Home / Technology / Bits Blog: Digital Transformation Going Mainstream in 2016, IDC Predicts

Bits Blog: Digital Transformation Going Mainstream in 2016, IDC Predicts

It is the time of year when the big technology research shops gaze into the near future to identify trends that will have the most impact on corporate America and the tech industry over the next few years.

The yearly ritual, of course, is partly a marketing vehicle for the research firms. Still, the forecasts can be thought-provoking, especially if they are detailed and sharpened by attaching numbers to their predictions.

IDC’s outlook, being published on Wednesday, qualifies. It is a 20-page document, chock-full of details, and its authors are not afraid of making numerical guesses about the future. By 2020, for example, IDC says that more than 30 percent of today’s tech suppliers will “not exist as we know them today,” having been acquired or failed.

Going beyond the detail in the IDC forecast, and reading reports published last month by Gartner and Forrester Research, the overall theme is that the pace of digital innovation is accelerating and broadening.

The digital technologies that are changing the economics and practices of traditional business — cloud computing, mobile devices, advanced data analysis and artificial intelligence — are better, cheaper and more widely available.

“Mainstream companies in every industry are realizing they’ll be disrupted if they don’t get moving now,” said Frank Gens, IDC’s chief analyst and the report’s principal author.

Many of these companies, according to IDC, are not moving fast enough. It predicts that a third of the top 20 companies in every industry will be “disrupted” over the next three years, meaning their revenue, profits and market position will deteriorate — not that they will go out of business.

The reports of the three research firms vary in their emphasis. The Forrester outlook focused on organizing technology and corporate strategy around the “age of the consumer.”

The Gartner study featured the likely impact of advances in artificial intelligence, with “autonomous software agents” expected to play a crucial role in the economy and everyday life. “The future,” the Gartner report said, “will belong to the companies that can create the most effective autonomous and smart software solutions.”

Code is king in the IDC report as well. By 2018, IDC said that corporations pursuing digital transformation strategies would “more than double the size of their software development teams.” So the job market for software engineers with cloud and web development skills should stay hot.

The same is true for data scientists. In the digital economy, the IDC report said, “innovation = code + data. Data is the grist of the innovation mill.”

The IDC report foresees big growth for Internet of Things devices and for the software needed to make sense of all the sensor data. By 2018, IDC predicts, the number of Internet of Things devices will more than double, prompting the development of 200,000 new apps. In the near future, companies lacking an Internet of Things strategy and expertise, the IDC report said, will be “like individuals functioning without most of their five senses.”

Cloud computing is fast becoming the fundamental technology engine in corporations. IDC predicts that by 2020, spending on cloud services and related hardware and software will be more than $ 500 billion, three times the current level.

In the IDC view, there will be different tiers of the cloud business. One level will be several “industry cloud platforms,” the report says, developed by mainstream companies like “General Electric, John Deere, Johnson Controls and United HealthCare” that are “providing epicenters of innovation, growth and disruption in their own industries.”

But for underlying cloud infrastructure, IDC sees a “significant consolidation,” with “six or fewer cloud platform vendors” holding 80 percent or so of the market by 2020.

In an interview, Mr. Gens said the candidate survivors included Amazon, Microsoft, Google, Salesforce, IBM and two Chinese companies, Alibaba and Tencent.

In the next 12 to 18 months, Mr. Gens predicts, there will be another entry in the cloud platform market: Apple. Its cloud presence today, Mr. Gens said, is mainly though the services that connect to the iPhone for data backup and syncing devices. But Apple has the resources, and it is getting into Internet of Things data with the Apple Watch fitness-tracking capabilities and other cloud-based fields. And Apple’s technology is increasingly used in corporations.

“I think Apple has to make a broader cloud move, including in the enterprise market,” Mr. Gens said. “Apple can’t just stay on the periphery of a technology that is so fundamental.”

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