Analysts: Mary Allen (InsightaaS), Anurag Agrawal (Techaisle), Michael O’Neil (InsightaaS)
December has traditionally served as the occasion for the publication of New Year forecasts. It’s understandable that we want to look ahead to the sources of opportunity that lie ahead. But in the business world, December also marks the beginning of the review season, the point at which we need to answer for our past performance. And while detailed forecasts focus on the next twelve months, the planning horizon needs to look a little further, so that tactics provide support for business strategies, rather than simply delivering a series of course adjustments.
Here at InsightaaS, and in conjunction with our partners at Techaisle, we decided to tackle all three of these tasks this December: we developed an outlook for 2016 and for the longer term, and also looked at how our 2015 predictions fared. What follows is unique amongst year-end analyst pronouncements – a ‘review and forecast’ document that fully addresses both goals!
A look back – what was it we said was right around the corner, again?
Last December, Techaisle and InsightaaS collaborated on “Ten predictions for 2015 – and five issues to keep an eye on for 2016 and beyond.” Here are the issues we highlighted, and how we think we did in our prognostication.
The Top 10 for 2015
- Hybrid arrives – not as a strategy but as the result of many discrete decisions.
- With the benefit of today’s perspective, we might fairly say that in 2015 and for several more years to come, a more apt description of hybrid is journey rather than destination. Digging into the detail, though, we believe our prediction that “an ability to manage hybrid infrastructure will become a key corporate IT requirement in 2015” has been borne out by the focus on tools and strategies (ranging from Docker to Agile) that we saw throughout the year. In Techaisle’ SMB Cloud adoption studies, there was a sense of growing ubiquity in the usage and plans for private, hybrid and public cloud. Use of hybrid cloud continued to increase as both a conscious strategy and as a reaction to use of both public and private resources within a single infrastructure; by the end of 2015, two-thirds of companies with 100-999 employees expected to use hybrid models.
- Collaboration becomes a much bigger concept.
- In 2015, collaboration began to expand beyond file-sharing to become a necessary tool for driving decision-based agility, fostering innovation and extending customer intimacy. Collaboration is a process rather than a discrete outcome. Our key notion that collaboration “extends beyond the corporate staff (and as a result, beyond large enterprises) to include customers” clearly did reflect strategies and investments in 2015. Within the SMB segment, in particular, collaboration is increasingly becoming a central component to virtually all business activities rather than a means to enable connections between discrete tasks. Other changes in this area will further reshape collaboration, but you’ll need to refer to the “forecast” section of this document for that discussion.
Collabmobilicloud becomes a management reality.
- We’re going to give this one a check mark. The core concept explained that despite vendor tendency towards defining collaboration, mobility and cloud as separate domains, both enterprise and SMB users have started viewing them as integrated components of business solutions. The user belief that collaboration, mobility and cloud should all be attributes of modern applications has become clearer, and even suppliers are starting to recognize the importance of an integrated collabmobilcloud approach.
- UX, not DevOps, is the key 2015 application development trend.
- No one’s arguing that UX isn’t important – especially with the widespread focus on adaptive apps – but in 2015 there was more dialog and emphasis on DevOps than UX, so this one can be put into the “naughty” column. DevOps, not UX, was the key trend in 2015, and will likely continue to be so for some time to come. However, an important defining outcome of DevOps is user experience and SMBs are more concerned about a consistent user experience in their cloud and mobile solutions than the style of application development. The success of many unicorns in 2015 can be attributed to their intense focus on user experience rather than on solving a niche problem.
- Connected security becomes ‘security’.
- In a rebound from the DevOps vs. UX prediction, we get another checkmark. The lines of demarcation between security products are disappearing as vendors respond to user demand for solutions that leave no exploitable gaps in coverage. SMBs are not only increasingly dependent on IT – they are dependent on increasingly-interconnected systems, which are in turn accessible via an ever-expanding population of devices and access points. The volumes and value of data contained in these systems continues to grow, which intensifies the potential damage associated with a breach, while attracting heightened attention from hackers. A hardened perimeter is only as hard as its softest point and the perimeter has become dynamic, flexible with increasing data flow across boundaries in cloud networks.
- BYOD – more a story than a choice.
- This prediction might have been a bit timid: in 2015, BYOD stopped being an issue of choice, and by the end of the year, it wasn’t much of a story, either. It was simply (as our forecast predicted!) “a reality, not a subject of debate.”
- “Cloud Orchestration” is everybody’s problem.
- We would really like to say that this has become true, but as with several earlier predictions, we’re still on the train, not in the station. Give us a partial checkmark on this, and let’s keep an eye on it in 2016.
- The BDM becomes the KDM for cloud business applications.
- As noted in last year’s outlook, in this prediction “we are just describing a transition that is mostly complete.” The trend is now pretty well established with no reversal in sight.
- IT bifurcation.
- This prediction actually had longer legs than even we might have expected. Another analyst firm (readers of our material, maybe?) began heavily promoting the concept of “bi-modal” IT. Our forecast was actually a bit more nuanced than that as we called for “a distinction between IT-as-an-important-force-in-driving-corporate-strategy and IT-as-a-supplier-of-management-and-integration-services.” Our prediction was that the “the former will spend much less time on ‘IT’ than ‘business strategy’,” while “the latter group will likely divide again, with one part focused on connecting business applications together so that ‘task automation’ becomes ‘process, department and/or enterprise automation’, while a second group focuses primarily on on-premise product acquisition, configuration, deployment and support.” We’ll take credit for having highlighted the trend – and extra credit if the bi-modal discussion expands to discuss the split between operations and procurement/deployment (and supplier management, if we want an additional observation for the New Year).
- In the channel, the ability to manage recurring revenue streams will separate the “viable” from the “ready for consolidation”.
- This was starting to happen in 2014, but it definitely accelerated in 2015 as firms that weren’t able to transition with the market went from “ready for consolidation” to “consolidated.” In 2015, successful cloud and mobility SMB channel partners derived 58 percent of their revenue as recurring with MSPs achieving the highest percent of recurring revenue. Expect more in 2016!
Five issues that we saw as ‘likely to appear on future lists, but not quite ready to be part of the 2015 mainstream’ included:
- Big Data is still long on promise…but a bit short on real application.
- We’ll put a tick mark next to this one. Most analytics initiatives are still focused on description or diagnostics based on structured internal data. However, recent research has found that lead adopters are starting to cluster multiple benefits around their analytics systems. Big Data was a priority for only a quarter of small businesses (as in 2014) but slightly over half of midmarket businesses (1.5X that of 2014). Let’s add this to the 2016 watch list.
- IoT – still lots of smoke…but again, the fire is more than a year away.
- Widespread use of IoT is clearly a bit further away than mass market adoption of analytics/Big Data, but it’s advancing rapidly. IoT continued to represent an early adopter technology in 2015, so we’ll take a tick mark for this one. Looking at 2016 from the current perspective, we believe that IoT is ready to branch out, but we’ll save that thought for the forecast side of this document.
- SDN is still on the horizon.
- This proved to be true in 2015, but only just. SDN is rapidly moving from future technology to current means of integrating on-premise and cloud resources within a single fabric. Will that go mainstream in 2016? There are reasonable arguments both ways.
- Power and cooling as a business issue.
- To be fair, this may have been more a case of casting the world as we would like it to be than as it is. In any event, we get only partial marks for this. As we observed a year ago, “in a lot of ways, cloud is to power and cooling what fracking is to oil: it relieves the immediate pressure to do something substantive about a looming issue.” Power and cooling as a business issue (and fracking itself, come to think about it) is not as compelling today as we expected 12 months ago.
- Wearables are approaching prime time, but…
- The gist of this observation was “wearables will become ubiquitous, but not in 2015!” That seems fair, as do doubts as to whether wearables will become a major interface in 2016. A year ago, we pointed to the need for advances in battery technology and even basic materials science to move the wearables market forward. Today, the key issue seems to be inertia: until users find a compelling reason to move from smartphones to wearables, and until they form part of coherent business solutions, wearables will remain a niche product.
Looking ahead, what trends will shape the role of technology in the business world of 2016?
Our review finds a substantial proportion of hits, a few misses, and a handful of ‘still in transition’ items in our 2015 predictions. At a management level, we are looking forward to similar performance for our 2016 outlook, though we’ll need to wait another year before we are able to confirm the stars, dogs and incompletes.
With that past as prologue, here’s what we expect in 2016:
- 2016 will see even more intense emphasis on “CIA-Plus.”
- Suppliers will begin to align their offerings with Cloud, IoT, and/or Analytics; products that don’t address user needs in these areas will be positioned as the infrastructure and integration services needed to capitalize on these technologies. This trend, like hybrid IT, will continue into 2017. In 2016, Cloud and Analytics will remain among the top five IT priorities of SMBs and midmarket businesses. IoT will inch its way up into the priority list, through adoption will remain limited.
- Rise of IoT will be constrained by a lack of real-world examples.
- From a buy-side perspective, the rise of IoT will need to be fueled by real-world examples showing the benefits of automating tasks and processes within IT and in other sectors. Within the SMB community, we expect sporadic implementation and a lack of concerted effort put towards creation of IoT strategy, even though ICT suppliers will continue to push forward their solutions, hoping to remain top-of-mind in order to claim leadership in this emerging space. Each IT supplier will create its own solution set causing decision and adoption inertia, despite the wave of innovation that we expect to see emerge from the smaller, more agile IoT providers that are able to more easily align ICT expertise with real life solutions. Experienced consultants, and system integrators in particular, will hold sway in matching adopters with suppliers.
- IoT supplier success will be determined by ecosystem management.
- On the sell side, the rise of IoT will be accompanied by an intense wave of interest in ecosystem management. It’s difficult to buy or sell a ‘box of IoT’, though providers will claim to provide complete solutions. (Parenthetically, this constraint isn’t limited to IoT. While it’s possible to sell a “’box of cloud’ under the right circumstances, only AWS really manages to do so. And while you can sell a ‘box of analytics’, the boxes themselves come in a lot of different shapes and sizes.) To meet buy-side demand for IoT, sellers will assemble coalitions that provide the many products and services that comprise an IoT solution. This will make alliance management a key success factor in the marketplace. The last time alliances determined market leadership, SAP became the global standard in ERP. Which supplier will emerge in IoT? And will the niche value added reseller find a new source of success in IoT?
- Business transformation will continue to elude analytics users.
- Analytics users will find that they aren’t achieving the expected benefits, prompting divergent responses. Some companies will find that analytics has not been transformative, and will blame the technology; others will find that analytics has not been transformative and will look to move past descriptive and diagnostic views, piloting predictive or prescriptive initiatives. One of these responses is clearly more sensible than the other, but that doesn’t mean it will be universal, at least in 2016. Focus on visualization will increase (mine is better than yours), on how the technology can solve business issues and challenges for SMBs and midmarket customers. Simplified implementation of customer and social analytics will be key drivers of adoption.
- “Hybrid” will be used more often in conjunction with “IT” than “cloud”
- User organizations will accept the notion that their focus on cloud needs to evolve into a focus on hybrid IT, as firms realize that their platforms and management scope must encompass on and off-premise systems. Truthfully, there’s still a lot of work to do in cloud adoption. But the nature of the discussion has changed from ‘what and how do we move to the cloud?’ to ‘what do we do to build an integrated, manageable infrastructure?’ In 2016, there’s likely to no longer be infrastructure debate about use of cloud, but there will be an important emerging discussion around managing hybrid IT.
- Collaboration will drive ‘silo’ to the realm of four-letter words
- Anywhere, anytime also means any type of collaboration. Businesses will look for unified shared virtual workspaces that allow employees to enter into the workspace from any entry point to work together, collaborate and interact. Collaboration solutions can’t be deployed on stand-alone platforms – they need to be viewed as a framework for integrating multiple capabilities, native to multiple applications.
- Integrated security will be recognized as important to business competitiveness
- In 2015, we (correctly) saw security solutions connecting and overlapping in ways that do not leave vulnerabilities. In 2016, we expect to see security viewed increasingly as a business enablement platform, rather than strictly as a technology solution. Security needs to be a core consideration in application deployment, designed to prevent exploits from outside or inside the organization. In particular, data that is tagged as high-priority will be encrypted to protect against network intrusion and against risk associated with poorly-secured endpoint devices on one hand and from employee mistakes or malfeasance on the other.
- Enablement becomes the key constraint in the channel
- Migration to advanced technologies such as cloud and analytics, which require sophisticated deployment capabilities and (often) new recurring-revenue-based sales models, has left the traditional channel behind. Vendors are ‘helping’ partners to build the capabilities needed to participate in the growth segments of the IT industry, but their methods are (unsurprisingly) designed to align the channel with a particular product set. This has the net effect of converting resellers/integrators/consultants into sales agents – which erodes the channel’s basic position as a trusted advisor. There isn’t a lot of current appetite for vendor-neutral enablement, but there’s a great deal of need for it. Will we see it in 2016? Perhaps not, but we may see some initial activity in areas like IoT that are heavily dependent on the creation of multi-vendor solutions.
- Digital business will be the goal, but goalposts will keep moving
- SMBs and midmarket businesses will accelerate movement towards true digitization and will be more nimble in their trajectory than enterprises; however, they will suffer from lack of direction, skills and investments from senior management rather than lack of IT enthusiasm. In a hyper-competitive world, SMBs will finally realize the value of customer and will focus on customer service using automated solutions in a multi-channel setting.
- Cognitive computing will challenge the developer community
- 2016 will be the year that the developer community takes a serious and advanced look at cognitive computing by combining the process and data from cloud, IoT and analytics the CIA-plus. To be fair, we can also foresee that when we review our predictions at the end of 2016, cognitive computing itself will land in the “in progress, not complete” variety. But the prediction here isn’t that the developer community will master cognitive computing, but rather, that it will begin to seriously address the issues that it raises.
Things we won’t see in 2016, but wish we would
- IT migration from managing ‘stuff’ to managing relationships. Why do we want it? Since outcomes are more important than the components used to build systems that support them, we’d like to see better alignment between IT attention and business benefit. Why won’t we get it now? Human inertia, fear of the unknown and a lack of management skills will delay a needed transition.
- Reconnection of IT and business systems. Why is it important? Greater awareness of the interdependence of IT infrastructure and business applications is needed to enhance productivity of the user organization as a whole. Why isn’t it going to happen immediately? Credit card cloud procurement, combined with business impatience for instant on resources are likely to continue to be at odds with IT priorities, namely security and control.
- A refocus on improving the data centre’s environmental specs. Despite years of education provided by industry groups such as the Green Grid and the development of products designed to improve energy performance, efficiency is still viewed largely as the enemy of uptime. Focus on drawing these two measures together, and on transition to sourcing data center energy from renewable resources is a desirable goal that remains in the hands of the hyperscale facilities, rather than a broad adoption trend. Discovery of cheap, less carbon intense natural gas repositories is likely to disincent facilities operators from introducing change in the near term.
The longer-term outlook
Now that we’ve covered what will and won’t happen in the New Year, what are the key longer-term planning assumptions? Here are some that you can use to help guide strategic initiatives:
- In 2017-2018…
- 2017: A new attitude and culture that values and uses data visualization as the quickest way to gauge overall performance and specific areas of interest at a glance will become prevalent.
- 2018: Graphene becomes the word of the day, as manufacturers of portable and (especially) wearable devices look for ways to build devices with entirely new characteristics and profiles.
- 2017-2018: The growing reliance on industry evolution through ICT will continue apace, with the automotive sector building ‘connected car’ systems rather than discrete vehicles, and digitization of sectors such as healthcare, resource extraction and retail leading the way.
- In 2019-2020
- 2019: Overall B2B spending on XaaS will surpass overall spending on physical IT goods in the US.
- 2020: Key Performance Indicators (KPIs) will be a standard part of application architectures as will a meta-directory of KPIs that all applications can access. It will be possible to measure and optimize for elusive objectives like Return on Marketing Investment, Optimal Pricing, Cost of Acquisition and Lifetime Customer Value
- 2020: Data will be collected from all applications and broken into several areas: for people, productivity will be monitored through activity and results (as it already is in the new generation of SaaS applications), and effectiveness of software and equipment will be measured through algorithms that follow click paths, analyze application usage, optimize the process flow and usability of the systems.
- 2020: Robotics will begin its migration from the plant floor in sophisticated manufacturing applications into new process areas through experimentation with broader development of smaller, simpler, purpose-built devices.
- 2020: Advances in 3D printing technologies that allow use of a broader range of printing materials will launch the beginning of a shift 3D from hobbyist or niche applications such as engineering and architecture to digital disintermediation of logistics and physical manufacturing at scale.