Top 2015 Technology Predictions from IDC

Crystal_BallIn a recent webcast (and accompanying report), IDC issued its top 10 predictions for 2015. IDC’s Frank Gens advised companies in all industries to “Amazon” themselves, but also predicted that the best job of “Amazoning” will be done by Amazon itself.

All innovation today is Amazon-style innovation: at scale, high-velocity, and low-cost. China will use this type of innovation to join Amazon in ruling the world of technology. Here’s my edited version of IDC’s 2015 predictions:

New technologies will account for 100% of growth

Worldwide IT and telecommunications spending will grow 3.8% in 2015 to more than $3.8 trillion. Nearly all of this spending growth and one third of total spending will be focused on new technologies such as mobile, cloud, big data analytics and the Internet of Things.

Wireless data, the largest segment of the telecommunications sector, will also be the fastest growing

Wireless data will be the largest ($536 billion) and fastest growing (13%) segment of telecom spending.  Net Neutrality will be mandated in the US, with a hybrid approach that will provide a baseline of services available to all.

Phablets will be the mobile growth engine

Sales of smartphones and tablets will slow down from the pace of recent years, reaching $484 billion and accounting for 40% of all IT spending growth. Chinese vendors will capture 15% or more of worldwide mobile growth. Phablet sales will grow 60%, cannibalizing the tablet market. Wearables will disappoint, with “only” 40-50 million units sold in 2015. A wrist-phone will ship and flop. Mobile app downloads will slow in 2015, reaching $150 billion, with Chinese independent app stores accounting for 18%. But enterprise mobile app development will more than double.

New partnerships to redraw cloud computing’s landscape

Spending on the greater cloud ecosystem (public, private, enabling IT and services) will reach $118 billion (almost $200 billion in 2018), $70 billion ($126 billion in 2018) of which will be spent on public clouds. Amazon will withstand attacks on many fronts to maintain or even gain market share.  Gens predicted we will see “strange bedfellows” in the cloud market in 2015 such as Facebook with Microsoft and/or IBM or Amazon partnering with HP.

Data-as-a-Service will drive new big data supply chains

Worldwide spending on big data-related software, hardware, and services will reach $125 billion. Rich media analytics (video, audio, and image) will emerge as an important driver of big data projects, at least tripling in size. 25% of top IT vendors will offer Data-as-a-Service as cloud platform and analytics vendors offer value-added information from commercial and open data sets. IoT will be the next critical focus for data/analytics services with 30% CAGR over the next five years, and in 2015 we will see a growing numbers of apps and competitors (e.g., Microsoft, Amazon, Baidu) providing cognitive/machine learning solutions.

The IoT will continue to rapidly expand the traditional IT industry

Internet of Things (IoT) spending will exceed $1.7 trillion, up 14% from 2014 (and will reach $3 trillion by 2020). One-third of spending for intelligent/embedded devices will come from outside of the IT and telecom industries. This, said Gens, amounts to a “dramatic expansion of what we would consider IT.” Seeing the opportunity, a number of traditional IT vendors (possibly Cisco, IBM, and Intel) will form “an IoT solutions company.”  Predictive maintenance will emerge as an important IoT solutions category.

Cloud service providers will become the new data center, redrawing the IT landscape

The massive shift to datacenters operated by cloud service providers will spark a burst of “cloud first” hardware innovations and drive greater consolidation among server, storage, software, and networking vendors. By 2016, over 50% of compute and 70% of storage capacity will be installed in hyperscale data centers.  IDC expects to see two or three major mergers, acquisitions, or restructurings among the top-tier IT vendors in 2015.

Rapid expansion of industry-specific digital platforms

The new technologies combine to create a business innovation platform, not just a technology platform, helping transform “every industry on the planet.” One-third of market share leaders in every industry will be disrupted by vendors selling new IT products and services.  Examples include alternative payment networks in financial services (in 2 years, 2% all global payments will be conducted with bitcoin); expansion of IoT technologies into city safety, public works and transportation systems (25% of all government IoT spending by 2018); and the expansion of location-based services in the retail industry. The number of industry platforms – industry-specialized cloud-based data and services platforms, usually created by leaders within the industry – will expand rapidly, doubling in 2015 to 60.

Adoption of new security and printing innovations

Securing the edge: 15% of mobile devices will be accessed biometrically (over 50% by 2020). Securing the core: 20% of regulated data will be encrypted by year-end 2015 (80% by 2018). Threat intelligence will emerge as a killer Data-as-a-Service category: By 2017, 55% of enterprises will receive customized threat intelligence data feeds. 3D printing will see significant activity among conventional document printing companies: 2015 spending will surge 27%, to $3.4B, and by 2020, 10%+ of consumer products will be available through “produce on demand” via 3D printing.

More China, everywhere

China will have a “skyrocketing influence” on the IT and telecomm market in 2015 with spending that will account for 43% of all industry growth, one third of all smartphone purchases, and about one third of all online shoppers. With a huge domestic market, China’s cloud and ecommerce leaders (Alibaba in ecommerce, Tencent in social, and Baidu in search) will rise to prominence in the global marketplace. Chinese branded smartphone makers will capture 40% of the worldwide smartphone market in 2015.

[Originally published on Forbes.com]

 

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2015 Trends in Data Science (Infographic)

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The Deep Learning Saga or how Geoff Hinton discovered how the brain really works. Once a year for the last 25 years.

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Predictions for CMOs and Digital Marketing in 2015

DigitalMarketingIn 2015, digital marketing budgets will increase by 8%, according to a recent Gartner’s CMO Spend Report, a survey of 315 marketing decision makers representing organizations with more than $500 million in annual revenue.

Customer experience is the top innovation project for 2015, continuing its role as the top priority for marketing investment in 2014. The survey also found that

  • In 79% of companies, marketing has a budget for capital expenditures — primarily, for infrastructure and software
  • Marketers are managing a P&L and generating revenue from digital advertising, digital commerce and sale of data
  • 68% of organizations have a separate digital marketing budget — it averages a quarter of the total marketing budget
  • Two-thirds of companies are funding digital marketing via reinvestment of existing marketing budgets

Earlier this year, IBM found in its worldwide survey of CMOs that CEOs increasingly call on them for strategic input. Furthermore, the CMO now comes second only to the CFO in terms of the influence he or she exerts on the CEO. The survey also found, however, that very few CMOs have made much progress in building a robust digital marketing capability: Only 20%, for example, have set up social networks for the purpose of engaging with customers, and the percentage of CMOs who have integrated their company’s interactions with customers across different channels, installed analytical programs to mine customer data and created digitally enabled supply chains to respond rapidly to changes in customer demand is even smaller. Almost all CMOs, 82% of survey respondents, felt underprepared to deal with the explosion of data.

With this as a background, here’s a summary of what digital marketing and the CMO will look like in 2015, based on observations by Scott Brinker, a leading commentator on marketing technology, Forrester, TopRank online marketing blog, Wheelhouse Advisors, and Brian Solis.

CMOs will take charge of focusing their companies on the customer

CMOs and their marketing teams will become the primary driver behind customer-centric company growth. Leveraging their knowledge of the customer and the competitive landscape, CMOs will advise and council CEOs on how to win, serve, and retain customers to grow the business. They will also lead organizational changes and new collaboration initiatives aimed at unifying all customer engagement activities across the enterprise.

CMOs will poach IT staff to help them manage a rapidly expanding digital marketing landscape

The number of digital marketing tools will grow in 2015 with new startups and large, established tech companies confusing even more that CMO with their numerous offerings. To help manage this embarrassment of riches and move their companies further on their digital marketing journey, CMOs will be poaching IT staff looking for new challenges and better salaries.

CMOs should expect heavy rains from proliferating digital marketing clouds

Digital marketing tools will be increasingly offered as a cloud-based solution (“marketing-as-a-service”) rather than licensed software. Cloud-based solutions will continue to expand their ecosystems, with many small software developers adding apps to existing cloud-based digital marketing platforms.

CMOs will invest in new digital marketing hot areas

Content marketing and predictive analytics will continue to be hot areas of interest and investment for CMOs, but they will be joined in 2015 by sales enablement, post-sale customer marketing, marketing finance, marketing talent management, and new tools based on the Internet of Things, allowing for the integration of offline and online experiences.

CMOs will become brand publishers

CMOs in 2015 will act as heads of a publishing house, overseeing the entire spectrum of brand engagement, increasing the quality of their output, and improving the perceived value of digital interactions with customers and prospects.

[First published on Forbes.com]

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Top 2015 IT Predictions from Forrester Research

Crystal_Ball_2_by_Trish2The analysts at Forrester Research have been blogging about their top IT predictions for 2015. Here’s my take on the predictions which cover all IT trends, technologies, opportunities and challenges, from mobile to security and big data analytics and from the Internet of Things (IoT) to the changing role of the CIO.

The gap between digital leaders and digital laggards will widen in 2015

The trouble with digitization is that it does not slow down. Even worse for those expecting to catch their breath, it unexpectedly moves by leaps and bounds. The companies that haven’t grasped what it can do for their business and what it’s doing to their competitive environment or the companies that are slow to experiment and innovate, are doomed to lose more ground in 2015. Every aspect of the digitization of everything, from mobile solutions to privacy and security, is a source for competitive differentiation by the companies that get it. Forrester: “2015 will serve as an inflection point where companies that successfully harness digital technology to advantageously serve customers will create clear competitive separation from those that do not.”

Almost half of the world will have a powerful computer in their pocket and vastly different expectations from your business in 2015

The twin sister of the digitization of everything is the mobilization of everything. “42% of the total population globally will own a smartphone by the end of 2015,” predicts Forrester. These always-connected consumers and workers will abandon your business if it does not understand where they are and what they want. Forrester: “Consumers are undergoing a mobile mind shift: the expectation that [they] can get what [they] want in [their] immediate context and moments of need.”

The Web is rapidly being replaced by the computers in our pockets–already more time is spent on mobile apps than on the Web.  Mobile has reached a tipping point in 2014, says Forrester, as it solidified its position as one of the most disruptive technologies for businesses in decades. “Consumers expect to engage with brands to get any information or service they desire immediately and in context. Today, 18% of US online consumers have this expectation, while 30% are in the midst of a transition to this mobile mind shift.”

Apple will rule 2015

Apple’s recent product announcements paved the way to what could be the best year ever for the company, possibly reaching $1 trillion (with a T) in market cap (that will require an almost 50% appreciation from last Friday’s close; the stock is up 56% from a year ago). With mobile payments and wearables, Apple may energize, expand and lead two new markets. Forrester: “Apple Pay will influence every discussion of mobile payments through 2015” and “Apple is poised to drive the smartwatch market and, once again, catalyze a new category of products and experiences.” Forrester estimates that 7% of US online adults (15+ million) are ready to buy an Apple Watch and that the market for US mobile payments will expand from $52 billion in 2014 to $142 billion by 2019.
More money spent on security will lead to… more security breaches-related losses

As we’ve learned again and again, the digitization of everything leads to security holes everywhere. Increased investment in security, however, is not correlated with better security or with increased investment in the right reaction to the inevitable breach. Forrester: “In 2015, there will be large increases in security budgets, with double-digit growth in some sectors… [but] more security budget doesn’t guarantee better security or even increased security maturity… A large majority of companies will discover a breach but botch the response.”

60% of enterprises will discover a breach in 2015 but only 21% of enterprises report that improving incident response is a critical priority, says Forrester. This is a sorry state of affairs as the digitization of everything leads to new opportunities for the bad guys. For example, “the quest for security will dominate the US payments marketplace throughout 2015,” says Forrester. But it also leads to new opportunities for the good guys to stand out from the crowd by better protecting customer data: “Today, about a third of security decision-makers in North America and Europe view privacy as a competitive differentiator. Forrester expects to see half of enterprises share this sentiment by the end of 2015.”

Data is the new product

“As ones and zeros eat the world, data is the new product and data science is the new process of innovation,” I wrote earlier this year. Forrester: “Data as a product or service will create new revenue and customer value streams.” In 2015, we will see data services become a mainstream aspect of product offerings, as “Do you want data services with that?” becomes a familiar refrain, says Forrester.

While big data investments have been directed in the past primarily to mining the flood of external data (“The number of business and technology leaders telling us that external data is important to their business strategy has been growing rapidly — from one-third in 2012 to almost half in 2014”), the focus is shifting to unearthing the value of the data—external and internal—that is unique to the company. Forrester: “Firms will be taking a hard look at their ‘data exhaust’ and wondering if there is a market for new products and services based on their unique set of data… in many cases, the value in the data is not that people will be willing to pay money for bulk downloads or access to raw data, but in data products that complement a firm’s existing offerings.”

The data business is not just for companies, but also for individuals, turning data scientists into data entrepreneurs. Forrester: “Now that data scientists can in effect publish algorithms to an ‘app store’, they can monetize their research, knowledge, and creativity.”

Many established companies will become venture capitalists

It used to be that established companies bought innovation by acquiring startups and smaller companies. In the high-tech sector, acquisitions have also been supplemented by “strategic investments” in promising startups. This approach to building a portfolio of innovations and bringing talent into the company’s sphere of influence is now taking hold in other industries. The digitization of everything leads to the venture capitalization of everything. Case in point is what is perceived to be one of the most sober, steady, and sedate industries around, insurance, where “a continuing flow of venture capital,” says Forrester, “will open up new categories for digital innovation.” What Forrester says about “smart insurers” applies to companies in other industries that are rapidly being digitized. The smart insurers are “recognizing that in the need to generate more good ideas faster, they have to radically change how they develop and execute new thinking. That means that insurers need to short cut the industry’s traditional ‘we’ll build and control’ culture and instead go into the market, spot a hot business technology start-up that brings a lot of what’s needed to create a minimum viable product, and partner with them.”

Some sectors will not see the fruits of digitization for a long time

While insurers (at least the smart ones) and established companies in other industries are adopting the high-tech lifestyle (fail fast, anyone?), other sectors of the economy, while being rapidly digitized, will not see the benefits anytime soon. In a stunning counter-statement to the hype about how IT is “transforming” the healthcare industry, Forrester says “In the years from 2020 to 2030, look for the vast array of innovation to be made globally operational as some of these significant investments start to affect the way in which most humans receive care.” It’s not a typo; we have to wait for the next decade to “start” seeing the impact of current investments.

Healthcare is one sector of the economy that does not lend itself well for next-year predictions as far as information technology is concerned and possibly not even to ten or twenty-year predictions. Gideon Gartner, one of the godfathers of the market research industry to which Forrester belongs, wrote in 1978: “Health care delivery will be revolutionized by 1990, with most large metropolitan areas having implemented vertically-integrated health facilities coordinated by computer… [including] physicians’ offices, neighborhood health care centers, hospitals, university medical centers, nursing homes, rehabilitation centers and home health care.”

The Cloud is the New Normal

Forrester predicts that the Nadella Way will triumph and “Microsoft will make more profit [in 2015] from cloud than on-premise.” The cloud will become a mainstream option, an integral part of an organization’s IT strategy and deployment. Forrester: “In 2015, cloud adoption will accelerate and technology management groups must adapt to this reality by learning how to add value to their company’s use of these services through facilitation, adaptation and evangelism. The days of fighting the cloud are over.”

The cloud will also play an important role in the expansion and utilization of the Internet of Things (IoT): “In 2015 we’ll see increased focus on the software and especially the cloud services to make all these sensors connect, upload data, and drive analytics that generate insights and enable business improvements.”

In 2015, many organizations will answer the question “Who’s your digital daddy?” with a three-letter acronym

Who is in charge of the digital transformation of the business? Forrester tells us that 39% of CEOs believe that they personally set digital strategy for their firms, but only 26% of other executives believe their CEO actually owns digital strategy.

Adding to the confusion, many CEOs are by-passing their CIOs, giving the digital reins to a newly hired Chief Digital Officer (CDO). Forrester, unlike Gartner and IDC, thinks this is an unnecessary move, adamantly recommending not adding yet another three-letter acronym to the C-suite. “2015 will be the year that CIOs can prove that the CDO role is unnecessary,” says Forrester. “Are all CIOs up for the challenge? No. But in 2015, any CIO that isn’t will be replaced by a one that is.”

Moreover, “traditional technology organizations, led by CIOs, are on the cusp of a significant pivot, shifting focus from maintaining operational systems to implementing the digital capabilities that win, serve, and retain customers.”

The digital leaps and bounds force the issue, as only someone with the CIO’s experience and skill in coordinating (and yes, controlling) all IT activities across the enterprise, can provide the urgently needed digital governance. Forrester’s predictions and estimates provide a glimpse into the digital chaos, where business units rush to embrace the latest technology and the enterprise suffers from unnecessary duplication and lack of beneficial coordination. As in “Analytics spending will increase, but less of it will be visible in the CIO’s budget” and “Only 7% percent of enterprises surveyed had an organization in place to enable the use of mobile to transform customer experiences throughout the entire business, and at the most, we expect to see 25% of companies do so in 2015.”

The CIO is the new CDO.

[Originally published on Forbes.com]

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NewVantage Partners Survey: Big Data Now Mainstream, Term Still Widely Disliked

For the third year in a row, NewVantage Partners has conducted a survey of Fortune 1000 senior business and technology executives regarding their companies’ investments in big data. This annual survey (see my summary of the 2013 report here) provides a unique glimpse into the big data initiatives of large enterprises and how fast they have adopted the set of technologies, processes, and skills associated with it.

BD_NV14_Figure 5Big data has gone mainstream with 67% of executives reporting that they have big data initiatives running in production, up from 32% last year. A remarkably rapid adoption rate, since only two years ago 85% of the respondents had a big data initiative “planned or in progress.” While a third of respondents in 2012 had big data investments of $1 million or more, 45% reported big data spending of greater than $10 million this year, and 74% estimated that their companies will spend that amount in 2017.  82% of the executives surveyed said big data is already integrated into the mainstream of their organizations while only 12% said it is managed as a separate environment.

Who leads this new mainstream corporate activity which 82% of the executives surveyed view as being highly important or mission-critical within their organizations? 37% of executives reported that the primary executive sponsor is the CEO, COO, or business President, stressing the importance of sponsorship from the top of the organization. And who does the executive sponsor turn to for big data accountability? Leading the charge in many situations is the Chief Data officer (CDO) with 43% of executives reporting that their organization has defined and established such a role. This is a sharp jump from previous years–in 2012 only 19% of executives reported that their organization had established a CDO function, growing only slightly to 26% in 2013.

The business function that is the primary driver of investment in big data for 36% of the respondents is sales and marketing. But other functions also lead big data initiatives, including those focused on internal activities: Risk, security, regulatory, and compliance (29%); R&D and new products (21%); IT and operations (10%); and finance, HR and administrative (4%).

What are these diverse functions expecting from their investments in big data?  Three quarters of executives cited greater insight and learning, the ability to answer business questions faster, make informed decisions faster, and accelerate speed-to-market as the primary business driver for their big data initiatives.BD_NV14_Figure 13

“It should be noted,” the NewVantage Partners report state, “that the level of skepticism [about big data] has dropped significantly since we first conducted this survey in 2012.” Indeed, most of the executives surveyed (74%) now believe that big data warrants “serious attention” and only 3% call it “same old stuff.” But the level of comfort with the term itself is still very low. Most respondents said that the term is not helpful in focusing a serious discussion about the value and benefits of big data to their organizations and 83% of executives claim to dislike the term big data (53%), or find it to be overstated (30%).

BD_NV14_Figure 12aAs Tom Davenport writes in his introduction to the report: “Everything is sunny in the world of big data… except, its name! Perhaps never has there been such enthusiasm about a business topic, and less satisfaction with the name of it… [Big data is] clearly not just hype, and it’s not just experimental. Companies are getting real value from it in production applications. Now if we could only figure out what to call it!”

It is clear, however, that the executives answering the survey, while not happy with the term itself, knew quite well what they were talking about when they referred to their big data investments. For them, it is a new type of activity associated with new programs and new roles and responsibilities, and it is centered on new business drivers (see above), but also a diverse set of needs related to the rise in the volume and variety of data. When asked about the most important technical driver for their big data investments, they answered as follows: Integrate more varieties of data (22%); apply new big data approaches (17%); integrate larger volumes of data (16%); more effectively integrate legacy data (13%); and enable greater agility (12%).

Regardless of the mainstream coverage big data gets which is mostly about the new technologies (e.g., Hadoop) it is associated with, its ascendance to the mainstream of IT investments by large enterprises has much more to do with the success of these investments in answering specific business needs and demonstrating the value of improved data analysis.

[Originally published on Forbes.com]

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The Web @20: On Magazine Special Issue 2009

 

The special issue of my magazine, published in 2009, celebrating 20 years of the World Wide Web. See also Steve Jobs Did Not Liberate Us. Tim Berners-Lee Did, By Freeing Ones And Zeros To Eat the World

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