Today's application development activity is characterised by both the development of custom software as well as the required systems integration for deployment of packaged applications into the overall application portfolio. Longhaus estimates that 40% of ICT businesses in Australia are involved in some form of application development activity. Additionally, 60% of organisations conducting enterprise level application development have between 3-4 different application development skills each potentially requiring different training and toolsets. In the last 6 months both IBM and Microsoft have announced significant improvements to their application development suites. Most notable amongst these improvements has been the integration of collaboration capabilities, akin to those of social computing, on an integrated development platform. An understanding of the impact of these changes is critical for local CIOs, Directors of Application Development, and Application Architects.

In contrast to Australian ICT's dependence on government handouts, billions of venture capital and private equity dollars are once again pouring into the global industry. Everywhere that is except Australia. In 2006-2007 both India and China's venture capital investments (including private equity) were 4.3 times that reported in Australia. Even Singapore attracted 1.6 times higher investment in the same period. Yet while the international ISV market is in a frenzy, all levels of Australian government and industry association are bogged down in conflicting investment statistics. The future of Australian ICT is being left to fate. Regional governments must now acknowledge that an inflection point has been reached. They must choose between playing an active role in ICT investment or fully focus their attention on investment attraction activities. While for the technology vendors, new investment networks are highlighting that it is the relationship between capital and talent outside the share price that may potentially deliver greatest long-term shareholder dividends.

Microsoft launched the core components of their long awaited server product-line in March 2008 including Windows Server 2008, SQL Server 2008, and Visual Studio 2008. As Windows Vista adoption remains under a perceived cloud in key verticals the industry could easily assume that the server line up may be set for an equally lack lustre market response. However, results from Longhaus' 2008 IT Spending Priorities study indicate expectations are high with over 40% of organisations saying they’ll spend more with Microsoft in the coming year. Key features and functions of these new products, most notably the Server Core and soon to be released HyperV virtualisation engine, look set to ignite fierce competition with Unix and open source vendors who will no longer be able to claim traditional operating system differentiations such as "embeddable", "headless" and "easily managed". Combined with potential standards activity by Microsoft around their new PowerShell language the stage is set for more PR battles on the international standards front. As the advocates and opponents of a new "open" Microsoft face-off it is wise to remember that less than 20 years ago IBM trod the same path out of a "closed" and "proprietary" business model. For end user organisations, Microsoft has seriously entered the enterprise computing landscape presenting at least two new opportunities to consolidate and standardise onto the Windows platform.

The strongest customer gains and product releases in the 2008 Software-as-a-Service (SaaS) market will come from the on-demand and on-premise vendors (Salesforce, SAP, RightNow Technologies, and IBM) with Lotus finally making a much needed appearance. SAP's launch of Business by Design expands the market to now include a globally recognised ERP solution and will reinforce the movement of the purchasing decision outside of ICT, to the CFO. Salesforce.com too has set a strategic direction towards becoming a multi-application, multi-category (i.e. not just CRM) company, and EMC is now offering online storage through a SaaS channel. However the lack of differentiation, marketing, and market education strategies surrounding SaaS over the past 2-years will still see Microsoft, the least-SaaSy of all the SaaS vendors, benefit the most in 2008 as they continue to be perceived as the dominant player for their broad-reaching channel partner market strategies, development partners and through managed service product such as Exchange, MOSS or Office. For medium to large organisations, SaaS is still not even a medium-to-high priority for improving efficiencies, managing costs, nor planned adoption in 2008. But for end-user organisations, 2008 is certainly the year to further develop their SaaS plans and understand the core elements of the underlying business model with Longhaus predicting 2009 as a tipping point year for enterprise SaaS adoption in Australia.

The rise of off-shoring and selective sourcing over the past 5 years has dramatically changed the ICT benchmarking landscape in Australia. Benchmarking has fallen victim to shorter contract periods, facilitated by multiple, smaller deals. Even major consumers of benchmarking services who remain largely untouched by the offshore BPO market – namely the Federal and State governments – have impacted the procurement of such services. This stands in stark contrast to the mega-sourcing deals of the 90's and early 2000's assigned to the IBMs, EDSs, and CSCs. The move effectively brought a dormant tier 2 vendor market in Australia into play, increased visibility and upward pressure onto short-term pricing, and ultimately forced a sharp decline to annual three-party (procurer, supplier, and benchmarker) engagements. At the enterprise-end of the market traditional benchmarking engagements occurred in Year 1 then typically bi-annually through Year 7 of the many mega-services contracts. With short-term contracts now typically 2-3 years in length, end-user organisations are seeing little value in baselining year 1 of a 3 year contract whereby year 1 represents what is effectively a market price offering and with contracts going back to a competitive tendering process in year 3. However, demand still exists for ICT benchmarking services as an enduring approach for CIOs wishing to optimise their overall ICT service performance. In this report Longhaus defines a first principles technique for identification of appropriate benchmarking suppliers in the Australia and near-shore market.