In 2013, big companies in the cloud space faced downtime challenges, companies in the social media space were valued at costs seemingly much higher than they’re worth, and a superpower’s secrets were revealed to the world.
Four big events or trends in the IT space this year have had great significance for the industry. In each case, the trends bear thinking about, because how we respond to them now will shape the future of the way we interact, work and play online and in the cloud.
1. The year of cloud failures
At the end of 2012, I predicted that 2013 would see big cloud failures, and this definitely turned out to be the case. In August, Amazon experienced a hardware failure that quickly spiraled out of control, causing problems at a host of online services including Instagram, Vine, AirBnB and Flipboard. Although the event lasted only 49 minutes, long-term questions have been raised about why web companies are so dependent on the services of a single cloud provider and data centre.
Microsoft’s Windows Azure was hit by a worldwide partial compute outage in October, with analysts calling for Redmond to examine more closely the way that it has partitioned. One of the key benefits of the cloud space is supposed to be that it frees customers from terrestrial downtime, but this is increasingly being proven not to be the case.
This is the pressure of growth. Cloud providers will have to examine how they can deliver on their promises, in light of these failings. At the same time, customers should have serious conversations with their cloud providers about their service levels, the uptime that they commit to, and their guarantees for delivering.
2. Inflated IT company valuations
Various IT companies have listed or been valued at disproportionately high costs. This level of excitement around companies — some of which don’t even have a strategy for realising revenue — could point to the start of another bubble.
In early November, Twitter started trading on the New York Stock Exchange at a price of US$45.10 per share — 73% above the IPO price of US$26 that the company set the night before. This implies a valuation of US$31.34-billion.
A decade after LinkedIn launched, it boasts 259-million registered users and its stock price has almost quadrupled since the company went public in 2011. Its stock is trading at more than 120 times projected earnings for next year, and some analysts are saying that investor expectations for growth are unrealistic.
And, also in November, it emerged that Snapchat, which has developed a smart phone app that is popular among teens, turned down a US$3-billion offer from Facebook to buy it out — three times what Facebook paid in 2012 for Instagram. Evan Spiegel, the 23-year-old founder won’t consider any more offers until next year.
It’s great for these entrepreneurial startups that they’ve become giants and can command such significant price tags. But investors need to be cautious about getting caught up in another frenzy of overvalued stocks that don’t deliver.
3. Edward Snowden blew the whistle on the US government
The only thing more astonishing than Snowden’s revelation that the US government has been listening in on every global leader’s secrets, is the fact that the US government are making such a show of tracking him down for revealing theirs.
In May this year, after months of careful planning, Edward Snowden, a computer specialist, former CIA employee and former NSA contractor divulged the existence and functions of several classified US surveillance programmes and a British black-ops surveillance programme.
Aside from the consequences for national security and international diplomacy, this leak has highlighted the very real need for companies, governments and individuals to give serious thought to data security and encryption. The reverberations of Snowden’s actions will be felt for a long time in the security community and in the IT industry as a whole — never mind in governments around the world.
4. Gartner predicted Application Integration would account for 90% of implementation budgets by 2018
In 2013, Gartner predicted that by 2016, midsize to large companies will spend 33% more on application integration than in 2013. By the same year, the integration of data on mobile devices will represent 20% of integration spending. By 2017, over two thirds of all new integration flows will extend outside the enterprise firewall, and by 2018, Gartner predicts that more than 50% of the cost of implementing 90% of new large systems will be spent on integration.
With this prediction by Gartner, it has been made clear that the industry has recognised integration application as a significant part of the IT mix. This new segment of the industry already has significant players punting solutions, and is set to be a growth sector for many years to come.
Gartner says: “Big IT and business opportunities are driving application integration and its complexity and cost. CIOs, managers of competency centres and centres of excellence, and IT leaders must refocus their attention and budget on integration to successfully adopt IT innovation driven by the Nexus of Forces.”
Gartner’s “Nexus of Forces” is the convergence and mutual reinforcement of social interaction, mobility, cloud and information.