The unique thing about the digital world is its ever-growing pace of change. On the one hand, that is great: every day, companies and organizations gain access to new tools enabling them to work better and more efficiently. On the other hand, accelerating progress is creating significant challenges of choice. How to allocate the IT budget? What technologies can help your business make a breakthrough? What solutions for specific business tasks are the most promising today?
As a large digital solutions provider, we answer these questions every day, helping our customers deal with accelerating changes and navigate the world of modern technology with confidence. We would be unable to do this without a deep understanding of the forces and trends shaping the future of our industry. Our extensive experience and close relationships with trend-setting vendors give us a clear vision of the future. In this review, I will cover the main trends that I expect to drive the development of the IT industry in 2020.
Clouds will go big
In the last few years, the share of cloud services in the global IT market has been snowballing. Reports from analytical firms such as IDC and Gartner predict this trend to become even more apparent in 2019, driven by the success of the largest cloud platforms—Azure, Google, AWS, Alibaba Cloud. IDC predicts that by 2022, top 4 mega-platforms will host 80% of cloud workloads (IDC Worldwide Big Data and Analytics Software Forecast, 2019).
The consolidation of cloud services has natural reasons. Large scale makes it easier to ensure high availability and reliability, as well as low costs. Besides, many off-the-shelf business solutions from ISVs are already available from global cloud vendors. Microsoft Azure, with its ISV ecosystem, is a fine example. Another reason why we expect Azure to succeed next year is the ubiquity of Microsoft products. Transforming itself into a cloud platform provider, the corporation offers the users of SQL Server, Exchange, and SharePoint to migrate their local infrastructure to the cloud. Of course, most of them will go to Azure.
Highly regulated industries and markets are going to be an exception. One of them is the Russian market, where many customers are prohibited from hosting critical data and applications in foreign clouds (or even in public clouds at all).
The rising challenge for these and many other customers are combining public and private clouds, global and local providers. Infrastructure solution providers understand very well that customers need a multi-cloud strategy and integrated management tools. HPE, Cisco, DellEMC (including VMware) will be focusing strongly on hybrid and multi-cloud infrastructure solutions in 2020.
Another significant cloud trend is the growing number of cloud-native applications. Although on-premise versions of business solutions from Microsoft, Oracle, SAP are still available, vendors consider the cloud to be the platform of choice.
Interest in services will grow
According to IDC, the global (and Russian) IT market grew faster than forecast in 2018, but the analytical agency does not expect abnormally high growth in 2019-2020. The only field with excellent growth prospects is services, mostly those related to AI, IoT, and Big Data. (IDC Worldwide Black Book 3rd Platform Edition, April 2019)
Due to its convenience, service-oriented architecture becomes more and more popular in IT and business. Soon, the shortage of qualified professionals will make outsourcing even more attractive (according to The Global Talent Crunch 2018, the world lacks 85 million specialists). Of course, experts in the Internet of Things, big data, and cybersecurity are exceptionally rare and expensive. In addition to the rapid service development, the HR deficit will increase the demand for automation solutions, such as RPA, in 2020. According to McKinsey (World Economic Forum, McKinsey), the total amount of work done automatically will increase from 29% to 42% between 2018 and 2023. And of course, the demand for education in the most hyped technologies will continue growing.
Another consequence of this trend is that service providers will become a new, fast-growing class of consumers. The rapidly growing class of service (not only IT service!) providers will need a lot of data center hardware, software, workstations, and cloud resources.
Data: from the Internet of Things to the dashboard
According to IDC (IDC Black Book, Q4 2018), the fastest-growing specialization in IT (20%) in 2019-2023 will be the Internet of Things (cloud, BDA, security, mobility, and generic IT are also listed in the study). At the same time, the hype stage is ending, and, instead of numerous pilot projects, companies prefer a more pragmatic approach to solve specific business tasks.
The industries that will demand IoT the most will be transport, energy, manufacturing, and consumer goods (smart home). They will use the Internet of Things to solve such "boring" but important tasks as increasing efficiency and reducing costs, improving the quality of decision-making, and the customer experience. New communication technologies, such as 5G and Wi-Fi 6, significantly expand the IoT capabilities and unveil new use cases.
IoT sensors generate a huge amount of data. For example, the Pratt & Whitney GTF jet engine uses five thousand sensors, which generate 10 GB of data per second to save up to 16% of the fuel and reduce noise by 75%. The amount of data generated worldwide will grow from 25 ZB (zettabytes) in 2018 to 42 ZB in 2020 and 71 ZB in 2022 (Cisco, The Zettabyte Era). This growth by far exceeds the networks capacity pace; moreover, data transfer takes time and consumes power. A few years ago, companies started to use edge computing to solve this problem—data is processed near the place where it is generated, and only the results are sent to the data center. This is a leaner approach. According to IDC, 37% of IoT users already use edge computing, and in 2020 this number will grow.
As the volume and diversity of data increase, the data processing technologies, primarily analytics and AI, will transform as well. More than 90% of companies face the challenge of data analysis, and the work of more than 50% of employees is related to data to some extent (IDC & Hitachi Vantara survey, 2019).
More and more analytical workloads are going to be moved to the cloud and provided as a service. Even now, services comprise 53% of the global business intelligence market (IDC, Worldwide Big Data and Analytics Software Forecast, 2019). The platforms of global cloud providers such as Google, Microsoft, and Amazon offer rich analytical capabilities, and independent developers create specific application solutions based on them. As a result, customers will be able to feed their data to the analytics system and pay for the use of algorithms and computational resources.
The companies face a new significant problem—the so-called “dirty data”. Analysts and big data experts have less time for analysis because they need to clean data, check reliability, normalize, and compare it. Since the data volume growth will only exacerbate the problem, the only way out is to increase the data culture, change the attitude of all business units to data. When decision-making is powered by AI analytics, the question of data quality inevitably turns into a matter of trust.
New world leaders
We are all accustomed to the fact that Western countries are the world's economic and technological powerhouses. Today this situation is changing. According to the PWC (World in 2050 report), by 2040, the economic power of the E7 countries (China, India, Indonesia, Brazil, Russia, Mexico, and Turkey) may double compared to the G7 (USA, UK, France, Germany, Japan, Canada, and Italy). In 2015, the economies of E7 and G7 were equal, and in 1995, G7 economies were bigger by two times.
What consequences will the growth of new economies have? Undoubtedly, the demand for IT will grow in these countries, and global market players will strive to meet the needs of consumers from the E7 countries. The success of domestic IT industries will depend on the result of competition between the global companies and the local ones supported by the authorities of these countries. For example, such a closed country like China already has its own global clouds, analogs of Google, Facebook, and Paypal, domestic software developers, and hardware manufacturers. Moreover, many of them, such as Huawei and ZTE, are also active in the international market. It is unlikely that the torch of technological leadership will be passed to developing countries in the coming years, but I think it is possible in the medium term.
Conclusions
I have listed some of the trends for the near future that I consider significant for the IT market development in 2020. What practical insights can be derived from them?
- If you have not moved to the cloud yet, get ready to do it. If you haven't chosen a cloud yet, choose a large global platform and deploy cloud-native applications.
- Consider using third-party business and IT services in any non-core parts business. It usually saves you money.
- Pay more attention to data. Keep your data in order and think about where and how you can extract meaningful insights from it.
- Track the Chinese, Indian, and Indonesian markets. These are the countries where the world's best IT practices are generated today.
