What is Happening?
As 2018 rapidly approaches, ISG Research analysts have taken a look back at some of the most significant trends of 2017 – with an eye toward those that will have important long-term impacts. A companion Research Alert will be issued next week, when we identify key emerging trends that we believe will have broad and significant impact on enterprise IT in 2018.
Why is it Happening?
Throughout December, ISG Research held a series of discussions both internally and with enterprise clients about the key trends and events that have shaped and will continue to shape enterprise computing going forward. We grouped the 2017 trends into two overarching themes: Urgency and Maturation and Technology for Business’ Sake.
In this Research Alert, we briefly define and discuss each trend and conclude with some actionable guidance. For our premium subscribers, more comprehensive assessments of these trends with actionable guidance will be presented in a series of associated Research Notes this month and next.
2017 Theme 1: Urgency and Maturation
During 2017, ISG Research analysts observed:
- A growing sense of urgency among enterprise IT executives that manifested most often as a heightening desire to accelerate change within their IT infrastructure and within their IT organization; and
- A shifting or maturing of criteria used to evaluate and select offerings and providers. The emphasis shifted from a predominant focus on costs to professional and managed services capabilities to assist in attaining enterprise IT goals.
- Accelerating pace of change. The pace of change continued to accelerate across the IT and business landscape in 2017. The changes include accelerating new product introductions by cloud providers, shifting and consolidating among providers of cloud offerings and cloud-related services, and increased enterprise IT pressure for more rapid adoption of cloud-based options. Google Cloud Platform rapidly gained acceptance as a hyper-scale cloud offering.
- Security as-a-service. As of 2017, practically everything needed to automate cyber security became available as a service. Whether or not IT and business organizations feel the urgency or have the required maturity to apply these effectively will be key determinants affecting how security shapes up in 2018.
- Hybrid solutions the “new norm.” ISG Research analysts observed that, despite the complexities of managing workloads and data, enterprises increasingly utilized hybrid IT infrastructures (i.e., IT infrastructures consisting of more than one traditional in-house, private cloud, and/or public cloud) in 2017. The desired objective appears to be providing the optimal infrastructure for all major workloads.
- Automate now? While many large enterprises are well along in their RPA journey, many firms still have not begun to build out a digital workforce. During 2017, leading RPA providers started giving away their base software, putting pressure on competitors to innovate beyond basic automation.
- Offshoring losing appeal? During 2017, we saw more outsourcing clients demonstrate growing disinclination toward offshore services. The reasons for this were varied, including for example political and public pressure not to send jobs offshore, diminishing returns from labor arbitrage and increased desire to accelerate digital transformation. Some enterprise IT organizations expressed other reservations about offshoring such as data security, IP protection, geopolitical stability and availability of talent.
2017 Theme 2: Technology for Business’ Sake
ISG Research analysts observed an increasing focus on the value that technology delivers to business. This includes the use of technology in improving the business processes of IT itself, encompassing the following key market developments and trends:
- One-stop shopping for security. Large providers became digital innovators and one-stop-shopping centers in 2017 with the result that 50 percent of digital security spend was allocated to the top 20 providers in 2017.
- IoT hype exceeded results. Despite IoT moving to real applications in Smart Cities, Manufacturing, and Transportation, measurement of IoT results and ROI at scale were elusive in many industries. Large investments often are required for sensors, edge computing, advanced analytics and linkage with other data sources. Some IoT technologies were reported as not working as advertised.
- Mobility stays 4G. 2017 brought considerable hype and announcements of 5G pilots, feasibility studies and pressure for early adoption. However, about 80 percent of enterprises with mobile service/app/management policies are based on LTE/4G networks and services, and many network providers are still rolling these networks out globally and investing heavily in them.
- Automation for business impact. Service providers finalized their “build” or “partner” automation strategies and began to integrate their automation capabilities across IT and business operations. There was considerable interest in applying machine learning to IT business operations but little actual implementation.
- Technology niches. Drones, IoT, VR/AR and wearables have all gone from incubation to production in incredibly short time cycles. However, each has entered a relatively confined niche with definitive near-term returns. Other niches have begun to emerge in motion processing, image processing and machine learning.
Impact & Guidance
As the combined impact of cloud, analytics, automation and digital transformation became widely felt over the past year, enterprise IT management began confronting a new set of challenges in organization, skills and staffing. These challenges reflect a new self-image for the enterprise, a shifting balance in the IT-LOB relationship and new processes in the business of IT. We characterize those challenges as:
- Increased reality of the Boundary-free Enterprise™. The combination of cloud, social networks, and ubiquitous usage of mobile devices has redefined the nature of the enterprise, challenged its self-image and broken boundaries prompting significant culture and process transformation.
- Re-balancing the IT-LOB equation. Selection and acquisition of cloud-based offerings have continued to shift toward enterprise business units and away from the control of the IT organization. The good news is that business units are getting the solutions they are seeking. The bad news is that IT organizations are challenged with 1) integration of the cloud-based offering with existing systems, and 2) ongoing operations management to deliver service levels desired by the business units and security demanded by the enterprise.
- Transforming the IT organization. As ISG Research analysts have observed since 2007, converging forces are catalyzing requirements for new skills in IT organizations. We first articulated this as a shift from managing IT assets to managing relationships with cloud providers. In 2017, IT management executives began struggling with sweeping changes – the first core re-structuring of the entire IT organization.
Overall, ISG Research sees unlimited potential for IT providers as enterprises increase their appetite for IT services and accelerate their adoption of technologies such as cloud and automation.
Next week, ISG Insights will post what our analysts see as the most likely impacts and effects of these core trends and developments, including what enterprise clients need to plan for, why and when.