Analysis & Commentary:

PricewaterhouseCoopers' TECHNOLOGY FORECAST 2002-2004

The bursting of the dot-com bubble -- as evidenced most obviously by the disappearance of many of the highly visible dot-com startups and the decline in the market value of its survivors -- should not be mistaken for the end of e-business. In fact, it's just the beginning, and the continual evolution of enterprise applications and enabling software has not slowed with the economy. With the gold rush over, the IT industry is going back to work and refocusing on building the tools and infrastructure needed to push e-business further into every facet of business activity and everyday life, according to the annual PricewaterhouseCoopers Technology Forecast 2002-2004, Volume 1 entitled Navigating the Future of Software. The Forecast has been published since 1988.

"Many companies felt the pain of the dot-com implosion, but the exuberance that marked the past few years left behind some very positive aspects that will help carve out the future of enterprise software," said Mike Katz, Chief Operating Officer and managing director, PricewaterhouseCoopers Global Technology Centre. "The addition of inter-enterprise capabilities has been the major factor influencing the development of corporate applications during the past few years. And the future will see increasing sophistication of these capabilities as vendors release their next generation of e-business enabled applications, leading to significant changes in the software industry."

Unlike many other technology areas, forecasting the future of software is difficult to do with any degree of accuracy. For instance, semiconductors and computer hardware move in incremental steps towards well-defined, agreed-upon goals -- growing denser, smaller, and faster. In contrast, the software world is characterised by a low degree of certainty about the speed and direction of progress. But according to the Technology Forecast, certain identifiable trends carried over from the dot-com boom will lend a sense of direction to an industry marked by creativity and innovation.

Technology Forecast explores the ongoing emphasis on inter-enterprise capabilities and other functional enhancement trends influencing the development of enterprise applications, including analytic capabilities, collaboration, mobility, portals, real-time computing, and usability.

Technology Forecast: 2002-2004 also explores the ongoing evolution of enabling software technologies, and provides predictions for three software architectures used to satisfy the technical requirements of enterprise applications -- application integration, componentization, and Web services. "Possibly the greatest technical challenge facing most large organizations today in their use of information technology is application integration. Many enterprises now are -- or soon will be -- in the midst of a transition from a software architecture based on the use of EAI middleware to connect packaged application suites to one in which applications are divided into smaller components that are much easier to integrate," said Eric Berg, managing director at PricewaterhouseCoopers' Global Technology Centre and editor-in-chief of the Forecast. "However, the realization of the Web services vision will be unlikely during the three-year forecast period, particularly because the concept assumes that companies will be willing to do business with new and unfamiliar business partners. Instead, Web services are more likely to be used during the forecast period for integration between trusted business partners, and for integrating applications within an enterprise."

In addition, the Technology Forecast features interviews with four industry experts known for their views on the future of software and the implications for enterprise computing:

• F. Warren McFarlan, a professor of business administration at Harvard Business School
• Roger McNamee, co-founder and general partner of Integral Capital Partners
• Ray Ozzie, inventor of Lotus Notes and co-founder and CEO of Groove Networks
• Hasso Platner, co-founder and CEO of SAP AG

The Technology Forecast discusses these and other changes under way in enterprise IT. It is divided into three major sections, each highlighting a different area of enterprise software, that together comprise 17 chapters providing detailed coverage of specific technologies and applications:

• Enterprise applications: contains chapters on enterprise resource planning (ERP); customer relationship management (CRM); supply chain management (SCM); e-markets and e-procurement; data warehousing and analytics; and enterprise portals and knowledge management.
• Commerce software: comprises chapters on commerce servers (including online catalogues and configurators); personalization; online merchandising and campaign management; Website content management; and Website analysis.
• Enabling technologies: includes chapters on enterprise application integration (EAI); component software; Web services; Web browsers, servers, and mark-up languages, including extensive coverage of Extensible Mark-up Language (XML); the mobile Internet; and digital rights management.

In addition, the Technology Forecast discusses five important trends that are expected to influence the future of software: the impact of applications using peer-to-peer (P2P) architectures rather than the client/server architecture that has been in widespread use for the last decade; the rise of open source software as an alternative to commercially licensed products; the potential for intelligent software agents able to act without constant human supervision; a new approach to software development based on the Model Driven Architecture being developed by the Object Management Group (OMG); and a reversal of the trend toward the use of the Web browser as the standard client for client-server applications.

The Technology Forecast is the result of comprehensive research and analysis by the PricewaterhouseCoopers Global Technology Centre in Menlo Park, California. The Centre, part of PwC's Global Thought Leadership organisation, has a staff of researchers, technology analysts, and consultants with extensive experience in advanced applications of existing technologies and knowledge of the potential uses of emerging technologies. Using the research embodied in the Technology Forecast, Paths to Value (a new model for understanding value creation in early-stage companies), and other original thought leadership publications as references, Technology Centre staff deliver on-site presentations on technology trends around the world. The Centre also provides technology due-diligence and competitive analysis of industry trends and information, computer, and communications technologies. Similar services are provided to European clients by Menlo Park Europe, a London-based group of technology analysts.

Volume 1: Navigating the Future of Software is the first of two Technology Forecast volumes slated for issuance this year. The second volume, scheduled for release in October, will focus on information technology infrastructure. These Technology Forecasts are geared toward providing detailed information and insights about new technology developments that are used by global decision-makers to anticipate change and plan accordingly.

To illustrate its key points, Technology Forecast draws upon implementation scenarios to illustrate some of the challenges organizations face when they undertake an effort to install and use a particular type of application. Examples of these fictitious case studies include a business as it endeavors to "Web-enable" its contact centre and integrate both Web- and phone-based customer contact channels into a single customer interaction medium; and a leading retailer as it looks to organize and build a superior online catalog.

PricewaterhouseCoopers, www.pwcglobal.com, is one of the world's largest professional services organizations. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.

Contact Kristen Staples of PricewaterhouseCoopers, 646-394-3596, kristen.staples@us.pwcglobal.com.