By Straight Talk Editors

As could be predicted, industry analyst firms Gartner, IDC, and Forrester have issued their technology and IT predictions for 2016, promising more volatility, disruption, and bumpy rides over the next few years.

Gartner predicts the emergence of the “algorithmic business” and the “programmable economy,” urging CIOs to “focus on the power, scale, and dynamics of the digital business based on connections to people and things, interconnections and relationships, and on the value of algorithms.”

IDC predicts the emergence of the “DX (digital transformation) economy,” estimating that enterprises’ commitment to digital transformation on a massive scale will drive more than half of enterprise IT spending within the next 24 months, rising to 60% by 2020.

Forrester charts a roadmap for companies responding to digitally savvy and empowered customers, warning that “we are approaching a fork in the road where companies can either make the hard changes to dramatically improve their chances to win in the market or preserve old models and defer transforming their operations at the risk of failure.”

Here are is a condensed composite of Gartner’s, IDC’s, and Forrester’s predictions:

Digital transformation will define business success for the balance of this decade

Only 27% of today’s businesses have a coherent digital strategy that sets out how the firm will create customer value as a digital business (Forester). However, 125,000 large organizations are launching digital business initiatives now and CEOs expect their digital revenue to increase by more than 80% by 2020 (Gartner). By 2020, the percentage of enterprises creating advanced digital transformation initiatives will more than double from today’s 22% to almost 50% (IDC).

In 2016, digital transformation efforts will move beyond customer-facing veneers and deeply into the business operations that drive growth. B2B industries will start to close the digital gap to their B2C peers as they too are confronting rapidly rising customer expectations. Companies that become experts in digital will further differentiate themselves from those that dabble in a set of digital services that merely decorate their traditional business (Forrester).

By year-end 2018, customer digital assistants will recognize individuals by face and voice across channels and partners. This will be a seamless two-way engagement with customers and will mimic human conversations, with both listening and speaking, a sense of history, in-the-moment context, timing and tone, and the ability to respond, add to and continue with a thought or purpose at multiple occasions and places over time (Gartner). Customers will reward companies that anticipate their individual needs and punish those that have to relearn basic information at each touchpoint (Forrester).

Leadership ranks and roles will be transformed

CEOs… will make significant changes to their leadership teams as hanging on to current leadership structures will create unnecessary risk (Forrester). By 2018, 67% of the CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy and will actively participate in the recruitment of the best software developers, as software development becomes a critical success factor in the DX economy (IDC).  In 2016, CEOs will make a concerted effort to integrate the various digital initiatives across the business and create a clear digital vision that shows how the business will deliver revenue generating digital experiences. Those that invest in culture to fuel change will gain significant speed in the market; those that avoid or defer culture investments will lose ground (Forrester).

CDOs… By 2017, 60% of enterprises with a digital transformation strategy will deem it too critical for any one functional area and create an independent corporate executive to oversee the implementation. This position could be filled by business-savvy CIOs (IDC).

CIOs… By 2017, 80% of global CIOs will initiate a data transformation and governance framework to turn information into a competitive business differentiator. CIOs will have to adapt to an increasingly market-facing role for them and their organizations and also work on developing and maintaining internal relationships, partnering with business executives and reaching out to the software developers working in the business units (IDC). To successfully create value for customers in 2016 and beyond, CIOs will adopt an outside-in approach and make customer journey mapping and design thinking part of their standard toolkit (Forrester).

By 2018, 35% of IT resources will be spent to support the creation of new digital revenue streams and Line-of-Business (LOB) executives will control 45%+ of all IT spending worldwide, over 60% in the U.S. By 2020, almost 50% of IT budgets will be tied into digital transformation initiatives (IDC). Regardless of who leads the digital transformation, CIOs will have to show the way — engaging, collaborating, and innovating with a broader ecosystem of internal and external partners (Forrester).

IT transformation will bring new challenges and opportunities

IT’s new role… digital transformation could marginalize the central IT organization but could also make it a true change agent and a transformation engine (IDC). In 2016, enterprises will increasingly place deputy CIOs as embedded ambassadors for the CIO, each sitting inside respective business-unit leadership teams (Forrester).

IT’s new skills and processes… By 2018, enterprises pursuing digital transformation initiatives will more than double the size of their software development teams, focusing those developers almost entirely on digital initiatives (IDC). Digital skills like mobile app development, analytics, and design thinking will become table stakes for a successful tech management team. More than half of new projects will shift to fast-cycle development strategy and governance (Forrester).

Risk, security and privacy… By 2017, the typical IT organization will spend up to 30% of its budget on risk, security and compliance, and will allocate 10% of their people to these security functions (Gartner). Leaders will extend privacy from a risk and legal consideration to a position to win customers. Companies that relegate privacy as a niche consideration will play defense and face churn risk. In 2016, top management will require all business departments to provide extensive documentation of their risk management approach with a clear definition of personal accountabilities as part of their digitized business strategies (Forrester).

Competing for talent… Access to talent and the ability to hire the right people at the right place will become a huge competitive differentiator (Forrester).

The cloud will become core IT

By 2018, at least 50% of IT spending will be cloud based. The most functionally-rich IT offerings will be found in the cloud (IDC). By 2018, 50% of enterprises with more than 1,000 users will use cloud access security broker products to monitor and manage their use of SaaS and other forms of public cloud, reflecting the growing recognition that although clouds are usually secure, the secure use of public clouds requires explicit effort on the part of the cloud customer (Gartner).

While there will be major consolidation in the public cloud market (down to six “mega-platforms”), there will be rapid proliferation of industry cloud platforms. Enterprises with advanced digital transformation initiatives will create and/or partner with industry cloud platforms to scale up their digital supply and distribution networks (IDC).

Big data analytics will make a bigger impact

Leaders will use analytics as a competitive asset to deliver personalized services across human and digital touchpoints; laggards will drown in big data (Forrester). Advances in semantic tools such as graph databases as well as other emerging data classification and information analysis techniques will bring meaning to the often chaotic deluge of information (Gartner).

Success in the DX economy will depend on the ability to build robust "data pipelines" that flow both in and out of the enterprise. Data analytics (“Cognitive Services”) will be embedded in new apps, and the top new Investment areas over the next couple of years will be Contextual Understanding and Automated Next Best Action capabilities. Embedded data analytics will provide U.S. enterprises $60+ billion in annual savings by 2020 (IDC).

The Internet of Things (IoT) will redefine supply chains and distribution channels

By 2018, there will be 22 Billion IoT devices installed, driving the development of over 200,000 new IoT apps and services (IDC). Also in 2018, six billion connected things will be requesting support and responding to service requests from things will spawn entire service industries, and innovative solutions will emerge to improve the efficiency of many types of enterprises. In five years, 1 million new devices will come online every hour (Gartner).

IoT devices and solutions have the potential to redefine competitive advantage in virtually every industry. Most active IoT development will cluster around the manufacturing, transportation, retail, and healthcare industries (IDC). Practical applications for 3D printers will expand to more sectors, including aerospace, medical, automotive, energy and the military. The growing range of 3D-printable materials will drive a compound annual growth rate of 64.1% for enterprise 3D-printer shipments through 2019. These advances will necessitate a rethinking of assembly line and supply chain processes to exploit 3D printing (Gartner).

Artificial Intelligence (AI) and Robotics will augment and supplant humans

By 2018, at least 20% of all workers will use automated assistance technologies to make decisions and get work done (IDC). By 2020, autonomous software agents outside of human control will participate in five percent of all economic transactions; we will see algorithms, often developed in a transparent, open-source fashion and set free on the blockchain, capable of banking, insurance, markets, exchanges, crowdfunding — and virtually all other types of financial instruments (Gartner).

By 2018, more than 3 million workers globally will be supervised by a "robo-boss"; Supervisory duties will increasingly shift into monitoring worker accomplishment through measurements of performance that are directly tied to output and customer evaluation (Gartner). By 2020, there will be 5X increase in the capability of robots in manufacturing (IDC).

Sources

Gartner

Gartner Says the Economics of Connections in Digital Business are Accelerating by the Use of Algorithms

Gartner Reveals Top Predictions for IT Organizations and Users for 2016 and Beyond

Gartner Says It's Not Just About Big Data; It's What You Do With It: Welcome to the Algorithmic Economy

Gartner Identifies the Top 10 Strategic Technology Trends for 2016

Forrester

Companies Will Thrive And Fail In The Age Of The Customer In 2016

Predictions 2016: The Trust Imperative For Customer Insights Pros

Predictions 2016: The New Breed Of CIO

IDC

IDC Predicts the Emergence of "the DX Economy" in a Critical Period of Widespread Digital Transformation and Massive Scale Up of 3rd Platform Technologies in Every Industry

IDC Reveals Worldwide Digital Transformation Predictions; Kicks Off IDC FutureScape Web Conference Series

IDC On-Demand Webcasts: IT Industry 2016 Predictions; Digital Transformation 2016 Predictions; CIO Agenda 2016 Predictions