2. David Metcalfe, PhD Research Director Forrester Research Organic IT: Coming To A Data Centre Near You

3. Theme Organic IT will deliver business innovation

4. Organic IT Computing infrastructure built on cheap, redundant components that automatically shares and manages enterprise computing resources -- software, processors, storage, and networks -- across applications.

5. Agenda  What are the key trends in corporate IT today?  How does Organic IT help IT deliver value to the business?  How are firms embarking on the Organic IT journey?

6. Deep-seated trends impact IT  High IT spending doesn’t translate into better financial performance

7. High financial performers spend just 3.3% of revenue on IT 3.3% 4.5% 4.2% Percent of revenue spent on IT Company financial performance 2.6% Forrester Report October 2002 “Linking IT Spend To Business Results”

8. Deep-seated trends impact IT  High IT spending doesn’t translate into better financial performance  Executives don’t think IT provides business innovation

9. The IT organization plays a limited role in business innovation Forrester Report December 2002 “Putting Innovation Back In IT”

10. Deep-seated trends impact IT  High IT spending doesn’t translate into better financial performance  Executives don’t think IT provides business innovation  Centralization of IT organizations continues to grow

11. In 2003, 74% of firms expect to have centralized IT organizations Forrester Report June 2003 “How Companies Govern Their IT Spending”

12. Deep-seated trends impact IT  High IT spending doesn’t translate into better financial performance  Executives don’t think IT provides business innovation  Centralization of IT organizations continues to grow…  … even as European IT headcount continues to shrink

13. European IT departments are still shrinking Base: 490 European IT decision-makers We're hiring 21% We're holding staff flat 43% Don't know 2% We're downsizing 34% “Which one describes the status of your full-time IT staff?”

14. Deep-seated trends impact IT  High IT spending doesn’t translate into better financial performance  Executives don’t think IT provides business innovation  Centralization of IT organizations continues to grow…  … even as European IT headcount continues to shrink  Cost reduction remains top of IT’s agenda.

15. 45% of European IT managers focus on lowering operating costs “What is the top priority for IT to support?” Base: 490 European IT decision-makers

16. Agenda  What are the key trends in corporate IT today?  How does Organic IT help IT deliver value to the business?  How are firms embarking on the Organic IT journey?

17. CRMERP The problem: Fragmented infrastructure Finance Peoplesoft SAP Siebel Software: Monolithic code SunHP Dell HP Processors: Single purpose servers NetApp EMC Hitachi Storage: Isolated disks Internet WAN LAN Network: Fragmented

18. CRMERP The solution: Organic IT Finance Peoplesoft SAP Siebel NetApp EMC Hitachi Internet WAN LAN Software: Processors: Storage: Network: Web services XML SOAP WSDL UDDI Fabric switch CPURAMCPURAM Net Fibre chan. Computing fabric Computing nodes High-bandwidth networks Fabric OS Shared pool IP/FC- bridging NAS TCP offload Redundant array of Internet Links (RAIL) VPN hardware Route optimization

19. “I need to integrate with Acme’s SAP R/3” Dealing with today's IT infrastructure 6 months/$$$$ 1 month/$$ 2 months/$$ 6 months/$$$ 8 months/$$$$$Total:

20. Dealing with an Organic IT infrastructure 1 week/$Total: “I need to integrate with Acme’s SAP R/3” “How’s next Tuesday?”

21. Agenda  What are the key trends in corporate IT today?  How does Organic IT help IT deliver value to the business?  How are firms embarking on the Organic IT journey?

22. Awareness of IBM’s On Demand is growing

23. 41% of IT execs think On Demand is a credible offering, 26% think its pure marketing

24. Firms Can Prepare Now For Organic IT With Simple Steps

25. Firms Should Move To Organic IT In Three Phases

26. Choose the right Organic IT strategy

27. Summary  Business executives see IT as a costly barrier not as a cash generator  Organic IT offers flexibility at lower cost increasing IT’s business value  Selective investments in Organic IT are a reality today

28. David Metcalfe, PhD +44 207 323 7684 dmetcalfe@forrester.com www.forrester.com Thank you Entire contents © 2003 Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc. All other trademarks are the property of their respective companies. All information provided by Forrester Research, Inc. is proprietary to Forrester and is protected by US and international copyright law and conventions. Except as set forth herein, direct or indirect reproduction of the information provided herein, in whole or in part, by any means, is prohibited without the express written consent of Forrester. Any slides that are delivered as part of a speech by Forrester employees may be shared only with those attending the speech. Forrester shall not be liable for any damages incurred by or arising as a result of reliance upon Forrester's information.