ITCandor publishes predictions for the IT and communications industry in 2018

PRESS RELEASE – Didcot, Jan 8, 2018

Siri, Alexa, Watson – what can I do now you’ve put me out of work?

ITCandor has published its 10 predictions for 2018 – its 9th continuous year and a process that includes a self-assessment of its accuracy each year. Over 2,000 people have already read them online since publication on Jan 1st. 

2018 Highlights include:

  • The year will see increasing social unrest as white and blue collar employees are made redundant by robots and computer-based automation
  • AWS will replace Cisco as the world’s largest supplier of IT infrastructure to enterprise customers
  • Oracle will make strong headway as an enterprise IT supplier due its offerings meeting new market demands
  • Cloud services (IaaS, PaaS, SaaS) will see the strongest growth in demand demoting HPE and other suppliers who have chosen not to provide them
  • ITC demand in EMEA will be lower than in the Americas and Asia Pacific partially due to a lack of major vendor support by the EU
  • The will be major clashes between governments and the largest ITC suppliers over data protection, stateless finance and tax affairs

 ‘The market will grow, new nationalism will continue to disrupt normal spending patterns, cloud will outgrow everything else, vendor consolidation will continue as product areas commoditise, spending growth in EMEA will be behind the other continents… all developments of earlier trends. The big issue to emerge in 2018 will be the realisation that AI, machine learning and automation are moving too fast to maintain full employment. Governments around the world will find it increasingly difficult to handle the consequences, putting them at loggerheads with the largest ITC suppliers.’ – Martin Hingley, ITCandor

We make these predictions each year to stimulate a debate about the status of the ITC industry and to help business planners address issues that might otherwise come at them from left field. We particularly enjoy discussion the underlying issues and forecasts with leading execs, especially if they disagree some or all of them – so contact us to book a meeting.

What others are saying about the predictions:

I hope @mHingley is wrong on this one. The problem is ….he’s usually right’,

Going against the conventional #cloud wisdom. An interesting prediction from ITCandor’s @mhingley’ – (via Twitter)

Bonne année Martin! Thank you for sharing again your predictions for the ICT industry. Great read!’ – (via LinkedIn)

To read these predictions in full and/or download them as a presentation or document visit http://www.itcandor.com/2018-prediction-intro/

To contact ITCandor please email: [email protected]

ITCandor 2018 predictions – Siri, Alexa, Watson – what can I do now you’ve put me out of work?

Welcome to my predictions for the ITC industry in 2018. The market will grow, new nationalism will continue to disrupt normal spending patterns, cloud will outgrow everything else, vendor consolidation will continue as product areas commoditise, spending growth in EMEA will be behind the other continents… all developments of earlier trends. The big issue to emerge in 2018 will be the realisation that AI, machine learning and automation are moving too fast to maintain full employment. Governments around the world will find it increasingly difficult to handle the consequences, putting them at loggerheads with the largest ITC suppliers.

These are my predictions:

  1. The global ITC market grows 1.8% to $6.7 trillion
  2. EMEA ITC spending falls behind the Americas and Asia Pacific
  3. UK the worst, Switzerland the best country for spending growth
  4. SaaS, IaaS, PaaS – the fastest growing offerings
  5. Cloud – local and regional CSPs gain against global giants
  6. People are the product, but they don’t get paid 
  7. Enterprise computing shifts off premise – AWS replaces Cisco as top enterprise supplier
  8. Storage commoditisation puts more suppliers out of business
  9. Oracle makes strong headway as an enterprise supplier
  10. Automation will create social disorder

As always I’ve had lots of help and suggestions from my friends and colleagues, to whom I give my thanks as always – and to Hieronymus Bosch for the illustrations. My process started with a self-assessment of my predictions for last year. I’m keen to discuss these ideas with you – especially if you disagree – so please contact me and book a meeting. Click on the following download my predictions as a document and/or slide set.

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10. Automation will create social disorder

It might be because I’m seeking justification for a career spent helping IT companies to sell their offerings more successfully, but I’m becoming deeply concerned about the way in which automation by both physical and Web-based robots is changing our world. In 2018 there will be more conflicts between the world governments of the world and the largest global suppliers; blockchains will allow those suppliers and the super-rich to squirrel their billions into stateless off-shore funds. Meanwhile the gap between the ‘haves’ and ‘have nots’ of society widens – especially as automation spreads through manual to general purpose office tasks making millions unemployed. To a certain extent the new nationalism we’ve seen in the UK, US and Spain is a reaction – ‘if only we can redefine our borders to something smaller and more manageable, maybe we can improve the lives of the poorer citizens’, or ‘why are we giving so much money away to people who aren’t part of our group’ are part of the motivation. Unfortunately automation means that, even is we create local businesses and bring back manufacturing from cheaper offshore countries it will have little positive effect as the new automated factories will have only tiny workforces. Automation is removing millions from the workforce. In the ITC industry – the driver of automation – for instance we would employ 2 million more in 2018 if productivity had remained at 2005 levels and of all the countries in the world China is suffering from the greatest replacement of its workforce with robots.

We are already suffering from social disruption as whistle blowers such as Wikileaks and the Paradise papers expose the tax avoidance schemes of the rich and suppliers such as Apple. Governments are slow and/or powerless to resist the movement of wealth into the pockets of the super rich. My dystopian tenth prediction is that things will come to a head in 2018 – that automation will be resisted by new Luddites, who try to resist the rapidly increasing changes to employment and relative wealth between the rich and poor. As an industry we should be aware of these changes, reinforcing our CSR strategies to address underprivileged and be aware of how our technology affects employment levels.

‘Siri, Alexa, Watson – how can I pay for things now you’ve put me out of work?’

Martin Hingley January 1st 2018

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9. Oracle makes strong headway as an enterprise supplier

Let me start by saying that I currently have no business ties to Oracle – this prediction isn’t a ‘thank you’ to the company in any way. It’s the result of studying the financial results of 180 vendors every quarter since 2008. Sun was the world’s largest server supplier for a period in the 1990s and combined with Oracle in 2010 to become one of the deepest thinking, different and often most frustrating supplier of all. It’s clear vision of social business and the way businesses had to change in order to make the most of new computing techniques was balanced by expensive and inflexible pricing of its world-leading database and ERP offerings. Like IBM it was one of the first traditional enterprise suppliers to embrace the cloud as a delivery model for its software and hardware infrastructure offerings. In 2017 a number of other suppliers launched (or planned to launch) special cloud services to accommodate Oracle’s different software offerings.

As increasing numbers of customers shift their spending to off-premise solutions so the differences between the way Oracle does business ceases to be as important – the acquisition, funding and management of Oracle products will stop being a limiting factor for many.

Just like Apple in 2009 Oracle looks set to make a major push in 2018, especially as it builds out the international capabilities of its newly-acquired NetSuite business. My ninth prediction is that it will outgrow most other enterprise IT suppliers in the year, using its cloud services approach to win multiple new customers and rise from a long period of relative obscurity.

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8. Storage commoditisation puts more suppliers out of business

My Figure shows a forecast for raw storage revenues and capacity between 2005 and 2020. Although capacity doesn’t always grow on a quarterly, or even annual basis (see 2011 and 2012), it continuously outperforms the financial results of its manufacturers. The increasing standardisation of interconnections and ready availability of storage management software from specialist vendors mean that most users no longer need to spend over the odds for storage systems from established players. In 2018 the huge differences in price between integrated offerings from Dell EMC, IBM, NetApp and other major vendors and the more ‘do it yourself’ solutions using commodity raw storage and clever software will widen even further. Large customers will still need help in balancing and managing their block, file and object storage and in improving their data governance to meet the requirements of data protection legislation and the onslaughts of internal and external cyber criminals.

My eighth prediction is that the increasing commoditisation of the storage business will create even more vendor consolidation and turmoil in 2018. While the challenges of new unstructured data sources and Web app development will keep users focused on learning and mastering new storage techniques, increasing numbers of them will avoid paying large sums of money for handholding by the leading storage systems vendors.

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7. Enterprise computing shifts off premise – AWS replaces Cisco as top supplier

My Figure shows a long term forecast for the major elements of enterprise computing between 2005 and 2026. It shows how spending on enterprise hardware has remained on a level while infrastructure software grew in the first decade and cloud exploded, taking away the need to design, plan, budget a build data centers by thousands of medium to large users. Often hidden from discussion is the rapid decline in spending on outsourcing and managed services – a business run by hundreds of thousands of (typically) SMB suppliers who take on parts or all of their customers IT operations in fixed price, inflexible contracts. The decline in this business doesn’t necessarily mean the demise of all of the suppliers, as the smartest ones are in the process of shifting from people-based multi-year contracts to cloud services support.

The net result of these changes are a major shift from branch and distributed computing to a more centralised model, which is being accelerated by better security, resilience and reliability of cloud services and cheaper, faster wide area networking from telecom suppliers. As a new generation of IT managers and admin staff take over from older ones, so I expect a natural move from on to off premise computing. Those enterprise suppliers who talk about hybrid and multi-cloud approaches often miss the point that, although every business will need to keep some of its corporate computing in house, the majority of their spending will shift to offerings from specialist service providers. In future enterprise computing will be outsourced by businesses in the same way that the car park and canteen are.

My seventh prediction is that the movement of computing off premise will accelerate in 2018 and that AWS will overtake Cisco as the largest supplier of enterprise IT.

 

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6. People are the product, but they don’t get paid

The extensive use of smart phones and social media creates billions of saleable private data which is being exploited by thousands of suppliers and traded for billions of dollars. Their secret techniques are nothing new – I remember Barclaycard in the 1980s telling me that it made more money from selling personal data to other suppliers that it did from its customers transactions. Users appear to be entirely ignorant and/or uncaring about the depth of information about their financial status and purchasing history held by a multitude of shadow suppliers.

The Figure shows my forecast for ITC spending by customer type; I expect consumer spending to continue to fall behind business spending. In 2018 it will fall by 2.9% to $2.5 trillion, while business spending grows by 5.0% to $4.1 trillion.

It’s logical that eventually suppliers will pay their prospects for personal information in order to increase their sales, especially if GDPR and other data protection laws around the world are successful in limiting the current high levels of exploitation. Social media has made ‘people the product’, but I doubt whether they’ll start to get paid in 2018… it’ll have to wait until 2019!

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5. Cloud – local and regional CSPs gain against global giants

There is no question that cloud computing has been the biggest hit of the last decade – it’s astonishing that there are still major enterprise computing suppliers (HP, Cisco for instance) who are not participating fully by launching their own public IaaS and PaaS services. They seem willing to lose their shirts in order to compete with their service provider customers, the largest of which design and create their own servers and storage systems from components any way. 2018 will see Amazon become the largest enterprise computing supplier on the strength and growth of its AWS business – just think about it Amazon has never been a data center or enterprise vendor at all before it launched its cloud services.

Nevertheless I believe the largest global cloud suppliers (AWS, IBM Softbank, Microsoft Azure, Google, Alibaba) will lose ground to local and regional players such as A1 Telekom (Austria), UKCloud (UK), OVH (France and multiple other countries). As we will see later the growth in cloud services is coming mainly from spending by enterprises on outsourcing and managed services, as users wriggle loose from multi-year inflexible contracts in favour of those which offer some form of ‘pay as you go’ ones. There are tens of thousands of small to medium managed services vendors and channel players across the globe who are biting the bullet and shifting their business models to cloud provision. The net result will be that they compete more strongly with the global leaders, who will continue to open local data centres and SMB services as they expand their businesses.

2018 will be remembered as a year in which the top-down success of global cloud service players was met by the bottom-up success of local ones.

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