At IDC’s annual Directions conference, held on February 28, 2017 at the San Jose Convention Center, IDC’s leadership and analysts reiterated and reinforced their viewpoint on the impact of digital transformation (DX) on all business verticals. Throughout the event, IDC referenced executive sentiment, market research, and five-year projections to support their views on how businesses will compete, which technologies will be used, and what companies can do to plan for success as the DX opportunity continues to grow and evolve.
Waterstone representatives attended a series of breakout sessions around two key areas – Internet of Things (IoT) and cloud business models. We identified three forward-looking takeaways that are relevant for any business facing the complexities and issues associated with DX:
Industry-Specific Clouds, Platforms, and Marketplaces Will Become More Prevalent
IDC estimates that by 2020, 75 percent of the G500 will provide digital services through an industry cloud, where industry clouds are defined as cloud-based, scalable repositories that comply with industry security-level requirements, offer APIs for integration into software solutions, and enable an exchange of data or services to participating providers. Companies such as John Deere, Siemens, and Boeing have already launched industry clouds and platforms in an effort to support data collection and data standardization within their industry-specific offerings.
In the case of John Deere, its cloud-based agriculture product enables vendors to access and contribute agronomic data such as production summaries and client, farm, field, and boundary details, manage operations, monitor machines, and conduct a number of other analyses through SDKs and APIs. As noted by IDC, the value of the industry cloud will be found in data aggregation as robust data exchanges enable a more efficient process for innovating products and services on top of robust data sets.
Expect an Accelerated Shift to Customer-Centric Business Models
Many companies, particularly those in the software industry that are shifting from perpetual to subscription licensing, are undergoing a transition from product-centric to customer-centric business models. This shift represents a fundamental change in how a company defines its own value proposition, measures financial success, and manages product adoption. A few key examples of this shift, as developed by IDC, include:
IoT 2.0 Strategies Will Support New Business Models & Tighter Integration with Company Systems
The shift to customer-centric business models noted in the previous takeaway will also impact a company’s IoT strategy. Smart, connected devices will increasingly provide data that will enable a customer-centric focus on value delivery and optimized product development processes in IoT 2.0 companies.
Currently deployed IoT solutions are typically siloed, proof-of-concept (POC) level solutions that derive limited value from artificial intelligence (AI) / machine learning (ML) capabilities. With IoT 2.0, companies will be able to combine traditional business information with IoT data that can then be analyzed by AI-enabled software. For example, relevant IoT data will be integrated with next-generation, intelligent ERP systems with AI / ML capabilities as a core feature to automatically and accurately identify efficiency opportunities across all parts of the business, from R&D to Services.
IDC’s projections and industry outlooks generally align with what Waterstone sees on client engagements in the IoT and cloud software spaces. In the case of future-looking business models and value opportunities, we expect that industry leaders will need to continue to make consistent investments in their own transformation in order to demonstrate the value of these new technologies for specific use cases. Finally, as AI and IoT technologies become more mature, the ability to integrate new capabilities into a company’s operational execution may determine how successful they are in a DX economy.
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