The Forrester Report

JANUARY 2000

Beyond Management Tools

Today’s system management tools will hit the wall when

By Frank Prince
companies reinvent themselves for dynamic trade. Firms
With Carl D. Howe
should plan for new Net-native management services
Meaghan Cussen
starting in 2005.

2 I N T E RV I E W S
• IT is busy with the basics.
• Managing dynamic trade isn’t on the radar.
Headquarters
7 A N A LY S I S
Forrester Research, Inc.
• Today’s management tools will fall short of requirements
400 Technology Square for managing dynamic trade.
Cambridge, MA 02139 USA • Transaction management services will eclipse today’s
management tools by 2005.
617 / 497-7090

fax 617 / 613-5000 15 ACTION

• Prepare for cross-company transactions.
European Research Center
16 W H AT I T M E A N S
Forrester Research B.V.
• Management services companies won’t buy tools from
Emmaplein 5 traditional management vendors.

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Big honkin’ server. No reserve.
www.forrester.com Cold, dead fish? Or adult-film star?
How big is the Linux hysteria?
A truly mission-critical application.

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 Beyond Management Tools
INTERVIEWS

2
I N T E RV I E W S

IT Shops Are Mired In Tactical Management

Today, most companies use systems management tools to solve pressing
operational problems within their company. Executives think today’s tools
can expand to monitor both in-house IT and external service providers,
but almost no one plans to manage across companies.

MANAGEMENT TOOLS DEFINED

To research this report, Forrester spoke with 50 IT operations managers who use
technology service providers. We asked those executives about the problems they
encounter when managing service providers and what management tools they use,
which we define as:

Software that allows firms to administer and resolve problems in information

systems that support the business.

BASIC PROBLEMS CONSUME IT MANAGEMENT TODAY

When we asked our interviewees about their biggest operations or management
problem, 38% of respondents cited network and systems management. Twenty-two
percent of our interviewees noted problems with basic operational processes -- things
like inventory management and storage backup -- making it the second-most-cited
category (see Figure 1).

“The biggest operations headache right now is just trying to get a handle
on network management. The tools we are using are not sufficient. We are
concentrating on analyzing traffic and packet routing right now using NT
server utilities. It’s a real mess.” (Food company)

“My biggest operations issue today is inventory control of the computing

environment. We have a tough time keeping an accurate listing of who has what,
what we’re using where, and who has access. It all changes so dynamically that
we can’t keep track of it.” (Scientific equipment company)

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
INTERVIEWS

Figure 1 Network And Systems Management Top User Problems 3

“What is your biggest operations or problem management issue?”

Networks and systems

38%

Operational processes
22%

Other
6%

Personnel Service providers

8% 14%
Tools
12%

Source: Forrester Research, Inc.

“My biggest operations headache right now is backup. We are growing at a

tremendous rate and are going full-force NT at the end of April. We are trying
to get all of the historical data put together and are deciding how much more
disk space we will need. It will be a lot.” (Aerospace company)

Users Worry Little About Management For Service Providers

Our interviewees employ a range of one to six service providers for functions that range
from network management to outsourcing all of IT -- but only 14% of the companies
interviewed regarded managing service providers as their biggest problem. Sixty percent
said that tools did not help them manage these service providers, but nearly the same
number reported they would have to change their business processes if they had to
manage more vendors (see Figure 2-1 and see Figure 2-2).

“Having to manage more subcontractors would absolutely change the way we

do things. We would need more communication, coordination, and correlation
amongst all of the outsourcers involved. Our tools could help manage this if
we had the right architecture in place.” (Insurance company)

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
INTERVIEWS

4 Figure 2 Firms See Few Problems Managing Service Providers

2-1 “Do your tools help you manage your subcontractors?”

N/A
Don‘t know 6%
2%

Yes
32%

No
60%

2-2 “If you had to manage more service vendors, would that change the way you
resolve problems?”
Don‘t know
6%

No Yes
32% 62%

2-3 “What services do you subcontract?”

Internet-related services 46%

Extranet 44%

Desktop/apps support 44%

Server operation 26%

Help desk 22%

Network management 22%

Apps development 4%

Installation 4%

All of IT 4%

Other 10%
0% 10% 20% 30% 40% 50%

(multiple responses accepted)

Source: Forrester Research, Inc.

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
INTERVIEWS

“If we had more service providers we’d have to manage operations differently. 5
I think we’d have to develop a separate business unit to manage subcontractors.
I don’t think we’d invest in any other tools -- it would be up to the subcontractors
to provide us with status and access to reports.” (Petroleum refining company)

Internet Services Create Few Problems For Users

While half of our respondents contracted for some services delivered over the Internet --
for example, firewall management or Web hosting -- no manager saw managing an
Internet service as his or her biggest operational problem (see Figure 2-3). Many
respondents, however, identified a more central role for the Internet in operations.

“I think all of the tools are going to become more Web-enabled, especially in
commerce transactions. In the future, we will have more insight into providers’
processes, will be able to get better accuracy of billing, and will do this all through
the Web.” (Manufacturing company)

“A lot of vendors will definitely have to change to become Web-based. Many

companies today are not prepared to put in custom solutions that only help them
communicate with one supplier -- they need solutions that allow them to deal with
all of their suppliers. They need an Internet standard -- if service providers don’t
standardize, they are going to lose business.” (Scientific equipment company)

But Non-IT Service Providers Don’t Fit Into Today’s Framework

We asked about integrating non-IT subcontractors like accounts payable services into
IT operations. Only 24% of firms we spoke with had considered this (see Figure 3).
Those that had predicted that integration of these service providers would raise new
problems or need new solutions.

“If we had three vendors providing related services, we’d need a new manager to
understand who was responsible for what and to solve problems reliably. Say we
had an external eCommerce site we communicated with over our normal AT&T
extranet and our bank wasn’t receiving payments -- I’m not sure that we’d have
the skills to troubleshoot the problem.” (Chemicals company)

“We are talking about integrating accounts payable, accounts receivable, and
payroll into operations management, but we would only really be in charge of
the connections to the back-end systems. In the future, I think there really needs
to be a better commitment to standards. People will soon be using Web and
XML-based tools, which will make it a whole lot easier to analyze data.”
(Forrest products company)

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
INTERVIEWS

6 Figure 3 Non-IT Service Providers Are Under The Radar For Users

“Have you ever considered integrating non-IT subcontractors into your coordinated
operations management?”

Don‘t know
2%

Yes
24%

No
74%

Source: Forrester Research, Inc.

CONCLUSIONS
Based on our interviews with Global 2,500 firms, Forrester concludes that:

• IT remains mired in the pre-Internet era. Even though the Internet

is a growing component of operations, keeping internal networks, servers,
and applications running remains IT management’s focus.

• Firms expect they will be able to manage external service providers. Despite
little assistance from today’s management tools, our interviewees believe they
can handle more service providers.

• Companies aren’t worried about non-IT service providers yet. Managing

non-IT service providers still isn’t on the radar for the vast majority of firms.

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
ANALYSIS

A N A LY S I S 7

Management Services Will Eclipse Tools

For the next five years firms will slowly win the battle to manage business
on the Internet. But when firms start reinventing themselves for dynamic
trade in 2005, systems management tools will give way to a new
generation of transaction management services.

USERS DON’T SEE THE COMING REVOLUTION

Our interviewees think they’ll be able to cope with a plethora of new service providers
because they see the future as a simple extension of today’s world. They’re wrong.
Forrester’s research shows that Internet commerce will force companies to cut their
cord to the past and embrace radical shifts in business economics that will come from
dynamic trade (see the June 1999 Forrester Report “Dynamic Trade Voyage”).
Companies will undergo this change in three steps as they:

• Experiment. Until 2001, companies will focus their energies on adapting existing
business practices to the early eCommerce environment of the Internet.

• Deconstruct. Between 2001 and 2004, firms will re-evaluate the ways they
run their businesses and slice and dice their business processes into configurable
elements.

• Reinvent. After 2004, leading corporations will have more agile and flexible
business operations built around an Internet core. Those processes will operate
in real time, be externally focused, sport transparent partner relationships, and
employ service providers for many business functions.

Dynamic Trade Will Force Management To Undergo Evolution And Revolution

Today’s management tools and tool vendors won’t survive this business revolution
unscathed. Forrester sees two epochs in the dynamic trade voyage in which various
management strategies and different tools will dominate (see Figure 4):

• 2000-2004: Old tools extend. Extensions of today’s management strategies

will stretch to handle the experiment and deconstruct phases of dynamic trade
while Internet business models are being established and refined.

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
ANALYSIS

8 • 2005 and beyond: New transaction management services appear. Once

companies reinvent themselves for dynamic trade in 2005, they will shift
to services that troubleshoot, track, and report on Internet transactions.

DYNAMIC TRADE REINVENTION MEANS NET-NATIVE MANAGEMENT

Companies that reinvent themselves for dynamic trade in 2005 will discover a
completely new competitive landscape because:

• The number of business partners will explode. In 1999, Forrester found

businesses that were already interacting with thousands of trading partners and
tens of thousands of individual customers online (see the January 1999 Forrester
Report “Driving IT’s Externalization”). By 2005, companies will expect to work
with tens of thousands of business partners as a matter of course.

• Change will accelerate. As dynamic trade allows firms to run faster, change
business direction on a dime, and interconnect easily with third parties, today’s
“Internet time” will feel like the 1800s. By 2005, deals and transactions that used
to take months to negotiate will happen in hours.

Companies Will Need Management Services, Not Tools

In this frenetic competitive environment, corporations will need independent services
that can manage eCommerce transactions in a meaningful way, not tools investments
that just tell managers whether servers are up or down. Forrester predicts firms will
clamor for Internet services that can:

• Troubleshoot multicompany transactions. Consider an Internet order for 1,000

steel I-beams. A dynamic trade company might fulfill that order using three steel
manufacturers and six different shippers. When an incomplete shipment shows
up at the construction site, the company will want a service that can figure out
who to blame -- even if no one company has the records for the entire order.

• Store transaction information in easy-to-access ways. The days of calling

down to the data center for last May’s transaction records are over. In dynamic
trading networks, the transaction records may span across 100 different companies
and 20 incompatible transaction formats. Firms need services that can make sense
of this information.

• Create problem-specific views. Tracking down vendor-specific problems is easy

when a firm uses only a few suppliers. But when Ford starts seeing unexpected
breakdowns in sport utility vehicles it built using parts from a few thousand

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
ANALYSIS

Figure 4 The Two Epochs Of Management Tools 9

The Two Epochs Of Management Tools

Reinvent
Transforming for the
Internet economy
Dynamic Deconstruct
trade Preparing for the
voyage interconnected world
Experiment
Adapting existing
business to the Net

1998 2000 2002 2004 2006 2008

Epoch 1 Epoch 2
The two Transaction
epochs Old tools extend management services
of systems appear
management

Epoch 1: Old tools Epoch 2: Transaction

extend management services appear
Time frame 2000-2004 2005 and beyond
Drivers Transition to the Internet Multicompany dynamic trade
Who manages? IT and systems managers External service providers
How? Extensions to Transaction service
existing tools providers
What to manage? Uptime of servers, networks, apps Cross-company transaction IDs
System performance Transaction histories

What do they do? Install software agents on partner Troubleshoot multicompany

computers transactions
Measure Internet flows Store transaction information in easy-
Correlate system events with to-access ways
business processes Create problem-specific views
Vendors Tivoli, CA, HP, BMC Dun & Bradstreet, VeriSign

Source: Forrester Research, Inc.

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
ANALYSIS

10 suppliers, it will want to trace accountability for the problem back to the wiring
supplier that didn’t meet Ford’s environmental spec.

Business-Oriented Players Will Create Transaction Management Services

Forrester believes three new types of trusted third parties will develop the tools to
manage transactions and then deliver them as services (see Figure 5):

• Transaction authorities. As a complement to their digital certificate businesses,

companies like VeriSign and CyberTrust will issue unique transaction identifiers
for cross-company transactions. So a transaction authority might issue a single
coded ID that could be used to track a Toyota Corolla order from the NUMMI
manufacturing plant in California through delivery to a CarMax dealer in
Wisconsin all the way to a corporate fleet buyer in Indiana.

• Transaction repositories. Organizations that currently store large amounts

of transaction information -- like Equifax or EDS -- will record complete histories
of transactions as they pass through multiple organizations. For example, the
transaction history of the Toyota Corolla order would cover everything from
the delivery of the engine from Toyota Japan to the assembly of the car at the
NUMMI plant to delivery to the customer by CarMax -- and all those details
would be archived at the transaction repository.

• Management services firms. New managed services from companies like

Dun & Bradstreet and Ernst & Young will mine information from repositories
and translate it to meet specific business needs for problem management,
reporting, and planning. When our fleet buyer plans his next set of auto orders,
he checks with one of the management services companies to find out which
combinations of car manufacturers and dealers had the best track record for
on-time deliveries to its Indiana fleet.

Transaction Management Services Arrive In 2005

In 2005, transaction management services based on stable technology will be in place.
Firms embracing dynamic trade will overcome lingering worries about these new
services because:

• Competitors and a need for speed will force adoption. Early adopters of
dynamic trade will not only still be in business -- they will also flourish. In spite
of corporate fears that these transaction services are too new, when competitors
that use them start grabbing market share, executives will jump on the
management services bandwagon to avoid being left in the dust.

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
ANALYSIS

Figure 5 The Three Components Of Transaction Management Services 11

Management services firms

Transaction authorities Transaction repositories

Transaction Management Service Providers

Transaction Transaction Management

authorities repositories services firms

Primary service Issue unique Record transaction Mine transaction

transaction IDs history data

Secondary Store participant data Alert on event Trace transactions

service: Record ID histories occurrence Escalate problems
Store and export XML Track process progress Rate vendors
DTDs by company and
process

Likely VeriSign Equifax Dun & Bradstreet

players: CyberTrust EDS In-house departments
Entrust
Equifax
Software In-house In-house Remedy
provided Oracle TIBCO/ InConcert Clarify
by: Eastman Software Seagate Software
Oracle

Source: Forrester Research, Inc.

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
ANALYSIS

12 • Fears of litigation will not materialize. Some firms will fear unexpected legal
risk and resist using repositories. But eMarketplaces’, ASPs’, and ISPs’ litigation
issues closely parallel those of transaction management services, and the legal
world will have had five years to work out any kinks.

• Proven security processes and auditing will establish trust. Repositories will
employ stable security processes like VeriSign’s certified practices and deploy
security systems like Hewlett-Packard’s VirtualVault to convince corporate buyers
of their trustworthiness. Smart repository startups will engage a Big Five auditor
like PricewaterhouseCoopers to certify their operation while they build a proven
track record.

THE VOYAGE TO DYNAMIC TRADE REQUIRES TOOLS UPGRADES

Sadly, companies can’t just wait five years for these management services to evolve --
firms must manage their evolving Internet commerce infrastructures with today’s tools
until 2004. To prepare for the reinvention phase of dynamic trade, firms must pressure
their management vendors for systems that can:

• Span multiple companies. New management tools must oversee business

processes constructed from offerings that span multiple service providers. When
Dell gets an alert that its computer production has slowed, someone must track
the problem back to the stalled SAP server at Seagate that is holding up disk drive
deliveries needed for its just-in-time manufacturing.

• Rapidly adjust to changing information flows. The next wave of management

tools must understand how to adapt to changing demand. If Sony Music hosts
eCommerce sites at both Exodus and UUNET, it must be able to detect when
the pipes to Exodus’ California data center are jammed with MP3 downloaders
and shift the demand to UUNET’s lightly loaded servers in Virgina.

• Map system failures to business impact. New management tools must connect
changes in infrastructure status to events that a COO or VP of eCommerce
cares about. If the T1 connection to credit card processor CyberSource fails,
management tools must be able to flag the event as: “We can’t process orders
on the Web site!”

The Good News: Vendors Will Upgrade Today’s Management Tools

Management vendors Hewlett-Packard, Tivoli, Computer Associates, and BMC will
respond to dynamic trade needs by upgrading their systems management products.
These upgrades will include:

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
ANALYSIS

• Remote agent technology for multicompany management. Management 13

vendors like Tivoli have put software agents on internal computers for a long
time. Agents monitor and control network, system, and application operation,
and vendors will enhance them to cross-company boundaries. When placed on
systems at business partners they can report information back to central
monitoring stations.

• Tools that measure Internet flows. Keynote has created a global network of
monitoring stations to measure and analyze Internet performance data from the
end user perspective. Tools like HP’s OpenView will tap into Keynote’s
information as well as that of other established software products -- making sure
it can be gathered and reported over the Internet.

• Systems that determine how failures affect business. Firms like Micromuse
made names for themselves by discovering how to figure out that the 12,000
failures being reported by a monitoring system resulted from a single power
outage -- not 12,000 separate failures. They and firms like Aprisma will extend
this event correlation facility to relate events to business impact -- if the power
failure brought down the networks that finance uses, the system knows that
accounts payable functions aren’t available -- and also knows who to tell.

The Bad News: Management Upgrades Will Fall Short

While these upgrades will help users, they won’t address the fundamental limitations
of today’s tools. Even in 2003, these systems will still suffer from:

• Little standardization. Except for standards like Simple Network Management

Protocol (SNMP), every vendor has its own agents and agent-programming
environments -- and only expensive engineering can get them to work together.
Worse, suppliers, like steel-maker USX, that serve manufacturers in several
different industries will rebel when multiple, incompatible agents vie for resources
and control on their machines.

• Overwhelming complexity. These management systems aren’t simple, shrink-

wrapped systems from CompUSA. Management tool integrators estimate that
integrating a new customer into an existing management system can take 30 to
90 days and system stabilization can take up to six months.

Firms Must Plan To Put Tools On Life Support When Services Arrive
By the end of 2004, companies that have aggressively deconstructed their companies
for dynamic trade will awaken to a harsh reality: They need to keep their tools alive even
after services evolve. Why?

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
ANALYSIS

14 • Internal systems still need management. Transaction management services may

provide accountability for transactions, but they won’t tell you if your email server
is overloaded. Just as distributed systems didn’t cause the death of mainframes,
management services won’t kill off the old tools.

• Companies still need technical views into external systems. While transaction
management will tell a firm that its transaction processing processes are falling
behind those of its competitors, it won’t tell them why. If the problem is with your
infrastructure partners, you’ll still need legacy management tools to figure out the
root causes of the problem.

JANUARY 2000 © 2000 Forrester Research, Inc. Reproduction Prohibited

 Beyond Management Tools
ACTION

ACTION 15

Dynamic trade may seem a long way off. But preparing for it can make today’s
operations more effective. Here’s how:

Implement event correlation software.

Dynamic trade makes knowing how infrastructure and business interact crucial.
Install an event correlation system from a company like Micromuse or Aprisma
for its ability to correlate seemingly disconnected events. Implementing the
solution will have the ancillary effect of mapping the relationship between
networks, systems, applications, and business processes. That knowledge will
be invaluable as companies engage in dynamic trade and externalize operations.

Get involved in defining data exchange standards.

Data standards enable eCommerce -- without them even firms in the
same industry can’t communicate. With the Internet, moving first matters,
and standards involvement gets companies in on the ground floor. Join
CommerceNet and help define your industry’s eCommerce standards,
or join OASIS and become involved with the supporting data standards.

Consolidate event management.

In a dynamic trade world, IT will have to manage eMarketplaces like Ariba
and ASPs like Corio. To cope, firms should install service management products
from Remedy or Clarify that can consolidate a lot of events into one console
and coordinate problem resolution. Moreover, firms should make these tools
the standard for IT’s own subcontractors.

Make a core competency of service provider management.

We’ve said this before -- build your ability to manage service providers by
allocating 10% of contract value to contract management now. If you don’t,
all you’ll catch from the dynamic trade wave will be a surfboard in the back
of the head.

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
W H AT I T M E A N S

16
W H AT I T M E A N S

Traditional management vendors will hit the wall.

In epoch one traditional framework vendors like Computer Associates, Tivoli,
and BMC make money from upgrades driven by technology, scale, scope,
and new metrics. When it comes to transaction management services, however,
they will fail to bridge the gap. When they integrate business-level transaction
management into frameworks designed for system and network management,
the integration won’t work. Only a clean slate and freedom from integration
requirements will produce a viable product -- framework vendors’ organizational
structures will keep them from climbing that wall.

Industries with complicated supply chains win big.

When Boeing establishes a dynamic trading network it gets more out of it than
Toys “R” Us because complicated supply chains benefit more from optimization
than simple ones. Why? Those supply chains have a huge barrier to entry
spelled S-A-P. Easy-to-manage dynamic trade networks will allow more
suppliers to join those networks, thereby lowering costs.

Information retention becomes a hot issue.

Transaction repositories are useful to firms because they help track day-to-day
business activities. But when things go wrong lawyers will step in and subpoena
all the relevant information. Smart firms will set stringent requirements for
data destruction -- and will look to their lawyers to work out the details.

Reputation returns to the Internet.

Once transaction management services are in place, smart information
brokers will use the newly available data to independently judge companies’
performance. These rankings will also be available in a machine-readable XML
format to make buying decisions on a minute-to-minute basis. Having trouble
with distribution to Dubuque, Iowa? Better fix it fast, or every company you
work with will know you have the problem -- and demand concessions for it.

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 Beyond Management Tools
R E L AT E D M AT E R I A L

R E L AT E D M AT E R I A L 17

Companies Interviewed For This Report

Aprisma Management Technologies IBM Global Services
www.aprisma.com www.ibm.com/services/
BMC Software iCOMS
www.bmc.com www.icoms.com
Compaq Lucent Technologies
www.compaq.com www.lucent.com
Computer Associates International Manage.Com
www.ca.com www.manage.com
Corio Micromuse
www.corio.com www.micromuse.com
Digex Tivoli
www.digex.com www.tivoli.com
Exodus Communications Unisys
www.exodus.com www.unisys.com
Hewlett-Packard USWeb/CKS
www.hp.com www.usweb.com
i2 Technologies UUNET
www.i2.com www.uunet.com

Related Research
October 1999 Forrester Report “Organizing For eCommerce”
October 1999 Forrester Report “Sizing eCommerce Services”
October 1999 Forrester Report “The Digital Business”
September 1, 1999 Forrester Brief “Engine Rooms Of The Internet Economy”
June 1999 Forrester Report “Dynamic Trade Voyage”
April 1999 Forrester Report “Outsourcing’s Future”
April 1999 Forrester Report “A Rational Approach To XML”
January 1999 Forrester Report “Driving IT’s Externalization”
January 1999 Forrester Report “Dynamic Trading Networks”
March 1998 Forrester Report “Making Outsourcing Work”

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000

 Beyond Management Tools
GRAPEVINE

18
GRAPEVINE
Big honkin’ server. No reserve.
Earlier this month, Sun announced that it had begun selling brand-new servers on eBay,
an auction site better known for peddling Beanie Babies and Elvis figurines. What was
the server giant thinking? Apparently, the firm was just testing the waters -- and has no
plans to use the site as a major distribution channel. Good call. Selling complex, high-
end hardware via eBay is like pitching new BMWs at the local flea market -- you may
sell a few, but most buyers will balk at writing a huge check to an anonymous seller.

……

Cold, dead fish? Or adult-film star?

Ryan Ashton, vice president of sales and marketing at power-line-networking vendor
Intelogis, stopped by to speak with Forrester. He told us that in 2000 the firm would
change its name to Inari, which is Japanese for lightening. One problem: The word
has several other meanings, including the term for a specific type of sushi -- and is also
the stage name of an adult-film star. We’re not sure which meaning customers will latch
onto -- but whichever it is, it’s probably better than Intelogis.

……

How big is the Linux hysteria?

Forrester can’t help but marvel at the current valuation of Linux-related firms. For
example, at its current share price of $257, Red Hat is valued at about 1,179 times
trailing revenues. If we applied that same valuation to a more pedestrian stock such as
Cisco, that networking vendor would have a market cap of nearly $16 trillion. At that
valuation, Cisco could buy all the real assets in the United States other than the land and
still have money left over.

……

A truly mission-critical application.

Conventional wisdom says that online shopping doesn’t have the same mission-critical
nature that stock market trading does. A marketing manager at Compaq recently
emailed Forrester with a contrary opinion after eToys failed to ship a toy for his
daughter that it had claimed was in stock. He wrote: “A five-year-old girl is harder
to reason with than an industry analyst -- and her parents are also more likely to click on
to another site after a bad shopping experience.” Forrester agrees -- after all, would an
excuse like “Santa was out of stock” work with your child?

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 Research Tear-Out
P A
S
S
T
H
I
S
The Forrester Report

R
E
S
JANUARY 2000

E
Beyond Management Tools

A
P E R F O R AT I O N

R
C
By Frank Prince

H
With Carl D. Howe

O
Meaghan Cussen

N
A LO N G

T
O
T E A R

A
C
QUICK VIEW

O
L
L
Today’s system management tools will hit the wall when

E
A
G
companies reinvent themselves for dynamic trade. Firms

U
E
should plan for new Net-native management services
starting in 2005.

I N T E RV I E W S
• IT is busy with the basics.
• Managing dynamic trade isn’t on the radar.

A N A LY S I S
• Today’s management tools will fall short of requirements
for managing dynamic trade.
• Transaction management services will eclipse today’s
management tools by 2005.

ACTION
• Prepare for cross-company transactions.

W H AT I T M E A N S
• Management services companies won’t buy tools from
traditional management vendors.

Forrester Research, Inc. 400 Technology Square, Cambridge, MA 02139 USA 617/497-7090 Fax 617/613-5000
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Dynamic trade may seem a long way off. But preparing for it can make today’s
operations more effective. Here’s how:

Implement event correlation software.

Dynamic trade makes knowing how infrastructure and business interact crucial.
Install an event correlation system from a company like Micromuse or Aprisma
for its ability to correlate seemingly disconnected events. Implementing the
solution will have the ancillary effect of mapping the relationship between
networks, systems, applications, and business processes. That knowledge will
be invaluable as companies engage in dynamic trade and externalize operations.

Get involved in defining data exchange standards.

Data standards enable eCommerce -- without them even firms in the same
industry can’t communicate. With the Internet, moving first matters, and
standards involvement gets companies in on the ground floor. Join
CommerceNet and help define your industry’s eCommerce standards, or join
OASIS and become involved with the supporting data standards.

Consolidate event management.

In a dynamic trade world, IT will have to manage eMarketplaces like Ariba
and ASPs like Corio. To cope, firms should install service management products
from Remedy or Clarify that can consolidate a lot of events into one console
and coordinate problem resolution. Moreover, firms should make these tools
the standard for IT’s own subcontractors.

Make a core competency of service provider management.

We’ve said this before -- build your ability to manage service providers by
allocating 10% of contract value to contract management now. If you don’t,
all you’ll catch from the dynamic trade wave will be a surfboard in the back
of the head.

© 2000 Forrester Research, Inc. Reproduction Prohibited JANUARY 2000