Tech companies will continue to apply cognitive technology into their suites and integrate it with Internet of Things (IoT) applications. Furthermore, enterprise-technology victors will bets on technology stacks that combine open source, big data and the move off-premises to increasing hybrid cloud architectures.
Technology analysts shared these predictions as we enter the new year.
We've coordinated this peek into hot technology trends with a series on companies to watch in 2016. We begin that series today with a profile on Affectiva, a Waltham, Mass.-based artificial intelligence provider that provides insight into customer emotional reactions to digital content.
To set the stage for these company profiles, we caught up with Deloitte Consulting’s Paul Sallomi and Thomas DelVecchio, director of Enterprise Technology Research (ETR).
Let’s Get Thinking
Sallomi and Deloitte — based in New York City — are high on cognitive technologies. Everyone else seems to be, too.
Just last week at CES 2016 in Las Vegas, Ginni Rometty, chairman, president and CEO of IBM, said the the future of the Internet of Things is cognitive. "This is an era of systems you do not program; they understand, they reason and they learn. Cognitive computing "will change what you make, it will change how you operate, and the IoT will change who you are,” she added.
Investors have dumped $2 billion into artificial intelligence products and technology since 2011, according to Deloitte. Even Facebook CEO Mark Zuckerberg has jumped in. Simply put, AI technologies are part of our lives now, and our work lives.
Sallomi told CMSWire the technology sector’s interest in applied cognitive technologies has substantially increased in the last three years. More than 100 companies have seen mergers or acquisitions related to cognitive technologies in this period, according to the December Deloitte study, “Cognitive technologies in the technology sector: From science fiction vision to real-world value.”
“We’ve seen a considerable uptick in companies leveraging cognitive technologies for commercial applications,” said Sallomi, vice chairman and the global technology, media and telecommunications industry leader for Deloitte.
“We expect this trend to continue as cognitive capabilities are increasingly being demanded by both consumers and enterprises and more tech companies are responding by investing in offering open developer platforms.”
IoT: The Real Thing
Gartner forecasts that 6.4 billion connected things will be in use worldwide this year, up 30 percent from 2015.
That number in 2020? About 20.8 billion. In 2016, 5.5 million new things will get connected every day, according to Gartner.
What’s really interesting is the intersection of the Internet of Things with cognitive tech, of which IBM is a firm investor.
“Cognitive IoT technologies will make it possible for business leaders to understand what’s happening in the world more deeply,” Harriet Green, general manager of IBM Watson, blogged last month.
“By infusing intelligence into systems and processes, businesses will be able to not only do things more efficiently, but to improve customer satisfaction, to discover new business opportunities, and to anticipate risks and threats so they can better deal with them.”
Sallomi said the integration between cognitive technologies and the IoT — “with cognitive being embedded in IoT applications” — should accelerate adoption rates.
“In addition to impacting the types of products and services technology companies offer, cognitive technologies and the IoT can drive a shift toward consumption based business models (CBBM) where customers enjoy the flexibility to consume and pay for a variety of hardware and software products based on need and usage,” Sallomi told CMSWire.
“As technology companies shift to offer CBBM, many aspects of their operating models will need to be transformed including marketing, sales, IT systems and taxation.”
Open Up, People!
DelVecchio, director of New York City-based Enterprise Technology Research (ETR), thinks it’s pretty clear what successful tech companies should do. And it starts with open source.
“There is a new world order of enterprise technology,” he said, “that is hinged on open source, big data, the move off-premise to increasing hybrid cloud architectures and the ability to seamlessly secure it all.”
Why open-source versus proprietary? And will this question ever end? (Many tend to fall in the "neither wins" category). DelVecchio said it’s easier and cheaper to move on and off open-source platforms and avoids vendor “lock in.”
“Almost all of these biz models are license/subscriptions models allowing pay as you go rather than large (capital expenditures) CapEx,checks every 3-5 years or annually,” he added.
With open source, he said, there is a “faster and greater innovation and software evolution" because open source "allows all in the global community to add and improve the software."
You have constant reiterations rather than waiting on one proprietary team at vendor XYZ innovating and releasing.
As for big data, enterprises should build, DelVecchio said, a combination of data lakes and tributaries to and from the data lake (storage repositories for data). This will help them access the data in near-real-time while simultaneously adopting a visual dashboard to view and mine the data that has been unlocked and made accessible and, hence, actionable.
“It all, of course, must be done inline with compliance, governance and securely,” he added.
Addressing Off-Premises Worries
DelVecchio also believes enterprises should move to hybrid cloud infrastructures. Asked what he’d say to the companies that tell him, "we're not ready to move off-prem yet," DelVecchio replied, “No one is saying this anymore.”
“They're now saying, ‘We can’t move off faster until we can trust the data is secure,’” he added.
In an August CMSWire article, Joe Shepley argued that exit risk should be the biggest concern for organizations considering the cloud.
“If I need to move my application (and its data) or content off of my provider’s servers, how can I do that, what will it cost, are there any constraints, etc.?” Shepley wrote.
“The reason why it should be a concern is because — to date — there is shockingly little clarity among most cloud providers about how exactly a customer might switch from its service to another service (or bring everything back on premises). And when your provider is unclear about something, you can bet that the details, once they come to light, will be favorable to them and unfavorable to you. If they were favorable to you, it would be used as a sales tool, right?”
DelVecchio told CMSWire Oracle and SAP have been ravaged by the move off-premises for the last two to three years. He's onto something: Oracle’s on-premises software revenue declined 4 percent to $5.8 billion from a year ago, according to its first-quarter earnings report in September. And SAP, in its Q3 preliminary earnings report, said the growth rate of its legacy on-premise business continued to slow.
However, Oracle’s not writing off on-premises yet. “Coexistence of cloud and on-premises computing is going to be a decades-long process, if not forever,” Executive Chairman and CTO Larry Ellison said in the earnings call in September, “But during this long period of coexistence we think that absolute compatibility between on-prem and cloud will be our biggest differentiator.”
DelVecchio sees Microsoft Azure and Amazon AWS in an “absolute battle royale over managed hosting/cloud computing.” AWS, he said, is the leader from an Infrastructure-as-a-Service (IaaS) perspective but Azure is catching up and Azure is already doing well from a Platform-as-a-Service (PaaS) perspective.
“Google and Rackspace have been getting lapped by the aforementioned two,” DelVecchio said, “so much so that Rackspace has pivoted to essentially an IT services company partnering with Azure and AWS.”
Beyond the nitty gritty of cloud infrastructure wars, Sallomi said tech companies that don’t sit idle will surge.
“The risks of delaying or doing nothing to adopt exponential technologies are significant,” the Deloitte consultant said. “The most successful companies will be those that are nimble, embrace new technology and business models as they emerge, develop strategies to actively participate in the broader ecosystems and either create or participate in open platforms that foster interoperability and rapid innovation.”
Title image by Dingzeyu Li
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