Hi everybody, I'm Paul Gottsegen. I lead research for ISG, and I'm pleased to be here with Prashant Kelker. He leads our consulting efforts in the Americas and is our chief strategy officer (CSO). Prashant, same time next year: a year ago, we did predictions for 2022. And the year flew by! I think you got most of them right. I have my scorecard here and we're going to try this. I think people found it interesting.
There are so many trends that are happening, it almost makes your brain explode to try to track them all. And I'm going to try my best to just sort of pin you down and narrow you down on maybe three or so megatrends. You can peel them back any way you want, but sound good?
Sounds perfect. Sounds perfect Paul, looking forward to it.
All right. Well, let's just why don't why don't you just lay the groundwork and give me a quick overview of what you think the top three trends will be. By the way, I should say Prashant spends almost all of his time in front of Fortune 500 or Global 2000 clients working through some of the tough issues. So, if anybody would have a sense of this, it would be Prashant. And given that, what's an overview of the three megatrends for the upcoming year?
I like the way you said, “tough issues,” Paul, because I guess that's exactly what the world is dealing with at the moment. So, everything that you and I discussed, when was it… December last year? That would have been looking at a very transformation-rich, I would almost say cash-rich market, which I guess changed on all of us starting June/July of this year. In the next four quarters of 2022 into 2023, we see removal of the froth from the market. And what's left is actually the real stuff. But given that, I think a lot of these trends can be clubbed under three megatrends.
Megatrend #1: Industry Specialization
If you step away from technology and start looking at, “what are these technologies looking for to achieve in terms of outcomes?” I would say the first thing we are noticing is a much bigger focus on industry specialization. So now, be it in terms of ecosystems, clouds or business platform as a service, a much bigger focus on industry specialization. Because I think each industry is seeing this market in a different way and so we expect the next four or six quarters to be very nuanced in terms of which industry you are in.
Megatrend #2: Servitization
Which leads me to the second topic, and that is one thing that everybody's trying to do is to move from product to product as a service. That’s what we call servitization. Now this is showing up in multiple ways, especially the more asset-rich you are as a firm. It's showing up much more in terms of software, electrical, mechanical coming together. It's leading us to areas like digital engineering, hyper-connected revenue models, platform engineering and the like.
Megatrend #3: Sustainability
The one the last megatrend I think would be sustainability. So, if we step away from the acronym ESG and start looking at the “S” in particular: sustainability. Sustainability in terms of green tech, in terms of revenue design for recycling and circular economies.
So those would be the three megatrends.
All right. I can't wait to dive into them. They make sense on the one hand, but on the other hand, focusing on industry, focusing on as a service, focusing on anything green or sustainable; these approaches have also been around for a long, long time. But you're obviously bringing it up now because you're seeing some key trends there. So. Sure. Let's talk about it.
Continue to the next video to dive into Trend #1: Industry Specialization.