As we get ready for another exciting NASSCOM Technology & Leadership Forum, I’m excited to share IDC’s outlook for 2020 and beyond in the tech industry. We’ve published more than 45 IDC FutureScape predictions documents in the last three months — each focused on a tech sector, industry or executive role. In this post, I’ll share our “uber” predictions: the trends that cut across most of the industry’s many sectors and customer segments. At #NTLF2020, we’ll convene to discuss and debate many of these key trends.
Over the past five years, IDC has documented the rise of the digital economy and the digital transformation that organizations must undertake to compete and survive in this fast-changing economy. We predict that the digital economy is approaching a critical tipping point: by 2023 more than half of all GDP worldwide driven by products and services from digitally transformed enterprises.
A new species of enterprise will be required to compete and thrive in this digital-first economy. Our 2020 predictions outline how enterprises will transform for the digitized economy by accelerating investments in key technologies and new operating models to become hyperspeed, hyperscaled, and hyperconnected organizations.
Here’s a quick flyover of our 2020 predictions:
- Companies hasten to innovation. By 2023, over 50% of all IT spending will go toward digital transformation and innovation, up from 31% in 2018, growing at a compound annual rate of 17%. This is a critical milestone: For decades, IT leaders have worked to increase the portion dedicated to innovation, decreasing the large portion spent “keeping the lights on”. In four years, we’ll be there.
- Clouds get connected. To compete in the digital-first economy, enterprises must expand their “digital reach”, across all cloud providers and locations. By 2022, 70% of enterprises will integrate their public and private clouds by deploying unified hybrid/multi-cloud management technologies, tools, and processes. Containers will be a key enabling technology. This effort will define a new chapter in the ongoing cloud wars – one defined by a new generation of distributed clouds and multi-cloud management.
- Building out the edge. We predict an explosion in edge IT infrastructure and apps, as more edge solutions come to market from tech providers, and as edge services rapidly expand from enhancing customer convenience to supporting critical business activities. By 2023, over 50% of new enterprise infrastructure deployed will be at the edge rather than corporate data centers, up from less than 10% today. By 2024, the number of apps at the edge will increase 800%.
- Digital innovation factories. Operating as a software-driven “digital innovation factory” will be at the core of an enterprise’s ability to sustainably differentiate and compete in its own industry. By 2025, nearly two thirds of enterprises will be prolific software producers: with 60% deploying code daily, over 90% of apps cloud-native, 80% of code externally sourced, and 1.6 times more developers than today. This will be the most essential – and difficult – change enterprises will make over the next four years.
- Industry apps explosion. By 2023, over 500 million digital apps and services will be developed and deployed using cloud-native approaches (agile methods, microservices architectures, container-based deployment, et al.). This is the same number of apps developed in the last 40 years! Most of these will be targeted at industry-specific digital transformation use cases. This explosion of new digital apps and services will define the new minimum competitive requirements in every industry.
- AI is inescapable. By 2025, at least 90% of new enterprise apps will embed artificial intelligence. Most of these will be AI-enabled apps, delivering incremental improvements to make applications “smarter” and more dynamic. More disruptive “AI-led” applications will take longer to develop and achieve mainstream adoption, representing about 10% of total enterprise applications by 2025. By 2024, over 50% of user interface interactions will use AI-enabled computer vision, speech, natural language processing (NLP), and AR/VR. By 2025, we expect to see enterprises using AI-enabled and AI-led apps and AI-powered interfaces to gain competitive advantage from 50% shorter reaction times, 25% greater success with product innovation, and 1.5 times higher customer satisfaction (NPS scores).
- Trust gets promoted. Getting trust right will be fundamental to competing in the digital economy as customers will require the organizations with whom they do business to demonstrate their digital trustworthiness. By 2023, half of the Global 2000 will name a Chief Trust Officer, who orchestrates trust across security, risk, compliance, privacy and ethical business operations. The boards of two-thirds of the G2000 will demand a formal “trust initiative” – a detailed roadmap for improving enterprises’ trust assurance and execution.
- Every enterprise is a platform. By 2023, 60% of the Global 2000 will have a digital developer ecosystem with thousands of developers. Half of these enterprises will be so successful that they drive 20% or more of digital revenue through their digital ecosystem/platform. Enterprises will need to operate well as a digital services provider in the digital economy – gaining greater revenue growth through third-party use of their digital services. For most, this is an entirely new capability and business model.
- Cross-Industry mashups. Enterprises must be prepared to form new digital ecosystem partnerships across industries – including industries not in their current value chains. The emerging Passenger Economy is a great example: automotive manufacturers are partnering with technology companies, entertainment companies, public sector agencies, financial service companies and others to enhance their customers’ experience. By 2025, 20% of revenue growth will come from “white space” offerings that combine digital services from previously unlinked industries.
- Tech platform wars continue. By 2023, the top 5 public cloud mega platforms will consolidate at least 75% of IaaS+PaaS market share (up from 62%), while the number of SaaS vendors becoming “platforms” will dramatically expand. The top 10 pure-play SaaS vendors will generate an average of nearly 20% revenue from expanding their PaaS services (up from 4%). The latter trend will be particularly important to watch as SaaS providers jockey to become key sources for enterprises’ digital innovation factories.
For more detail on these predictions, please check out the full document at: https://www.idc.com/getdoc.jsp?containerId=US45599219.
ABOUT THE AUTHOR
Frank Gens, SVP & Chief Analyst, IDC
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