Digital transformation is shaking the IT industry to its roots, and CIOs are reacting by strengthening their stakes in several promising new technologies while pulling back investments in other sectors.
A recent Gartner survey, “2019 CIO Agenda: Secure the Foundation for Digital Business,” identified several digital transformation technology areas that are experiencing strong enterprise investment support and a handful of sectors that are either languishing or retrenching.
Digital transformation is a rebalancing act, the survey of over 3,100 CIOs in 89 countries reports. “Digital business hinges on sound IT, combining new, disruptive technologies.” It also involves taking a close look at allocations in tech areas that no longer seem as bright as they used to be.
Here’s how tech investments are shaping up for CIOs in 2019.
Heating up: BI/data analytics
Percentage of respondents increasing investment: 45
Business intelligence (BI) and analytics are evolving from IT-driven tools in search of a problem to business line necessities, reports Brad Smith, managing director of Cornerstone Advisors, a banking industry consulting firm. Banks, like many other enterprises, are already widely using BI/analytics for fraud mitigation, portfolio analytics, product/channel mix optimization and marketing campaign insights. “Now we’re seeing mature BI users moving on to predictive analytics and more use of real-time data for high ROI use cases, such as real-time, individually targeted product recommendations and real-time individual performance dashboards,” Smith says.
Serge Findling, vice president of research for digital transformation at research firm IDC, anticipates solid growth for BI/analytics tools, with revenue growing from $23.9 billion in 2018 to $26.3 billion in 2019, or 10 percent year-over-year.
Yet another market observer sees trouble ahead. “We’re all aboard a runaway train of interest in BI and data analytics software, but we’ve neglected something important: users,” warns Thomas LaMonte, a senior analyst with Gartner Digital Markets and a writer for Gartner’s GetApp domain. He notes that actual BI adoption remains weak, with 91 percent of organizations having not yet reached a transformational level of maturity in data and analytics. “Stockpiling data analytics technology does little good if no one uses — let alone masters — these tools,” LaMonte says. “Nevertheless, into 2019, the tech-gluttony will likely continue.”
Heating up: Cyber/information security
Percentage of respondents increasing investment: 40
With virtually every IT leader focused on protecting systems and data, it’s not surprising that investment in security technologies will be strong in 2019. As existing security tools mature, the growing adoption of emerging technologies, particularly internet of things (IoT) networks, will present new and serious security challenges. “As technology and security threats advance, attacks against IoT devices will evolve, targeting critical infrastructure that bridges our digital and physical worlds,” says Kunal Agarwal, general manager for IoT at IT security firm Symantec.
Industrial control systems powering critical infrastructures, many outdated and ill-equipped to handle attacks, will be particularly vulnerable, Agarwal warns. “Recent studies have shown that more than half of these systems run on outdated Windows systems, leaving them highly-susceptible to ransomware, destructive malware and targeted attacks,” he says.
IoT hasn’t been overhyped, but it is underdeveloped, claims Hansang Bae, CTO of network software and hardware firm Riverbed Technology. “The widespread and rapid adoption of IoT devices has caused manufacturers to fast track development, sacrificing the advanced security technologies that would provide greater protection in favor of low production costs,” he notes. “This will lead to widespread IoT security breaches in 2019.”
Heating up: Cloud services
Percentage of respondents increasing investment: 33
Ben Lorica, chief data scientist at technology publishing and training firm O’Reilly, believes that 2019 will be a great year for cloud services and solutions. He notes that company research shows that more organizations are turning to the cloud for portions of their data and analytics infrastructure. “We also found that organizations that have extensive experience with cloud platforms are already using new technologies, like serverless,” he says.
PaaS adoption will become a mainstream technology for enterprises focusing on application containers as well as for business solutions, such as analytics, IoT, and also integration services for SaaS platforms, says Krishnan Ramanujam, president of business and technology services at Tata Consultancy Services. “The pureplay ‘lift and shift’ approach will soon disappear and cloud adoption, even at an IaaS layer, will transition to a ‘transform while you migrate’ approach,” he adds.
Ramanujam believes that AWS Outpost and other on-premises solutions, such as Azure Stack and Google Kubernetes Engine (GKE), will enable enterprises to embrace such hyperscale providers much faster and at a broader level, overcoming classical security/audit concerns surrounding the public cloud.
Heating up: Core system improvements/transformation
Percentage of respondents increasing investment: 31
As the lines between enterprise and consumer applications blur, pressure on core systems is increasing. “Modern applications, augmented by machine learning and natural language processing, require dynamic and performant compute, storage and network capabilities,” says Wendy Pfeiffer, CIO at Nutanix, a cloud computing software company. “The need to optimize financial and consumption models is also driving multi-cloud use.”
Through 2022, 75 percent of successful digital strategies will be built by transformed IT organizations using modernized and rationalized infrastructure, applications, and data architectures, Findling forecasts. “CIOs must modernize and rationalize the infrastructure and its related applications and data architectures — an incredibly difficult task.”
Heating up: Digital business initiatives
Percentage of respondents increasing investment: 31
Marketing that is driven by experience is a powerful way to build, maintain and strengthen relationships. In 2019, digital marketing will continue shifting from a transactional focus (doing business, getting things done) to an experiential focus (building a relationship), Ramanujam observes. “Consumers will reward enterprises that deliver a holistic, branded experience,” he states. “Smart enterprises will be investing in developing this kind of complete experience instead of a siloed experience of a particular unit or transaction.”
Heating up: Customer/user experience
Percentage of respondents increasing investment: 29
Customer/user experience technologies should be a high priority in 2019, says Lauren Maffeo, senior content analyst with Gartner’s GetApp service. “Gartner research consistently shows that most U.S. businesses with less than 1,000 employees either don’t use chatbots or plan to do so within the next one to two years,” she notes. On the other hand, 65 percent of U.S. millennials want to use chatbots, and Gartner predicts that by 2019 three times more businesses will use chatbots than used them in 2017.
“Customer experience-related technologies are high on our list in 2019,” says Ramneek Gupta, managing director and co-head of Venture Investing at Citi Ventures.
“People expect quick and intuitive product experiences that take into account their context and needs implicitly, and companies who fail to deliver are at risk,” he notes.
Heating up: Artificial intelligence/machine learning
Percentage of respondents increasing investment: 27
Pressured to curtail spending, improve enterprise IT agility and accelerate innovation, 70 percent of CIOs will aggressively apply data and AI to IT operations, tools and processes by 2021, Findling predicts. Yet while most IT leaders are aware of AI’s potential, most organizations still lack the ability to effectively tackle adoption. Findling notes, therefore, that 2019 will be a learning year for most enterprises as they struggle to attract much-needed AI competencies.
David Parmenter, director of document cloud engineering at Adobe, worries that AI may be in a period of irrational exuberance, and that a backlash may be developing. “Just as the world has awoken to real-world problems with privacy and security … we should be wary that this could happen in AI too,” he says.
Cooling down: Enterprise resource planning (ERP)
Percentage of respondents decreasing investment: 14
Counterbalancing the IT sectors exhibiting strong investment growth are areas that many CIOs now view as either fully established or too-new-to-embrace. Traditional premises-based ERP falls into the former camp as a mature technology, so new investment is declining. “[The] on-premises software market remains important, as medium-sized and large enterprises are still maintaining existing back-office software until contracts run out and they have a full digital transformation strategy,” Findling observes.
Ray Watson, vice president of technology for Masergy, a software defined networking services company, believes that ERP investments could revive in the years beyond 2019. “ERP systems will by no means fade into the sunset, but they’ll continue to evolve and be interacted with in different ways — specifically using voice interfaces and augmented reality, Watson says.
Cooling down: CRM solutions
Percentage of respondents decreasing investment: 35
Although the immediate future of customer relationship management (CRM) looks bleak, AI-powered data analytics has the potential to reinvigorate the sector in the years ahead. Cutting-edge CRM systems can infer information about whether an opportunity is going to close based on collected data, such as customer activity, web traffic, emails, proposals opened and more, observes Moritz Zimmermann, CTO of customer experience solutions at SAP. “With deep analytics, AI helps sales people spend more time with their customers and be more effective by receiving automatic ‘hints’ from CRM solutions about how to win deals.”
Cooling down: IoT
Percentage of respondents decreasing investment: 2
Despite nagging adoption concerns, IoT will surprise people in 2019, Lorica predicts. “The key pieces are in place: cheap sensors, specialized hardware for edge intelligence, machine learning models that take advantage of recent progress in AI and more mature data infrastructure technologies — often cloud based — that can handle large amounts of data,” he says.
Findling is somewhat less optimistic. “IoT will present CIOs will a broad range of challenges, including governance and security issues that will be a drag on the progress toward bridging IT and OT (operational technology),” he notes.