Technology Perspectives - Fujitsu

Technology
Perspectives
A thought-provoking look at
key forces of change
As of November 2010
shaping tomorrow with you

Technology Perspectives
Table of contents
Introduction p. 04
Who we are p. 04
Who you are p. 05
Why we prepared this document p. 06
Context p. 07
Where we have come from p. 07
How to prepare for the future p. 09
Four scenarios for the future of IT p. 14
Nine key trends p. 20
1. Organic collaboration p. 21
2. Real-time insight p. 25
3. Borderless security p. 31
4. Invisible technology p. 36
5. Connecting the consumer p. 42
6. Off-the-rack software p. 48
7. Changing rules of business survival p. 53
8. New cultural values and expectations p. 59
9. A workforce in motion p. 65
02

Twelve key predictions and their implications p. 71
On the horizon: Things on their way in p. 78
Rest in peace: Things on their way out p. 80
Conclusions p. 82
Credits p. 85
03

Introduction
Who we are
This document pulls together the thoughts of the Fujitsu CTO Community, which is made up of
the Chief Technology Officers and their teams from the various regions within the Fujitsu organization
around the world.
Fujitsu is the world’s third-largest IT services provider and the number one company in this category
in Japan. With research facilities in Japan, the U.S., the U.K., Germany and China, Fujitsu’s R&D spend is
$2.4 billion.
Our innovative power stems from 1,500 research scientists and 14,000 development engineers worldwide.
Together, they have produced more than 34,000 patents around the world.
You can learn more about Fujitsu at www.fujitsu.com
04

Introduction
Who you are
We certainly hope that this content will be of interest to anyone seeking to pull the future into
sharper focus. Nevertheless, we have written this to meet the needs of those who make or support
technology-related strategy decisions. This includes, but is not limited to:
■ C-level executives and their staff;
■ IT decision makers;
■ Analysts and journalists.
We would like to invite you to use this document as a reference work. Just flip through it to get an
overview of the key topics and then invest some additional time to read the sections most relevant for your
work. If you have not already seen it, you might also want to visit www.technology-perspectives.com for
an overview of the material.
05

Introduction
Why we prepared this document
At Fujitsu, we pride ourselves on being a forward-looking company that not only seeks to anticipate
the future, but also to form it. We do this through close cooperation with our customers in order to meet
their needs today and tomorrow.
We want to put you in the driver’s seat by making it easier to obtain the insight and tools needed
to prepare for a competitive future. Together, we can work toward realizing your vision for serving
your customers.
Our vision is to develop and build networks of intelligent systems that work together in a way that touches
and improves everyday life for people all around the globe. To make that a reality, we invest significant
resources to identify the patterns of change that are paving the way for the future.
The challenge
With change comes uncertainty. The big challenge for us all is to make sense of change and see it with
clarity in order to understand it and plan for its implications.
Technology Perspectives is intended to provide some background context for strategic planning. Above all,
we hope that these thought-provoking ideas will spark a debate about planning for the future. It’s a
debate that we would be delighted to join you in.
06

Context
Where we have come from
Waves. Three of them.
Innovation has long been a key driver of change in our society, and digital and information technologies
are now catalyzing change at an unprecedented rate. Today, IT underpins every business transaction, and
it is increasingly underpinning our social interactions as well. Over the past 40 years, this technology has
been carried forward by three waves of development that set the context for the developments that we
are examining:
■ The computer-centric wave: Big, powerful machines dominated until they ultimately gave way to the
personal computing revolution.
■ The network-centric wave: Computers became connected. First in island clusters, then as the global
Internet.
■ The people-centric wave: Mobile and network technologies as well as the burgeoning consumer market
are putting individuals firmly at the center of a technology enabled world. We are currently in the midst
of this wave.
The technology timeline
Technology will continue to play a prominent role in shaping our society. But the innovation we see today
and in the future has its roots in this timeline. It sets the context for how we shape tomorrow and we will
refer to many of these events in the following parts of this paper.
Computer-centric wave
■ 1965 Intel co-founder Gordon E. Moore introduces the concept of Moore’s Law – that computing power
will double every two years.
■ 1969 The Apollo 11 Lunar Module lands on the moon with the aid of a guidance computer with 2K of
RAM and weighing 30kg.
■ 1970 Bell Labs introduces Unix.
■ 1973 Xerox Parc develops a computer with a graphical user interface, but sees no future in it.
■ 1974 Intel releases the 8080 processor, the basis for the first personal computers.
■ 1975 Ed Roberts releases the first personal computer, the Altair 8800, launched – with software written
by Microsoft.
■ 1979 Sony introduces the Walkman.
■ 1980 IBM announces its first PC; it is released with DOS, an operating system written by Microsoft.
■ 1981 Technology prices fall: 256k of RAM costs $1,000 and a 5 MB hard disk costs $3,000.
■ 1982 Time magazine names the personal computer as its “man” of the year.
■ 1984 Apple introduces the Macintosh.
■ 1984 The number of hosts on the Internet reaches 1,000.
■ 1985 Microsoft releases Windows.
Network-centric wave
■ 1988 TCP/IP becomes a standard.
■ 1989 There are now 100,000 hosts on the Internet.
■ 1990 Tim Berners-Lee of CERN creates HTML, HTTP and URLs.
■ 1993 The White House, the UN and the World Bank go online.
■ 1993 Text messaging first appears on mobile phones as a utility for phone engineers.
07

■ 1994 Jeff Bezos writes the business plan for Amazon.com.
■ 1996 Netscape and Microsoft fight the browser wars.
■ 1997 The Kyoto Protocol limiting greenhouse gas emissions is issued.
■ 1999 Shawn Fanning creates Napster, prompting a copyright war in the music industry.
■ 2000 NASDAQ peaks at 5132.5 on March 10 when the dot com bubble bursts.
■ 2000 Google indexes one billion pages becoming the world’s largest search engine.
■ 2001 Wikipedia is launched by Jimmy Wales and Larry Sanger.
■ 2002 Microsoft drops its mission statement “a PC on every desk and in every home.”
■ 2004 Mark Zuckerberg launches Facebook.
■ 2005 “To Google” enters the English dictionary.
■ 2006 Wikipedia passes 1,000,000 articles.
People-centric wave
■ 2007 Apple releases the iPhone.
■ 2007 1.12 billion mobile phones are sold globally; 437 million of them are made by Nokia.
■ 2007 In the U.S., more electricity is now used to power servers than TVs.
■ 2007 Cloud Computing appears on Google trends for the first time.
■ 2008 Laptop sales exceed desktop sales for the first time.
■ 2008 China now has more Internet users than the U.S.
■ 2009 Internet advertising exceeds TV advertising in the U.K., the first major economy to do so.
■ 2009 One in every two people in the world now carries a mobile phone.
■ 2009 Twitter is used by the pro-democracy movement in Iran.
■ 2009 Global Facebook membership now exceeds the population of the U.S.
■ 2010 Ten billion songs and three billion apps have been downloaded from the Apple Store.
■ 2010 Apple unveils the iPad.
■ 2010 Microsoft launches Azure.
■ 2010 China overtakes Japan as the world’s second-largest economy.
■ 2010 The Internet is nominated for the Nobel Peace Prize.
■ 2010 Moore’s Law is still holding true ...
Dead ends ...
■ “A small, unostentatious car will be the workhorse for commuting and shopping.” Time Magazine, 1973.
■ “There is no reason for any individual to have a computer in his home.” Ken Olsen (DEC), 1977.
■ “Home Taping Is Killing Music.” BPI Campaign, 1980.
■ Apple Lisa 1983.
■ Apple Newton 1993.
■ “The Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” Robert
Metcalfe, 3Com, 1995.
■ “The truth is no online database will replace your daily newspaper.” Newsweek, 1995.
■ Microsoft Bob, 1995.
■ “On New Year’s Eve 1999, let me suggest three places you don’t want to be: in an elevator, in an
airplane, or in a hospital.” Sen. Christopher Dodd, 1998.
■ Boo.com, Flooz.com, Kozmo.com, Kibu.com, Pets.com, 2000.
■ “Two years from now, spam will be solved.” Bill Gates, 2004.
■ “Next Christmas the iPod will be kaput.” Sir Alan Sugar, 2005.
■ “I don’t anticipate any serious problems among the large internationally active banks.” Ben Bernanke,
U.S. Federal Reserve Chairman, 2008.
08

Context
How to prepare for the future
Our limited but fruitful capacity to predict
On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection and, with assets
of over $600 billion, became the largest insolvency in U.S. history. The collapse of Lehman’s prompted
a period of extreme volatility on financial markets and was the first in a series of catastrophic events in
the financial sector, which soon became known as the Financial Crisis. While billions were wiped off
shares and unemployment rose sharply across the world, an unlikely beneficiary of this crisis was Nassim
Nicholas Taleb, whose book, The Black Swan, swiftly became an international bestseller. Published a
year before, the book’s title coined a term to describe high-impact, low-probability events that lie outside
of human knowledge and are, Taleb argued, impossible to predict. Other examples of Black Swans have
been 9/11, the Asian Tsunami, the doc.com bubble and pretty much every economic crash before it. A
characteristic of a Black Swan event is that, in spite of its randomness, people mistakenly believe that it
was predetermined; using hindsight, they construct the causal pathway which led to it. It is human nature
to think that the future is predictable and follows logical patterns. Whether or not we subscribe to these
arguments, few would not accept that our world is regularly rocked by sudden, unexpected seismic
events that generate massive change in their wake.
But change also occurs more subtly. Many smaller, low-impact events can add up to great change –
evolution leading to revolution. Sometimes, it is possible to identify a starting point; the emergence of
a new technology or the beginnings of a social trend. However, it is harder to foresee the many ripples
of consequences that spring forth. Further, human thinking tends to put anticipation of change in the
context of the world as it exists, but cannot anticipate how the rules might be different after the game has
changed. A good example of this was the emergence of personal computing in the 1970s, an event that
had been widely anticipated as a natural development in the evolution of computing technology. But
predications for the personal computer were couched in the way people were using computing at the time.
People saw the value of home computers for controlling systems like central heating or enabling them
to write programs, but they could not possibly see the mainstream uses that eventually would emerge.
Functions like instant messaging, digital photography or digital music – things that computers just
weren’t used for at that time.
It is notoriously difficult to make bets about the future. Should we even try? The alternative, remaining
entirely reactive to everything that happens in the world, is perhaps even more unpalatable. And by
seeking to plan for the future, we are not wasting our time. There are some practical things we can do.
From the many possibilities and complex variables in play, we can simplify. We can search for areas of
stability, areas in which there is a clear consensus and strong momentum. And we can look to the past,
and particularly the recent past, to see how change has taken place and how this might influence things
to come. In doing this, however, we must keep an open mind, recognize the limitations of what we are
trying to do and understand that uncertainty is never far away. This paper attempts to do just that.
09

An assumption
Our starting point is to make an assumption – and it is the only one that we will make. The assumption is
that the world is getting more, not less complicated. This will turn out to be quite important to us because
it underpins many of the arguments that will be put forward in this paper. We think this is safe to make
and, looking at the timeline above, we can see that the world is a much more complex place than it was
20 or even ten years ago. There is a corollary to our assumption: The world is speeding up. The pace of
change is increasing everywhere we look. It took Microsoft 15 years to become a billion-dollar company; it
took Google only four. 1 It is, therefore, our belief that we can expect more, not less, change and that the
rate of change is increasing.
The world is in the midst of an information revolution that is far from reaching its conclusion. Four areas
of advance are particularly driving change in information technology. There is the trend described by
Moore’s Law – that the power of computing technology resources rises exponentially over time. With the
onset of multi-core processing and solid-state drives, we think it is not unreasonable to assume this trend
will continue. Then there has been the phenomenal growth in bandwidth, reach and ubiquity of networks.
Growth will no doubt continue as fiber replaces copper and 3G and other high bandwidth wireless
technologies enter the mainstream. Thirdly, the Internet has brought with it – and is continuing to do so –
the integration of people and technology on an unprecedented scale, generating enormous new levels of
interaction and collaboration, new services and of course information. And fourthly, the developing world,
three quarters of the world’s population, are arriving online at a mind-boggling rate.
This starting assumption presents us with a fundamental question. How do we react to all this complexity
and change? Do we try to control it? Do we try to simplify or partition it? Or do we let it loose? How we
respond to this question will determine the strategies we wish to adopt to move forward in into the future.
1. “Googled: The End of the World As We Know It,” Ken Auletta, 2009
10

A question of timing
Black Swan events aside, many – maybe the majority of developments – can be anticipated. If we
think about emerging technologies, social trends or regulation, very rarely do these come out of the blue
without warning. We might not always be able to predict the full implications or importance, but by
investing time in research, we can arm ourselves with a reasonable picture of what is coming down the
line. But the million-dollar question for any strategist is when to respond. What is it that triggers a physical
reaction? When does an item on a roadmap become a reality? In fact, most developments tend to occur
over a period rather than at a point in time and they follow similar patterns. The figure below, for example,
shows the cumulative adoption of broadband in the U.K. 2
U.K. broadband penetration
% penetration (subscribers per 100 inhabitants)
30
25
20
15
10
5
0
2002 2004 2006 2008
This s-shaped curve describes three distinct phases of adoption: a slow original take-up by pioneering
consumers, followed by a more rapid adoption as the technology enters the mainstream, and finally a
tailing off as it becomes pervasive and embedded into our everyday life. The theory behind this was
defined by Everett Rogers, who distinguished the ‘consumers’ of the change as innovators, early adopters,
early and late majorities and laggards 3 (see Fig. below).
2. “UK Broadband Penetration,” OECD statistics; 3. “Diffusion of Innovation Theory,” Everett M. Rogers, 1995
11

The adoption curve
Cumulative adoption (or impact)
Laggards
Late Majority
Early Majority
Early Adopters
Innovators
Emergence Tipping point Mainstream Absorption
TIME
Adapted from Everett M. Rogers, diffusion of innovation theory
Of course, not all innovations or changes will enjoy the success of the full S-curve adoption profile. Many,
after enjoying early hype, slip back into obscurity as the dead ends above are testament, and sometimes
people are just plain wrong. It is, therefore, useful to look for evidence of a tipping point – the point
at which the rate of change of the gradient of the curve is at its greatest, and the point after which the
change is assured to enter the mainstream.
The significant fact that arises from all of this theory is that, very often, a lag exists between the first
emergence of a change and its full absorption into our everyday life. It is a truism to say that we tend to
overestimate change in the short term and underestimate it in the longer term. Innovation takes time
to develop, but – more importantly – society takes time to react. The duration of this period may vary
between different types of change and innovation and could be measured in months, years or even
decades. Therefore, for any development that follows an S-curve, there ought to be time to plan and
execute a response. This is the strategist’s opportunity. But crucially, we need to understand what is going
to trigger our response and lead us into action. What moves an event off our roadmap and into our
reality? In our experience, there are three common and distinct triggers. They represent three different
phases on the S-curve.
12

Comparative Advantage. By reacting or adopting early, we can gain a comparative advantage over our
competitors. This is relevant for changes or innovations that benefit core or bottom-line activities. For
example, technology that lowered the product time to market or reduced the cost of a sale. Typically, this
trigger occurs ahead of the tipping point. As a result, it may involve a higher level of uncertainty and a
higher risk investment.
Reward Exceeds Risk. A second trigger is the point at which an innovation or change becomes stable. It
has already been proven by others and the risk has fallen to an acceptable level with regard to its benefits
and value. These may be changes with a lower impact on core business or which would have been too
risky to pioneer. This trigger is synonymous with the period around and just after the tipping point, as it
approaches the mainstream.
Keeping Up with the Jones’s. Inevitably, we are reactive rather than proactive in our response to change
the majority of the time. This trigger is about timing our latest reasonable reaction. That is the point at
which not acting means that we start to incur cost or risk relative to our competitors, the market or the rest
of society. This will typically occur after the change has become mainstream. At any given time, there is too
much change for us to proactively respond to, so this is by far the most common trigger.
What is absolutely key for us in planning our responses is to understand what a given development means
to us in the context of our objectives. In order to create an effective strategy, we need to know how change
impacts us with respect to our own needs. Change, like beauty, is in the eye of the beholder.
About this paper
This paper explores some of the host of changes that are taking place in the world right now and
examines some of their possible implications. We start by presenting some simple scenarios to help us
explore some of the key uncertainties of the future of business and technology. We continue the scenario
framework, referring back to it throughout the paper to help us to understand the impact of subsequent
areas of investigation in the paper.
From there, we move on to the heart of this document: an examination of nine important trends that
we believe will bring profound change to the worlds of business and technology over the next two to five
years. We briefly identify some trends that are further out, and some familiar things that are on the way
out. After that, we make 12 predictions that we believe form a reasonable foundation for mid-term
decision making.
We conclude by presenting three key themes derived from the observations throughout the paper. We
believe that those concepts will be a major influence in strategic business decision making.
13

Context
Four scenarios for the future of IT
What will your tomorrow look like?
Unfortunately, we don’t know. At least not with any degree of certainty. In order to help navigate our
way through the great many possibilities, we need to build a simple framework that can bring clarity to
our thinking. To do this, we have created a scenario model.
Scenarios for the future
CENTRAL CONTROL
1 Traditional enterprise
Strong
perimeter
Legacy
systems
Application
silos
3 Managed cloud
PRIVATE
PUBLIC
2 Enterprise ecosystem
Empowered Organizations Empowered Individuals
Cloud
platforms
Community
cloud
Open
source
Locked
down
High touch
Generation X
SaaS
Cloud service
brokering
Open
security
Closed, bespoke
Open, web-based
Enterprise
social
software
Private
app stores
Unified
communications
Self-
service
Virtualized
platforms
Virtualized
desktop
4 Consumer cloud
Mobile app
stores
Free software
Consumer
technology
Social
software
Mashups
Generation Y
PERSONAL FREEDOM
14

Four scenarios
The scenario framework is a theoretical construct that takes two major uncertainties and considers the
implications of them being realized at each of their extremities. We have chosen personal freedom as our
first value, and the source of technology provision as our second. Plotting these against a pair of axes gives
us four scenarios. By examining their implications, we can describe how each scenario might look in
reality, giving us four alternative possibilities. These four scenarios express very contrasting business and
technology futures.
In our model (see Fig. above) 4 , the horizontal axis exploits the uncertainty related to how systems will be
controlled and to the extent to which individual freedom or the power of organizations will be responsible
for this. In the consumer cloud and enterprise ecosystem, individuals have a large amount of freedom to
make choices about what technology they use or what privacy they have. In contrast, the managed cloud
and traditional enterprise scenarios characterize a world in which organizations have control and there is
very little personal freedom.
The vertical axis exploits the uncertainty around how we will consume information services and the extent
to which these services come from public or private sources. So the managed cloud and consumer cloud
scenarios are characterized by a more extensive use of public technology services, open-source software
and open-security models, whereas the traditional enterprise and enterprise ecosystem reflect systems
that are private, and internally controlled and governed. By implication, this axis also can be seen as a
measure of commoditization – public services will tend to be commoditized, while private systems will
tend to be custom.
We have selected these axes because we feel they capture two relevant issues that will be right at the
heart of business decision making over the medium and long term. Many of the developments that we will
be discussing in this paper, for example cloud computing, consumerization, social media or open security,
can be reflected in the terms of these two criteria. The scenarios are deliberately designed to represent an
extreme set of circumstances to create a higher level of contrast and distinction.
How do we react to this?
The scenarios help us to ask questions about the future. In order to answer them, we need to put ourselves
or our organizations inside the model. Which scenario do we think is most likely? Which scenario would
be hardest to respond to? How do our strategic priorities and business planning align against with them?
Which of our priorities would be relevant in the most scenarios? The crux of the scenario method is to
enable us to develop a strategic response that allows us to better understand the level of risk we are
exposing ourselves to. For example, do we make a “bet the farm” response based on the realization of a
single outcome, or do we take a balanced approach and either invest in many different outcomes or look
for strategies that fit across all? That our response reflects each individual context is absolutely crucial.
Consider, for example, how a large government department might plan across these scenarios compared
to a small start-up business. The purpose of the scenarios is to provide a context in which we can frame
the uncertainty of the future and enable greater clarity around our decision making.
4. The brand names and products that have been used in figure “Scenarios for the future” (see Fig. above) have been positioned based
on historical market perception. They do not necessarily reflect the strategies these organizations are pursuing or where they will be
positioned in the future.
15

Note that the scenario plan is not a roadmap – that comes later in the planning process. It is about
possibilities and uncertainty rather than creating a strategic pathway.
As you read the rest of this paper, keep these scenarios in mind as we will continue to revisit them. They
will help us to illustrate some of the uncertainty and implications of the various trends and developments
we will be describing as we go.
1. The traditional enterprise
We call this scenario the traditional enterprise because it describes how information technology has
onventionally been provided (see Fig. below). In this scenario, systems are delivered by an IT function that
exercises high-touch control and governance over the estate. Users have locked-down clients accessing
monolithic applications and there is very little mobility. IT systems are highly secure and are managed in
accordance with industry standards and best practices. In many ways, this scenario represents our comfort
zone because it describes a world that we are familiar with.
Traditional enterprise
Financial model
Commercial model
Client devices
Applications
Collaboration
Information
Security
Relevance of perimeter
Standards
Service model
Choice
IT buyer
CA PEX mainly
Fixed spend
Locked down
Monolithic
Low
Siloed + secured
Traditional
High
Across the board
Bespoke
Limited
IT function
16

2. The enterprise ecosystem
This scenario is characterized as an enterprise in which an agile and mobile group of users operate
(see Fig. below). The users are free to make decisions about much of their personal technology – they
choose their own mobile devices and work with virtualized desktop environments. They can choose
applications to download from an internal application store. There is a lot of collaboration within the
enterprise, both through communication technologies, such as instant messaging and video conferencing,
as well as through enterprise social media and wikis. Enterprise systems are secure, but the mobility of
their users means that security is exposed to a higher level of risk. Some systems could be implemented
in a private cloud, but in one that is secured using the enterprise security model. The IT function takes a
hands-off approach, having delivered an environment that enables users to be proactive in managing
their own systems.
Enterprise ecosystem
Financial model
Commercial model
Client devices
Applications
Collaboration
Information
Security
Relevance of perimeter
Standards
Service model
Choice
IT buyer
Cap Ex + Op Ex
Fixed + variable
Virtualized + thin client
Virtualized
Intra-organization
Shared + secured
Federated
Medium
Minimum needed
Self service
… of client devices
IT function + Individuals
17

3. The managed cloud
Here, the enterprise looks externally for the bulk of its IT, which it consumes in the form of online
services (see Fig. below). Services are well controlled, but business functions have a much greater say in
their purchase and delivery. All access to information services is via a browser and secured by open
security, which may be federated from the enterprise. While users are given little choice in their personal
technology, the simplicity of the browser interface gives them a degree of mobility and agility. Systems
are exposed to a higher level of risk, because much of their information physically resides on systems
provided by suppliers. Governance is applied at software interfaces, where industry standards are used to
ensure smooth integration and rigorous application of security principles. Business projects can be
implemented at extremely low cost and have little or no start-up time.
Managed cloud
Financial model
Commercial model
Client devices
Applications
Collaboration
Information
Security
Relevance of perimeter
Standards
Service model
Choice
IT buyer
Op Ex only
Variable
Browser-based
SaaS
Inter-organization
Shared + trusted
Open
Weak
For security + software interfaces
Commoditized
… of services
Business function
18

4. The consumer cloud
In this scenario (see Fig. below), the notion of enterprise IT becomes largely unrecognizable. The
enterprise consumes all of its services from online sources, and users have free reign to determine which
personal technologies they will adopt. All of the applications that are used are open source or free, and
devices are sourced from retailers with warranty and local service providers offering the only support
services that are consumed. Social media is used extensively and there is a very high level of collaboration
between users. There is very little governance. While costs are low, there is a very high level of risk;
nevertheless, there is also a high level of understanding and organization between individuals.
Consumer cloud
Financial model
Commercial model
Client devices
Applications
Collaboration
Information
Security
Relevance of perimeter
Standards
Service model
Choice
IT buyer
Op Ex + free
Pay-as-you-go
Anything goes
App stores
Everywhere
Public
As offered
Irrelevant
None
As offered
High
Individuals
19

Nine key trends
Crucial for strategic decision making
High-impact developments over the middle term
Few of these trends should surprise you because most of them have already gained at least some
traction. Several of them are already well underway; others are just beginning to take hold. They all have
the potential to set off a major shift in the way that technology powers businesses.
These areas represent significant forces of change. We believe that you should incorporate the main thrust
of these developments into your mid-range vision. Planning for their consequences is imperative, because
the transformations that they produce will be the foundation for much of the important innovation that
will be taking place over the next two to five years.
Here are a few questions to ask as you read:
■ What kind of mindset will you need to cultivate within your company in order to be properly prepared for
these changes?
■ Which of your activities and processes stand to gain the most from an advance in these areas?
■ What new business models and opportunities will this create in your industry?
■ What risks will these changes bring, and how can you mitigate them? Which trend is most likely to destabilize
your current set up? How might our competition implement this in a way that could take us by
surprise?
20

Nine key trends
1. Organic collaboration
The rise and rise of social media
Social media are organic in nature. They defy control and predictability. Yet, they also take our level of
trust into account. In this way, they extend the principles of a small community to a vast – virtually
infinite – pool of people, information and resources. Moreover, social networks have mechanisms for
organic self-regulation: links to fruitful sources naturally strengthen, while unreliable or redundant
ources wither away.
How can businesses tame these powerful collaborative communities?
Rebuilding the Internet – one opinion at a time
Back in December 2009, PepsiCo announced that, for the first time in 23 years, it would not be advertising
at the Super Bowl. Instead, they unveiled “Project Refresh,” a $20 million campaign that would use social
media and digital advertising to target a new market. 5 The idea of the campaign was to bring consumers
into a natural dialog with each other, which would reinforce and spread the brand’s values. The campaign
mechanism is perhaps not as significant as the fact that a major corporation was so convinced of the value
of social media, they were willing to forgo the best advertising slot of the year. This announcement is one
of many examples of the way social media is gaining a tangible hold on our social and economic behavior.
Social media has become incredibly popular as the domination of sites like Facebook, Twitter, Wikipedia
and Blogger.com is testament. The emergence of these kinds of sites has been called Web 2.0 because it
constitutes a second wave in the story of the Internet. It is a development that, even with the benefit of
hindsight, does not seem to have been an obvious one.
The first wave of Internet adoption, which we can describe as the creation of online content and services
by organizations, was highly disruptive and it brought a new channel for organizations to reach their
markets. But the second wave, the creation of online content and services by individuals, has – as is often
the case with a real tsunami – seemed to carry the more powerful forces. Consider that Facebook has
over 500 million members, more than there are people in the US, or that Twitter has the power to give
individuals greater daily exposure than a national newspaper. Web 2.0 is having a huge impact on society.
A value paradox
The business world is becoming more aware of – even savvy about – social media, which as little as two
years ago was seen as a recreational pursuit or a young-person’s activity. There have been many tangible
demonstrations of the commercial value of social media. Viral marketing has become a mainstream
activity and been used to great effect; for example, the rock band Rage Against the Machine became
number one in the UK because of a Facebook campaign. 6 A cursory search of Amazon indicates over 50
books on the subject. Google has revolutionized the advertising industry by exploiting the “long tail” of
the Web (we discuss this further below), giving advertisers the ability to reach customers in a more
targeted way and having real visibility of its effectiveness down to every last “click.” The UK recently
became the first major economy in which online advertising revenue exceeded that for TV advertising, 7
5. “Pepsi invites the public to do good,” http://www.nytimes.com/2010/02/01/business/media/01adco.html; 6. “Rage Against the
Machine beat X Factor winner in charts,” http://news.bbc.co.uk/1/hi/8423340.stm; 7. “Online Spending Passes TV in UK,”
http://www.emarketer.com/Article.aspx?R=1007312.
21

with the US set to follow soon. Recruitment agencies are exploiting real value by harvesting business
social networks for prospective candidates, and company and role information.
However, like Rage Against the Machine, the business value of social media has been realized by
chance – not the predictable return that commercial enterprises demand. While organizations (see Fig.
below) like PepsiCo are investing huge sums of money in social media; for many organizations, the risks
are great – not least around control and potential damage to reputation – and the value uncertain.
But the challenge presented by social media is an extraordinary one. The fact that organizations are yet to
really crack the secret of its value should not come as a surprise because by its very nature, social media is
organic and defies control and predictability. The commercial world dislikes risk and uncertainty, and
therein lies the paradox: How do you tame and control a social network without destroying its value?
Social media in our scenarios
1 2
Traditional enterprise
Access to social media
is not permitted under
enterprise governance
3
Managed cloud
Some public sources of social
media are used for
collaboration and
knowledge management
4
Enterprise ecosystem
Enterprise implementations of
social media tools are used such
as blogs, wikis, microblogging
and collaboration tools
Consumer society
Social media is used
extensively for all collaboration
Taming the crowds
There are signs this is changing. While we believe social media will have impact on a basic level, for
example by replacing e-mail as a means of communication, it will have more profound effects on business
value. We believe that social media and social networking are defining how relationships between people
and information can be exploited. We anticipate that enterprises can realize value from social media in
three areas:
22

1. Exposure and Reach. Organizations can gain exposure through social media by taking advantage of the
trust that builds up in social networks. People are more likely to buy into a message that has come via
someone they know – even tenuously. Communication through a social network is richer because it
enables a two-way dialog rather than a one-way broadcast. In that sense, it could be said to be more
persuasive. But of even greater value is the fact that such a dialog produces feedback. There is a cliché
that half the money spent on advertising is wasted – we just never know which half. Social media starts to
give organizations a real sense of the impact of their communications, and it can enable them to track
indifferent or negative responses as well as satisfied customers and lead to a greater understanding of the
reasons for all three.
2. Content Sourcing. Through social media, consumers now have an entirely new channel for the supply of
information content, tailored to their interests or needs and delivered to them instantly. This development
is revolutionizing the world of information, not least the news media industry. How this will play out
remains to be seen. There is a consensus of sorts that people are willing to pay for brands they trust, which
is the approach that many media organizations, such as News Corporation and the New York Times, are
pursuing. But this is a potentially volatile assumption, especially when considering the younger
demographic of the market. Loyalty in this context can just as easily switch to a free source if it turns out
to be trustworthy. While we anticipate that the big brand names will remain, new players will emerge;
players that are finding new ways of delivering and aggregating content from many different sources.
What we are seeing is the beginning of an “information arms race,” where successful organizations will not
only be effective at consuming and exploiting new sources of content, they will also be the most effective
at providing content to their customers.
3. A Bridge to Human Resources. Social media is providing a valuable way to access people and
knowledge, and we believe it will become an important way to secure human knowledge, activity and
services in the online world of the future. The value of social media over traditional search is that it takes
account of our level of trust. In this sense, it is an organic mechanism. Put another way, it enables the
principles of a small community to be extended to a vast – even infinite – pool of people, information and
resources. Social networks provide metadata – testimonials from other users, friend-of-a-friend linkages
and group consensus, which individuals can use to make more informed choices about possible risk and
value. Moreover, social networks have the mechanism to organically self-regulate so that links to fruitful
sources naturally strengthen, just as unreliable or redundant sources weaken and die away. The sum value
of the interactions in the network will rise over time. As social media evolves, the tools for knowledge and
expertise location will become more sophisticated, and online marketplaces will become mainstream for
all types of human resource or expertise engagement – the “Human Clouds” we describe later in the paper.
For most organizations, it will be in this area that the greatest value can be realized.
The exact progression of social media is, of course, uncertain and there are many ways in which it may
develop. But however these technologies advance, we believe there are two fundamental principles that
underpin the mechanism of social media: Any strategy must acknowledge these principles in order to
exploit the opportunity.
23

“Adding a broad social
dimension to the Web is a
permanent upgrade, not a
fleeting trend. For companies
and governments alike,
ignoring the new information
culture – and its inherent risks
– is not an option. ”
David Smith
CIO & CTO, Fujitsu UK & Ireland
1. Social networks are driven by payoffs not by mandates. Social networks grow because their members
want to use them and because they receive payoffs in doing so. The payoff may be subtle or seemingly
innocuous – reconnecting with an old friend, or finding a piece of new information. Sometimes it will
be more tangible, such as a job reference or even a financial remuneration. Payoffs will persuade users
to repeat certain transactions, causing them to be emphasized. Like Adam Smith’s invisible hand, such
rewards guide the members of the community towards productive outcomes. In the context of an
enterprise, this might mean new, potentially higher-value connections to be made outside of the strictures
of the organization chart, thus enabling more effective working. So to capitalize, organizations need to
have the faith and confidence that interaction in these mechanisms will provide results: They must create
the right conditions, but not enforce constraints on the community.
2. Scale really matters. Organizations that have tried and failed to implement wikis will realize that scale is
absolutely crucial to their success. There is a surprisingly large gulf between a network with a few hundred
members – which may seem like a lot – and what we might call the infinite scale of the global Web. This
gulf is often the difference between success and failure. This is because social networks have long “tails.”
Interactions on a social network tend to cluster around similar topics or activities, but there are many
other less common or unique transactions taking place, which form a long tail. The bigger the network,
the longer the tail. This long tail is where the real value is because this is where you find content that is
specific to an individual need – therefore providing the payoff that will strengthen the link between
members of the network. Wikipedia’s success owes much to its long tail. In fact, Wikipedia’s tail is very
long – the top five pages make up 8% of its traffic, the top hundred pages make up 10% of traffic, 8 and it
has well over 3 million English pages. So in order to capitalize, organizations should think about how to
maximize the scale of the social media they use. And the best way to achieve this is to take their
enterprises out into the social media community, rather than trying to create it inside their enterprise.
Key facts
■ Social media brings a value paradox; it is organic and unpredictable, but organizations demand control
and certainty.
■ We should look to exploit value through three practices: to extend reach and exposure, to source
content and information, and to source human activity, knowledge or expertise
■ Social networks are driven by payoffs, not by enforced rules, and they depend on massive scale to
function effectively.
■ Social media represents a major growth area and a second wave in the story of the Internet; second
waves are often characterized by the mass adoption of an innovation into society.
Key questions
■ How could you best benefit from social media in your organization?
■ What hurdles will you need to overcome to take advantage of social media?
■ Can you exploit social media with your existing assessment of risk?
8. Wikistics, http://wikistics.falsikon.de/long/wikipedia/en/
24

Nine key trends
2. Real-time insight
On your mark, get set, decide
People have never been patient. But now more than ever, they want things in real time. And in exchange
for gaining this speed, they have demonstrated a surprising willingness to sacrifice other requirements and
features, such as accuracy. Emerging technologies will take this form of information acceleration to a new
level and enable organizations to realize huge value by making better decisions at the speed of business.
How can your organization exploit real-time information and what will you be willing to trade off to
realize it?
Information in real time
On June 15, 2009, microblogging-site Twitter announced that it would be postponing a scheduled downtime
for maintenance. Nothing unusual it might seem, except that this came three days after the outcome
of the Iranian presidential election had been announced. There had been mass protests across Iran about
the credibility of the result and the blogosphere was set alight by disaffected Iranians desperate to share
information with each other and with the outside world. Throughout the election, strict controls were in
place as to what could be reported by the media, constraining both the speed and integrity of news
leaving the country. As the Iranian government suppressed reporting of anti-government activity, Twitter
and other social media emerged as a major channel for communication of information. Some sources
suggested that the postponement of the maintenance came at the request of the U.S. State Department, 9
recognizing the importance of the medium and anxious that it remained open at all times. Whether or not
this was the case, few would disagree that the Web became the focal point for news about this event.
The aftermath of the Iranian presidential election represented a watershed: It was arguably the first major
international news story for which social media was the most credible source of information. 10 While the
traditional news organizations were dogged by restrictions to what they could report and particularly
hampered by the speed at which news could be relayed, the Web was providing real-time information
about the situation from genuine sources. Ordinary people were reporting rallies and demonstrations,
describing human rights abuses and articulating the feelings on the ground. The tragic death of Neda
Agha-Soltan, a young woman allegedly shot by pro-government militia and who’s death had been filmed
on a mobile phone and posted on the Web, became a symbol of the struggle and a potent illustration of
the power of the medium.
Quick or right?
News gathering is perhaps the most obvious example of the value of up-to-the-minute information.
Social media is providing us with real-time information beyond the traditional news sources and the world
is getting a taste for it. But real time is a double-edged sword. On June 25, 2009, users of Twitter were the
first people to hear news of the death of pop star Michael Jackson. But in contrast, rumors had circulated
on several completely separate occasions in the same year of the death of actor Patrick Swayze, who at
the time was battling cancer. It seems what you gain in immediacy you can lose in reliability.
9. “State Dept. Spoke To Twitter About Keeping Iran Online,” http://www.huffingtonpost.com/2009/06/16/state-dept-spoke-to-twitt_n_
216414.html; 10. “Is Twitter the CNN of the New Media Generation?” http://techcrunch.com/2009/06/17/is-twitter-the-cnn-of-the-newmedia-generation/
25

Recent experience has shown, perhaps surprisingly, that the desire of the mass population for immediacy
of information trumps the need for credibility. Wikipedia has long been derided by the academic
community for its lack of accuracy. However, this is at odds with its continued success. Wikipedia currently
has over three million English articles and it adds a couple of thousand every day. In contrast, Microsoft
Encarta, whose content has always been populated by expert authors, produced over sixty thousand. It
was shut down in 2009, unable to compete with its online rival. As we saw in the previous section, its
long tail of articles gives Wikipedia users a high probability of an instant answer.
People are willing to trade some confidence in information in order to get quick access to the information
they are looking for. Twitter has been an even more rapid success. It has given us an instantaneous view
of what the world is saying. 11
It is interesting to examine the concept of the value of knowledge in this context. We associate accuracy
with traditional information sources, such as reference books or published articles. Surely the value of
the information depends entirely on the credibility of its source? What Wikipedia and other forms of
social media have demonstrated is that, in the Internet age, credibility is only one of many valuable
characteristics that information can have.
Traditionalists might disagree vehemently at this point: Surely accuracy is the only criteria on which you
can value information. Or, at any rate, the only one that matters. The Web has revealed that information
can have other dimensions that may be equally desirable. Here are three examples:
■ Dynamism. An online search can provide information accurate up to the same day, even to the hour.
The vastness of the Web ensures that new content is added all the time and search tools are getting
better at prioritizing and presenting the most recent information. The quality of a static information
source tends to decay over time – the longer the passage of time between the act of publishing and the
act of reading, the greater the possibility that the information is no longer correct, incomplete or
irrelevant. When we search on Google, we prefer to filter out anything that appears to be old, even if it is
only by a few years. Up-to-date information appears to have greater value to us. And in certain areas,
such as technology, politics or business, information is time-critical.
■ Context. Consumers of information from the Web, especially users of social media sources, will gain
an appreciation of the level of consensus surrounding it. There may be links to related pieces of
information, supporting or contradictory evidence from other sources, or comments expressing the
reactions of other readers. With a physical source, the view presented is rather more binary and much
more reflects the opinion of its author. This consensual view of information challenges the traditional
sense that information is black and white – either correct or incorrect – and that the reader’s judgment
is determined purely by the credibility and authority of the source. The Web can provide credibility by
representing the breadth of views of a community.
■ Richness. The Web has made richer forms of information available, such as pictures, audio and video.
It has also enriched many information sources by creating visualizations, overlays or integration into
applications. In comparison, physical sources of information tend to be less sophisticated and less
engaging in their format.
11.“Twitter Hits 50 Million Tweets Per Day,” http://mashable.com/2010/02/22/twitter-50-million-tweets/
26

Appetite for now
The huge popularity of online forms of information shows that the world is waking up to this new value, as
does the decline in newspaper circulation. It is important that we recognize that online and traditional
forms of media can have different value propositions. The latter emphasize the credibility of information,
but the former emphasizes the value of information, where the value, such as richness, context, dynamism
or some other characteristic is determined by the needs of its consumer.
Even for the most skeptical, there can be no doubt in the ability of the Web to generate the first signals
related to an event or pattern very quickly. If needed, these initial indications can then be followed up
with conventional or more trusted sources. Having witnessed the massive success enjoyed by Twitter,
the major search engines have been quick to incorporate social media searches for real-time information
into their services.
Google and Microsoft both introduced real-time search into their engines in 2009, and they are
continuing to work on improving this functionality. Google has been vocal in its desire to embed real-time
functionality into all of their tools, 12 and the company has since introduced Caffeine, a real-time indexing
architecture, as well as Instant Search, which enables results to be returned as people type their queries.
We anticipate that the capacity to provide real-time information will mature considerably over the coming
years. Information will come from social media, leveraged by powerful search functionality, but also
from other sources. The successful organizations of the future will be the ones best able to capitalize on
real-time information.
Analyze this
Social media aside, gathering information in real time is becoming an important practice within enterprise
boundaries. Business Intelligence is a term coined as a generic way to describe technology systems and
techniques that enable organizations to make better business decisions. Business intelligence tools
and methods have always tended to be niche and, as a whole, the discipline has yet to take off in the way
that analysts have predicted, in spite of long-term hype. It has tended to remain very much focused on
industry-specific and activity based research; for example, footfall analysis, which measures customer
waiting times in retail branches.
We believe that analytical toolsets are at the threshold of a major period of growth as organizations start to
take advantage of information availability through sources such as social media and public data stores,
which are cheap online computing resources enabling the mass processing of data. Ongoing technological
developments will accelerate this growth.
■ Web analytical tools enable monitoring and harvesting of information on the Internet to provide
insight. At a basic level, analysis can be carried out with tools such as Google Trends, but many more
12. “What Larry Page thinks about Twitter,” http://www.loiclemeur.com/english/2009/05/larry-page-about-twitter.html
27

sophisticated applications are available and are developing in this area. We anticipate the concept of
“perpetual search” – real-time analysis that looks for changes and disruptions in a particular information
landscapes – will become a mainstream and valuable practice.
■ In-memory analytics takes advantage of improving hardware specifications to process information
directly in computing memory rather than running slower disk queries. This technique will greatly
enhance the volume and speed at which information can be processed.
■ Grids and horizontally scaled computing can bring to bear large amounts of computing resources for
particular purposes. Computing power can be obtained cheaply through grids and “as-a-service”
models, enabling customers to scale computing resources up and down very easily.
■ Human and computational intelligence are being combined into single hybrid information systems –
“artificial” artificial intelligence. These systems use computing power to analyze the bulk of data,
but apply human intelligence to certain tasks delivered from a crowdsourced group of human
participants. This combination of rapid number crunching and human intuition is a particularly
powerful development.
Number crunching
So, there may be plenty of exciting possibilities coming from the technology, but how can we be sure
that this is not continued hype? We envisage two distinct areas in which organizations will apply
analytical intelligence.
1. Targeting Competitive Advantage. Analytical technology is actually not a new concept and it can deliver
real advantage to any organization that manages to implement it more effectively than their competition.
A good example of this is Tesco, the U.K. supermarket that launched their Clubcard loyalty scheme in
1993. At face value, it was simply a means of encouraging shoppers to make repeat visits. However, the
program’s real value to the retailer was in the greater understanding it gave the company of its customers.
The information allowed Tesco to model their customers to a really granular level. They were able to spot
unusual patterns – such as the mutual demand for beer and diapers (nappies) from new, home-bound
fathers – and tailor marketing responses accordingly. The program was a huge success, and it played no
small part in them overtaking their main rival to become the UK’s biggest retailer. 13 Tesco now accounts
for £1 of every £8 spent by consumers in the U.K. 14
Barack Obama’s 2008 election campaign also provided an early example of how intelligence technologies
can make a difference. While Obama’s effective use of social media is well documented, the fact that his
team used data mining techniques to identify, locate and mobilize Democratic voters in key areas provided
a crucial advantage. In Iowa, the turning point in the campaign, the intelligent analytics his team
employed were a major factor in him winning the caucus, which positioned Obama as the front-runner in
the Democratic race. 15
While the use of analytics is not new, we believe the emergence of new technology will unlock even
greater possibilities for organizations and fuel huge growth in this area. This would include, for example,
13. “Loyalty card costs Tesco £1bn of profits - but is worth every penny,” http://www.independent.co.uk/news/business/analysis-
and-features/loyalty-card-costs-tesco-acircpound1bn-of-profits--but-is-worth-every-penny-582877.html; 14. “A month in Tescoland,”
http://www.guardian.co.uk/money/2005/oct/07/consumeraffairs.supermarkets; 15. “Internet key to Obama victories,”
http://news.bbc.co.uk/1/hi/7412045.stm
28

electricity companies being able to predict local demand and inform consumers as to how energy efficient
they are. Or local authorities being able to target crime-fighting resources more effectively and to the areas
that most need them.
So compelling are the examples of the effective use of analytics that organizations can no longer afford to
ignore them as niche or academic pursuits. Analytical intelligence, particularly in the commercial sectors,
is already leading to an information arms race as organizations realize they can’t be passive consumers of
data – they need to be proactive, innovative and assertive in finding, using and embedding information
into their businesses.
2. Understanding Risk and Improving Performance. If competitive advantage is about the market and
the competition, analytical intelligence can also be about turning the microscope inwards. By enabling
a real-time sense of their operating position, an enterprise can understand and improve both their
performance and their exposure to risk. When Google lost several of their senior managers to other
organizations in 2009, the search giant investigated whether they could use analytical methods to
determine if somebody was likely to move and they funded a research project to find out. The result,
Google claimed, was an algorithm that crunched human resources data on pay and performance reviews,
promotion history and other factors. It was able to profile each of their 20,000 workers in terms of their
probability of leaving the company. 16 The company has so far not shared their algorithm with the outside
world and maybe is unlikely to, but the tool illustrates the sort of insight that technology can now deliver.
A second growth area will be in the integration of existing business monitoring tools into single
visualizations, giving enterprises a real-time picture of the state of their business. This is particularly
relevant in the aftermath of the Financial Crisis, the implications of which are still to fully filter through.
Many financial organizations are looking carefully at their information systems to determine how they
can give better warning of such catastrophes and of their exposure to risk.
We anticipate that business outcomes will become more embedded in the way organizations use
technology. For example, instead of measuring the number of transactions through a computing resource,
a company could measure the dollar value of the transactions through the resource. By doing this,
enterprises will have a much clearer view of their business operations.
Finally, we are likely to see an alignment of information technology and operational technology – those
systems that control operational processes, such as a manufacturing line, a power plant or even a road
vehicle. By and large, operational technologies are distinct entities composed of radically different components
and architectures. But physical assets are becoming more IT-enabled, often network-connected with
IP addresses, and the area of automated technology asset management is one area of obvious synergy.
Operational and engineering technologies are also becoming more service-oriented. For example, Rolls
Royce now focuses their aerospace business on the services they provide to their customers, such as
engine health monitoring and pre-emptive fault detection. The creation of an integrated operating
16. “Why Google Employees Quit,” http://techcrunch.com/2009/01/18/why-google-employees-quit/
29

“We are still learning how to
capture and manage all the
rich data that is available to us
inside our organizations and
out in the broader world. We
have just begun to learn how
to tap into all of that and put
it to work for better decisions.”
Marc Silvester
Senior Vice President and
Global CTO, Fujitsu
environment would be a desirable outcome for most organizations in terms of their agility and their ability
to provide information in real time. The possibilities increase when we consider the implementation of
smart metering, sensor technologies and cheap wireless networks, which will emerge over coming years.
The developments we have discussed in this section are particularly exciting, because they are about a
focus on information. The IT industry is often guilty of emphasizing the “T” of technology rather than the “I”
of information. But some of the other trends we are seeing, such as the commoditization of hardware and
software, and the explosion of the Social Web, mean that our attention will tend to focus much more on
the payload of information that technology is there to carry. And the information is where we find the real
value; it is what the technology is there to exploit.
Key facts
■ There is a voracious appetite for real-time information, but speed often comes at the expense of
accuracy or integrity.
■ The Web is redefining the value of information into new dimensions – dynamism, context and richness.
■ New technologies will further drive information in real time – analytical/search tools, in-memory
processing, grids, and human and computational hybrid systems.
■ Analytical intelligence can be used to great effect to understand customers and markets and create
comparative advantage.
■ Greater operational efficiency can be realized through analytical tools, visualization and the
convergence of information and operational technology.
Key questions
■ How important is real-time information to you?
■ What type of information would give you the greatest advantage?
■ What are the threats and opportunities of exploiting real-time information?
30

Nine key trends
3. Borderless security
Beyond the perimeter
The online world and particularly cloud computing is moving the goalposts of how we secure information.
As impossible as it might sound, the challenge of the future is to secure what we cannot control. This calls
for a new approach and new behavior in terms what we trust and how we perceive value and risk.
How can we secure data outside the bounds of our direct control?
Open security – sound like a contradiction?
Albert Gonzalez was arrested in Miami in August 2009 having perpetrated the greatest credit card data
theft in U.S. history. Gonzalez had hacked into retail systems and targeted 7-Eleven, the supermarket chain
Hannaford Brothers and the New Jersey-based card payment processor Heartland Payment, among others.
He made off with the details of 130 million credit cards. 17 In the U.K. in the same year, hackers obtained
the online résumés of 4.5 million people from jobsite Monster.co.uk, which was the largest instance of
data theft in that country’s history. 18
These examples had malicious causes, but there have been many public security lapses caused by
organizations either having inadequate controls or not observing security procedure. Such failures of
security can be a betrayal of trust. Often, the victims of the breaches are not responsible for the failure and
they had an implicit level of trust that their private information would be kept available and in confidence.
If we remember our starting assumption about increasing change and complexity, it becomes clear that
the problems of securing information are likely to rise over time.
Security of information is underpinned by three characteristics of information assurance – confidentiality,
integrity and availability. These characteristics have been delivered over time by integrating controls into
technology systems. The first computing systems were straightforward to secure because they had a single
defined set of users and were housed in a single physical location.
As systems became distributed, a new security model was required to protect them from the outside. Firewalls
were implemented to control network traffic and tiered application architecture evolved, separating
outward facing components from the more secure internal information stores. Greater protection at the
boundary was provided with a host of security management features to reduce the threat from malicious
programs, spam and denial of service attacks as well as mobile user access features such as VPN.
This is, by and large, the security model that is in place today and it relies heavily on the existence of a
perimeter – a physical boundary through which traffic must pass and be controlled at the point of entry.
The principle of perimeter security is that you trust everything within and mistrust everything outside.
Boundary changes
As systems have proliferated, so the level of complexity of technical architecture has also increased. Large
enterprises run hundreds, sometimes thousands, of application services spread across a variety of geo-
17. ”Government charges Miami man with largest-ever US credit card theft,”
http://www.guardian.co.uk/world/2009/aug/17/us-credit-card-data-theft; 18. “Job website hit by major breach,”
http://news.bbc.co.uk/1/hi/technology/7853251.stm
31

graphical and off-premise locations. Security has tended to be implemented in the same silos as the information
systems, and very few organizations have been able to achieve security federation in their systems.
Complexity is undesirable because it clouds human judgment about what the correct behaviors are. For
example, with many passwords to remember, you are more likely to write them down and store them
insecurely. Complexity is dangerous because it obscures the overall position of information risk. How can
you understand your exposure to risk if you can’t tell where your weaknesses are?
The concept of the perimeter is losing its relevance. Personal mobility and portable media technologies
have meant that information easily and regularly travels beyond the perimeter. Integration with systems
outside of the enterprise is becoming more common as is technical collaboration with other parties. It
is becoming less viable – or efficient – to protect information with respect to a boundary and to rely on
security controls at that interface.
Related to this is the notion that the owners of information and those responsible for securing information
are often different parties – a trusting party and a trusted party. While a level of security can be ensured
through technology and processes, inevitably, a real level of trust – or confidence – will be required from
one of the parties with respect to the other. The implication is that it is confidence, rather than certainty,
that must become the defining characteristic of information assurance.
Enterprise security in our scenarios
1 2
Traditional enterprise
Conventional security model
with access control lists,
locked-down functionality and a
strong perimeter
3
Managed cloud
Open security model, user
credentials assured by trusted
third party
4
11.“Twitter Hits 50 Million Tweets Per Day,” http://mashable.com/2010/02/22/twitter-50-million-tweets/
Enterprise ecosystem
Federated security model,
virtual desktops, much
movement across the perimeter
Consumer society
Level and type of security
determined by individual
choice
32

But while organizations don’t wish to expose themselves to risk, they also don’t want security principles to
prevent them from realizing value. Security is, after all, about delivering value at an acceptable level of
risk. In the light of these challenges, we believe that information security is reaching a tipping point at
which the traditional models are not equipping us to move forward. When we start to think about some of
the other topics raised in this paper – for example, cloud computing or consumer technology – we can
identify information security as a common dependency and as the key to creating the confidence that will
unlock the value.
The challenge of security is particularly amplified when we consider the consumption of information
services from external sources. Our three security characteristics – confidentiality, availability and
integrity – are all associated with control. As organizations and their technology users move towards more
public providers, it becomes less feasible to have direct control and a level of trust becomes necessary.
Information must change from being “stateful” (i.e., secured in reference to a fixed context, such as a
location), to being “stateless”(secured independently of any particular context).
The extent to which information can be secured in this way will largely govern how successfully new
ways of working can be adopted. It is likely that ever more complex networks of services will evolve in
dependence upon a whole array of providers along a value chain. Any one failure could lead to
compromise. In February 2008, for instance, when Amazon suffered a serious outage, a huge number of
Web start-ups were impacted as along with some major sites like Twitter and the New York Times. 19 This is
a very immature area in which security standards are emerging – as are legal and commercial models.
Unlocking security
If the world of information changes to a delocalized, more collaborative space, as we think it will, the
principles of securing information must evolve. If the challenge of the past was to secure the systems over
which you have control, the challenge for the future is to secure the systems over which you have no control.
Or rather, to deliver a level of confidence that information is secure, wherever it might reside or travel.
This will require a new type of thinking. The Jericho Forum is a group of security professionals who
advocate deperimeterization 20 – the complete removal of network boundaries. While this is an extreme,
one might even argue theoretical position; when you start to think about securing the public cloud, the
principles of security without boundaries become extremely relevant.
We believe that two concepts will prove important to the next generation of security systems.
1. Open Security. Open security is based on the idea of a single reference party who assures the identity of
an individual for any transaction they wish to make. In this model, a relying party (an application, service
or site) uses an identity provider to validate an access request from a user (see fig. below). The user trusts
the identity provider with their details, they mutually agree to the level of security they would like to use,
and their dialog is in accordance with an industry standard interface. Under this model, people can also be
19. “Web startups crumble under Amazon S3 outage,” http://www.theregister.co.uk/2008/02/15/amazon_s3_outage_feb_2008/
20. The Jericho Forum, http://www.opengroup.org/jericho/
33

validated on the basis of claims. For example, a claim might be “I am over 21” or “I work for Acme Ltd.”
This enables security that is founded on a person’s characteristics, rather than specifying named
individuals. Crucially, it allows them to securely access places they have never previously visited and
which may be completely ignorant of their existence.
User-centric security
#4: Welcome Sid!
#1: Hi! I’m Sid
#3: Yes,
it is!
Identity Provider
Web site or App
#2: is it
him?
2. Stateless Data. As the relevance of the boundary decreases, it becomes important to secure data
itself. Confidential information needs to be secured independently of the context of its source.
Information-centric security is about protecting a unit of data regardless of its location. There are a variety
of technical methods for achieving this, ranging from certification to digital rights management or to
the setting of time-to-live attributes on data.
But data and information security is not simply a technical problem looking for a technical solution. In
the real world, information is too rich, too complex and too varied to treat it with a single model.
Different styles of information will call for different approaches. Understanding the relationships between
data, security, trust and privacy will be the key to providing information assurance in the future.
But aside from practicalities of their security practices, organizations will face some more fundamental
questions. How much do they need to control? Whose responsibility is the security of information?
The U.K., e.g., has recently seen huge opposition to storage of personal information on large databases –
such as national identity and health record schemes. Paradoxically, at the same time, the popularity of
social media, of which personal information makes up a large part, seems to know no bounds.
34

“Security and privacy concerns
are two of the most important
obstacles keeping us from
realizing the full value of our
technological capabilities.
Much like parenting approaches
change as children grow
older, we now need revised
approaches for protecting data
and establishing trust as our
data begins to become
independent and leave home.”
Joseph Reger
CTO
Fujitsu Technology Solutions
This might be best explained in the context of personal choice. Where privacy is concerned, individuals
are more likely to have confidence in the systems they have personally chosen, rather than in those they
had forced upon then. Giving more control to individuals brings with it a new set of challenges, but it
may be the best way to deliver the efficiency and value that organizations will demand – for an acceptable
level of risk.
Key facts
■ With much information now held electronically, security failures involving data held by a third party will
often compromise trust.
■ Traditional security models are ill-equipped to deal with the future as greater mobility and integration
cause the perimeter to lose its relevance and as privacy concerns grow.
■ Confidence will replace control in the mitigation of risk.
■ Open security and securing of stateless data are two practices that will support the evolution.
■ Information security is not necessarily a technology problem. It calls for a greater understanding of the
different styles of information, and of the specific risks and implications associated with each type.
Key questions
■ How do you balance information security risk verses the need for greater efficiency and value?
■ Does your business strategy drive information security or vice versa?
■ How relevant is the security perimeter to your organization?
35

Nine key trends
4. Invisible technology
Hidden in the clouds
In recent years, the advances made in high-speed networking have made it increasingly more attractive
to generate business benefits by creating flexible and scalable pools of computing resources off site. Cloud
computing abstracts the physical computing technology out of our daily lives. This changes everything
about the way we choose, consume and execute technology services.
Which of your workloads could soon be running on someone else’s technology?
Reach for the sky
In computing, the cloud has long been used as a visual metaphor to represent something that performs a
particular function, but which is too big, too complex or too remote to be portrayed in detail. Some four
decades since technical architects first drew clouds on their infrastructure diagrams, the term has become
the most hyped technology trend of its era. And while it has a new meaning and context, it has not lost
this original sense of abstraction. In fact, as we shall see, abstraction lies at the heart of what we now call
cloud computing.
Cloud has come about from a number of different innovations, none of which today would be considered
new concepts; but it is the convergence of these things at a point in time that is significant and which has
the potential to open up exciting possibilities. Cloud has a heritage in Utility Computing – the concept of
an on-demand, metered service that was integral to mainframe computing and broken by the personal
computing revolution before we really appreciated its value. Cloud also draws on the horizontally scaled
resource paradigm of Grid Computing and the distributed configuration of Service Oriented Architecture
(SOA); both ideas that enjoyed massive hype in the early 2000s.
Nonetheless, it is the development of cheap, high-bandwidth networks that have really enabled cloud
to become a reality. Cloud computing can be described in a variety of different physical forms, such as
public, shared, private and so on, and it has technological, physical, financial, commercial and strategic
dimensions. But the essence of cloud is what it means to the consumer. As a consumer, you want to
purchase a service and not be concerned with how that service is engineered – and to have the flexibility
to expand, contract or terminate as you wish.
On cloud nine
Many organizations are already exploiting cloud computing. The European Space Agency’s Gaia project,
for instance, is mapping the billion brightest stars in our galaxy and is a heavily computing-intensive
undertaking. It has purchased all of its computing resources from the cloud, much of it from Amazon. 21
The cloud is already crucial for the platforms of many popular application services such as Twitter and
Facebook, which would have been really challenged to manage their high levels of growth with traditional
on-premise systems architecture. Indeed, for “green field” implementations and small businesses, cloud
would seem to be a natural and obvious path to take. Many analysts expect it to be a significant delivery
channel in only a few years’ time.
21. Gaia, The European Space Agency, http://sci.esa.int/science-e/www/area/index.cfm?fareaid=26
36

But will mainstream businesses and large enterprises really be able to realize value from it? We believe
that cloud computing draws on some key principles that have the potential to create real value for them.
By adopting cloud computing, organizations can become agile in the way they consume IT services. They
can avoid costly start-up times, depreciation and the regular cycle of technology refreshes. They will be
able to experiment more and try out new services without committing significant resources. This will lead
indirectly to cost savings and also to value from greater innovation. Further, the cloud can abstract the
complexities of delivering business services away from an organization, allowing them to be consumed in
a commoditized format on an on-demand basis.
Enterprises will have the potential to operate more efficiently through the cloud. Purchasing services in
this way will enable the types of economies of scale that large commodity suppliers can offer. These
economies will apply across the board, not just for hardware and software, but for facilities and power
and so on. As the market matures, costs are likely to drop further.
Our vision of cloud describes four distinct “as-a-service” modes of consumption that organizations will
undertake. In addition to technology consumption, organizations will have demands for content and
business services that they will also wish to purchase in a scalable and elastic way. These four modes of
consumption are illustrated in fig. below.
What cloud means to us – Four modes of consumption
Activity
Encapsulated business processes
and functions as a service
Infrastructure
Delivering compute, storage,
networking and infrastructure
applications
Pay Per Use
Self Service
Elastic and Scalable
Content
A service model delivering content
and data as a service
Application
Packaged applications supplied
through pay-as-you-use service
Typically, consumption will consist of a blend of these four modes, with the relative proportions changing
as markets and business models mature. For example, the market for applications and infrastructure is
currently more mature than the market for activity and content. Over time, there will be a natural drift
towards this second pair of modes and the focus will switch from technology services to business services.
37

This has significant implications, not least that it changes the way customers will behave. For example, we
anticipate cloud services eventually being purchased by business functions rather than by technology functions.
While much of the focus we see today is on technology offerings, radical change will become reality
when businesses process content from the cloud and brokered services can be consumed from the cloud.
But to understand the full implications of cloud, we need to think beyond there being a single form
of enterprise IT because the cloud creates the potential for delivering information systems in a
larger dimension.
We can anticipate that the cloud will provide cheap and massively scaled computing power on an
unprecedented scale. When we consider the convergence with innovation in user devices, telecommu-
nications, sensors, wireless networks and ubiquitous computing – “the Internet of things” – and the
huge scale of information that can be processed, we can start to think of computing on a societal scale.
For example, we believe that clouds will evolve to control water supply, energy provision and traffic flow
across entire societies.
Such systems will greatly challenge social characteristics that we take for granted; the distinction between
consumer and provider will become blurred as will that between public organization and private company.
The potential to deliver much greater value and efficiency to the whole of society is huge and this is one of
the most exciting aspects of the cloud.
Cloud computing in our scenarios
1 2
Traditional enterprise
Technology resources consumed
in a conventional way
3
Managed cloud
Public clouds and Virtual
private clouds and Software
as a Service platforms
4
Enterprise ecosystem
Private cloud infrastructure
implemented within the
enterprise boundary
Consumer society
Everything in the cloud
38

Stormy weather
In 2010, the hype surrounding cloud computing was immense. Where there is hype, disappointment
usually follows, and we can expect a period of controversy as organizations are confronted with the reality
of delivering it. The extent to which cloud will be adopted is uncertain. Some organizations will be challenged
more than others – smaller and newer organizations will be able to exploit it much more readily.
Cloud brings with it some new and unique challenges. One obvious challenge is caused by complexity.
In the short and medium term, enterprises will consume a variety of cloud-based services as well as
conventional, on-premise services.
Managing a hybrid estate will create a headache for service management and particularly for IT security
and governance. Coupled with this, it is likely that more and more services will be purchased from outside
of IT functions, and control and governance (of technology) will be eroded. We might compare this to what
happened in the PC revolution – while this delivered considerable value to businesses in terms of reduced
computing cost and increased functionality, the complexity of technology management rose as a result.
Secondly, the execution of a cloud strategy is not a simple process. For example, migration, reconfiguring
of application interfaces and integration into business processes are all likely to be required. There could
be technology or regulatory constraints that lock cloud customers into particular suppliers and reduce the
agility benefit that cloud offers. Organizations will be tested to transform the way they operate internal
services, which again will be compounded in hybrid estates.
And finally, cloud computing is truly a game-changing development. Moving services into the cloud
involves a different set of risks, or even a recalibration of risk that may prove challenging for many
business cultures.
Fresh thinking on security will be required to cater for information and services that now reside outside of
organizational boundaries, and to integrate with other remote systems. And as markets mature, this is not
just about technology, but about business activities and the processes that their operations depend on.
So there are some caveats. Cloud requires us to take a strategic view and invest accordingly. In fact, we
believe that capitalizing on the value of cloud will require organizations to gain a better understanding of
their business and its relationship with technology.
Getting there
Moving to the cloud will involve a level of business change that organizations have not seen since the
dot.com boom. As organizations contemplate the transformation, we see three areas that they will need
to focus on:
39

1. Managing Choice. In the last century, choices around technology were limited. Technology was
expensive, people lacked skills and organizations built up their own technology capabilities based around
a relatively small number of platforms and products. Today, these constraints have been removed and
organizations have choices at almost every level of technology provision – who performs the service,
where it is located and so on. In all likelihood, choice will continue to proliferate. Moving to the cloud is not
a simple, one-size-fits-all equation; it requires a series of business decisions to be made based on
objectives and value. It is, therefore, key to set strategy that supports choice and not rely on a limited set of
mandated options. In order to make choices, organizations will need to understand their baseline. If a
supplier reduces their compute costs by 30%, how does the customer respond? This pricing change may
be sufficient to drive an architecture change. To get the greatest benefit, organizations will need to be able
to respond dynamically to market changes.
2. Moving to a Cloud Operating Model. Organizations will need to consider how they will manage and
operate their service. It is likely that they will consume services from a variety of sources – private, public,
shared – and operate this hybrid blend of resulting services. In order to do this, organizations will need to
evolve their risk, governance, service, commercial and business process frameworks. As we have seen,
cloud is underpinned by abstraction – taking complex and variant technologies and activities, and
abstracting them to a logical, service-based view so that everything looks the same.
3. Executing a Business Strategy. As the cloud market matures, many organizations will consume services
in the different modes we have described. Each mode will impact the relationships their businesses have
with technology, and the way that organizations operate could change radically. Understanding what
constitutes the core business and non-core business functions will be crucial in this regard. This will drive
the areas where organizations can really innovate and drive competitive advantage – as well as governing
the barriers to enter new areas of business or the risks of being joined by competitors in existing spaces.
Organizations must think of their technology and services as a supply chain rather than an area of real
estate they control and manage. They must understand risk, cost and core value.
As we write, cloud computing is immature and currently a subject of great hype. As the market matures,
so some of the barriers will erode and the cloud will grow. And we anticipate that it will become a major –
the major channel for the delivery of technology and business services.
40

“Few people know the details
of how their water or electricity
are delivered. They just expect
things to work consistently
and at a reasonable price.
That’s where we are headed
with computing.”
Marc Silvester
Senior Vice President and
Global CTO, Fujitsu
Key facts
■ We are increasingly moving toward cloud computing, which is characterized by pay-per-use, self-service
models that provide elasticity and scalability.
■ We identify four modes of cloud consumption – infrastructure, application, activity and content. The
latter two representing a fundamental shift in the way IT creates value
■ The convergence of cloud computing with other technologies brings potential for large-scale, high-value
“social” systems such as traffic management.
■ These changes bring three key challenges: complexity, execution and risk measurement.
■ To achieve all the available benefits, organizations must look to exploit three practices: managing
choice, moving to a cloud operating model and executing a clear business strategy.
Key questions
■ How will cloud computing change the way you consume technology and business services?
■ What obstacles will you need to overcome to exploit cloud computing?
■ What are the risks and benefits to you and your competitors?
41

Nine key trends
5. Connecting the consumer
Ultimately, everybody’s a consumer
Consumer technology has overtaken business technology as the driver of innovation and the explosive
growth occurring in the mobile device market is fuelling further change. People enjoy better technology at
home than at work. In fact, some people even have access to better technology during their commute to
work than they have at their workplace.
How do you plan to accommodate the growing desire among staff members to choose their own
productivity tools?
People in the middle
The growth of mobile devices in the last ten years has been staggering. In 2009, for the first time,
global sales of notebook and netbook computers exceeded desktop computer sales. Incredibly, by the
beginning of 2009, there was one mobile phone for every two people in the world. 22 Global mobile phone
penetration has risen from 13% in 2001 to 70% in December 2009 as developing countries have
leapfrogged a generation of technology to go straight to the mobile device. 23 This is most marked in Africa,
where cell phones account for 90% of phone users. 24 In the mature European market, a quarter of
households have stopped using fixed lines and mobile penetration stands at 125% – and is growing at 8%
per annum. 25 The mobile handset is close to global ubiquity.
Client devices in our scenarios
1 2
Traditional enterprise
Standard device portfolio with
limited choice and locked down
3
Managed cloud
All client access via browser,
client devices governed
by software standards only
4
Enterprise ecosystem
Virtualised desktop environments
and thin clients, self procurement
of devices
Consumer society
Anything, chosen and purchased
by the user
22. “Finding value in smartphones,” Bank of America Merrill Lynch 2009, p.7; 23. International Telecommunication Union Information
Society, Statistical Profiles 2009, Asia and the Pacific; 24. Africa - Fixed-line Telecommunications and Infrastructure Statistics,
https://www.budde.com.au/Research/Africa-Fixed-line-Telecommunications-and-Infrastructure-Statistics-tables-only.html?r=51
25. “European Mobile Operators,” www.companiesandmarkets.com
42

What is perhaps more interesting is that, following behind, is the accelerating global smartphone market
which is already growing at an incredible rate. The significant fact about the smartphone is that it puts the
user in touch with digital content and experiences; in the developing world – three quarters of the world’s
population – the smartphone IS the Internet.
To start with, this has a huge impact in terms of the market volume. Around a billion mobile devices were
sold globally in 2009, with sales of traditional handsets reaching a plateau and smartphones on the rise.
This is an absolutely huge market. It carries with it not just a device, but the whole chain of suppliers of
components, products, services and content. But there is a greater implication in terms of reach. The
increasing mobile market is rapidly connecting people in huge numbers that were once beyond the reach
of digital services.
A global dial tone
Ten years from now, it is likely that the smartphone will have reached global ubiquity, and if the rate of
growth continues to increase, this could happen within five years. The implications of this are as big as
they are uncertain. However, we can anticipate with reasonable confidence:
■ The global demand for online digital and information services is set to explode.
■ The smartphone will become the global “common denominator” for consumer transactions.
For the developed world, information services are predominantly accessed by computers over fixed lines.
But smartphones and small-form-factor mobile devices are changing our assumptions about how people
consume information. Organizations will need to focus on this as a major channel and also as a new way
of thinking.
The technologies of business and consumer computing will naturally continue to advance and proliferate,
but the idea of what represents the core channel is set to change, see Fig. below. This has large
implications for mobile commerce (m-commerce) applications as the vision of reaching the entire global
population is becoming a reality.
The world may still have regional divides, but this will be defined only by cultural and language
boundaries, not by technological or physical reach. The personal device will attract innovation, investment
and a growth in m-commerce. It will also compliment and drive the demand for cloud services.
43

Growing global reach of technology
Reach of Business
Technology
World population
Reach of Consumer
Technology
Reach of
Digital Information
& Services
Will we see a convergence of device? We believe this is unlikely. People have preferences around cost, size,
performance, design and even prestige. We see a range of radically different models in other consumer
products (consider televisions or even cars). But we may well see more globalization of technology
standards and digital services as we approach global device ubiquity.
So not only is the information market about to mushroom, we believe the smartphone (or personal
device) will become the primary channel for digital services.
Are we being served?
Choices around devices are becoming increasingly complex. Where once it was a simple matter, a vast
array of form factors and mobility options is now available. Besides the ever-increasing range of desktop
and laptop PCs, devices such as tablet computers, smartphones, netbooks, e-book readers and games consoles
are all now widely available. Demand continues to grow from increasingly IT-savvy consumers for an
ever-expanding range of devices and services all the time. They expect – and get – more for their money.
Over time, there has been a shift in the home of innovation from the business market to the consumer
market. The pace of change is accelerating, and the range of user devices and services continues to
44

proliferate. New technologies will lead to ever more desirable consumer electronics and form factor
will become a matter of choice without limiting compatibility. People consume different devices to suit
different activities, rather than pick one that suits them best for everything they do.
When personal computing first became mainstream, a whole new industry of business IT services arose
as a result. At the time, technology was difficult to configure and people did not have the skills to be able
to service themselves, for example to connect a computer to a network. We did not generally access
computing resources outside of the workplace. Throughout the 1980s, the price of business computing
generally precluded consumers from gaining access to it; computing for consumer markets looked very
different and was limited to hobby and games devices.
It was only by the end of the millennium that personal computing had become mainstream, and that
business and consumer devices had essentially become the same thing. It is notable that Microsoft retired
their mission statement “a PC on every desk and in every home” in 2002. But in 1990, the vast majority
of new entrants to the workforce had never used a personal computer before. Desktop services were
designed around an assumption that organizations were best placed to provide computing services for
their users.
With any new technology, it is common for a service industry to build up around it. Often, the innovation
may be technically difficult to use, and people are unfamiliar with it. But history tells us that once people
become comfortable, they prefer to be self-sufficient. Fueling-station pump attendants and telephone
operators, once mainstream jobs, have all but disappeared. Many people now prefer to do without travel
agents to book their vacations. While a computing estate is clearly a much more complex thing than a
forecourt, we believe that consumerization will drive the responsibility of many of the aspects of technical
support and purchasing back to the user. Putting human behavior aside, there are also some compelling
business reasons to justify this:
■ There are now considerable economies of scale offered by the consumer market, and not just around
devices, but for support, fixed and mobile network connectivity. Prices in the consumer market are low
and highly competitive.
■ The cost of control is prohibitive for many organizations. Corporate governance is not agile enough to
deal with the huge and growing range of consumer devices. Consequently, organizations restrict users
to a few simple options, denying users the value from new choices that innovation is bringing.
■ Enabling employees to make choices about devices creates greater efficiency in the workplace.
Employees would select the devices that align most closely with their working lives.
We believe that enterprise desktop services, as we know them today, will come to be regarded as
superfluous. Allowing individuals to take greater responsibility for their personal technology will enable
the self-sufficiency that most people prefer and provide organizations with the ability to unlock large
cost savings.
45

While we believe there are compelling reasons that an organization may wish to retain control of some or
all of their desktop estate, this can only be justified on risk and security type arguments or for specific user
groups or business applications. In 2010, the retention of desktop services is becoming harder to support
on a cost or value argument.
Consumerization is a trend that we believe could move quickly when it has reached its tipping point,
because the cost differential is going to become so great. We believe that client virtualization will be a
key enabler of the use of consumer technologies within enterprises. This can be implemented in many
different ways, and as the technologies mature and gain acceptance, it will become easier for organi-
zations to create virtual workspaces with no dependency on the client device.
Technology will generate better and better experiences for people. The quality of the experience will be
increased – not only by a range of exciting new technologies, but particularly by giving people the choice.
The consumer vision is about enabling and taking advantage of choice, while removing the constraints
which hold this back.
Always on
The developments of consumerization and global availability of devices are key trends, but this is by
no means the end of the device story. Networks will play a crucial role in the development of consumer
devices and will continue to be a major driver of change and innovation in information technology. We
believe that the continued advance of networking technology will move society into an “always on”
mindset, where digital access becomes completely pervasive and the act of connecting turns into a
redundant or invisible step.
We anticipate that consumer channels, such as Fiber to the Home (FTTH), 3G and WiMAX will be
increasingly employed by enterprise users. Organizations will be able to exploit public infrastructure as
a means of creating corporate connectivity.
Next generation network services, such as WiMAX and iBurst, will provide broadband-capacity wireless
bandwidth. If these technologies deliver on their promise, they will enable high bandwidth mobile
connectivity. 4G networks will deliver the next generation of mobile functionality and a whole range of
exciting possibilities, such as real-time video. Fixed networks are set to deliver improved performance
through widespread use of fiber, especially as the trend for competition for suppliers in this area.
Consumers will have greater choices over how they make phone calls, and they will increasingly make
zero-cost IP telephony calls when they are on a fixed network or even a WiFi network. In developing
countries, users will continue to consume services from mobile phones and smartphones. We will see
further innovation, which will enable users to perform transactions from mobile devices.
There are huge customer experience possibilities with these technologies, for example as a replacement
for tickets or being able to read smart posters on the move. In environments like airports, technology will
46

“Most of the best technological
innovation these days is
coming from the consumer
space, and few businesses can
afford to cut themselves off
from the benefits of mobility,
usability and economies of
scale that this creates.”
Glen Koskela
CTO Nordic, Fujitsu
enable all passenger interactions – from the check in, security checks, boarding information and flight
information right up to boarding the airplane.
Context awareness and augmented reality are becoming adopted more quickly than anybody anticipated
thanks to smartphones, and particularly to the iPhone and the huge innovation taking place with its
apps. Augmented reality is being applied to mapping technologies and is also being rapidly adopted by
transport and retail organizations to deliver information into the field of view. Context awareness is a
broader area, but it entails delivery of information from the user that represents location, or something
else about their context, the time of day perhaps, their language and their history of transactions with that
particular source. Of these, location awareness is probably the most mature, being available through GPS
or network triangulation to smartphones.
The introduction of location awareness into social media brings massive opportunities. Being able to answer
the “who is the nearest person to me who…” question opens up many possibilities for business and
social uses. Beyond this, we will enter a sensor-enabled world, where many transactions that we take for
granted today will be carried out automatically for us – for example unlocking a door, or even driving a
car. Wherever we go, whatever we do, there will be a network in the background, interacting with us and
linking us to a whole new world of digital services.
Key facts
■ Mobile phones are set to become globally pervasive, and smartphones soon after; nearly the entire
global population will soon participate in the market for digital services.
■ Consumer technology has overtaken business technology as the driver of innovation.
■ Consumerization (or self-provisioning) of technology can deliver value to businesses through the
economies of scale that are made possible by the consumer marketplace and by better alignment of
technology and its use.
■ New technologies are driving “always on” device functionality – for example WiMAX, 3G, iBurst and
near-field communication.
■ We can realize huge value from exploiting sensors and location awareness technologies, and these
capabilities will drive future connectivity.
Key questions
■ How will a digitally connected world impact your business?
■ How much freedom should employees be given over technology choice?
■ How would being “always on” change the way you and your customers live?
47

Nine key trends
6. Off-the-rack software
Suites of commodities
Enterprise applications are becoming commoditized. This change is being driven by demand for Software
as a Service (SaaS) offerings and further fuelled by the now insatiable appetite for consumer apps.
Commoditized apps will generate huge innovation and greatly lower the cost of failure in IT initiatives.
This will enable organizations to realize the granular requirements of their specific businesses while
simultaneously taking advantage of the economies of scale.
Are you ready to continuously rebuild your IT services to match the need?
An IT gold rush
In the summer of 2008, Apple launched the App Store, an online shop serving users of the iPhone and the
iPod Touch. By the following summer, they were offering 50,000 apps; by November of 2009, this had
doubled to 100,000 apps. The three billionth app was downloaded in January 2010 26 and there are now
in excess of 290,000 apps on the store. 27
The runaway success of this business has surprised a lot of analysts and maybe even Apple itself, which
has regularly insisted that it is not in the content business and only wants to sell more devices. That the
store has enjoyed this level of success is a strong indicator of the viability of commodity applications. The
Applications in our scenarios
1 2
Traditional enterprise
Monolithic business
applications, bespoke and
licensed and installed locally
3
Managed cloud
Software as a Service,
Platform as a Service
subscription applications
4
Enterprise ecosystem
Virtualised, packaged, licensed
applications delivered by thin
client or private apps stores
Consumer society
Free and Open Source
applications from web sources
and public app stores
26. “Apple’s App Store: From 2 To 3 Billion Downloads In Just Over 3 Months”
http://techcrunch.com/2010/01/05/app-store-3-billion-downloads/; 27. “App Store Stats Summary,” http://148apps.biz/app-store-metrics/
48

usiness world has been envisioning a commodity online software model for some time through
developments such as SaaS. But the consumer market, without the constraints of corporate governance,
interdependent technologies or complexities, and with the benefit of a giant user base, has delivered
first. To regard this as only a consumer trend is misleading. A gold rush is now taking place in the world of
business software as the race to bring online commodity software products to the market intensifies. The
success of the consumer app stores, of which Apple’s is the most popular, has spurred on SaaS adoption
in the enterprise environment; many large organizations aspire to having online repositories for their
corporate applications. In the autumn of 2009, both the U.S. 28 and the U.K. 29 governments announced
major app store projects to pilot the software distribution models of the large community clouds they
plan to build.
Large software vendors are struggling to adapt to the changing marketplace as innovative new players,
such as Salesforce.com, establish major footholds in the applications industry.
In the short term, we believe we will see a growth in online- or cloud-applications and hosed platforms
(for example Microsoft Azure), will become major channels for applications to run from. In all likelihood,
some new entrants will also appear in this space – names we are unfamiliar with and perhaps some that
we are. We believe there will be a major growth in SaaS and particularly a growth in enterprise apps stores
mirroring or even utilizing the consumer apps market. Packaged software appliances – applications that
include operating system, security and management components – will become common and, in the
medium term, they will be packaged for cloud platforms.
Mashing up
Back in January 2010, when the U.K. was in the grip of a harsh winter, an application by a developer called
Ben Marsh enjoyed widespread popularity. His “snowfall mashup” 30 enabled users to broadcast their
location (the first three letters of their postal code) and the level of snowfall they were experiencing (on
a scale of 1-10) using Twitter. The application then plotted this simple data on a Google Earth map. As the
application grew in popularity, it very soon had thousands of people contributing. By aggregating this
content, the application became a highly accurate real-time weather map of the U.K.
There are hundreds of similar examples of mashups – simple applications that are created by exploiting
and combining publically available applications or data. Google Flu Trends, for example, enables
individuals to track the global spread of flu outbreaks by analyzing search content in a geographic
context. Moreover, most major world cities now have a traffic congestion tracking application.
An important reason for the growth of mashups is that application innovation is becoming quicker, easier
and cheaper. It is now quite possible to deliver real value from software without the investment in
development that was once required. The snowfall mashup is a good example because it illustrates
differences between traditional and new software. In particular, it shows how a software service can drive
value from its own user base.
28. “US Government Launches Cloud Application Store, But The Toughest Questions Remain Unanswered,”
http://blogs.gartner.com/andrea_dimaio/2009/09/16/us-government-launches-appsgo/; 29. “Government to create own private cloud,
app store,” http://www.itpro.co.uk/618334/government-to-create-own-private-cloud-app-store; 30. “Snow UK: how Ben Marsh is using
Twitter to create data,” http://www.guardian.co.uk/news/datablog/2010/jan/05/snow-ben-marsh-twitter-data
49

The rise of the mashup is evidence of a more general development trend. We are seeing both individuals
and organizations innovating new software and services by taking advantage of existing free sources, by
hooking into application programming interfaces (APIs) of existing services, and by combining private and
public resources. Before we look at the impact of this, it is useful to examine one further trend.
The falling cost of failure
In 2007, it was estimated that the cost of failed software projects in the U.S. amounted to some $75
billion per annum. 31 There have been some high-profile failures, notably the FBI’s electronic case system,
which was cancelled after spending of some $170 million. 32 In the U.K., it has been estimated both by
independent 33 and internal sources 34 that only 30% of U.K. government software projects achieve success.
Nevertheless, things are not much better in the private sector. In 1996, FoxMeyer – at the time the
fifth largest pharmaceutical company in the world – was bankrupted largely because of a failed ERP
implementation. 35 U.K. retailer Sainsbury’s had to scrap a £150 million warehouse system in 2003. 36
Given the scale of this problem, detailed analysis is difficult to find; perhaps not surprisingly, IT
professionals don’t like to dwell on their failures. A 2007 study found that, among other things, 31% of
IT managers think they are more likely to win their national lottery than they are to have a trouble-free
IT project. 37 A 2009 report by Standish Group is the most detailed analysis on this subject. It confirms the
poor delivery record. 38
These are examples of highly complex projects that would always have carried a high level of risk. It is all
too easy to make judgments with hindsight about poor specification or poor management. What this
trend highlights, however, is that there is inevitably an appetite from enterprise software consumers to
do things differently.
The growing availability of SaaS offerings and the new generation of vendors offering services from the
cloud are giving organizations a reason to pause for thought. Accepting a solution that, off the shelf,
meets most, but maybe not all of their technical requirements is more attractive than a costly and lengthy
development cycle and a truck load of risk.
The increasing ease with which composite applications can be created and the inclusion of Web 2.0-type
content and functionality in software is leading to an environment in which experimentation and
innovation in applications can happen very quickly and at relatively low cost. Given that we can expect
standardization around software interfaces to continue and development toolsets to become richer and
more widely available, the possibilities become even more thrilling.
In our view, the most significant implication of these software trends is that the cost of failure is being
greatly reduced. Where in the past business applications took months and years to implement, in the
future it will be days. Organizations will be free to experiment and test in real time and business
innovation will, as a result, increase exponentially.
31. “Calculating the cost of failed software projects,” http://www.computerweekly.com/Articles/2008/05/06/230115/Calculating-the-costof-failed-software-projects.htm;
32. “Missing software kept Chinook Mk3 helicopters in Wiltshire hangar,” http://www.timesonline.co.uk/
tol/news/politics/article6808604.ece; 33. The Joseph Rowntree Reform Trust, Database State, 2009; 34. “Public sector IT projects have
only 30% success rate - CIO for Department for Work and Pensions,” http://www.computerweekly.com/blogs/tony_collins/2007/05/publicsector-it-projects-have.html;
35. “SAP and Deloitte Sued by FoxMeyer,” http://www.nytimes.com/1998/08/27/business/sap-and-deloittesued-by-foxmeyer.html;
36. “CIO Jury: Is IT to blame for £290m Sainsbury’s loss?” http://www.silicon.com/management/cio-insights/
2004/10/22/cio-jury-is-it-to-blame-for-290m-sainsburys-loss-39125219/; 37. IT Projects: Experience Certainty, Dynamic Markets Limited
(Sponsored by TCS), August 2007; 38. CHAOS Summary 2009, http://www1.standishgroup.com/newsroom/chaos_2009.php
50

This has absolutely huge implications for organizations in terms of both new opportunities and risk from
competition. Legacy applications will not disappear overnight, and indeed where they deliver core
business value, the argument for reengineering may not be supported. But we anticipate that an
application revolution will occur in the business world with as-a-Service methodology eventually being
the prevailing method of delivery.
Vertically challenged
As the SaaS market grows, commoditization of applications will enable software to become even more
embedded into the business. While some of the developments we have discussed around consumer apps
stores have mass impact, innovation will undoubtedly occur in more niche markets. We will see substantial
innovation around business-specific applications; indeed, much of the early adoption of commodity software
will be to address specific business tasks. We expect four interesting factors to come into play here:
1. Architecting Business Process. We believe that business processes will play an increasing role in the
architecture of applications and systems. Business process visualization tools will enable greater
awareness of business outcomes and we anticipate that methods like Business Process Modelling (BPM)
will evolve to deliver truly business-transaction-aware applications.
2. Vertical SaaS. With the maturing of the cloud market, more vertical solutions will become available as
discrete offerings (for example, a boutique hotel management application or an advertising agency
application) that contain the required functionality to support a core business operation. SMEs are obvious
consumers of these types of services, but vertical offerings will be developed that bundle different SaaS
offerings into single vertical solutions.
3. Activity as a Service. We have identified Activity as a Service as one of four cloud consumption modes.
Although this is currently an immature market, we anticipate it growing quickly as organizations become
able to consume common business activities in a flexible and scalable way. This is a natural evolution
from the vertical SaaS model in which customers consume business activities from the cloud rather than
software. An organization may process its payroll, financial clearing or security checking: these business
services will be defined, encapsulated, commoditized and made available as subscription services.
4. Convergence with Operational Technology. As we describe in “real-time insight,” we are likely to see
a convergence of operational business systems and information systems. Operational technology is the
most customized of all business systems, but this will eventually see an alignment with other technology
systems, and in some cases it will be consumed from external supply.
51

“The commoditization and
service-oriented delivery of
applications will revolutionize
the way that organizations
meet their software needs.
This will significantly lower
costs while speeding up the
implementation process, thus
solving two of the problems
that have hindered IT for a
long time now.”
Craig Baty
GM Marketing & CTO, Fujitsu
Australia & New Zealand
Key facts
■ Commodity applications and app stores have been a big success in the consumer marketplace, while
enterprise application development projects have a poor record of success, often at great cost.
■ Commoditization of applications and composites, such as mashups, will greatly reduce the cost of failure
and create a boom in application innovation.
■ Applications are taking on new characteristics; for example, they are commoditized, consumed as a s
ervice and configured rather than installed. They are also in a better position to derive additional value
from their user base.
■ Applications will become more aligned with business and require their own a business vocabulary.
Key questions
■ How important is application innovation to you?
■ What are the barriers to development and implementation of new applications?
■ How do you align business requirements with application consumption?
52

Nine key trends
7. Changing rules of business survival
Who’s the establishment now?
Technological advances are changing the rules of competitive advantage in every sector. Barriers to
entry are decreasing and time to market is in a free fall. Organizations increasingly must rely on their
brands, but they must also be agile.
How will you differentiate your business in the era to come?
The shifting business landscape
Back in 2007, U.S. supermarket-giant Wal-Mart announced an ambitious plan to introduce health clinics
into its stores. 39 The economic conditions seemed right. The problem of affordability of health care in
the U.S., particularly for the lowest income groups, was becoming a significant one and a huge political
issue. Americans were looking to find cheaper health care. Moreover, Wal-Mart was looking to grow. An
in-store health clinic seemed to be a great way to attract customers as well as generate a revenue stream
of its own.
Their goal has been to provide a simple service in the style of Starbucks or McDonald’s. And being a giant
organization, their one million employees – in itself a huge potential customer base – contributed strongly
towards the business case.
Business implications in our scenarios
1 2
Traditional enterprise
Low risk of technical failure,
but high risk of competition
exploiting new technology
models
3
Managed cloud
Opportunity to deliver new
business services using online
technologies and deploy cloud
experience in new markets
4
Enterprise ecosystem
Opportunity to replicate
technology models in separate
business entities and M&A
Consumer society
Opportunity to collaborate
with mass niche providers and
customers
39. “In-store clinics boost Wal-Mart’s health,” http://articles.moneycentral.msn.com/Investing/Extra/InStoreClinicsBoostWalMartsHealth.
aspx
53

But the story gets more interesting. In 2009, Wal-Mart announced that they would be offering electronic
health records, 40 bringing what are traditionally niche and customized technologies into the mainstream
and targeting, guess what, small clinics as their customers. In doing so, they would take advantage of
their scale, their consumer channels and their experience in IT from their internal systems.
The product uses a SaaS model bundled with hardware and is sold through an existing online sales
channel. It is a commodity product that undercuts rival offerings by as much as half. Again, there has
been an external trigger, with Wal-Mart’s move coming at a time when the Obama administration
was trying to stimulate the electronic medical record industry. 41
But this is not an isolated example. In the same year, U.K. supermarket Tesco announced they were
going to build a bank from scratch. 42 At the time, they had been successfully selling financial products to
customers through Tesco Personal Finance, effectively a consumer channel of rebranded financial products
provided by the Royal Bank of Scotland (RBS). The British retailer has now bought out the RBS stake,
opened a customer service center creating 800 new jobs and branded the initiative Tesco Bank.
Like Wal-Mart, external events influenced the timing of the venture. The Financial Crisis hit the banking
sector hard and the realignment of the retail finance sector created widespread discontent in the industry.
The two organizations hardest hit in the U.K. were the Scottish banks, RBS and HBOS, and it is no
coincidence that Tesco decided to locate the new organization in Edinburgh. The opportunity to create
a new banking organization– unencumbered by legacy systems and processes, and drawing from a
suddenly available pool of talent – was a tempting one.
Changing scenery
What these examples highlight is how the barriers to entering industries are changing. While often
such moves are opportunistic, organizations can typically leverage their strengths in one single area, for
example sales, distribution or supply chain. Then, by using new technology or new suppliers, they can
create a brand-new business. And as technology and service models evolve, barriers to entry will
continue to fall. But this is just one example of the challenges organizations face in today’s business
climate. Others include:
■ More Channels to Market. Organizations can reach their customers in a variety of different ways,
through physical outlets, call centers, Web sites and, more recently, via social media. This brings opportunity
to engage customers, but also the challenge of aligning operations and strategy, generating a
consistent brand and extending reach.
■ Global Rebalancing. The rise of Asia, especially Chinese manufacturing and Indian services, and
the growth of new markets around the world are testing organizations’ ability to compete and
exploit opportunity.
40. “Wal-Mart Plans to Market Digital Health Records System,” http://www.nytimes.com/2009/03/11/business/11record.html?_r=2&hp;
41. The White House, Health Reform: the American Recovery and Reinvestment Act, http://www.whitehouse.gov/issues/health-care;
42. “Tesco plans to build a bank from scratch,” http://www.guardian.co.uk/business/2009/aug/20/tesco-personal-finance-new-bank
54

■ Increasing Pace of Change. As we have already seen, the pace of change in the world has accelerated,
product life cycles have fallen, new services are springing up and information can be shared in an
instant. In such an accelerating environment, the value of intellectual property declines relative to
the value of the brand, as we will investigate in the next section.
■ Competing Global and Local Interests. Global organizations are especially challenged to deliver value
based on their scale without compromising local markets, cultures or regulations.
■ Rise of Non-Monetary Values. Ethical and brand valuations of organizations are rising in their relative
importance over more tangible monetary measures.
From a technology point of view, there are some unique drivers impacting organizations at this point in
time (see Fig. below). We call these the Six C’s. These forces of change are putting irresistible pressure on
existing business models, and inevitably, organizations are changing the way they conduct business. In
rising to this challenge, it is particularly important for companies to distinguish between activities that are
servicing the business and those that can generate real competitive value or underpin the organization’s
strategic aims.
The six C’s
Consolidation
Commoditization
Collaboration
Consumerization
Conservation
Compliance
Better alignment and greater value from existing assets driven by
the desire for consistency and greater efficiency
Product and service becoming modular and off-the-shelf driven by
the need for greater agility and visibility of cost
Web technologies and better access, driving ever greater
interaction between people
Consumer technology, overtaking business technology as the
driving force of choice
The need to be green, driven by ethical, reputational, regulatory and
increasingly business grounds...
...with legislation, regulations, standards – impacting globally
and locally
55

As ever, organizations are driven by external competition, innovation and pressures to reduce costs. There
are also forces that restrict change, such as budgets, risk, complexity and security. The interaction between
these competing factors defines the pace at which an organization is able to change, the value it can
realize and the risk it exposes itself to.
The brand and value chain
In November 2009, Toyota announced it was recalling 4.2 million vehicles in the U.S. because of a
problem with sticking brake pedals. Over the weeks that followed, further problems were discovered and
by February 2010, the worldwide recall had risen to impact around 8.5 million models. 43 The scale of this
was unprecedented and the financial cost to Toyota has been huge. But of greater concern to the company
is the damage to its reputation. Many people have wondered how a company like Toyota, the world’s
largest car manufacturer, could suffer such a catastrophe.
In the years running up to the recall, Toyota had been pursuing an aggressive growth strategy. By 2007,
it had reached a 13.1% market share, equivalent to sales of 9 million cars per year. In order to achieve
this, the manufacturer extended its manufacturing reach and supply chains as far as it could around
the world, increasing the distance between its design and engineering heartland, its customers and its
manufacturing bases. 44
Operating such an extended supply chain exposed Toyota to faults that perhaps would not have arisen had
they been manufacturing closer to the intellectual center of the company and to the values for quality on
which Toyota built its reputation.
This example highlights the challenge organizations now face in balancing the competing needs for a
strong brand value and an efficient, low-cost operation. This conflict is particularly relevant because, in
today’s fast-moving and competitive marketplace, the value of a brand is more important than ever.
And for manufacturing and technology companies, brand value rises relative to the value of its intellectual
capital – one of the traditional measures of product company value. Falling product life cycles have meant
that speed to market has become absolutely critical for a business to remain competitive.
Furthermore, falling barriers to entry are enabling organizations to move into areas in which they have
no intellectual capital. Here, brand trust is all important. That is what will persuade consumers that a
good product or experience will be offered. Examples of this are becoming increasingly common: Apple
selling phones and music, Amazon selling cloud computing, Google selling broadband, supermarkets
selling everything.
43. “Toyota boss Akio Toyoda apologises for faults,” http://news.bbc.co.uk/1/hi/business/8533352.stm; 44. “Toyota loses its shine,”
http://www.economist.com/displaystory.cfm?story_id=15064411
56

The challenge for organizations, particularly in fast-moving sectors, is to maintain a strong brand
reputation, while ensuring that the quality of delivery is in line with their reputation. Building value chain
strategies will become more and more important. In contrast to Toyota’s difficulties, Apple has been one of
the great success stories of the new millennium, building on the success of the iPod and iTunes with the
2007 release of the iPhone.
While the uptake of this device has largely been due to great design and strong marketing, the commercial
success has been built around the value chain. 45 Apple brings together component manufacturers, mobile
network operators, content providers, application developers and Internet providers, and it delivers this
as an ecosystem presented to the consumer right at the interface. As a result, Apple is able to make $300
in profit per device. Compare this to Nokia, which generates a profit of $10 per device, 46 albeit at a much
larger market share.
Apple’s most strategic competitor in this market is Google, which also recognizes the importance of
the value chain. That company is building an ecosystem around the Android device based on a growing
developer network and a strong innovation pedigree.
What is a service?
Currently, technology services are defined and delivered according to Service Level Agreements (SLAs),
which are offered for a range of service products; from a managed service for a large enterprise right down
to an individual mobile phone contract. Service suppliers are now evolving to offer services that are
characteristically more commoditized and flexible.
If we believe that services will become commoditized, then the differentiation between service offerings
will tend to diminish and become based more around brand value. As services become more flexible,
customers will find it easier to switch suppliers and incur minimal start-up times and costs. The implication
of this is that, in all likelihood, the market will determine the service level by defining what constitutes
acceptable service quality.
It is possible that many of the characteristics that we would normally associate with provision of service,
such as a fixed duration or reporting of service quality, will no longer be required. The customers are
assured that features that they would expect, such as best practice or availability, are embedded in the
service – either because of publicly available data or their trust of the supplier’s brand. If the service falls
short of the SLA or the market-determined SLA changes to a level the supplier cannot provide, the
customer will switch to another provider.
In reality, many large and complex service contracts will remain and it is difficult to foresee large
enterprises being able to fulfill all of their service needs with commodity services. Nevertheless, we
believe the trends are taking us much more into the area of the market-driven SLA. And we anticipate
that the use of long-term service contracts will decline.
45. “Finding value in smartphones,” Bank of America Merrill Lynch 2009, p.7; 46. “Finding value in smartphones,” Bank of America Merrill
Lynch 2009, p.9
57

“The trend toward agility and
dynamic scalability coupled
with the ability to shift
technology costs from CAPEX
to OPEX provides benefits to
all businesses. However,
start-ups in particular will
profit from the fact that they
can start with less capital
and then ramp up as needed.
That will make it a lot easier
for newcomers and lateral
entrants to capture
market share.”
Terry Blow
Deputy Global CTO, Fujitsu
Key facts
■ Commodity applications and app stores have been a big success in the consumer marketplace, while
enterprise application development projects have a poor record of success, often at great cost.
■ Commoditization of applications and composites, such as mashups, will greatly reduce the cost of failure
and create a boom in application innovation.
■ Applications are taking on new characteristics; for example, they are commoditized, consumed as a service
and configured rather than installed. They are also in a better position to derive additional value
from their user base.
■ Applications will become more aligned with business and require their own business vocabulary.
Key questions
■ How important is application innovation to you?
■ What are the barriers to development and implementation of new applications?
■ How do you align business requirements with application consumption?
58

Nine key trends
8. New cultural values and expectations
Attitudes drive markets
Some human values are inherent, but others are more flexible. Peoples’ attitudes toward their
responsibilities are changing and the pace of technology is creating demographic chasms between
generations. The factors that determine our future go way beyond technology; they affect the way
that we live and do business.
Changes affect us and we cause change
As we try to plan for the future, human values are an important variable for us to understand and perhaps
one of the hardest to anticipate. On one hand, behavior is predictable; people generally act rationally and
in the way that they have always done. But as our prosperity grows and our choices increase, values based
on preference rather than need come to the fore.
Many of the developments we have discussed throughout this paper have implications for our values and
patterns of behavior (see Fig. below). Exposure to technology is a powerful influence, especially considering
the role the Internet now plays in our lives. So is the rise of the global economy, which we might anticipate
will drive a rebalancing of cultural values as the influence of the developing world grows. There are
many drivers of changes in values, but we will focus on just three.
Changing values in our scenarios
1 2
Traditional enterprise
Tension created if values are not
aligned to enterprise strategy
3
Managed cloud
Alignment with values that want
flexibility and sustainability
4
Enterprise ecosystem
There is greater democracy
and individual preferences
are catered for
Consumer society
Alignment with any values and
easy to switch
59

A social conscience
In 1996, Unilever committed to a strategy of sourcing all of its fish from sustainable stocks. It formed the
Marine Stewardship Council (MSC) to encourage sustainable sourcing across the industry and, by 2005, it
was sourcing 60% of its fish from sustainable fisheries and almost 50% from MSC-certified sources. 47
One might reason that the corporation had a commercial interest in trying to rebuild global fish stocks;
nevertheless, it was one of the first examples of a major multinational organization incorporating socially
responsible activities into the execution of their business. As well as the pressing environmental problem
that Unilever was addressing, it was also responding to a value shift among their customers. Consumers
have been displaying a growing awareness of ethical issues that are revealed in their purchasing decisions.
Many organizations have been damaged by scandals involving unethical behavior. Examples include Gap
and Nike being linked to Asian sweatshops. Conversely, some have benefitted from taking a proactive and
positive stance on Corporate Social Responsibility (CSR).
In the U.K., retailer Marks and Spencer announced Plan A in 2007 – a £200 million sustainability project
on a scale not attempted before. It cut across all areas of their business, from the use of biodegradable
packaging and ethical sourcing to reducing power consumption in stores and in its IT. 48
Fairtrade is a another good example of how ethical values have influenced economic behavior. Various
Fairtrade initiatives had been attempted in the 1970s and 1980s, but it was in the 1990s that it became
globally established – albeit limited mainly to charity shops and non-profit organizations. However, about
eight years ago, Fairtrade sales began to take off as commercial organizations adopted the concept. 49
Sales continue to grow today.
With Starbucks switching to Fairtrade coffee beans across Europe in March 2010, Fairtrade has well
and truly become established in the mainstream. This rising exposure of ethical behavior has also been
reflected in a wave of standards and accreditations for CSR – for example, the United Nations Global
Compact or the SA8000 standard on social accounting. Many organizations now recognize the
importance of signing up to them.
Going green
The growth of green values in society, particularly in the developed world, has been well documented.
But the experience that arose in recent years is more interesting. Hype around sustainability and
environmentalism reached a peak in 2008. Scientific evidence for climate change was overwhelming.
The majority of the world had signed up to the Kyoto Protocol on greenhouse emissions and appetite for
emissions trading systems was growing. But the hype has since been influenced by two unexpected
events that have had big impacts across the world.
47. “Fishing for the Future: Unilever,” http://www.wbcsd.org/Plugins/DocSearch/details.asp?DocTypeId=24&ObjectId=MjA5MjY
48. “M&S promises radical change with £200m environmental action plan,” http://www.guardian.co.uk/business/2007/jan/15/
marksspencer.retail; 49. Global Fairtrade Sales 2000-2009, Fairtrade Labelling Organization
60

The near collapse of the banking sector in the 2008 Financial Crisis and the ensuing economic recession
changed business priorities markedly. Organizations were suddenly concerned with financing and
restructuring their businesses, and the urgency of responding to an environmental mandate evaporated.
Then, in November 2009, an e-mail server at the U.K.’s University of East Anglia’s Climate Research Unit
was hacked, which caused the so-called Climategate scandal. While those involved were later exonerated,
the charge that scientists deliberately manipulated data to support the case for man-made climate
change further damaged the environmental imperative by giving the arguments of climate change
skeptics new credibility. 50
Whether real values have changed is hard to say. Many organizations, particularly in the public sector, are
measuring and pursuing emissions targets; in some cases aggressively. We must also acknowledge that
disappearing hype can be a sign that change is becoming embedded in human activity and part of normal
business – a sign that the change has moved beyond its tipping point.
But for the technology industry, green values are being overshadowed by a new reality that has emerged.
In 2007, the total amount of power being consumed by servers in the U.S. overtook the amount of power
being consumed by the nation’s televisions. 51
It is estimated a standard server in a U.S. data center will consume $800 of electricity each year. Over the
life of the server, the cost of the power is very likely to exceed the cost of the server itself. 52
And the problem is not just limited to computing technology. Only a small proportion of the total energy
demanded by a data center powers processing cycles; the bulk of energy lost in a data center is in heat,
cooling and power conversion. In 2005, world data centers accounted for 152 billion kWh, just slightly
less than the total power consumption of Mexico, and a little more than Sweden 53 (see Fig. below) Based
on current trends, data center energy consumption in the U.S. alone is expected to double from 60 billion
kWh in 2006 to well over 100 billion kWh by 2011. 54
50. “Climate sceptics claim leaked emails are evidence of collusion among scientists,” http://www.guardian.co.uk/environment/2009/
nov/20/climate-sceptics-hackers-leaked-emails; 51. Report to Congress on Server and Data Center Energy Efficiency, U.S. Environmental
Protection Agency Energy Star Program, 2007, p.7; 52. Report to Congress on Server and Data Center Energy Efficiency, U.S. Environmental
Protection Agency Energy Star Program, 2007, p.30; 53. “The Environmental Cost of Cloud Computing: Assessing Power Use and
Impacts,” Jonathan Koomey, 2009 p.11; 54. Report to Congress on Server and Data Center Energy Efficiency, U.S. Environmental Protection
Agency Energy Star Program, 2007, p.7
61

Data center power in context
Final electricity consumption (billion kWh)
Italy
South Africa
Mexico
World Data Centers
Iran
Sweden
Turkey
0 100
200 300
Source for country data in 2005: International Energy Agency
The good news is that technologies like virtualization and the miniaturization of hardware are creating
ever more efficient power consumption. The growth of cloud computing and commodity computing
resources will also help by delivering greater efficiency through scale. Globally, there is huge investment in
R&D for energy-efficient technologies, for reduction of power consumption and heat dissipation, which will
drive further improvement.
The bad news is that the demand for computing resources is rising. As the Cleantech Group put it, “like
death and taxes, the absolute certainty surrounding data centers is that they will continue to expand.
Simply put, that demand calls for even greater energy consumption.” 55
The IT industry is now taking the energy efficiency problem very seriously. And this is not just because of
customer values or a genuine desire to protect the planet, admirable though these aims these may be.
It is being taken seriously because it has become about cost.
55. “Putting the heat on data center cooling costs,” http://cleantech.com/news/5063/putting-heat-data-center-cooling-co
62

Generation Y
The file-sharing site Napster was started in 1999 by Shawn Fanning, a student at Northeastern University
in Boston, MA. The site enabled users to share digital music with each other on a peer-to-peer basis and
became hugely popular. Its user base, mostly young people, grew quickly and reached a tipping point at
which virtually any search for a piece of music could be fulfilled. The site attracted heavy criticism from the
music industry for copyright infringement and, in 2001, after losing a legal challenge from a group of
companies headed by A&M Records, Napster was shut down.
The story of Napster has revolutionized the music industry, accelerating it in into digital media faster
than it might have gone on its own. Global sales of online music will soon exceed traditional channels.
But it also highlights one of the first impacts on the world of a new demographic group –Generation Y.
When heavy metal band Metallica sued Napster in 2000, it was the first public clash between a new
establishment and this new generation.
The demographic we call Generation Y has been variously named as the iGeneration, Millennials, Digital
Natives and the MTV Generation – phrases which all describe the sector of the population who have grown
up with technology, the Internet and mobile phones. Members of Generation Y were typically born in the
late 1980s and onwards, are now in the first phases of their careers, and appear to have a set of values
that is unique to their demographic. They are culturally liberal, ethically aware and self-reliant. The U.K.’s
Observer newspaper claimed “two thirds know the price of an Apple iPod Mini, three quarters have no idea
what a pint of milk costs. Many never read newspapers and two thirds do not vote.” 56
It is a generation that has grown up with a unique set of circumstances. They have experienced more
personal choice and freedom than any of their predecessors. They have not known anything other
than economic prosperity and been surrounded by ubiquitous technology. They have been targeted
commercially in a way over and above previous generations of young people. The mobile ringtone market,
estimated by the ARC Group as being worth $3.5 billion in 2004, is almost entirely down to this demographic.
Put in context, the global music market was estimated to be worth around $32 billion in 2004. 57
But it is their relationship with technology that defines Generation Y and may have the greatest
implications.
■ They are technically literate. Using technology is instinctive, not something that needs to be
learned. For the previous generations, technology use has required some kind of adaption to a
greater or lesser degree.
■ They expect simple and quick answers. For Generation Y, the answer is “never more than three clicks”
away. They use the Web and social media extensively and are happy to trust the views of people they
don’t know rather than invest time in getting an answer from a more credible source.
■ They demand flexibility. As young consumers, they have grown up managing their own mobile phone
contracts and bank accounts. They think nothing of changing a supplier. In their working lives too, they
demand flexibility in their careers and expect to change employers frequently.
56. “They don’t live for work ... they work to live,” http://www.guardian.co.uk/money/2008/may/25/workandcareers.worklifebalance;
57. “Ring Tones Bringing in Big Bucks,” http://www.wired.com/techbiz/media/news/2004/01/61903
63

“It’s easier to adjust to a new
technology than to a new way
of thinking. You can replace an
outdated server in minutes,
but it takes a long time to
replace an inappropriate sense
of responsibility toward the
environment or an old-school
approach to work behavior.”
Sanya Uehara
Senior Vice President,
Fujitsu Laboratories Ltd.
The influence of Generation Y is, of course, controversial, not least because our values and priorities
change as we get older and face up to greater responsibilities. On top of this, the Financial Crisis has been
a reality check. It is the first economic downturn many have experienced and is likely to constrain the
personal freedom and flexibility they have come to expect. But like many observers, we believe this
generation will have a strong influence on the future.
As they grow into positions of responsibility, business decision making will increasingly reflect their values
more fully. With the buying power of Generation Y set to eclipse other demographics, 58 we can expect to
see these values reflected in consumption patterns, causing a fall in demand for newspapers or for
scheduled television programming, for instance. But perhaps of greatest significance is that Generation-Y
values tend to reinforce many of the other changes we have described in this paper: The consumerization
of technology, the rise of social media, the growth in ethical values and social responsibility, and the
demand for flexible services.
Whether or not Generation Y turns conservative as they become middle aged, we believe their impact on
the world will already have been significant. As far as the Napster story is concerned, Generation Y appears
to have had the last laugh. It was estimated in 2009 that illegal downloads constituted about 95% of all
online music transactions. 59
Key facts
■ Social responsibility and ethical behavior have become established as a driver of economic behavior.
■ Pro-environmental momentum has been slowed by the economic recession …
■ …but green IT has strong momentum on cost grounds. Over its lifespan, it will cost more to power a server
than to purchase it.
■ Generation Y and Generation Z will drive changes in values as they increasingly move into positions
of influence.
■ The values that these two generations hold reinforce many of the other trends we have described.
Key questions
■ How is your organization impacted by the ethics of your employees – and your customers?
■ How important is energy efficiency to you and your regulators?
■ Will a younger generation force change in your organization?
58. “The New Counterculture’s Buying Power,” http://www.forbes.com/2008/10/01/hipster-buying-power-forbeslife-cx_ls_1001style.html;
59. “Revolution, Innovation and Responsibility,” http://www.ifpi.org/content/section_resources/dmr2008.html
64

Nine key trends
9. A workforce in motion
Wanted: flexible workers
A new source of human resources is emerging, which enables crowdsourcing of human labor from a
huge pool of virtual resources. The human cloud gives organizations greater choice and value. Overall,
workforces are becoming more mobile in terms of geography, skills and working styles. That flexibility
is already important, but it will become crucial in tomorrow’s rapidly changing markets.
Where exactly is this flexibility needed in your organization and where will it come from?
Reinventing the office
How much of how we act is determined by ingrained practices and how much can be altered by
environmental changes? Our way of life is not a volatile activity. It is often shaped by cultural factors
that go back hundreds, if not thousands of years. But change in behavior does steadily take place,
particularly as a result of our response to technology and our rising standard of living.
Think of how technology has impacted the workplace. Our way of working is very different in the 2010s
compared to how it was in the 1980s, which was completely different than how it was in the 1950s. Some
things have remained constant. We still work for a salary, we tend to work for one organization at a time
and we tend to travel to our place of work.
But we believe that the workplace will undergo a transformation over the next decade; again driven by
technology, but in ways that will be more profound.
The human cloud
Liveops.com is a company that describes itself as a virtual call center. It first came to the attention of the
news media in the wake of Hurricane Katrina in 2006, when the company was used to rapidly set up a call
center to link people impacted by the disaster with their families. 60
Over a single weekend, they handled 31,000 calls. But liveops.com does not have a regular workforce. It is
staffed by a community of agents, of whom there are currently around 20,000. To work for liveops.com,
you need to register online and take an aptitude test. Having successfully passed this, and only a minority
of applicants do, you are able to start work. As you gain experience in working for them, your capability
and status rises, and you are able to work on more challenging tasks.
The significant thing about liveops agents is that they work from home and can choose how much or
how little they want to. When they log in, they select tasks from a pool representing their level of skill. An
agent could pick up only one single call if they wished, or they could work all day. Or all night. They get
paid simply on the number of calls they take. Because the community of agents is so big, they can fulfill
workloads flexibly and the customer receives the same service as they would from a traditional call center.
Liveops.com describes its community as a “workforce in the cloud.” They are a human cloud.
60. “Call center for hire helps sell blenders,” http://www.networkworld.com/news/2006/082106-call-centers-outsourcing.html
65

In the last few years, technology, and particularly the Web, has enabled the concept of crowdsourcing –
engaging a large number of people to fulfill a specific task – to become a practical reality. The idea of
crowdsourcing probably is not new to anyone, even though the term may be. For example, Wikipedia is
an example of crowdsourced work, as is a simple e-mail request for the answer to a question sent out to
a large number of people.
Croudsourcing human expertise
Increasing Human Expertise and Attention
Scientific problem solving
Open innovation
Medical diagnosis
Translation
IT problem solving
Design work
Call centre work
CCTV monitoring
OCR tasks
Recorded actions
We are starting to see some interesting applications of crowdsourcing in the marketplace and we believe
this concept will continue to mature. As it does, it will revolutionize human resource management.
Generally, activity in this area can be broken down according to the level of skill or difficulty of the task.
Here are some of the different types of tasks that can be accomplished efficiently by taking advantage of
emerging technologies and crowdsourcing processes:
Solution creation. These are tasks that try to create solutions to a complex problem. There have been
quite high-profile examples of these, such as the X-Prize, which offers large sums of money for solving
specific major scientific or engineering challenges.
66

Another example is Innocentive, a solution marketplace in which seekers post problems with bounties
for solvers to respond to. Open innovation initiatives like this have been immensely popular in the
pharmaceutical industry, where it is proving to be a faster and cheaper way to develop a product. 61
Expert Knowledge and Expertise Location. These might be tasks requiring an expert opinion, such
as advice from a lawyer or physician, or to find the solution to a specific technical problem. Expertise
location is typically about finding the answer to a query or problem that an expert should routinely
know the answer to.
Specialized Activity. This is the commissioning of an activity that leads to the output of something
tangible; for example, a piece of design work for the cover of a book, the creation of a standard legal
contract or even a piece of software code. The artifact that is produced may be simple or complex,
but it takes a specific skill to produce it.
Human Intuition. There are some tasks that don’t require a particular skill, but which are unable to be
performed by a computer. These are tasks that we may consider mundane, but they are difficult or costly
to automate, for example, monitoring CCTV pictures. In 2005, Amazon launched a service called
Mechanical Turk, a crowdsourcing marketplace that enables the resourcing and automating of just such
tasks. Computer programs, written by requestors package and post human intelligence tasks to the crowd.
These might be activities like tagging photographs or identifying performers on CDs. Such activities can
be engineered to compliment artificial intelligence systems because they allow human intuition to be
incorporated into computation, greatly improving the output; for example, problem solving or language
translation systems.
Inattentive Activity. Finally, there are tasks that can be carried out with a person barely noticing that
they are contributing. This might be a task a person is given when they log onto a Web site, for example
performing optical character recognition from a scanned piece of text. Many of us will have already
contributed to these types of task, probably without realizing it.
The web has been instrumental in delivering crowdsourcing as a practical concept because it is so effective
at connecting us with large numbers of people. As Web technologies continue to grow in sophistication
and use, the usefulness and prominence of crowdsourcing will increase accordingly.
The crowdsourcing market mechanisms work slightly differently depending on the difficulty of the task.
With high level tasks, the challenge is to engage with a small number of people with the right skills –
exploiting the long tail of the web. Lower-level tasks are about engaging as many contributors as possible,
taking advantage of the large volume of people you can connect on the Internet. Different models for
reward have been employed.
61. “The Next Wave of Open Innovation,” http://www.businessweek.com/innovate/content/apr2009/id2009048_360417.htm
67

A marketplace is a good way of exploiting a human cloud, rewarding individuals on a task completion
basis. But other mechanisms are also possible for some tasks. For example, prediction markets have
emerged as an effective way of generating insight based on a model in which individuals are rewarded for
the accuracy of their predictions. Sometimes, the competitive urge is incentive enough and many crowdsourcing
systems have grown around points systems or prestige. Many markets rely on this game-playing
principle in cases where participants enjoy the process of contributing.
As crowdsourcing matures, so will the possibilities. However, we believe that human clouds will soon be
recognized as a new branch of human resources. Engagement of human labor will have the same basic
characteristics as cloud-based technology services – elastic, scalable, self-service and pay-per-use.
For example, in the field of IT services, this form of human resource will be effective for solving technical
problems. With a mature human cloud for helpdesk, the efficiency and agility of service desks will be
greatly enhanced. This model will also drive collaborative business models with which consumers are able
to provide feedback into the design process. In this way, they will help shape the design of products they
will consume or help market products that they are passionate about.
Diverging human resources
Direct
employment
& freelance
Today
Tomorrow: Alternative labour supplies
Direct
employment
& freelance
Human
cloud
68

The mobile workforce
While the human cloud represents a radical change, steady evolutionary change continues to take place
in the workforce. Based on recent history, the workforce has steadily become more mobile and agile. We
expect further change around workforce mobility to be generated by changing values, changing business
expectations as well as changes in technology.
Human resources and mobility in our scenarios
1 2
Traditional enterprise
Low mobility, no means of
engaging human clouds
3
Managed cloud
Higher mobility, subscriber
use of human clouds
4
Enterprise ecosystem
High mobility, some internal
crowdsourcing through enterprise
social media
Consumer society
High mobility, supplier and
subscriber use of human clouds
Commercial Mobility. Where once upon a time you had a job for life, individuals are now less tied to a
particular employer and commonly move through many different employers, often changing every few
years. A 2008 survey by the U.S. Department of Labor found that individuals born in the 1960s had, on
average, held 10.8 jobs up to the age of 42, with two thirds of these being held before the age of 27. 62 It is
likely that this trend will accelerate, especially as many of the incentives for long-term employment, such
as final salary pension schemes are disappearing. Social networks are also making the job market more
efficient and flexible, particularly for skilled and professional workers. This will further drive employment
mobility. Longer term, it is likely that online marketplaces will emerge based on principles similar to those
operating in the crowdsourcing marketplaces that we have already investigated. Commercial models will
underpin each employee contract and determine the nature of the relationship between organizations and
employees. We anticipate that this trend will lead employers to focus more on task-based recruitment –
sourcing skills for specific, point-in-time activities rather than career recruitment.
62. U.S. Bureau of Labor Statistics, Economic News Release, 2008, http://www.bls.gov/news.release/nlsoy.nr0.htm
69

“Technology enablement will
bring globalization to a new
level and enable workflows
that would have been
inconceivable even just a few
years ago. Exploiting these
developments without
exploiting people will be a
great challenge, but there are
benefits to be gained by all.”
David Gentle
Strategy Manager, Fujitsu
Global Business Group
Skills Mobility. Transfer of skills is becoming much more common in the workplace. Again, where once
people tended to have the same job role for life, people have become more flexible about taking on new
skills. In part, this is a value change. However, it is also reflective of the fact that technology and social
change is creating new opportunities. Even within fixed roles, employees are having to adapt to changes
that impact their disciplines. Look at how microblogging has impacted the PR and marketing professions,
for instance. We believe that human resource management will become adept at supplying “just-in-timeskills”
to empower a more skills-efficient workforce.
Physical and Geographical Mobility. Technology has had a huge impact on the physical mobility of people
and this is set to continue. It has enabled people to be connected with their colleagues and customers
remotely through mobile computers and more recently, through smartphones. Further, people have been
able to collaborate more effectively over long distances through teleconferencing, videoconferencing and
webcasting. While we tend to think of such people as “knowledge workers,” the availability of consumer
technology means that more and more people will be able to make choices about where they work.
Key facts
■ The human cloud represents a new source of human resources and a divergence from the traditional
ways of hiring of labor.
■ Acquisition of human resources from the cloud will be enabled by social networks and online services
for crowdsourcing.
■ Resources will be acquired depending on skill and attention; from highly specialized to
mundane activity.
■ Workforces are becoming more mobile in terms of commercial flexibility, skills adoption and
physical location.
■ Organizations will have greater choice over how they can benefit from human resources.
Key questions
■ Which of your business functions could be serviced from a human cloud?
■ What are the risks and benefits of employing crowdsourcing?
■ How would you use technology to enable greater mobility in your organization?
70

Twelve key predictions
and their implications
What do we know today?
From incremental advances to game-changing innovations, the future is always shaped by the
developments taking place in the present. There may be uncertainty around the extent and implications
of change, but like a ship’s navigator, we can observe our course and the prevailing conditions and
make some assumptions about where we may end up
We can’t, of course, know the unknowable. However, by taking a pragmatic, realistic and informed view,
we can consider the future with greater confidence and give ourselves a much more stable platform and
context for planning. After all, the most successful business leaders in the world – think about Bill Gates
or Steve Jobs – have not built their achievements on getting things exactly right, but on being mostly right.
Gaining insight into changes that are affecting numerous intersecting areas can lead to practical and
profitable conclusions.
We started this analysis by considering this question: If we were looking back from five years’ time, what
could we say that we knew today?
As a result, we have identified 12 predications for change that we think are safe bets. They are
developments that we see carrying solid momentum and which are backed up by strong evidence,
but which are yet to pass their tipping points into the mainstream. Each one carries significant
implications, which we have attempted to capture.
As you read through these 12 predictions and their implications, consider the following questions:
■ Are the relevant people within your organization aware of these developments and in a position to act
on them?
■ Which topics can you safely put on the “back burner,” and which do you need to act on immediately?
■ Which of these developments pose the largest risk? Which offer the most opportunity?
■ What processes will you need to have in place to manage the required change?
71

1. Smartphones will become pervasive.
While sales of traditional handsets are reaching a plateau (at a high level), the global market for
smartphones and mobile-computing devices is growing at an incredible rate. These devices are putting
users in touch with digital content and experiences, wherever and whenever they choose. And crucially,
the developing world is seeing massive growth and is skipping a generation of fixed-computing
technology; the increasing mobile market is rapidly connecting people in huge numbers that were
once beyond the reach of online services.
Implications:
■ Demand for global digital services will rise exponentially.
■ Smartphones will be the channel through which the largest numbers of customers can be reached,
and new, smartphone-enabled markets will emerge.
■ Digital interfaces will become ubiquitous; everything will be available, and context and location will be
known and understood by the systems they access.
■ Mobile devices will become the main focus for business, and technology innovation and the global
common denominator for consumer transactions.
■ Innovation will be strong in developing countries, where cellular networks account for a greater
proportion of Internet use.
■ Competing organizations will find it easier to reach each other’s customers, even from overseas.
■ The word “mobile” will lose its meaning – at least in a technology context.
2. Social media will deliver real business value when used in scale.
Information technology has come a long way since the days of the mainframe – when “they” provided
computing for “us.” We are in an age in which digital content is created and shared by individuals, and
social media enables this interaction in vast numbers. For organizations, perceptions of social media and
social networking as only the preserve of teenagers – and timewasters – are changing fast; like it or not,
they have little choice but to embrace this major channel to their customers. But there is a catch: Where
companies seek to control and place boundaries around social media, they will fail. The value of the
networks comes from their organic nature and in order to capitalize, organizations must look beyond
their own boundaries and open up to these developments.
Implications:
■ All customer applications will have social media functionality built into them.
■ Communications tools will either be replaced by social media/networks or evolve to incorporate their
characteristics.
■ Organizations will have to look beyond their traditional boundaries.
■ These platforms will enable companies to gain a greater understanding of their markets and how their
businesses function.
■ The word “user” will lose its connotation of a passive technology consumer – and may disappear entirely.
■ The lines between “producers” and “consumers” will become blurred.
72

3. Speed of information will be everything.
The last couple of years have seen huge changes in the way we use technology, and one of the
most significant has been in real-time information. When we search, we are no longer content with
information from a year ago, or even more recently. We need to know what is happening now, this
second. It would seem a safe bet that real-time social-media searches will continue to develop and
become more sophisticated, but also that real-time information will become more embedded in
operational and business systems.
Implications:
■ Decision-making time will be reduced.
■ Organizations will learn how to exploit “free” information from social searches and the real-time Web.
■ Operational technology and information technology will converge; sensor technologies will provide
information from the ground up.
■ Competing organizations will engage in information arms races.
■ By investing in technology, organizations may gain a better understanding of their competitors’
customers than even their competitors have.
4. Organizations will consume business services, not technology services.
Cloud computing will see us consuming technology resources in an on-demand, subscription-based
fashion. As a result, technology will become abstracted from us. We will stop caring about detailed technical
requirements, such as makes and models, and will focus exclusively on what services we need. This will
naturally drive a change of focus from technology requirements to business outcomes. No longer requiring
the expertise of IT departments, business functions will be able to consume business services directly.
Implications:
■ New markets will appear for pay-per-use business activities, and agreements will become more flexible
and based on outcomes.
■ Organizations will become outward-looking rather than inward-looking with regard to technology and
services; information supply chains will replace reference architectures.
■ Technology resources will be modular and highly scaled. They will be provisioned rapidly, elastically and
dynamically. Services will come from a variety of physical channels.
■ Financial models will emphasize operational expenditure rather than capital expenditure, and the focus
will be on management and aggregation of suppliers rather than management of physical resources.
73

5. Support of choice will become essential.
The world is becoming ever more complicated and the pace of change is accelerating. In every walk of
life, there are more options available to us than ever before. We have entered an era in which change
is the norm and stasis the exception. Flexibility and agility are becoming key attributes for thriving
organizations; in contrast, those which respond by limiting choices will struggle. Successful organizations
will be the ones that position themselves to capitalize on the huge value that technology and social
change is delivering.
Implications:
■ Organizations will replace inflexible technologies or architectures, such as application silos or
“fat” clients.
■ Governance and risk perception will change to enable greater agility and empowerment of individuals.
■ Self-service and consumer services will become the norm.
■ Organizations will have to be able to determine the best source of any service at any given time, and
continually respond and adapt.
■ Agile working and fast decision making will become crucial.
6. Crowdsourcing will become a major supply of human resources.
Crowdsourcing – the outsourcing of tasks to a large pool or community of people with an open request –
is enabling human resources to be engaged in an on-demand fashion. Mirroring the way that
technology resources are consumed through cloud computing, human resources can be engaged through
crowd-sourcing without the normal overheads associated with fixed labor. While crowdsourced labor is
not always a substitute for direct hires, it will offer a significant new channel to deliver reduced cost, and
greater speed and flexibility.
Implications:
■ Crowdsourcing will fulfill many human resource requirements.
■ Human resources will be engaged on a task and utility basis: elastic, scalable, and pay-per-use
approaches.
■ Business activities that can be specified as discrete tasks will be resourced from crowds.
■ Greater value will be obtained by leveraging free or very low-cost human input.
■ Crowdsourcing will play a critical role in specific functions, such as technical support or medical
diagnosis.
74

7. Enterprise users will procure and manage their personal technology.
People have become comfortable with technology and the assumptions on which enterprise IT has grown
up with – that technology is expensive, complicated and inaccessible – no longer hold true. Individuals are
better placed than ever before to make decisions about what technology they use in their daily lives and
we have seen so many times before, for example with travel or personal finance. Once people gain a level
of familiarity, self-service is greatly preferred.
Implications:
■ We will see the end of the help desk as we know it.
■ Internally provided desktop services will provide help for specific business activities and security access
rather than help with general technology use.
■ Retailers will be used to provide bulk of technology and related services to individuals.
■ The application of computing technology will lose its white collar implication – everybody will use
technology.
■ A wide variety of form factors and devices will proliferate in enterprises.
8. Location and context data will become embedded in our digital
interactions.
As technology plays an ever greater part in our lives, so our technology experiences are becoming ever
more personalized and contextualized. We are already seeing many location-based services develop
around mobile devices, delivering information related to our geographic position. As mobile services
proliferate, we can only expect to see this type of functionality accelerate. While users will benefit from
new features, providers of services and applications will be able to exploit an important new source of
information about their customers.
Implications:
■ New application functionality will be realized that provides location or context-based services
and exploits information about users.
■ Systems will become ever more responsive to the needs of their users, offering ever improving
experiences
■ Integration of location details will further accelerate the importance of social networking and
social media.
■ Huge new markets will likely open for location-based services and applications.
■ New privacy issues will arise.
■ Uptake of related technologies – such as sensors and smart devices – will accelerate.
75

9. Uncontrollable areas will need to be secured.
Many of the changes we are anticipating describe a move from a stateful environment to a stateless one.
A world in which technology services are very much defined by the physical environment, and location of
their source is giving way to a world in which services are fluid and dynamic and can be consumed from
anywhere. Security models that exist today are inadequate to support this new way of working and new
solutions will need to be found.
Implications:
■ Managing stateless data will become a key challenge.
■ Security models will evolve to emphasize protection of the unit of data (becoming information-centric)
and trusted sources of user credentials.
■ The corporate perimeter will decline in importance and relevance. Trust will become the enabling factor;
people and organizations will collaborate extensively.
■ Data protection and privacy will derive much more from personal control than from organizational or
governmental control.
■ Adoption of identity management and biometric technologies will accelerate.
■ Our perception of risk will change.
10. Apps are here to stay.
It is fair to say that enterprise IT has really struggled to find a simple way of distributing applications,
and it seems ironic that, with the rise of the app store, the consumer sector has found it. The corporate app
store will become a reality, delivered by some focused internal development, but mostly exploiting the
huge scale of the open market.
Implications:
■ Commodity applications, delivering most requirements off-the-shelf and immediately, will be more
attractive than custom development.
■ Innovation will accelerate in the business applications market and the cost of failure will fall.
■ Applications will be lighter and developed faster, and big development projects will decline.
■ User ratings rather than acceptance testing will determine the quality of applications.
■ Development efforts will focus on creating composite applications, mashups and niche functionality.
■ Monolithic applications will become less common, but legacy systems will persist where they provide
core business services or brand value.
76

11. IT functions will lose their buying monopoly.
IT functions exist because they have expertise in a technology that is required to support the operation
of their businesses. The relevance of this expertise is in decline as individuals become more familiar with
personal technologies and cloud computing offers for utility consumption of technology services. IT
departments will change as a result and may even contract: Some of their current functions, such as
sourcing decisions, will move into businesses.
Implications:
■ Business functions will buy technology services directly from the market (rather than through the
IT department).
■ Individuals will choose and purchase their own technology, and use it to access business and personal
services accordingly, enjoying the best possible experience.
■ Business governance will become more important than IT governance.
■ Technical skills will move from in-house IT organizations to technology companies.
12. People and markets will determine service levels.
As we move towards the on-demand consumption of technology services, we will be participating in a
dynamic market place. The concept of a service agreement as something pre-determined by the customer
and supplier will change to being defined in the market. The quality of the service will be what the market
says it is. As such, the duration of service consumption and the nature of contracts will also change:
Services will be consumed until a better service is available somewhere else, at which point the customer
will switch.
Implications:
■ Service quality will be defined by real-time customer satisfaction rather than contractual service-level
agreements.
■ Contract durations will shorten, and contracts will change very rapidly.
■ Services will be terminated whenever quality drops below the acceptable market level, bringing
structures much like price-comparison sites to B2B offerings.
■ These effects will accelerate as Generation Y makes up an increasingly large percentage of the adult
population.
77

On the horizon
Things on their way in
These trends are coming. Big.
As we prepared these materials, we had to restrict ourselves a bit. Our “Nine key trends” focused on the
developments that we believe will have the greatest impact over the next three to five years. However,
there are many burgeoning technologies that, in the long run, might have a far more significant impact
than the trends that we have examined more closely. Here are a few nascent trends to keep on your radar.
Data Center on a Chip: As Moore’s law continues to hold, building servers on a chip will soon be a reality
with the potential to revolutionize current infrastructure models and bring massive gains in computing and
energy efficiency. These advances will also present a different set of challenges: system integration with
other technologies, such as networking, where the rate of miniaturization is slower.
Sensors and Sensor Networks: By gathering real-time information on every conceivable variable to
monitor conditions and react automatically, interlinked sensors will play a big part in making systems (and
systems of systems) more efficient. This will put more data in our hands in a more timely and relevant
manner. Sensors have the potential to deliver technology systems on a vast and even societal scale.
These giant systems providing, for example energy, traffic or agriculture management, will change our
world radically.
Internet of Things: Forget about phones and computers; imagine if everyday items were addressable
over a public network – your car, your fridge, even your medical prescriptions. We will soon have countless
numbers of miniature tags, sensors and processors sending and receiving information. As a result, we
will gain even greater knowledge and control over the world around us, and even over our own bodies.
Recording, informing, responding, tuning, pre-empting. This is the Internet of things and it is not far away.
Tactile Interfaces and Haptics: Until now, our ability to interact with devices has been fairly limited: mostly
just pressing keys and sliding a mouse around. Multi-touch devices, such as phones and tablets, are
already teaching us about the shortcomings of the mouse and keyboard. But there are many more ways
that we can provide input into digital systems, and such systems will be capable of providing feedback to
us via touch. Adding a tactile dimension to 3D images will take virtual reality to a new level.
Semantic Web: In many ways, Internet-powered machines have become our eyes and ears – scanning the
globe to find information for us. However, those machines are still very limited when it comes to drawing
useful conclusions from what has been found – a computer on its own cannot read and understand a Web
page. The concept of a Semantic Web envisions a world in which machines not only find the dots, but also
connect them. They won’t just provide information for us to analyze, they will be able to initiate action on
what they find.
78

Wireless Energy: We saw what happened when we cut the cords off our telephones. What will happen if
we cut the cords off a myriad of other devices? Supplying power without cables has long been a dream. It
will soon be part of everyday life.
Augmented Reality: Augmented reality uses computers to project a layer of graphics or information on
top of physical environments. This technology is being used for applications ranging from video games
and automotive navigation displays to computer-enabled weapons and surgery assistance systems.
79

Rest in peace
Things on their way out
Their time has come. And gone.
It’s often difficult to envision a world without the tools that we rely on. However, as revolutionary as some
advances are, they are not necessarily permanent. As a case in point, just look at the rapid rise and
subsequent decline of the fax machine. Once a highly useful technology, these devices have nearly faded
into oblivion. Here are eight things that will soon go the way of the fax.
E-mail: The mobile revolution has been accompanied by a boom in text messaging; the domination of
social media, instant messaging, chats, status updates, and even video calls are replacing e-mail. The
purpose of e-mail has changed markedly over its lifetime – from an expression of thought to an expression
of identity – and is being used to unite multiple online profiles.
Mice and Keyboards: Touch, movement detection and speech input are on the advance and even cameras
and microphones are able to scan your environment and grab the information that you need to enter.
Newspapers: Struggling newspapers have been trying to reinvent themselves for quite some time now. It’s
not working. Digital media are crushing their print counterparts and making a financially sound transition
to the new platform is a huge challenge.
Scheduled TV Programming: Viewers are already putting together their own entertainment smorgasbord
based in their personal preferences and schedule. Sporting events are pretty much the only thing left to
stay on a strict schedule.
3G: Rollout of 4G technologies is already beginning. Fourth-generation cellular technology is poised to
bring us more data at higher speeds and in better quality.
Physical Media Formats: The advances of networking technology combined with the rise of cloud storage
will put the focus on the data, making the media that it is stored on irrelevant. Data carriers like CDs
and DVDs will quickly become obsolete, and Blu-ray discs may be remembered for being the last physical
media format.
Large IT Projects: Rather than design, build and test custom applications associated with long delays and
high risk, organizations are increasingly piecing together modularized, commoditized elements to meet
their needs more quickly and inexpensively. Agile development and exploiting on-demand technology will
be the order of the day.
80

Long-term Contracts: We are moving toward outcome-based, agile contracts. These agreements will
move parties towards a common desirable result rather than trying to define a certainty. Where the
telecoms and utilities industries have led, with consumers regularly switching to get the best deal, other
industries will follow.
Business Desktop Services (as we know them): IT users are increasingly tech-savvy and desktop
technology has matured. As enterprise IT becomes consumerized, retailers will be providing bulk
technology services to individuals.
81

Conclusions
Drawing conclusions
Our perspective
In this paper, we have discussed some of the forces that are driving change and discussed some of its
implications. We have examined nine key trends. We have looked at information: the social media
revolution, the demand for information in real-time and how this can be secured and protected. We have
surveyed some of the major trends in technology – the emergence of cloud computing, the ubiquity of
personal devices and the commoditization of applications – and we have investigated changes to the
business landscape, the workplace and to human values. By analyzing these trends, we have distilled our
12 predictions and attempted to capture their key implications. We have looked at what is coming on
the horizon and those things whose days are numbered.
We started out with a single assumption – that the world is becoming more complicated. And this is
about the only thing we can say with any confidence about the future. But while we should acknowledge
uncertainty, we believe it is crucial to anticipate change and plan for the implications of it.
So what should you takeaway from this? We have examined a large number of ideas covering many
different types of technologies and human activities. But what are the important principles effecting the
changes that we are anticipating?
To conclude, we have highlighted some themes that we believe are particularly relevant to navigate the
coming period of change. These themes run like currents underneath the visible surface changes that we
have been describing.
Freedom of choice
The evidence points to us moving to a world of greater choice. Whatever we plan to do, we are confronted
with many alternative ways of realizing our objectives. Choice is increasing at every level of decision
making, whether it is an individual deciding which phone to buy or a large organization contemplating
an outsourcing decision. With the genies of consumer technology and cloud services out of the bottle,
organizations will struggle to maintain a single set of technology sources or styles of provision. And to do
so might be to ignore a growing source of value. Having a clear idea of needs, preferences and wants will
be crucial in a world of greater choice.
We believe that organizations will need to evolve to make the management of choice a business practice.
They will need to be able to move dynamically between strategy and execution, and understand the
parameters that led to a certain choice being made. In the world of cloud computing, seemingly
innocuous changes – a change in the cost of online storage say - may have major implications for the
enterprise technology strategy. Organizations will need the visibility and agility to respond to market
changes to ensure they are pursuing the optimum strategy at any given point in time.
In order for organizations to make informed choices, it is critical that they understand their own
businesses. They need to know which activities are core to their existence and identity, and which exist
82

The information supply chain
Production
Creation of
components,
application
development,
technology,
e.g. storage,
network, etc.
Increasing value
Aggregation Integration Presentation Consumption
Bundling of
components
into information
services,
e.g. a healthcare
app from a
bundle of apps
Configuration
and implementation
in a
particular context,
e.g.
organization or
region-specific
or configured
to interface to
other services
Presentation of
the information
service to its
target audience
Consumption of
the service by
the subscriber
Revenue
to service the organization. They need to be aware of how much services cost to provide, and how they
provide value to the business.
A new vocabulary
The world seems to be moving toward a place where technology is much more abstracted, both at the enterprise
level, where everything is becoming virtualized to the individual level, where people expect technology
to work off-the-shelf. Organizations will need to be able to articulate technology investment and
purpose much more in terms of business outcomes – e.g. the IT spend required to attract a new customer,
or the carbon footprint of a credit card transaction. There will be greater opportunities for organisations to
consume business services from suppliers directly – particularly as we have seen in the consumption of activity
and content modes of cloud consumption. In order to accomplish this, the culture of the organization
must move away from one that thinks only in terms of resources and activities. Online business services
will become ever more important as human resources begin to be supplied and consumed in a cloud
engagement model. In effect, organizations will have to reassess – and adapt – their business models.
83

The Information Value Chain is one way that an organization can view the relationship between
technology, service and business value that underpins how they function. A value chain is about
identifying the component outputs of a business, how they are built up and delivered, and where the
value in them is created along the way. These components are composed of products and services, and
may be created or carried out by a number of different parties – both internal and external – in
exactly the same way as a manufacturing supply chain. By taking a value chain view, it is easier for an
organization to focus on what they are trying to achieve and the best way of doing it. It enables
organizations to be agnostic about which components are provided by suppliers and to have greater agility
in the way they architect their businesses. The information value chain gives an organization greater clarity
of the areas in which they can uniquely add value and everything that underpins their brand (see Fig.
above). We believe the value chain view will equip us better for the future than the more traditional and
real estate-based reference architectures. Increasingly, what will be important is plotting the external
services that are supplied, the relationships between them, and how value and risk flow throughout.
Service aggregation will play a key role in the value chain. Third-party aggregators will assemble and
execute areas of the chain on behalf of a customer. The marketplace will move so that the components in
the chain will become commoditized and flexible. Long-term contracts will become rare and SLAs will be
determined by the market. The vision of a flexible, responsive and dynamic business is at last becoming
a realistic possibility.
Organic solutions
Complexity and control exist in a trade-off relationship. The more complicated things become, the harder
it is to control them. We think that organizations are already struggling with complexity and many will find
adopting new ways of working, such as consumption of cloud services or self-procurement too difficult
to achieve. But there is some good evidence, particularly from the world of social media and social
networking, that organic mechanisms can successfully generate value in a complex system. A social
network is organized on the sum of all the decisions of its members. A group of people, provided there is
a payoff for a ‘successful’ interaction, will naturally organize themselves to create value. It is of course
important for an organization to recognize the activities that are crucial to its business, and control these
proactively. But for many other transactions, an organization might see greater value by relaxing control.
Examples are outcome-based or agile contracts – agreements that move parties towards a common
desirable outcome rather than trying to define a certainty – or trust models in security.
When it comes down to it, this is a question of risk. We have seen that the challenge is to enable value
for an acceptable level of risk. But we also have to recognize that, in the context of a rapidly changing,
interconnected world, our assessment of risk and value may need to be recalibrated.
Innovation can be game-changing and, when it is, we need to rewrite the rule book.
84

Credits
Acknowledgements and disclaimer
About the author
David Gentle, Strategy Manager, Fujitsu Global Business Group
David is an analyst working in Fujitsu’s Global Business Group, providing thought leadership both internally
and to customers, and shaping business and technology strategy across the global Fujitsu organization.
He has 15 years’ experience of working in the IT industry, five of which have been with Fujitsu. David has a
background in leading large IT infrastructure projects with blue-chip customers in the U.K. and abroad. He
has a degree in economics from the University of Bath.
With special thanks to Marc Silvester as well as Craig Baty, Terry Blow, Christina Blunt, Andrew Brabban,
Richard Clarke, Guy Daniels, Adrian Dickson, David Hannam, Tatsuya Hidano, Ian Humphries, Alan Goswell,
Paul Higgs, Glen Koskela, Kim Kranz, Andreas Lechner, Mark Locke, Manuel Ludwig, Alex Macadam, Mike
Macken, Mark McGuire, Cameron McNaught, Heiko Mergard, Steve Nunn, Claire Pritchard, Dr. Joseph Reger,
Vincent Rousselet, Pernille Rudlin, Lester Russell, Jat Sahi, Michael Schmitz, David Smith, David Steven,
Clive Tillotson, Masayuki Tokuda, Sabine Twest, Sanya Uehara, Bala Varadarajan, Stefan Vomstein, Sophie
Weguelin, Susanna Wendelin, Rachel Wellings, Lynn Willenbring, Mark Wilson, and Philip Oliver.
Cautionary Statement
These presentation materials and other information on our meeting may contain forward-looking statements that are based
on management’s current views and assumptions, and involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those expressed or implied in such statements. Words such as
“anticipates,” “believes,” “expects,” “estimates,” “intends,” “plans,” “projects,” and similar expressions that indicate future
events and trends identify forward-looking statements. Actual results may differ materially from those projected or implied
in the forward-looking statements due to, without limitation, the following factors:
General economic and market conditions in the major geographic markets for Fujitsu’s services and products, which are
the United States, the EU, Japan and elsewhere in Asia, particularly as such conditions may effect customer spending;
Rapid technological change, fluctuations in customer demand and intensifying price competition in the IT,
tele-communications, and microelectronics markets in which Fujitsu competes;
Fujitsu’s ability to dispose of non-core businesses and related assets through strategic alliances and sales on commercially
reasonable terms, and the effect of realization of losses, which may result from such transactions;
Uncertainty as to Fujitsu’s access to, or protection for, certain intellectual property rights;
Uncertainty as to the performance of Fujitsu’s strategic business partners;
Declines in the market prices of Japanese and foreign equity securities held by Fujitsu, which could cause Fujitsu to
recognize significant losses in the value of its holdings and require Fujitsu to make significant additional contributions
to its pension funds in order to make up shortfalls in minimum reserve requirements resulting from such declines;
Poor operating results, inability to access financing on commercially reasonable terms, insolvency or bankruptcy of Fujitsu’s
customers, any of which factors could adversely affect or preclude these customers’ ability to timely pay accounts receivables
owed to Fujitsu; and Fluctuations in rates of exchange for the yen and other currencies in which Fujitsu makes significant
sales or in which Fujitsu’s assets and liabilities are denominated, particularly between the yen and the British pound and
U.S. dollar, respectively.
85

FUJITSU LIMITED
Shiodome City Center, 1-5-2 Higashi-Shimbashi
Minato-ku, Tokyo 105-7123, JAPAN
Tel. +81-3-6252-2220
www.fujitsu.com
Copyright © 2010 Fujitsu Limited
All rights reserved. No reproduction, copy or transmission of
this publication may be made without prior written permission
of Fujitsu Limited.
86