2016 Technology Outlook

2016 Technology Outlook E X E C U T I V E I N S I G H T S

published by Cartenia Group

January 2016

author: Anthony DeLima

© Copyright 2016 - Cartenia Group Inc.

DICLAIMERANDWARRANTY

Thisdocumentrepresentsourperspec0veonperspec0vesforITin2016.Thiscommunica0oncontainscertainstatementsrelatedtofutureresults,orstatesinten0ons,beliefsandexpecta0onsorpredic0onsforthe futurewhichare forward-looking statementsas that term isdefined in thePrivateSecuri0esLi0ga0onReformActof1995.Nowarran0esareprovided that the strategies iden0fiedwill yield thenotedoutcomes.

2016TechnologyOutlook–Execu6veInsights–January20161

Rewind one year: In 2015, companies experienced all types of disrup6ons. Cloud compu6ng becamemainstreamanda cri6cal elementof any company’s IT strategywhether inaprivate,hybridorpublicmode.Exis6ngproviders,tostartupscon6nuedthetrendtobuildMobileandWebAppsthatrunintheCloud,drivingmanybusinessestorethinktheircoreITinfrastructureandapplica6oneco-system.

ThebaMleforthepublicCloudbecameabaMlebetweenthreegiants;AmazonWebServices(AWS),Google

andMicrosoTAzurewhileothersshiTedtheirfocusonbringingnewofferingstothetablethatfocusonhybridandmanagingtheprivateenterpriseCloud.Thesecompaniesrelyonamassofcommodityserversandstoragedevices interconnected in global datacenters.Google,MicrosoT, andAmazon topedprofit es6mates, as theybecamesellersofcompu6ngpowertoagrowingnumberofbusinessesofalltypes.

Equally, Socialmedia andOmni-channel customers con6nued to push for the drama6c rethinking of how

companiesdobusiness,theirvalueandhowtheyconsistentlyengagewithcustomers.Withthat,theroleoftheCIOalsodrama6callychangedwhilenewrolessuchasthecustomerexperienceofficer(CXO),digitalmarke6ngofficer (DMO) and others con6nued to proliferate. The introduc6on of the Apple watch and similar devicesmarkedthebeginningofthenextwaveofsmart,loca6onaware,contextsensi6vedevicesandapplica6ons.

Streaminganaly6csalsotookcenterstagein2015ascompaniesdrovegreatercompe66vevaluebyrapidly

adop6ngtoolsandmethodstoassessconsumerandmarkettrendsanddrivingintelligentac6onsacrossglobalsupply-chains.

Theyear2015wasalsomarkedbyvariousmergersandacquisi6ons,notablyDell’sacquisi6onofEMC.This

trendislikelytocon6nuein2016astheTechindustrycon6nuestoconsolidateandstartupsofthepastmaturebothinstructureandserviceofferings.

While2015wasanexci6ngyearyoucanbetthat2016willbringaboutevengreaterinnova6onsespeciallyin

the areas of Digital transforma6on, IoT, Mobility and most notably ar6ficial intelligence – “the dawn ofintelligentbusinessmachines.”

Fueled by the need for growth and differen6a6on, many businesses will be stepping up investments in

innova6on,whileotherswillbeclampingdownoninvestments.AstrongU.S.dollar,poten6allylessthanstellarperformanceintheequi6esmarkets,characterizedbystagnantearningsleadustopredictthatITspending,willlikelybeexperiencingslowergrowththanpreviousyears,rangingonaverageabout2to3percent.

AnthonyA.DeLimaPresident

CarteniaGroup,Inc.


Introduction

Whenselec6ngourpredic6onsfor2016wefocusedontechnologybreakthroughs that will drama6cally disrupt businesses as we knowthemtoday.However,morethanjustgivingout10predic6ons,wesatout to map four fundamental trends, which we believe are drivingsignificantchange.

At the heart of these trends is the no6on thatyour customerwill

con0nuetoincreasinglycontrolandinfluenceyourbusinessmorethanever before.Theywill con6nue to shape yourbrand24/7/365.Morethanever,customersen6ment,engagement,theabilitytodynamicallypredict demand and supply and manage risk will make or break abusiness. Interac6ng with customers will con6nue to evolve from atransac6ontoanengagementmodel.

Increased Mobile commerce will also con6nue to reshape

companiesastheyrestructurethemselvestodealwithmassiveSocialscale. At the same 6me, real-6me analy6cs coupled with intelligentM2M (machine-to-machine) execu6on will start to dynamicallymanagesupplychainflowsandacompany’sen6reorder-to-cashcycle.

Taking these four drivers into considera6on, we’ve iden6fied our

favoritetop10trendsfor2016:

Where to Focus

Four trends that are disrupting the world


*EnableBuyOnlineReturnInStore(BORIS)**EnableBuyOnlinePickupInStore(BOPIS)

FROM TRANSACTIONS TO ENGAGEMENT

• Real-&meengagement• Buildingrela&onships• Improvetheexperience• Socialmediaorienta&on

• Mobile“EVERYTHING”• Intui&vedesign• Frompulltopush-based

• Real-&mesense&response• Paymentsystemintegra&on• Openarchitecture

• Personalorder&fulfillment• Massivepersonalizedscale• BORIS*• BOPIS**

• BI&Periodicstaterepor&ng• Servicedeliveryscoring&grading• Real-&mesupplier/partnerreviews

• Real-&merepor&ng• Customerreviews• Dynamicpricing• Dynamicinventorycontrol• Proac&veservicecontrol• Dynamicsupply-chain• Ar&ficialintelligent

• Proac&veengagement• Trackingsen&ment• Socialmediaanaly&cs

MOBILITY

• Real-&meno&fica&ons• Unstructuredcontentdelivery• Real-&mecustomerreviews

REAL-TIME ANALYTICS

SUPPLY CHAIN TRANSFORMATION

The Opportunity to “Uber-fy”

Increased Security Threats

Advanced Machine Learning

Analytics & BI

IoT takes center stage

Multimedia Impact

Digital transformation

Mobile Transformation

Changes at the Top

Cloud & Colocation Changes

Hardlyaword in theEnglishdic6onary,webelievecompanieswilladopt the“Uber”model (shared, on-demand), which is transforming the transporta6on industry andothers. Theability todelivereverythingasa serviceon-demand,handover control tocustomerstoselecttheirserviceagentsandlevelswhileenablingthemtoprovideinstantcustomerfeedbackbygradingthelevelofservicereceivedisapplicabletoawiderangeofindustryver6cals.Webelievethistrendwillcon6nuein2016anddriveafundamentalrethinkingofhowcompaniesdobusinessanddeliverservice.

1 The Opportunity to “Uber-fy” deliver everything as a service


2 Increased Security Threats security and privacy continue to be major risks

WepredictthatITorganiza6onswillspendmorethanathirdoftheirbudgetsonrisk,securityandcompliance.Leaderswillextendprivacyfromariskandlegalconsidera6onto a posi6on to win customers. Companies that relegate security and privacy as anaTerthought will play defense and face the risk of losing customers and sufferreputa6onal damage because of disrup6ons and data theT. In 2016, topmanagementwillrequireallbusinessdepartmentstoprovideextensiveplansthatdelineatetheirriskmanagementposturewithacleardefini6onofpersonalaccountabili6esaspartoftheirongoingopera6ons.

Themajorityof CIOs iden6fy security asoneof their top concerns, especially taking

into account the increased number of security breaches and data theT. To protectthemselvesproac6velybusinesseswillhavetoadoptpredic6vemodelingtoolssupportedbybig-dataanaly6cs.Playingdefenseisnolongeranop6on.HavingitasanaTerthoughtinvites greater issues andpoten6al forbreaches.Asbusinesses increasingly embarkonMobile,WebandSocialmediaenvironments, leveraging informa6on iden6fied throughanaly6cs will provide valuable insights into impending risks. Companies will thereforelargelyinvestinadap6vesecurityarchitectures.

Thecon6nuedriseofMobilepaymentsolu6onswillalso likelydriveuptheneedfor

businesses to further6ghtennetworksecurity.Hiringandretainingkeysecuritystaff inthisareawillbeacri6calchallengefortheyear.

Toanincreasingextent,ar6ficialintelligent(AI)systems(supportedbyadvanced Inference engines) will take center stage. These systemssupportedbyvastneuralnetworks,willnotonlycollectdatathroughBigdataanaly6cs,butalso learn from theprocess.Machines,eleva6ng theanalysis in the process, will increasingly be doingmuch of the analysisthattypicallyrequiredhumaninvolvement.Whatisenablingthedrama6cgrowth of advanced machine learning and AI is the availability ofpowerfulandaffordablecompu6ngpower,whichwillcon6nuetomovefrombeingprohibi6velyexpensivetorela6velycheap.Theendbusinessresultwillbetheabilitytodrama6callyprocesslargequan66esofdatatofurtherdrivereal-6medecision-makingandflippingMichaelPorter’sfivecompe66veforcesonitshead.

Not surprisingly we predict a drama0c increase in the poten0al for

intelligent machines to con0nue to surpass humans in their ability toundertake human tasks – not just rou0ne ones but also key decisionmakingac0ons.

3 Advanced Machine learning intelligent machine driven actions


The crea6onof relevant keyperformance indicators and their use inmanagement will con6nue to be a key topic. More importantly,businesseswilluseanaly6csasacompe66veasset todeliver“real-6mepersonalized services” across human and digital touch points thatdynamically morph based on user interac6on paMerns. Con6nuedadvancesinseman6ctoolssuchasgraphdatabasesandotheremergingdataclassifica6onandinforma6onanalysistechniqueswillstarttobringordertothemassivedatacollec6onchaos.

Dataanaly6cswillbeembeddedinmostcri6calMobileandWebApps

enabling contextual understanding and driving automated smartdecisionsandac6ons.

4 Analytics & BI deliver greater impact

The InternetofThings (IoT)hasmoved fromconcept to realityand is rapidlybecomingthe third major Internet wave. Lower cost of sensors and processing power and cheapubiquitousconnec6vitytoconnectdevicesareenablingbillionsofdevicestocomeonlineeveryday,whileSmartphonesarebecomingpersonalgatewaystoIoTsolu6ons.

However,mostbusinessesares6llstrugglingtocreatenewvalueproposi6onsfortheir

customerthatleverageawidevarietyofdatathatisnowavailablethroughSmartdevices.While some companies are launching new products and services that leverage IoT as adriver for incremental revenue streams–wholenewservice industries arebeing createdovernight. Others will con6nue to leverage IoT to improve produc6vity and reduceopera6ng costs. Businesses in the manufacturing, transporta6on, retail, healthcare,consumer electronics, financial services and others are crea6ng complete new servicemodelsandAppsthatleveragedatathatisnowavailablefrombillionsofdevicesworldwide.These deviceswill request support, respond to service requests and spawn en6rely newserviceindustries.

This year will likely also usher in an age of so called “predic6ve living’” where

organiza6onscanan6cipatepoten6alissuesandproblemsineveryaspectofourlivesandactaccordinglytocreategreatercustomertrustandengagement.

IoTdevicesandsolu6onshavethepoten6altoredefinecompe66veadvantageinevery

industry.Thiswilldrivethecrea6onofnewwinnerswhileleavinginitswakeahostofloserswhoweresimplyunabletoredefinetheirvalueproposi6onbylaunchingnewservicesinaconnectedworld.

5 IoT takes center stage deliver everything as a service


Some companies are focused on IoT as a driver for incremental revenue streams, others are leveraging IoT to improve productivity and reduce operating costs.


The IT, telecommunica6ons, consumer electronics, Social media andentertainment sectors will undergo further conversion. This will be driven by asignificant shiT in the economic, cultural and Social paradigms that encourageconsumerstoseekoutnewinforma6on,interactwitheachotheronaSocial level,use various media plajorms to create new experiences and content both at thebusinessandpersonallevel.

ThisyearwillalsobemarkedastheyearthatVirtualrealitystartstotakeshape.

Facebook’spastacquisi6onofOculusVRsignaledthefirststepincrea6ngamajornew trend. Virtual worlds will allow users to enter a completely immersivecomputer-generated environment. In 2016 we will see a whole new breed ofimmersivegames.However,thatisjustthestart.Virtualrealtywillmakeitpossibleforpeopleacrosstheglobetovirtuallymeetbothonapersonalandbusinesslevel,traveltofarawayplacesorcreateimpossibleadventures.

Streamingservices,IoT,mul6-mediainterac6on,aneverexpandingSocialmedia

phenomenon,andVirtualrealitywilldrivetelecomcompaniestodrama6callygrowtheir network backbones to deliver high quality ubiquitous broadband technology(and higher bandwidth levels) and services. Proac6vely expanding the Telecom,cable,andsatelliteinfrastructuresthatcarrytrafficthroughbroaderWi-Finetworkswillbecri6caltoavoidcollapse.Whennetworkingandconnec6vityfail,peoplelosetheir primary source of connec6on, the ability to work, communicate and beentertained. Addressing con6nued connec6vity growth will require significantinvestments in infrastructure at a point where bandwidth pricing con6nues toexperiencedownwardpressures.Mone6zingnewandadvancedinfrastructureswillbeakeychallengeforbothtelecomandtechcompaniesfortheforeseeablefuture.

6 Multimedia impact impact to infrastructure & capacity

Proactively expanding the Telecom, cable, and satellite infrastructures that carry traffic through broader Wi-Fi networks will be critical to avoid collapse.


This trendwill con6nue for the foreseeable future. Research shows thatonly about 25% of today’s businesses have a coherent digital strategy thatmaps out the customer journey and iden6fies how a company createscustomervalueasadigitalbusiness–andwearenottalkingjustcoolMobileAppsorothercustomerfacingtechnology.Wearereferringtothecompleteoverhaul of a company’s order-to-cash (OTC) cycle to deliver new “As-a-Service”offerings.

Weexpectthepercentageofbusinessesthatarecrea6ngadvancedDigital

transforma6on ini6a6ves tomore than double in 2016 as these companiesracetodelivernewvaluethroughanOmni-channelservicesmodelleveraginganaly6cs,andIoT.

B2BindustrieswillstarttoclosethedigitalgaptotheirB2Cpeersasthey

tooareconfron6ngrapidlyrisingpartnerexpecta6onsforcloserconnec6vity.Companiesthatembraceend-to-endDigital transforma6ontoredefinetheirvalueproposi6onwilldifferen6atethemselvesfromthosethatdabbleinasetof digital services that aremerely intended to augment tradi6onal businessmodels.

Companieswillbe increasingly facedwithensuringglobal interoperability

of their various products and services; developing new Omni-channelsolu6ons and services; building alliances to launch new technology-enabledproducts(i.e.,IoT);plajormsandmarketsegmentpenetra6onstrategies;andproductanaly6cs.

7 Digital Transformation continues to drive massive disruption

Digital transformation efforts will move beyond customer-facing initiatives to a complete overhaul of core business processes in order to enable dramatic growth.

Wewill con6nue to see a trendwhere users interact and to some extentworksolelyviaMobiledevices(insteadofdesktops).Theimplica6onsforhowsites aredeveloped,maintainedand securedwill be significant. The reality isthatwithout a soundMobile strategy,manybusinesseswill be leTbehind in2016. Couple this with the transi6on from a “pull-based” to a “push-based”Web, its not hard to see that the model where your en6re Mobile devicescreenisjammedwithAppiconsischangingdrama6cally.

ThecurrentWebis"pull-based”–we ini6atesearches(assumingweknow

whatweare looking for), andvisitwebsites.Highly customizedproducts andservicesareproducedon-demandanddeliveredtoconsumersthroughone-on-onedigitalrela6onships.ThatversionoftheInternetisrapidlydisappearing.

The futureWeb is "push-based,” - theWeb is coming to us and is being

transformed from a large repository of records to an intelligent engine thatno6fiesusofwhat is happeningorwhat is relevant tous. Content, productsand services find you, rather than you having to search for them. Instead ofvisi6ngwebsites,customersareproac6velyno6fiedofwhatisrelevanttothemand asked to engage. Considering that theMobile plajorm is becoming themostprevalentgatewaytotheWeb,itsclearthatthisyearwewillseeawholeneweraofMobileAppsthatare“push-based.”

Companies that adopt a Mobile strategy will build systems that

interconnect,have intelligenceand leverage intelligentno6fica6oncards thatenable full product experiences and independent workflows right inside thecard. Appswill live in the background, pushing content onto our experience.Apps that are standalone and do not engage the user will likely not meetexpecta6ons.

8 Mobile Transformation the next wave of Mobile Apps


Content, products and services will find you, rather than you having to search for them - customers are proactively notified of what is relevant and asked to engage.

CEOscanbeexpected tomakesignificantchanges to their leadership teamsashangingontocurrentleadershipstructuresmaylimittransforma6onandgrowthina new Digital world. This year most CEOs will have Digital transforma6on at thecenteroftheircorporatestrategyandwillac6velypar6cipateintherecruitmentofthe best soTware developers, asMobile andWeb Apps become key compe66vedifferen6ators.WeseeCEOsmakingaconcertedeffort to integratevariousdigitalini6a6vesacrosstheenterpriseandcreateacleardigitalroadmapthatspecifieshowthebusinesswilldeliverrevenuegenera6ngdigitalexperiences.

Businesseswithadigitaltransforma6onstrategywilldeemittoocri6calforany

onefunc6onalareatoownandthusappointanindependentcorporateexecu6vetooversee the transforma6on. This posi6on represents a great opportunity for thebusiness-savvy CIO. The successful CIOwill adapt to an increasinglymarket-facingroleandpartnerwithhis/herpeersinwaysneverbeforeenvisioned.CIOswilllikelyadopt an outside-in approach and make customer journey mapping and designthinkingpartoftheireverydayjob.

Not surprisinglywe predict that over 50% of IT resourceswill be spent on the

crea6onofnewdigitalrevenuestreams(throughMobility,IoT,andAnaly6cs)whileline-of-businessexecu6veswillcontrolalargepor6onoftotalITspend.RegardlessofwholeadstheDigitaltransforma6onagenda,CIOshaveanopportunitytoguidetheprocessbyengaging,collabora6ng,andinnova6ngwithabroaderecosystemofinternalandexternalpartners.

IT’s growing role within individual business segments to enable Digital

transforma6onwilllikelymarginalizethecentralITorganiza6onbutcouldalsomakeit a true change agent and a transforma0on engine by helping to select best-of-breed products, defining architecture standards, consolida0ng expensiveinfrastructure and overseeing security. Enterprises will increasingly place businessunitCIOsasembeddedambassadorsforthecorporateCIOandplayingtheroleofmajorchangeagents.

EnterprisespursuingDigital transforma6on ini6a6veswillmorethandoublethe

sizeoftheirsoTwaredevelopmentteams,focusingthosedevelopersalmosten6relyon digital ini6a6ves. Mobile App development, analy6cs, and crea6ve design aresurely to be this year’s table stakes for successful IT organiza6ons. Also notsurprisinglymostprojectswillshiTtofast-cycledevelopmentefforts.

9 Changes at the Top change in leadership ranks


Corporate datacenter build projectswill con6nue to be fewer in favor of thirdpartyColoca6onandCloudmodels.SeveralyearsagoFortune500companiesweres6lltalkingaboutbuildingnewdatacenters.Thoseconstruc6onprojectsareallbutgone.Datacenterspaceisatapremiumandthereareplentyofchoices.For2016,new Coloca6on providers will come onto the scene, and exis6ng providers willcon6nuetobuildnewstructuresinmoremarkets.

ThesoTware-defineddatacenter(SDDC)willbecomearealityasvirtualiza6onof

compute, storage and networks all become part of the corporate IT strategy forforward-looking companies.Historically, compu6ngpowerwas virtualized throughservers.Subsequentlystoragevirtualiza6oncame intoplay.Whatwasmissingwasthevirtualiza6onofthenetwork.

For an SDDC to exist, all of the main components (compute, storage and

networks)must be soTware-defined (virtualized). In 2016, expect to see broaderadop6on of SDN-based approaches by large service and solu6on providers ascorporate clients aggressively realize the benefits of a complete SDDC. This nextitera6onof thedatacenter is essen6al to supportmanyof the strategic ini6a6vesthatbusinessesarepursuing,suchasMobile,Big-dataanaly6csandgreateruseofCloudservices.

Wepredict that this year at least 40%of IT spendingwill be Cloudbased. The

most func6onally rich ITofferingswillbe found in theCloud.Mostbusinesseswilluse a Cloud access security broker and service orchestra6on engine to provision,meter,monitorandmanagetheiruseofSaaSandotherformsofCloud,instances.

Whiletherewillbecon6nuedconsolida6oninthepublicCloudmarket,therewill

berapidprolifera6onofindustryCloudplajorms.

10 Cloud & Colocation Changes continued growth


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