IDC FutureScape 2016: Digital change is forcing innovation

The market research firm IDC expects dramatic changes in the business strategies of companies over the next few years: Enterprises will have to invest particularly in their digital business. Cloud computing is becoming virtually indispensable.

As early as 2007 it became apparent that mobile computing, cloud services, big data and analytics as well as social networks would be the technological drivers of growth in the IT industry. IDC thus summarised these technologies with the generic term “third platform”.

On the third platform – and beyond

Companies have since then rapidly integrated these technologies into their processes. According to IDC, a new stage has now been reached: the Innovation Stage, which is distinguished by numerous innovations and transformations based on the third platform. This stage is expected to reach and shape ever more areas of industry in the next three to five years. There will be a digital transformation (DX), which will subsequently lead to a DX economy.

This is already reflected in the investment plans of companies. In its FutureScape: Worldwide IT Industry 2016 Predictions, IDC predicts that companies will invest more than 50% of their IT spending in the expansion of their digital business over the next two years. This figure is even expected to reach 60% by 2020.

An essential prerequisite, however, is that companies master the third platform and actually make use of it. The cloud plays an especially important role here as it forms a kind of basis for the other technologies. IDC expects spending by enterprises on cloud services, hardware and software for cloud support as well as the implementation and management of cloud services to triple to around 500 billion US$.

All companies are becoming software companies

A company’s ability to innovate and thus its success will largely depend on the development of suitable software in the coming years. IDC believes that “every company will increasingly resemble a software firm”. It is more likely, however, that small and medium-sized enterprises in particular will rely on external service providers for this need. It is nevertheless undisputed that the digital transformation will utilise development departments extensively or even to capacity, where these exist.

Data will play a major role in the digital transformation. It will be important for companies to establish stable data pipelines capable of reliably transmitting the growing data streams to and from their locations. The more advanced the digital transformation is, the greater the volume of incoming and outgoing data will be.

Massive data streams and new industry-specific clouds

A lot of it will be accounted for by the inter-device communication as the Internet of Things (IoT) continues to grow. IDC anticipates that the number of networked devices will increase to 22 billion, which in turn will lead to the development of approximately 200,000 apps and solutions. These new devices and solutions have the potential to completely revamp the economy and reshuffle the cards for the market players in the various sectors.

In the opinion of market researchers, the effects of the Internet of Things will be especially noticeable in the production, transport, retail and healthcare sectors. That will also contribute to the increasing importance of the cloud. Industry-wide cloud platforms are needed to organise the digital supply chains and distribution channels. Companies are therefore expected to work increasingly closely with special industry-specific clouds or even try to create their own, overarching clouds.

Customer experience is becoming a KO criterion

The DX economy is expected to result in price reductions in many industries. To compensate for this, companies will try to considerably increase the number of their customers. For this purpose, they will first of all have to revise their digital shop systems as well as more thoroughly analyse and optimise customer experience in terms of contact with the company. Customer engagement, i.e. the interactions and relationships between customers and companies will be given much higher priority than has often been the case so far. The importance of customer loyalty will also rise.

These developments will eventually even lead to changes in the IT industry, which will also become increasingly software-driven. The new requirements of companies will result in many providers repositioning themselves or merging with other providers in order to survive. For corporate customers, by contrast, it will be important to keep a close eye on changing offers in a dynamic market and identify what the right solutions for themselves are.

An industrial revolution is underway

It is becoming apparent that companies will be facing major challenges over the coming years and that there will be profound changes in industrial production. Although the vision of IDC is only one of several possibilities, the market research firm’s extensive data inventory and analysis tools surely make it one of the most solidly founded visions. What is clear, in any case, is that IT and above all the areas of mobile computing, social networks, big data and analytics as well as cloud computing (i.e. the third platform) will play an increasingly important role. (rf)