As the iSeries community stands on the threshold of a new year, it is a good time for all of us to think about the opportunities and challenges that could unfold over the next 12 months. As I consider what those months could bring us, what strikes me is how the events of the last several weeks have set the stage for what will likely happen in 2005. You will understand what I mean by this observation as you read my predictions for the coming year. Without further ado, here they are.
Prediction #1: There will be a rapid increase in the number of IT vendors that sell their products to medium-sized businesses. In recent months, growing numbers of IT vendors have concluded that they must gain a foothold in the mid-market to boost their revenues. Many of these vendors are being enticed by studies indicating that mid-market IT spending continues to grow at rates that are several percentage points higher than those of large enterprises. One such vendor is Siebel Systems, which just created a 70-person team that will work with partners to sell its customer relationship management software to mid-sized companies. Another vendor is Oracle Corporation, which recently forged a partnership with Hewlett-Packard to package its ERP applications on HP's Intel servers for sale to medium-sized businesses. Such entries into the mid-market will become all the more frequent during the coming year.
Prediction #2: Consolidation within the IT industry will intensify, leading to the acquisition of many mid-market and iSeries vendors. As IT vendors struggle to gain a foothold among medium-size companies, many of them will gain that foothold by acquiring vendors with mid-market account bases. Such acquisitions will be part of a broader wave of takeovers that began this December with Oracle's purchase of PeopleSoft.
Over the coming months, I expect that large IT vendors will buy out smaller vendors with two key attributes. First, they will offer solutions that have proven to be attractive to mid-market companies. Second, those solutions will help large IT vendors to add specific capabilities to their middleware and systems management software stacks. Among the most-wanted capabilities will be solutions that help medium-sized businesses manage information more effectively. Typical areas of interest will include content management, business intelligence, product data management, and regulatory compliance.
While most of the acquiring companies will purchase mid-market vendors that sell Windows solutions, it is highly likely that several iSeries vendors will agree to be acquired. As such, Oracle will not be the only company that suddenly inherits iSeries customers in 2005.
Prediction #3: PeopleSoft customers will decide that they can work with Oracle, and Oracle and IBM will decide that they can work with each other. Speaking of Oracle, I have grown increasingly confident over the last two weeks that the IT vendor will be responsive to the needs of the iSeries customers that it is gaining from the PeopleSoft acquisition. In my meetings with Oracle executives, all of them have stressed that they will do everything they can to retain 100% of PeopleSoft's World and EnterpriseOne customers. That includes working with IBM to support those customers on IBM products. While Oracle has a long journey ahead of it to win over iSeries customers, it has started the journey with the right intentions. I predict that those intentions will enable it to build good working relationships with IBM and the vast majority of PeopleSoft's iSeries customers.
Prediction #4: IBM and Microsoft will escalate their battle for the hearts and minds of iSeries customers. A few years back, Microsoft turned down the volume in its campaign to woo iSeries users to Windows. Three weeks ago, however, the software giant joined with other vendors to announce that they will work together to promote Windows-based alternatives to the iSeries. The coalition, which has dubbed itself the Midrange Alliance Program, includes iSeries vendors such as ASNA and LANSA as well as service providers such as Electronic Data Systems. The group has created a roadmap for migrating to Windows technologies that bears a strong resemblance to IBM's iSeries Developer Roadmap. The move will likely generate strong debates within the iSeries community--not to mention between IBM and Microsoft--over how iSeries customers should modernize their applications. Look for this debate to become one of the major themes of 2005.
There you have it...my top predictions for the iSeries market of 2005. If these predictions become realities, they will pose big challenges for IBM. As new vendors enter the iSeries market, acquire iSeries vendors, or try to convert iSeries customers to other platforms, IBM will have to respond rapidly to a host of new opportunities and threats. In its responses, the iSeries Division will have to demonstrate that its eServer i5 is not merely another upgrade to the mature OS/400 environment, but is a growth platform that merits the investments of customers and vendors. To demonstrate that fact, IBM will need to dedicate considerable resources to the new iSeries marketing campaign that it is launching this year. Just as importantly, the company will have to back up its marketing dollars with substantive programs for recruiting and retaining solutions providers for the iSeries.
While IBM will have a big job on its hands, iSeries professionals will also have a critical role to play. If you are one of those professionals, you should expect that decision-makers in your company will receive growing numbers of sales calls from vendors that declare they have the solutions to your IT problems. In many cases, those solutions will exclude the iSeries or assign it to a marginal role. Once again, you will have to explain the unique value proposition of the iSeries to your management teams. This will make it all the more important that you understand that value proposition and communicate it effectively.
As we enter the new year, my wish for all of you is that you successfully rise to the challenges and capitalize on the opportunities that the next 365 days bring to you. I look forward to offering you the news and analyses that help you do just that.
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
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