According to the IT research institute Gartner, the global IT market is expected to grow by 2.2% in 2016. This is not a very high growth rate, but the technologies that will enable this growth are constantly being introduced. What technologies are worth watching this year? Let’s see what’s drawing attention from professional market research institutes.
Gartner mentioned two axes that will lead IT market growth in 2016.
The First are digital businesses. These are creations of new business designs by blurring the digital and physical worlds. The car share service Uber is a good example of this. It digitalizes the cars’ physical location with GPS and sends this information to consumers who are in need of transportation. A consumer then calls an Uber car through the digital system, and gets into the Uber car that arrives in the physical world.
In other words, they provide more convenient services by merging information from both the digital and the physical worlds. A digital business can also be understood as an IoT (Internet of Things) business. Digital businesses were actually the talk of the town last year, but are attracting even more attention this year as many corporations are expected to make investments in IT for their digital transformations.
The second are algorithmic businesses. Algorithm usually means a formula or procedure created to solve a problem, but it is closer to a data analysis model in the context of algorithm businesses. Basically, an algorithm business is a concept where the value of a product comes from the algorithms’ value.
One of the best examples is the Nest thermostat. Nest analyzes and checks whether there is anyone in the house and the weather while analyzing the users’ thermostat use patterns, in order to set the temperature to their liking. Although it costs a bit to buy and it has to be installed by the user, many consumers find this thermostat with a set of well-made analysis and control algorithms very attractive.
Gartner predicts that companies will change into digital and algorithm businesses starting from 2016, and announced their 10 most strategic technologies of 2016. Let’s have a look at how they embodied the concepts of digital and algorithm businesses.
The technologies that apply the digital business model include:
- Device mesh which provides services by linking devices
- Ambient user experience which provides uninterrupted UX anywhere and at any time by connecting devices.
- 3D printing material related technologies for creating physical objects based on digital information in more diverse fields such as medical science, medicine, and aerospace engineering. As for algorithm business, there are
- Information of Everything (IoE) emphasizing the big data field to expand its interest throughout the storage, utilization, and management of big data
- Advanced machine learning which analyzes patterns to make judgments as
- Autonomous agents and things such as robots, drones, and voice recognition.
The infrastructure for digital and algorithm businesses is changing so the following architectures also caught Gartner’s attention.
- Advanced security architecture that adapts to a given situation
- Advanced system architecture which dramatically improves system performance through parallel processing using a GPU
- Mesh app & service architecture through which a system can be assembled like Legos
- IoT platform & architecture which integrate fragmented IoT technologies.
Now that we have covered Gartner’s IT prospects for 2016, let’s move on to IDC’s choice for the top ten keywords that are expected to greatly affect corporations this year.
- CEO-led DX digital transformation – 2/3 of the 2,000 global companies are expected to have gone through digital transformation by the end of 2017 as part of their key business strategy. Their investment in IT for this transformation is also becoming active, and 43% of the company’s IT related budget will be used for their digital business by 2020. Unlike in the past where the CIO led investments, the LoB (Line of Business) will control up to 45% of the IT budget and lead the digital transformation.
- 3rd platform IT – According to IDC the first generation platform is the main frame and the second generation is an internet and client∙server type. The third generation is a platform that combines a basic infrastructure such as clouds, mobile and social networks, and big data analysis with new technologies like IoT, cognitive computing, robotics, augmented reality, and new security technologies. They predict that 50% of the entire IT budget is going to be spent on 3rd generation platform technologies, and the IT organizations will have to not only secure this technology, but also master it. Any 3rd platform technology user should also consider utilizing it as a service, instead of keeping it within company development.
- Cloud core – In expanding digital transformation globally, cloud is no longer an option but a necessity. Over half of the total IT budget will be spent on cloud in 2018, and most organizations will have to not just be able to use the cloud service but master it by 2016.
- Innovation capacity – Programming code is a key factor of digital transformation. Therefore, the size and the skillset of the team in charge of creating the company’s own code, therefore becomes crucial. Unlike in the past where the code focused on structuring the internal systems like those for personnel, accounting, and sales, it will pay more attention to creating the offers to enhance their business value and competitiveness.
- Data pipelines – Innovation in a digital business environment happens when code meets data. Because good quality data for analysis can be the key to successful innovation, securing the pipeline for this data becomes crucial. 70% of large corporations are already buying data from outside sources around the globe, and venders also expect to expand their data stores like app stores so that these corporations can easily find and subscribe to the data they need.
- Intelligent edge – Intelligent edge basically means intelligent IoT devices. 22 billion IoT devices and 200,000 new IoT apps and services are expected to be installed and developed by 2018.
- Cognitive everything – A cognitive system is a form of artificial intelligence which covers a machine’s learning, text analysis, forecast analysis, and cognition of video and audio sensor data. This includes not only data analysis but also user interface through which machines communicate with humans using human language and motion. Cognitive computing is expected to be adopted for company services in 2016 and be utilized for robotics, automobiles, and IoT data analysis by 2020.
- Industry cloud platform – Industry clouds provide industry-specific services standard within a company or industry based on a cloud system. As the 3rd generation platform is being developed, cloud services that focus on business processes specific to the industry rather than technologies are also emerging.
- Customer intimacy @ scale – Economy of scale is a definite “must” when raising the entry barrier of a digital business ecosystem. Increasing the number of clients doesn’t always maximize profit, but it still helps keep the priority in the competition. IDC suggested that companies reexamine their customer engagement system to increase the scale of clients and provide customized user experience.
- Realign suppliers and partners – Digital transformation and the 3rd generation platform as well as the increasing dependence on core cloud technologies show us that the relationships between IT suppliers and partners need to be revisited. IDC forecasted that the suppliers and partners which are not in pace with the change will be weeded out, and 30% of the venders we currently know will be gone by 2020.
Today, we had a chance to have a look at the IT trend forecast provided by Gartner and IDC. Tomorrow, I will introduce you to the IT keywords of 2016 suggested at CES 2016, which I also participated in.
Written by Youkyoung Lim, LG CNS