Top 2015 IT Predictions from Forrester Research

The 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]