CeBit 2010 Enterprise Trends

I had the chance to visit the CeBit last Friday and like to share some personal impressions around the show and my conversations with execs indicating some enterprise IT trends:

The CeBit in general is still world’s biggest and most global IT fair. Although not as big as it was three years ago or even in the Dot-Com times ten years ago, it recovered on a solid level. The giant trade fair campus in Hannover hosted this year 4.157 exhibitors out of 68 countries. North American software vendors used this platform to get global market traction and APAC hardware vendors showed again a strong presence to sell their (OEM-) hardware to EMEA and US brand vendors and distributors. The organizers continue to experiment with the format of the show, which was only five days this year. It attracted 334.000 visitors which is still a bit behind the 400.000 of last year. CeBit went 6 days last year which meant a bigger commitment of the exhibitors’ staffing. The five to five day comparison is already a 3.7% increase in visitors compared to last year. The reduced effort for exhibitors will hopefully motivate more vendors to show up again. The CeBit organizers will give the show an even stronger structure next year with a "Cebit pro" for professional IT users, a "Cebit gov" for the public sector, a "Cebit lab" as an networking platform for research and education and finally a "Cebit life" focusing at the consumer market. The structure will make it definitely easier to navigate across the halls and drive more customers to the right vendors. But it’s questionable if CeBit can catch-up on the topics that they underestimated such as the take-off of the mobile business. Barcelona’s MobileWorldCongress dragged literally 49.000 visitors from CeBit’s potential.

Enterprise Hardware sales is reshaping. In confidential discussions execs from multiple hardware vendors admitted that their traditional sales to direct customers will very likely never fully recover to the level prior to the downturn. Although hardware innovations such as IBM’s Power 7 and Z10 helps to consolidate hardware, I perceived another driver of new hardware sales on CeBit. The larger hardware vendors are confident to recover with two new strategies. IT users definitely buy less hardware to install their packaged and custom developed software on their own. So, hardware vendors drive more partnerships with software and consulting services provider again to offer merged solutions. IBM reshaped their whole CeBit booth for example into such a smart solution approach versus the traditional hardware, software, and services categories of previous years. The second strategy shift in hardware sales is already caused by the global cloud computing hype. Sales execs start to realize this year, that some deals are not lost to hardware competitors but to Infrastructure as a Service (IaaS) providers in the cloud. Some hardware vendors are starting to create special offers for cloud providers for the public cloud and the virtual private cloud which is naturally characterized by less consolidated and more regional players. In this respect I found some irony in Amazon showing up on the CeBit the first time with a little booth dedicated at AWS right next to IBM’s large presence.

Enterprise Software at CeBit lags innovation. The enterprise software market is quite innovative, but this was not obvious at the CeBit! The innovation happens a lot in the cloud and at software vendors that have unfortunately not returned to CeBit. Innovative SaaS applications like NetSuite’s ERP or Successfactor’s human capital management was hardly represented. Oracle driving the next level of enterprise middleware and ERP applications was again missed at the CeBit. The traditional strong presence of SAP is proportional to SAP’s dominant market position in Germany and Europe. However, it was pretty difficult for an average visitor to realize the incremental steps of the SAP Business By Design slowly moving feature packs for example. Most of the innovation was provided by SAP’s well developed ecosystem rather that by the vendor itself.

The Cloud drives infrastructure management innovation. In contrast to the absence of cloud business applications, the cloud was quite visible for infrastructure solutions. Even more important than the Amazon AWS booth was the fact that systems integrators like T-Systems showed already well established offerings for virtual private clouds and its migration out of traditional dynamic hosting model. T-Systems also showed some exciting pilots for dynamic sourcing across on premise, virtual private and possibly public clouds in the future. In cooperation with FluidOperations and Zimory, T-System was able to show a dynamic provisioning of SAP Systems in a elasticity that is hardly found elsewhere. This could actually help SAP on their own to fix the operation issues of Business By Design, but T-System showed again more instinct and sensitiveness to leverage start-up innovations into a commercial offering.

Service Management is a real challenge in the Cloud. Most people are still concerned about security in the cloud. But those that articulate this concern loudly are not the same people that are using cloud! I have not found anybody on CeBit or elsewhere in the last 2 months, who was really disappointed by the security levels of any major cloud computing provider that they use. Once you onboard the cloud, the integration to the legacy systems becomes one major challenge, which was not yet visible on the show this year. Major integration vendors such as Software AG leverage cloud infrastructure to run their own community services, but they do not offer dedicated cloud/legacy products and services yet – very likely a hot topic on next year’s CeBit. Beyond the technical integration of cloud and non-cloud services, the unified management of services is a major cloud-challenge which was already addressed from some vendors on the CeBit. Innovative software vendors like helpline realized early that an extended service management can go far beyond ITIL services and could be applied for example to facility management or to healthcare helpdesks. These vendors are now in the pole position for the race of an higher level cloud business service management. This is a missing steps to turn innovative cloud sourcing projects such as T-System’s pilot, finally into a commercially successful solution.

I guess every analyst’s personal selection of CeBit highlight is different. Let me know what was most exciting for you if you made it to Hannover and leave a comment.

Stefan