I don't envy people who foretell the future. Lots of smart people who made the wrong educated guess end up in Internet slideshows chronicling false predictions. And eschatologists haven't been right yet -- the last time the world was supposed to end was Oct. 7.
IDC has the advantage of being in the tech prediction business a long time. The market research outfit released 2016 predictions this week, declaring that cognitive systems, robotics, 3D printing, augmented and virtual reality, next-gen security and billions of Internet-connected "things" will power the journeys of more and more businesses toward digital transformation. The latter is industry talk for using digital technology to reinvent new business and operational models. IDC analyst Frank Gens said that two-thirds of big-corporation CEOs will make DX -- as IDC calls digital transformation -- the jewel in their corporate crowns. Here's his recommendation:
"CIOs, you need to completely revamp enterprise IT to support digital transformation," Gens said in a Wednesday webinar relaying the predictions. He called for focusing investments in artificial intelligence, Internet of Things and other avant-garde "third-platform technologies" to gain expertise in those areas -- and an edge over competitors. More traditional IT priorities, notably migrating legacy systems, should command fewer investment dollars over the next four years, as the next-generation mission-critical apps and services take center stage at corporations.
IDC predicts budgets for third-platform technologies will grow more than 13% year over year, while legacy budgets will shrink by almost 5%.
The research shop said that by 2020, almost half of IT budgets will be tied to digital transformation efforts. A significant portion of that money will support what IDC predicts will be a massive uptick in software development capabilities. To realize DX, Gens said, "every successful enterprise must become an excellent software company."
That software development expertise will be needed to write, say, applications that can parse sensor data for the Internet of Things, which IDC predicts will expand to 22 billion devices by 2018. And for any of this to be possible, the company said, organizations will spend big on the cloud -- at least half of all IT spending by the same year.
CIO perspective on 2016 predictions
What's the view from the people actually doing the job? CIOs I reached out to aren't arguing against IDC's call for new tools to innovate and keep pace in the marketplace, but they aren't planning overnight makeovers, choosing instead a more gradual, systematic approach to fitting new technologies into the business framework.
For Niel Nickolaisen, CTO at O.C. Tanner, a human resources consulting and services company headquartered in Salt Lake City, improving product delivery and updating old systems are both needed to move "fast and then faster."
"The currency of business today is speed, and so we need to purge our lives and our systems of the complexity that slows us down and makes it hard for us to adopt -- or even experiment with -- new technologies like IoT and cognitive systems," Nickolaisen said. "For the future, we need to be experimenting today with new technologies. We should be doing our own research into and then playing with the new things."
Cynthia Nustad, CIO at Health Management Systems Inc., in Irving, Texas, said investments of the kind and scale IDC talked about could indeed further organizations' digital transformation strategies. She still sees the need for upgrading legacy systems, but agrees with IDC that the "wholesale lift and shifts" no longer make sense, because of the options available today.
"The technology transformation can be led with smaller successful projects on a migration roadmap that ultimately allows the conversion but also allows for new cutting-edge technology to be infused along the way," Nustad said.
IDC's 2016 IT predictions
Here is IDC's outlook for 2016 and beyond:
1) By the end of 2017, two-thirds of the CEOS of Global 2000 enterprises will have digital transformation at the center of their corporate strategies.
2) By 2017, more than 50% of organizations' IT spending will be for "third-platform" technologies and services, rising to more than 60% by 2020.
3) By 2018, at least half of IT spending will be cloud-based, reaching 60% of all IT infrastructure and 60% to 70% of all software, services and technology spending by 2020.
4) By 2018, businesses pursuing data transformation strategies will more than double software development capabilities; two-thirds of their coders will focus on strategic digital transformation apps and services.
5) By 2018, businesses with digital transformation strategies will expand external data sources by three- to fivefold and delivery of data to the market by 100-fold or more.
6) By 2018, there will be 22 billion Internet of Things devices installed, driving the development of more than 200,000 new IoT apps and services.
7) By 2018, more than 50% of developer teams will embed cognitive services in their apps, providing U.S. businesses $60 billion annual savings by 2020.
8) By 2018, more than 50% of businesses will create or partner with industry cloud platforms to distribute their own innovations.
9) By 2018, 80% of B2C and 60% of B2B businesses will overhaul their 'digital front doors' to support 1,000 to 10,000 times more customers.
10) By 2020, more than 30% of the IT vendors will not exist as we know them today, requiring realignment of preferred vendor relationships.
Source: "IDC FutureScape: Worldwide IT Industry 2016 Predictions -- Leading Digital Transformation to Scale"
Barry Porozni, CIO at The Reinvestment Fund, said the technologies IDC touted won't affect his financial services institution much -- yet. Better integration of business systems -- for example, general ledger talking to investor management -- is in his IT organization's future. But that doesn't mean new technologies won't be making an impact elsewhere.
"The 'more, smaller, faster, cheaper' theme should be felt at the consumer level first and fastest," he said, citing the potential of the Internet of Things used for home monitoring -- sensors detecting a broken or missing part on a water heater or a freezer. That data could be sent to a 3D printer, and the part could be minted and ready for delivery. It was pure science fiction just a few years ago.
Still, it won't happen overnight.
"I think the digital transformation is going to be more evolutionary than revolutionary for many existing businesses."
IDC gave CIOs until 2020 -- so there's time.
CIO news roundup for week of Nov. 2
Here's some more headline-grabbing -- and future-foraying -- news for the week:
- Toyota will invest $1 billion in a research and development company to explore the use of artificial intelligence and robotics, including driverless vehicles. The facility will start operating in January 2016 in Silicon Valley, and a second facility will open on the East Coast, near MIT. The move represents a turnaround for the Japanese carmaker, which wasn't interested in joining other automakers with plans for autonomous cars. But Toyota President Akio Toyoda had a change of heart after he got involved with the planning for the 2020 Olympic and Paralympic Games in Tokyo, seeing the need for technology that can help the elderly and the disabled.
- Ralph Loura left Hewlett-Packard Enterprise Group as CIO just after HP split into two. He started in July 2014. Scott Spradley, an HP veteran, is now CIO for the new Hewlett-Packard Enterprise, which sells business software, servers, storage and other computing equipment. HP Inc. is the second company; it includes the old HP's PC business. Loura's resignation was the latest in a recent reshuffling of staff in the lead-up to the breakup Sunday. Naresh Shanker is CIO for HP Inc.
- "Liked" anything on Twitter today? Yes, Twitter. The social media company replaced its Favorites button -- which users pressed to highlight a tweet with a message they supported, enjoyed or agreed with -- with a Facebook-like Like. Twitter also swapped the star that represented the feature with a heart. After all, "You might like a lot of things, but not everything can be your favorite," said Twitter product manager Akarshan Kumar in a blog post. The company has rolled out a number of tweaks recently in an effort to make the site less confusing for casual users. In the background of the changes is last week's user-growth numbers, which distressed shareholders.
Another 2016 prediction? More cloud consolidation
Cognitive systems set to change knowledge worker market