BEYOND THE BUZZ

Today’s trending topics. All in one place.




February 2017

2017 TECHNOLOGY PREDICTIONS

Welcome to the new edition of Beyond the Buzz. Our focus for 2017 will be on the “technology trends that really matter now,” that have immediate and practical implications for the well-being and sustainability of the enterprise. We will closely examine innovation in its many forms: its orchestration, contextualization, deployment, and sustainability.


Lanny Cohen, Executive Vice President


Group Chief Technology Officer


BEYOND THE HYPE

Market demand, technology investment, and business forums continue to place a disproportionate emphasis on big data, analytics, and the digital customer experience compared to any another domain. Yet the overall business impact and ROI of these both continue to fall short of expectations and vision.

Analytics for Action and Impact

We have witnessed an impressive progression in technology capabilities and their application as the market has evolved from its focus on data to information to insights, fueled by analytics. In fact, massive investments have been made to derive more and more targeted insights to allow enterprise leaders to make impressively informed decisions. Yet while so much has been put into deriving the insights, far less has been devoted to the actions taken by decision makers and ultimately the impact to the business. Going from data to information to insight as a technology-enabled process and value proposition has witnessed strong market investment and momentum. Alternatively, from insight to action to impact has been on the contrary. Business technologies addressing next best action, automating the process from insight to action in real-time, and otherwise, questions will start to appear more frequently, challenging the value of spends in big data and analytics.

 

Predictable and Sustainable DCX

It can be argued that digital customer experience has become the holy grail of any successful enterprise in a digital world. It is the basis for market-leading customer acquisition, customer loyalty, and customer retention. Massive investments and innovations have occurred in the customer mega-process domain for decades, be it salesforce automation, customer relationship management, customer experience, tools, etc. Arguably, not all are intended to directly address the customer experience; oftentimes, more at the process of selling to the customer.  Unfortunately for many, a broad brush is often used to still consider these technologies related to the customer or enabling the customer experience. In turn, the question surfaces, have we witnessed a sustainable, predictable, and appreciable difference in the customer experience? Likely, short of the market investments and promotional promises. As we look ahead, a true holistic approach to customer engagement will be critical.  This will, in short, require deep examination of the customer journey and all its components, the numerous variables contributing to and affecting the experience, the enabling processes and technologies – both front office and middle office/operations (e.g., supply chain, provisioning, fulfillment, warehousing, distribution, etc.) – necessary to deliver the end to end target experience, and those enterprise governance, behaviors, and organizational improvements to execute, reinforce, and monitor the “to be” state and outcomes.  Similarly, the “last mile” of the customer experience, which is where the final hinge moment of a successful customer experience occurs, will need to gain further prominence in the design and realization of the intended customer experience.  This is where the human element often remains and customer satisfaction is ensured and validated. Yet, oftentimes receives modest attention or improvement discipline.  No question that aggressive pursuit and funding of a formidable DCX agenda should remain, however further investment in digital business technologies will be under extreme scrutiny unless the customer experience sees a marked improvement, both predictable and sustainable. The investment needs to be directed toward the whole of the customer experience, the 360-degree view, and the end-to-end value chain; not solely or even mostly the enabling technologies.  Only this holistic approach gives a realistic opportunity to design, build and deliver predictable and sustainable DCX.

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PLATFORMS

Platforms can be viewed as both a technology architecture and delivery paradigm, and as a business model paradigm. The term has taken on many of the same attributes of digital, transformation, innovation, etc.—widely used, broadly applicable, and borderline too general and vague. Yet platforms are, and will remain a major disruptive force in the market.

Cyber Physical and Operational Technology

 As we witness the unprecedented connectivity of devices, equipment, machines, systems, clouds, and people, we see platforms emerge as the aggregation, orchestration, and operating paradigm. Platforms, properly designed and managed, provide speed, agility, scale, and security in a world that is no longer just one of stateful transaction processing systems. At the same time, we are poised to accelerate beyond the heretofore concepts and instances of IoT. These platform concepts will further dominate as more and more physical devices, components, equipment, structures, and machinery become instrumented. They will be additionally reinforced as products are embedded with more sophisticated software and become increasingly smart, and as operational technologies receive a disproportionate share of the enterprise’s “technology” investments compared to the more traditional IT spend.

In 2017, we anticipate platforms becoming the business technology architecture and operating paradigm for the enterprise. At the same time, IoT moves from connectivity and a predominantly data-gathering medium and driver of analytics to an “impact IoT,” or the Internet of Action/Platform of Business Impact. Further, one of the most prominent uses of this paradigm will be for the increased connectivity, network, and value creation requirements of the business’s cyber physical and “smart” things strategy.

 

Business Models and Monetization

New business models have now become standard fare for enterprises pursuing new sources of revenue growth, contemplating new positions to secure differentiation or market share, and considering disruptive plays in their industry or in adjacent industries—either as disruptor or disrupted. Examples are many in nearly all industries in the market today. What is less obvious, although nonetheless prevalent, are the platform models driving these new business models. These platforms provide a unique, highly adaptable value creation and realization model, aggregating and scaling sources of supply and demand through a robust technology networked platform.

What we now see more frequently is a recognition of the incremental value that specific elements of the platform can provide. Two examples are noted here: the analytics derived from the typically large amounts of information that pass through the business platforms and the tendency to adopt an open-API approach to allow non-enterprise labor to contribute to the growth, value, and future relevancy of the platform and therefore the new business model. In turn, these analytics and the API-driven transactions can be a formidable source of revenue in their own right. A further opportunity emerges to commercialize and monetize these additional “services.” As we consider and pursue the power of platforms and new business models going forward, monetization opportunities, of which analytics and APIs are two, should be an integral part of the strategic intent, design, and projected new revenue considerations.

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NEW ENTERPRISE COMPETENCIES

The enterprise’s core competencies continue to undergo significant change, and there is a transition to be more software-centric or even a software company. Also, product companies are taking on the characteristics of service businesses and service companies are taking on attributes of product businesses.

Applied Innovation

In 2014, we highlighted the acceleration of the pace, the increase in the impact, and the globalization of the sources associated with the emergence of business technology innovations. No longer were we in a world of a scarcity or infrequency of major innovation. Rather, enterprises were facing an abundance of innovation. They hoped to benefit from these innovations— through speed, scale, security, and certainty—yet few of them were equipped to apply, adopt, consume, deploy, or sustain innovation.

Given the supply that had emerged and lack of proficiency to leverage these innovations, we put forth a position that the successful digital enterprise would need to become proficient at applying innovation. In other words, applied innovation would be a necessary core competency of tomorrow’s enterprise. More broadly, this would include subscribing to a discipline or framework for discovery, contextualization, deployment, and sustainability. It would require a genuine curation, orchestration, and governance of a global ecosystem of third parties, the majority of which would be start-up entities. Innovation labs or centers, corporate venture funds, and investment in start-ups would need to occur with a much more thoughtful, strategic, and ROI orientation. And other key barriers to successful transformation, scaling, and adoption of innovation such as culture, organization, mindset, vision, risk tolerance, legacy integration, talent, process change, etc. would need to be calibrated and addressed. Clearly, innovation in the broadest of terms is far from the random act that many might suggest.

 

VUCA Architecture and Engineering

Historically, technology solutions and systems were designed and built to last. In fact, the entire methodology for designing and building software was oriented toward getting all requirements defined, specified, and agreed to. The worth of the solutions and systems were oftentimes judged on how well they endured and how little they changed. Further, “change” was an exception, an event that would occur from time to time that had to be planned, managed, priced, tested, scheduled, etc. Not only is this far from the paradigm or principles for today’s business technologies, but the environment in which today’s solutions, systems, and platforms are built is characterized by just the opposite set of attributes.

The environments in which enterprises operate today, and will for the foreseeable future, are highly volatile, uncertain, complex, and ambiguous. In short, VUCA. How do we expect our business technology response to this to be stable, certain, definitive, predictable, or lasting? Perhaps counterintuitive, but the approach to solutions, systems, and platforms will be built to change, to evolve, to adapt, to respond, etc. And to do so with speed, agility, security, and certainty. Hence, we suggest an approach to architecture and software engineering that is aligned to and coherent with a VUCA business environment and a time of intense and rapid emerging technology introductions, innovations and discontinuities.

The ability to architect for change and to engineer for continuous adaptation, new requirements, efficient integration, and frequent releases will become a new core competency, drive the enterprise closer to a software-company operating mentality, and provide the kind of speed and agility needed in today’s competitive business landscape. Certainly, techniques including open- and inner-source development and DevOps are quite relevant here. Lastly, we introduced the concept of Vanguard IT in 2016 and have evolved our point of view concerning Digital IT as well. These remain particularly relevant to ensure that the overall transformation of the IT function and capabilities within the enterprise progresses and even accelerates. IT governance, leadership, talent, process, work environment, tools, methods, automation, and technologies, to name a few, become prerequisites for creating the necessary operating conditions in which VUCA architecture and software engineering can take root, can deliver, and can be sustained.

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TRUST

Arguably no other topic commands the attention in today’s market more than “trust.” It manifests itself broadly in subjects such as risk tolerance and risk management, security, privacy, data sovereignty, loyalty, reputation, hacking, threat landscape, and attack surface. It is a topic on the agenda of boardrooms and the C-suite, the highest levels of government, and enterprises in every industry. 

Cybersecurity and Risk Orchestration

A direct correlation exists between the number, scope, and potential impact of new technologies and new application of current technologies with the vulnerabilities these create for the enterprise. Fueling this are the:

1) Components of the infrastructure (network, compute, and storage) on which these technologies operate

2) Continuum of security maturity across the multitude of devices and network elements supporting today’s business technology solutions

3) Risk profiles and tolerance and the behavior paradigms of the enterprise

4) Intentions and growing capabilities of threat actors across the market

5) Primacy of market availability over security adequacy in many product commercialization launches

6) Sheer volume of access points and targets (note IoT and smart devices)

7) Spectrum of safeguarding capabilities across the trading partner ecosystem of the enterprise

Less apparent is simply the adequacy of the legacy application portfolio. Historically, applications were designed and delivered with security and privacy features and controls bolted on vs. built in, data flowed unencumbered across applications, and most interfaces and integration approaches had security and privacy considerations as afterthoughts, at best.

Considering today’s threat landscape and risk management requirements and demands, these capabilities, let alone defenses, are highly inadequate and ineffective. In many enterprises, it remains unclear as to where accountability and responsibility clearly lie for cyber risk, response, governance, management and mobilization across all CXOs.

Nonetheless, the attack surface of the enterprise will continue to expand due to globalization, regional market expansion or the deployment and adoption of newer and emerging technologies. At the same time, the frequency and scope of vulnerabilities will expand from the growing threat landscape and the sheer number of actors and their motivations. Compliance and regulatory requirements of states, quasi-governmental entities, and industry bodies will become more evident. And the debate emanating from customers, watch groups, employees, board activists, and the citizenry at large will add to the disruption and the need to respond. If not already poised for an enterprise-wide risk management, including adequate defensive and protective measures, detection capabilities, and remediation responses, now is the time to act.

 

Distributed Ledgers and Blockchain

The architecture principles of distributed ledgers, more commonly referenced from a design and engineering perspective as blockchain, will make a move toward the center of the enterprise “trust” dialogue in 2017. Observing the maturation of blockchain over the past few years suggests a few important dynamics: first, the shift from a cryptocurrency or even suspicious application of the technology to more legitimate commercial and public sector trust, security and risk management applications; second, the relevancy of blockchain’s use case to industry sectors beyond financial services into both other regulatory and non-regulatory verticals; and third, the significant increase in blockchain start-ups, venture funds, and R&D activity in major high tech players globally. While it is unlikely there will be broad market adoption and deployment of distributed ledger and blockchain solutions in 2017, we will see a very likely acceleration of consumption in financial services, noticeable progress in health care, life sciences, energy, payments, procurement, distribution and transportation, and other further disruptive use cases being explored even more broadly.

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MAINSTREAM REALITIES

For many years we have quietly seen the maturation of both virtual and augmented reality technologies (AR and VR). In the media, gaming, and entertainment applications, both VR and AR have continued to gain ground. At the same time, two other dynamics have become more apparent and noteworthy.

First, a legitimate set of business applications have quietly advanced and early stages of adoption are increasingly apparent. Use cases for knowledge transfer, training, and asset maintenance and management across industries as diverse as manufacturing, health care, transportation, automotive, distribution, and energy are in production and expanding rapidly. Further, AR and VR technologies are being introduced at an increased pace in education and, most importantly, across elementary and secondary education levels. This exposure and adoption in the domain of how we learn are significant as an indicator of broader future mainstream acceptance and adoption. And second, AR and VR devices have taken another significant step forward in the consumer electronics market recently with the introduction of more and more alternative reality consumer devices—typically an impetus, although not a guarantee—for future market visibility, experimentation, and potential broader commercialization.

While the AR and VR technologies advance and use cases continue to emerge, the more relevant, practical and immediate focus is Mixed Reality (MR), sometimes referred to as hybrid reality or merged reality. Here, we move from creating or engaging in an alternative reality to addressing the co-existence, merging, or interacting of both physical and digital realities and objects to produce new environments, solutions, or visualizations. In essence, it is not physical vs. virtual or digital, but both—co-existing or even merging. VR and AR are included in the MR paradigm. As was the case with AR and VR, media and entertainment leads the way in terms of commercialization and adoption of MR, but we are quickly moving beyond this obvious industry focus. Applications such as workplace safety, surgical procedures, equipment repair, next generation product lifecycle management, as a few examples, are very relevant MR solutions. For 2017, it will be prudent for the enterprise to explore the subject of MR; identify existing or new business processes that can be delivered more efficiently, more quickly, and with higher quality, great predictability, or less risk with the application of an MR solution—and then experiment. Not only is the use case important here, but gaining the knowledge and beginning to establish an understanding and competency in MR may be even more relevant in the near-term. MR, or its next generation application, will gain momentum very quickly, without question. Establishing a foothold and pursuing real competitive advantage from MR will serve the enterprise well. The key in 2017 will be to initiate the journey, gain experience, and set the course.

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AUTOMATED, SMART, INTELLIGENT

We conclude our 2017 Business Technology Trends discussion with a continuum of topics that may emerge as the most debated, invested, disruptive, and transformative for the enterprise in the near-term: automation in new venues, smart and connected devices, and intelligence drawn from data.

The social, political, ethical and moral considerations associated with various aspects of these topics are no less relevant than the potential impacts of the technologies themselves. The ability and intent to automate processes and tasks are profound. While the efficiency and cost savings usually form the basis of a typical automation strategy, the opportunities for speed and cycle time compression, outcome quality and predictability, and safety and control are now driving more and more of the business case considerations. The potential dislocation of workforces due to automation creates a larger and broader debate that business and government officials will be called upon to address as automation opportunities continue to expand in number and scope.

The presence of embedded software, communications capabilities, and other data or object capture and dissemination means that “smart, connected, and pervasive” are present in more and more devices, products, and form factors. Costs for all componentry, transmission, and storage continue to decline rapidly. As a result, the opportunities to leverage smart and connected devices to disrupt, transform, or replace existing business processes or create new ones are equally vast. Beyond cost, the benefits derived from speed, agility, quality, certainty, etc., become material. This leads to a preponderance of new use cases, new revenue streams, especially those from the massive amounts of data being collected, and new competitive advantages. However, the attack surface of the enterprise also grows requiring substantial cybersecurity and protection considerations.

The next logical progression is the growth in application of artificial intelligence, natural language processing, cognitive computing, machine learning, machine-to-machine communication, and beyond. At this stage, business processes leverage and exploit the automation and the enormous access to gathering and processing data to now allow vast and faster learning and response to occur: in effect, transitioning beyond digital to the intelligent enterprise. In sum, this is a massively expansive set of topics for discussion. What is essential early in 2017 is for the enterprise to be proactive, consider these important domains in the context of its competitive market strategy, and formulate early stage directions and strategies for on-going refinement and experimentation.

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GOING FORWARD

2017 will no doubt be a year of further disruption and the introduction of additional new technologies and business opportunities. So go on the offensive; mobilize the business and IT together; act quickly through experimentation; and establish external partnerships.

We have attempted to present something other than the conventional listing of new and emerging technologies, classically abundant in the market. Adhering to the principles of applied innovation, it is our goal to shine a light on the trends that matter now with meaningful ramifications for the enterprise in the next 12 months. In addition, these trends are non-prejudicial to the enterprise; there are not a select few that matter—they all do.  Every industry is in play when it comes to these disruptive forces. While these trends are presented here as industry-agnostic, they can be further contextualized for their unique application to a specific industry or industry segment.  How quickly they will disrupt and with what impact may be open for debate. However, it is prudent to mobilize now and, at a minimum, begin the debate and establish a position no matter how early stage it may be.  Last, we have identified topics that go far beyond technology for the sake of the technology. These are topics that are on, or should be on, boardroom and C-suite agendas. They can equally create opportunities for growth and competitive advantage, be the seeds for a disruptive attack, or threaten the very survival of the enterprise. While they clearly create upside and broad benefits, they are not without exposure and risk. And they have significant implications on the culture, social, behavior, and the fundamental competency and skill profiles of the enterprise. 

Referencing the shrewd words of GE’s Jack Welch, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near,” we underscore that the time to act is now. The pace, source, and impact of change in the market today is profound and becoming more dramatic. Whatever the motivation for the enterprise—opportunities and challenges alike—we believe our 2017 Business Technology Trends that Matter Now can provide a useful and relevant set of swim lanes to guide your discussions and help to establish your priorities.

Waiting to respond is too slow. The future is an integrated business and technology mandate. The perfect answer doesn’t exist and it is better to start and learn than to wait to get it right. And solid partnerships with third parties of various sizes and geographic bases will be a bulwark for future success.

More is at stake in terms of competitive advantage, market positioning, risk management, and long term enterprise viability than perhaps ever before.

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