there is a financially motivating factor, is what protects the company from unexpected markets shifts. Microsoft has responded by aggressively cutting its prices by 21 to 33 percent for hosting and processing customer online data. In order for customers to qualify for the cuts they must make monthly commitments to Azure for either six or 12 months. Microsoft also is making its Windows Azure Virtual Network technology (codenamed "Brooklyn") generally available effective April 16. Windows Azure Virtual Network is designed to allow companies to extend their networks by enabling secure site-to-site VPN connectivity between the enterprise and the Windows Azure cloud.
• HP launched its initial Moonshot servers, which use Intel Corp. Atom low-cost, low-energy microprocessors, This next-generation of servers is the first wave of hyperscale software defined server computing models to be offered by HP. These particular servers are designed to be used in dedicated hosting and Web front end environments. The company stated that two more "leaps" will be out this year that will be targeted to handle other specific workloads. HP claims its architecture can scale 10:1 over existing offerings while providing eight times the efficiency. The Moonshot 1500 uses Intel Atom S1200 microprocessors, utilizes a 4.3U (7.5 inch tall) chassis that hosts 45 "Gemini" server cartridges, and up to 1800 quad-core servers will fit into a 42U rack. Other x86 chips from Advanced Micro Devices Inc. (AMD), plus ARM processors from Calxeda Inc., Texas Instruments Inc., and Applied Micro Circuits Corp. (AMCC) are also expected to be available in the "Gemini" cartridge form factor. The first Moonshot servers support Linux, but are compatible with Windows, VMware and traditional enterprise applications. Pricing starts at $61,875 for the enclosure, 45 HP ProLiant Moonshot servers and an integrated switch, according to HP officials. (For more on this topic see this week's Research Note "HP's Moonshot – the Launch.")
• According to a new study by IDG Connect, 83 percent of European respondents believe there is no IT skills shortage while 93 percent of U.S. respondents definitely feel there is a gap between the technical skills IT staff possess and the skills needed by the respondents' companies. IDG attributes this glaring differentiation to what are loosely defined as "hard" (true technical skills and competencies) and "soft" (business, behavioral, communications, and interpersonal) skills. The European respondents focused on hard skills while their American counterparts were more concerned about the soft skills, which will become more prevalent within IT as it goes through a transformation to support the next-generation data center environments and greater integration with the business. As IT becomes more integrated with the business and operational skill requirements shift, IDG concludes "companies can only be as good as the individuals that work within them. People … are capable of creative leaps of thinking and greatness that surpass all machines. This means that any discussion on IT skills, and any decision on the qualities required for future progression are fundamental to innovation. This is especially true in IT, where the role of the CIO is rapidly expanding within the enterprise and the department as a whole is becoming increasingly important to the entire business. It seems IT is forever teetering on the brink of bigger and better things - and it is up to the people within it to maximize this potential."

RFG POV: IT always exists in a state of disruptive innovation and the next decade will be no different. Whether it is a shift to the cloud, hyperscale computing, software-defined data center or other technological shifts, IT must be prepared to deal with the business and pricing models that arise. Jeff Bezos is correct by not sitting on his laurels and constantly pushing the envelope in pricing and services. IT executives need to do the same and deliver comparable services at prices that appeal to the business while covering costs. This requires keeping current on technology and having the staff on board that can solve the business problems and deliver innovative solutions that enable the organization to remain competitive. RFG expects the staffing dilemma to emerge over the next few years as data centers transform to meet the next generation of business and IT needs. At that time most IT staff will not need the current skills they use but skills that allow them to work with the business, providers and others to deliver solutions built on logical platforms (rather than physical infrastructure). Only a few staff will need to know the nuts and bolts of the hardware and physical layouts. This paradigm shift in staff capabilities and skills must be anticipated if IT executives do not want to be caught behind the curve and left to struggle with catching up with demand. IT executives should be developing their next-generation IT development and operations strategies, determining skills needed and the gap, and then begin a career planning and weaning-out process so that IT will be able to provide the leadership and skills needed to support the business over the next decade of disruptive innovation. Additionally, IT executives should determine if Moonshot servers are applicable in their current or target environments, and if so, conduct a pilot when the time is right. 

Trends: HPC, Programming, and Security

Lead Analyst: Cal Braunstein

Focal Points:

• IBM took back the top slot in the supercomputer rankings with the LLNL Sequoia installation, which delivered 16.32 petaflops of sustained performance running across the 1.57 million PowerPC cores inside the box during a Linpack benchmark run. Sequoia has a peak theoretical performance of 20.1 petaflops. To deliver the 16.32 petaflops IBM claims it only consumes 7.89 megawatts. The IBM supercomputer shifted the K massively parallel Sparc64-VIIIfx machine built by Fujitsu Group for the Japanese government down to number two. The Fujitsu Sparc machine had a sustained Linpack performance of 10.5 petaflops against a peak of 11.3 petaflops but it consumed 12.7 megawatts. Sequoia is 2.5 times as energy efficient as the Sparc K. IBM now has five of the top 10 high performance computing (HPC) engines. 372 of the processors, or 74.4 per cent of those on the list, are based on Intel Corp. Xeon or Itanium processors, down slightly from the 384 HPC machines on the November list. The latest Top 500 list has 58 Power-based processors, up from 49 six months ago. There are also 63 clusters based on Advanced Micro Devices Inc.'s (AMD's) Opteron processors, unchanged from last year.
• According to Indeed.com companies are embracing the Web to reach customers and employees and are therefore turning to the programming languages and technology stacks made popular by companies such as Facebook Inc. and Google Inc.   Current programming languages such as C++, Java, and .NET will still be the primary languages for enterprise applications but the scripting languages will dominate the Internet. The below chart produced by Indeed.com shows the variances in job growth rates. Aside from the Internet movement another key reason for the adoption of PHP and Python is the movement to open source. Python appears to be a run-away winner because of its design elegance and framework simplicity. The next most used languages are Java and then .NET.

• Symantec released the findings of its 2011 SMB File Sharing Survey of more than 1,325 SMB organizations this week. The survey results found SMB employees are increasingly adopting unmanaged, personal-use online file sharing solutions without permission from IT. These behaviors are making organizations vulnerable to potential data losses and security threats. A Symantec executive observed that a staggering 71 percent of small businesses that suffer from a cyber attack never recover. 74 percent of respondents who adopted online file sharing did so to improve their productivity. Respondents also cited risk concerns included sharing confidential information using unapproved solutions (44 percent), malware (44 percent), loss of confidential or proprietary information (43 percent), breach of confidential information (41 percent), embarrassment or damage to brand/reputation (37 percent), and violating regulatory rules (34 percent). However, only half of the respondents stated they would go to IT for help with sharing large files while only one-third expressed interest in utilizing an already existing IT solution. 14 percent now report the average shared file size is greater than 1 GB. Additionally, more and more people are remote. The survey found that about 37 percent of SMB organizations will have employees working remotely, up from 32 percent today.