One of the big events on many tech companies’ calendar each year is the IDC Directions conference. IDC, for those who don’t know, is the premier tech industry research company; if something should be on a tech company’s radar, IDC will be talking about it. This year’s conference was no exception. As usual, tech vendors big and not-so-big gathered to hear about the critical trends to watch for over the next few years, and how these trends might affect their business in growing and competing.

The message at IDC was loud and clear: digital transformation continues increasing in pace and importance. IDC estimates that, by 2021, 50% of global GDP will consist of some kind of digitized offering and companies will spend $2.1 trillion on digital transformation initiatives. As Alex Gorsky, Chairman and CEO of Johnson and Johnson, recently said, “We should all be acting like Amazon is getting into our business.”

 

The Four Technologies Driving Digital Transformation

This digital transformation wave is being driven by the emerging ubiquity of four key technologies and the ability to use them as building blocks to multiply the innovation potential and create new services on top of existing ones.

1. Cloud is everywhere, and it can be used by just about everything and everyone. It is moving far beyond the workhorse task of hosting, with 15% of cloud spend dedicated to specialized workloads by 2021.

2. Artificial Intelligence (AI) is leveraging existing technology platforms and services to drive development of bots and agents, machine learning, language and image recognition and processing, and threat analytics; in fact, IDC estimates 75% of commercial enterprise applications will be using AI by 2021.

3. Architecture is turning hyper agile, going beyond merely an API or two. The new world is all about creating connections between microservices to create new technology solutions big and small.

4. Blockchain, driven by its decentralized ledger concept, is going to help enable trust between these microservices, becoming a mainstream part of the digital landscape. By 2020, IDC estimates 25% of top banks, 30% of top manufacturers and 20% of top healthcare providers will use blockchain in some shape or form.

To support this transformation, the IT organization is changing too. Many expect the European Union’s GDPR regulations to impact technology firms worldwide, forcing them to consolidate data lakes, clean up and manage data streams and break up data-hungry applications into easier-to-digest microservices. To make this a reality, IT organizations must embrace a DevOps mentality, becoming fully agile in method and in culture.

 

The Emergence of a New IT World Order

IDC believes these trends when taken together signify the emergence of a new IT world order – and that tech vendors have to be ready to find their role within it. At the base, network and infrastructure providers are the new utilities – boring businesses perhaps, but enabling the whole stack to exist and thrive. Sandwiched in the middle are a small, powerful slice of mega platforms – think AWS, Azure, IBM and the like. On top of these mega platforms, app-centric platform suites like Salesforce, Oracle, Microsoft, Intuit – many of which don’t want to be a mega platform but want to partner with them. Consolidating these platform suites are multi-cloud integration management platforms: companies like Accenture, HPE and DXC. Finally, the icing on the top, if we can be so positive, are industry-specific platforms – creating innovation communities around a topic area.

New IT World Order 

 

It is this world order that will drive what IDC sees as the next chapter of the IT revolution: the emergence of true autonomy in technology. While this topic is firmly on the horizon and has the potential to change what we do and how we do it, it is not quite on our doorstep yet. IDC thinks that by 2027, 10% of technology innovation will be derived from autonomous AI, vastly changing the nature of technology jobs.

As an advisor to tech vendors, Waterstone is always looking to the future to understand what challenges companies need to be aware of – but also where the exciting opportunities are and how to take advantage of them. If you would like to discuss these trends and how digital transformation is impacting your clients and your business, please get in touch.

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About the Author
Andrew Clark

Andrew Clark is a Principal at Waterstone. Andrew advises clients on key strategic issues, including growth planning, new market entry, go-to-market strategy, and operations performance improvement. He has worked in a range of industries, with a focus on financial services technology, telecoms, and business services.