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Will it be unified communications, e-payments, social media or better knowledge management that propels your company in 2008?
By Danny Bradbury
2007 was a significant year for technology. Microsoft and Apple both shipped major new versions of their operating systems, just as the market decided that running multiple operating systems on the same computer was a good idea. VMware, the flagship virtualization company, landed US$10 billion from its stock market offering. Social networking exploded with the growing success of Facebook (with Microsoft investing US$15 billion) and with the unveiling of Google’s open social networking programming standard. The search giant, which became one of the five largest companies in North America, also announced plans to bid on wireless spectrum. And Apple launched the iPhone.
What will 2008 bring? Backbone spoke to analysts at market watcher IDC Canada to get their predictions for the coming year in several broad technology areas, and received surprising results. Our own prediction is this: articles in this format will become increasingly difficult to write in the future. Talk about developments in one area of technology and you’ll automatically find yourself encroaching on trends in another. That’s because the different technology areas are running together. Convergence is here, and happening at breakneck speed. Software applications and the Web are no longer separate entities, as hosted applications take off. Data networks and voice services are growing increasingly symbiotic. Consumer and enterprise technologies are becoming the same thing, as we find ourselves using the same software and hardware for the activities we love to do at home and the tasks we need to complete at work. And mobile technology? That’s the single most important vector, upon which everything will converge over the next few years.
Technological development is speeding up and some of the problems that stood in the way before, such as slow networks, limited hardware and interoperability challenges, are rapidly disappearing. Get ready. It’s going to be a wild ride.
1 Web 2.0 in. Knowledge management systems out
 Who would have thought that social networking would be used by anyone other than teenagers? This class of Web application epitomizes the Web 2.0 breed of online software that has revolutionized the way we think about the Web, using new interfaces that make it intuitive to share information with a whole community. Joel Martin, vice-president for software at IDC, said this year will see Web 2.0 applications firmly establishing themselves in the corporate world.
“Just look at how this is becoming Microsoft and IBM’s strategy, which is around creating [application programming interfaces] and social networking tools to replace the failed knowledge management systems that were installed previously,” Martin said. Such systems were hard to navigate and too restrictive. Often structuring information through top-down taxonomies designed by managers or information scientists, they forced users to conform, rather than the other way around. Today, tagging (attaching descriptive labels to Web content) lets communities create their own taxonomies, sometimes called folksonomies. Suddenly, technology has stopped getting in the way and people can connect with each other more intuitively.
While Facebook gathered significant mind share throughout 2007, in November Google partnered with several other players to create OpenSocial. It is an application programming interface that will make it possible for developers to write  applications that can be used across a wide variety of social networking sites, including LinkedIn, Plaxo and Ning. This will fuel development and push those applications into internal, intranet-based systems.
“The danger is to pretend that it doesn’t exist and that this is simply something that kids want to do,” Martin said of Web 2.0 and social networking. It is the younger generation that companies should be attracting. “Companies are saying that they can’t get enough qualified people,” Martin said. “These collaborative environments will help to attract the best and brightest.”
2 IT security: getting worse before it gets better
 In the past couple of years, the security industry has seen attacks on computing systems become much more severe. Whereas writers of viruses and other malware used to do it for the glory, now money is the motivation. Consequently, attacks are becoming much stealthier, as criminals try to keep malicious software running on victims’ computers to steal data over long periods. In spite of a number of high-profile security breaches, such as the theft of 45 million customer credit card records from retail group TJX, Canadian companies are still somewhat blind to the threats.
“In a general sense,there is a threat that something may happen,” said David Senf, director of Canadian security and software research at IDC, who added that confidence among Canadian companies has actually grown in the past year even as threats have become more targeted. “Companies need to improve the level of understanding of internal versus external threats and, more importantly, what the business impact of the threats may be.”
Companies may have installed anti-spam software to improve worker productivity, for example, but may not have properly tested their Web-facing applications to assess their vulnerability to attack. SQL injection attacks are still relatively unknown among developers, but make it possible for attackers to dump a firm’s entire customer database to a text file simply using a Web browser, or even to delete it altogether. Until companies understand where the vulnerabilities lie they won’t be able to do anything about them, which could lead to more high-profile  security breaches in the coming months, especially as the groups involved in producing the attacks become more sophisticated and systematic in their approach.
Many Canadian companies understand the importance of risk management, but are not implementing it across the entire organization, Senf said. They may understand the probability of something occurring, but don’t necessarily know what the business impact of the threat may be. They should therefore begin by assessing the risks to their organization so they can prioritize and implement countermeasures.
3 Technology will battle carbon production
 2007 saw an increasing focus on the environmental aspects of IT, but a lot of that activity revolved around reducing power consumption in the data centre and at the desktop. 2008 will see companies expand that focus, using technology as a tool to affect wider environmental change.
“People have been focusing on the IT department, but that is only a tiny part of a broader problem,” said Lawrence Surtees, IDC Canada’s vice-president and principal analyst for communications research. “You can flip it around and ask how you can use IT to reduce and manage your carbon footprint.”
Several IT-enabled initiatives will gain traction in the coming year, Surtees said. Using technology to better shape energy demand will be a growth area in the next year, he predicted. Bell Canada is providing a service that enables consumers with specially equipped power meters to manage their air conditioning and heating remotely via the Web, for example. This means they can turn the heat off all day and remotely turn it on before they leave work, for example, or remotely adjust heating and cooling temperatures if the weather fluctuates.
Adjusting power usage dynamically could help reduce loads and offset peak demand, but creating efficient systems in the first place will also contribute, he said. “Through Web portals and wireless networks, all kinds of amazing things can be done to improve remote and centralized management of corporate real estate to manage its own carbon footprint.”
Wireless motion sensors may help control heating and lighting systems inside buildings but wireless communications systems, complete with GPS capabilities, will also be important for fleet management on the road, Surtees said. Astute use of such technologies will drive further efficiencies into company operations. Finally, online collaboration will begin to gain more of a foothold as videoconferencing and application sharing systems continue their move into the mainstream.
4 VoIP will achieve critical mass
 Refining real-time communications in Canada has been an arduous process. We have had to wean ourselves from traditional PSTN-based networks onto Voice over IP (VoIP) systems that use the same protocols to exchange voice signals that the Internet uses to exchange data. Historically, the benefit in moving from one to the other has been perceived cost savings. Traditional telephone companies charge a premium for long-distance calls, so companies with geographically disparate offices or with lots of calls to make to external parties in remote locations have suffered. Conversely, sending IP traffic to the end of the block costs much the same as it does to get it halfway around the world.
Jason Bremner, director of research for Canadian infrastructure hardware at IDC Canada, has his eyes on the long game. He argues that cost efficiencies are just the lowest-hanging fruit for IP-based communications. Companies are beginning to find even greater value in the flexibility and productivity gains that it can offer. Concentrating on the voice signals alone misses part of the point; exchanging control data enables telephone services to be dynamically configured in a more flexible way than ever before, and also enables them to merge other data-based communications mechanisms such as videoconferencing, e-mail, fax and instant messaging (complete with the presence information that the latter offers).
But before any of that can happen, companies must transfer to VoIP systems, providing a foundation for further development. 2008 is likely to be a tipping point for the adoption of that technology, which sets the scene for more intelligent communications infrastructures further down the line. “We see VoIP at the cusp of entering the early majority phase,” Bremner said. “That’s where voice telephony will be in 2008. As people realize the benefits from cost savings and see their peers do it, they will adopt it, but they will then follow that up with unified communications solutions.”
5 Software, service integration will create agile companies
 Historically, sourcing services has been a long process. Even internally, requisitioning new services was often beset with bureaucratic and technical challenges, while outsourcing to external providers was often a long-term affair. Terms were inflexible and it was difficult to adapt the relationship to meet changing business conditions.
That is all changing, according to Sebastien Ruest, IDC Canada’s vice-president of services research, who said technological developments have created new ways to procure services from multiple parties. We have already moved to what he calls outsourcing 2.0: a world of service aggregators and selective sourcing in which prime contractors deal with sub-contractors on the client’s behalf. And that’s just the start.
“In the future, it will be about mash ups,”Ruest predicted. Mash ups stem from the standardized software interfaces that emerged around the start of the decade. Getting programs to talk to each other was traditionally difficult because of the incompatible proprietary formats they all used. Today, Web services built using the eXtensible Markup Language standard let us easily plug software together across the network in minutes. That software is starting to reflect business services—everything from currency conversion to online authentication systems—that are becoming accessible across the Internet. Google Maps, for example, can be folded into corporate software applications,  and XML data feeds can be ‘mashed’ together to create new possibilities for employees.
Many of the outsourcing contracts signed around the year 2000 are coming up for renewal in the coming year, Ruest said. “We are seeing a lot of activity around contract renegotiations and early contract terminations, where organizations are re-evaluating those seven to 10-year contracts. There is a breaking apart of those particular contracts, rather than a continuation of the traditional outsourcing model.”
6 Goodbye wallets: mobile payments finally arrive
 Technology may normally evolve quickly, but the payment industry has moved like molasses. Cash was king for a long time, and although credit and debit cards are years old, they are still the primary method of non-cash payment. This is about to change, however, according to Robert Burbach, senior research analyst for Canadian financial services at IDC division Financial Insights. Near-field communications—very short-range radio technologies used to send small amounts of data— are set to introduce new payment options for customers. They may even create more synergy with the other item all people carry: the mobile phone.
Some retailers are already supporting these systems. “I can walk in with my Paypass, which is a MasterCard offering, and instead of handing over cash or a credit card I can charge purchases just by touching a reader,” Burbach said. “That will let me charge any amount less than $25 without using a personal identification number.”
Visa offers its own PayWave system in the Canadian market and it has teamed with the Royal Bank of Canada to pilot a version of its system that puts the payment chip directly into a mobile phone. Staff trials happen early in 2008, with a limited consumer trial later in the year. “So then you’ll have your phone, which you will use as a card with or without a PIN, depending on the purchase size,” he said. “That’s the short term, that’s what we’ll see in the next year.”
 This could positively affect sales revenues for retailers supporting the systems, because customers may be more inclined to buy smaller items as purchases become more convenient. But the real disruption will happen among service providers and banks. Who would’ve thought the Royal Bank would begin muscling into the phone business? And where are the operators? “The telcos haven’t responded to the Royal Bank,” Burbach said.
But one thing could confound the uptake of mobile payments, he added: Canada is second to last in the OECD group of countries when it comes to wireless penetration. We need to get more mobile-savvy if phone-based payments are to take off as much as credit card companies might like.
7 Consumer technology will continue its workplace march
 IT managers may be lovers of technology, but many may wish the Web 2.0 revolution never happened. That is because the line between business technology and home life is fading. You wouldn’t have found a VT100 mainframe dumb terminal in many family rooms in the 1980s, but work technology has moved into homes since then, said Marc Perrella, vice-president for the technology group at IDC Canada. For example, notebook computers now double as business tools and entertainment devices. And that means trouble for the IT department.
“As we become more comfortable with the technology and as it becomes more pervasive, it impacts the way that we identify our business needs,” Perrella said. Employees seduced by technology in their private lives now want to bring it into the office. This is how instant messaging made its way into the corporate environment—via employees who liked it so much at home that they brought it to work. But such technology can cause problems. It opens up both technical and organizational security holes, and it impacts productivity in unpredictable ways. And if there’s anything corporate computing chiefs don’t like, it is unpredictability.
As these technologies continue to evolve at breakneck speed and as the Web 2.0 interfaces gain traction, the new generation of employees expects newer technology in the workplace. “This is now table stakes,” Perrella said. “You have to think about how you put these in play from a workflow and organizational perspective. You have to think about how it impacts productivity, efficiency and the way you interact internally.”
8 Mobile advertising and search go mainstream
 Lawrence Surtees learned many things in his 17 years as a telecommunications reporter at The Globe and Mail, but one thing stands out: “It’s wireless, wireless, wireless,” said IDC Canada’s vice-president and principal analyst for communications research. “It’s the future of the entire global, $1.2-trillion telecommunications service franchise.” And the real future lies specifically in wireless data.
No wonder, then, that companies such as Google, Yahoo! and Microsoft have been pushing ahead with mobile search. The seeding of that market was Surtees’ prediction for 2007, “but mobile search is just a means to something far more profound: mobile marketing and advertising. There will be a huge explosion of energy, spending and effort in 2008.”
Several factors are converging to make these two activities viable. Location awareness will be an important part of the equation, as will the incremental increase in battery life that we have seen over the years. Higher bandwidth and the gradual increase in screen size and resolution have also served to make phones more usable as information delivery tools.
Now that these pieces of the puzzle are in place we can look forward to innovations in the way companies provide information about available local resources by phone. Restaurants may be able to send electronic discount coupons to the mobile phones of business people who are travelling in the area, for example.
 However, some factors still have to drop into place to properly fuel the trend. “More realistic data plans are what we’re looking for,” Surtees said, pointing to AT&T’s flat-rate plan for the iPhone’s introduction in the U.S. “The question is, do the Canadian operators see the light?” Ultimately, however, given the rising interest in promoting mobile search and advertising, the operators will have to change and introduce more equitable data plans, Surtees said. “The writing’s on the wall.”
2007 rewind
By Danny Bradbury
Last year, Backbone explored the potential developments in seven broad technology areas for 2007. Here’s what happened.
>>Mobile
Number portability took effect in 2007 but perhaps the biggest competitive driver was the November scheduling of a wireless spectrum auction. Industry Canada has set aside more than a third of a new block of wireless spectrum for new entrants. The government will also force incumbents to share their networks with newcomers.
>>Converged devices
The iPhone shipped, although not in Canada yet. Its software- and screen-based interface is a new concept that may enable manufacturers to jam more functions in a handheld device while making it easier to use.
>>Social networking
Social networking sites exploded this year. Web traffic analysis firm Alexa said that less than one per cent of worldwide Internet users visited Facebook in January, but this had risen to almost six per cent by November’s end.
>>Old vs. new media
The vanguard of old media is finally embracing new media’s free content model. Rupert Murdoch vowed to make Wall Street Journal online content free, following a similar decision in September by The New York Times.
>>Web broadcasting
One significant event of the year in Web broadcasting was the open public availability of Joost, an online TV service launched by the founders of Skype. The service has signed large advertisers and content owners alike.
>>NAND Flash drives
Flash memory is increasingly finding its way into consumer technology such as the iPhone and iPod Touch. 32GB drives are available from players like Samsung, designed for ultraportable and high-end notebooks. Seagate announced plans for a solid state flash drive business in 2008.
>>Skype
Skype has definitely captured the market for VoIP telephony. Internet traffic management firm Ipoque said Skype accounts for 95 per cent of all VoIP traffic. Skype owner eBay has failed to capitalize on the company’s technology, however, and wrote down its original US$2.6 billion purchase price by US$1.43 billion.
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