Enabling technology: Computing on demand. Building on the component software architecture and open standards foundation, the next-generation platform will lead to new forms of outsourcing. Not only will some applications be handed over to service providers, but so too network, processing and data storage. (Securing that interaction is another feature of the next-generation architecture; see key element six.) IT services companies, including CSC, EDS and IBM, already control computer operations for global businesses and are investing today in computing centres that can quickly switch on or off major resources as the business needs of their customers change. The component-based software architecture, at the same time, will allow companies to keep operating assets loosely coupled, making it easier to add or remove them. (For more on utility computing, see "Plug and Pay", CIO May.)

Key impact: IT will adapt to your company rather than the other way around. Today, one of the major costs in both time and dollars of mergers and divestitures is the fragility of mission-critical IT systems. With an infrastructure built on open standards and supported by on-demand resources, the scalable company will be able to plug and unplug divisions and even acquire competitors without having to wait for applications to catch up with the changes a year or two later. Having converted to a standardised application and desktop environment in the late 1990s, oil giant BP, for one, has leveraged that investment to simplify its acquisitions of Amoco and Arco, and it now runs the business of its former competitors on its cheaper and more reliable platform. The Amoco take-over was completed nearly a year ahead of schedule, in part because BP simply replaced Amoco applications and hardware with its own standardised environment.

5 Compartmentalised application components. Following a long-standing trend toward separation of data structures, application logic and user interfaces, next-generation applications will manage each component independently, making modifications far simpler. The job of enhancing the next generation of legacy software will not be met with the same dread it is in today's environment, where even a small change can ripple through to hundreds of other programs, files and screen layouts. Enabling technology: Web services. Though poorly understood, the true promise of Web services will be to simplify not only application development but, more important, application maintenance. In the model for Web services developed by vendors participating in WS-I, small software modules located anywhere on the Web will be able to interact with each other using standard protocols, making it possible to cobble together computer systems that reflect the needs of your organisation, even - perhaps especially - as those needs change. Your IT organisation will only have to worry about the pieces that describe functions specific to your business.

Key impact: Ownership of key IT components will migrate to the organisation best suited to develop them. In the rush to present users with Web-based interfaces - and with few development tools available - most companies built first-generation Internet applications that hopelessly entangled data, logic and interface. Connecting the new software to existing systems proved difficult, and adding new functionality or taking advantage of new Internet technologies proved even harder.

Most companies will start over in the next two years, adopting a ruthless insistence on true separation. Once they do, the Web services model will flower. Some companies aren't waiting. Start-up airline JetBlue has built all its systems from scratch using Microsoft's .Net environment. The company claims dramatic reductions in development time, cost and operations overhead, and it's succeeding despite being in a ruinous vertical industry.