This year has been a breakout year for a number of key technology trends, part 2 CIO Priorities
9. CIO priorities will shift from cost abatement to “digitization”
2013 and 2014 were for most large organizations an experimental period with the cloud and many new technologies. One of the biggest movements that many CXO’s saw from this new technology was cost reductions. They have been pushing CIOs and IT departments to cut costs cut costs cut costs and to do more with less. They heard about how many companies were drastically reducing costs by moving to the cloud. While not every organization can see immediate gain from such a move, some companies could gain dramatic efficiencies with very little effort. One company I know dropped its costs by a factor of 50 for its services by moving to the cloud.
With the price reductions we saw in cloud services mid-year in the very favorable cost/value equation for using cloud has become apparent to everyone. Cost abatement will still be a factor in decisions to move to new technology but the pace of change will have accelerated and the expectations of the market have changed and are changing. The fact is today you can get virtual hardware that has what you need to make your application run fast and efficiently in the cloud at unbeatable prices. If you need SSD disk drives Google and Amazon sell you servers with SSD for cheap prices. If you need high speed networking, high speed processors or alternatively if you don’t need those things but simply want to run your service at the least cost possible for the hours you use it in a day nothing can beat the cloud today.
The flexibility to order it when you need it, in incremental levels with the features you need for that application make this an unstoppable force. It’s hard to think of a reason why a corporation would buy hardware these days. The move to virtualization will take giant strides this year.
The need to adopt “digitization” or “platform 3.0” the new paradigm emerging will dominate over cost concerns. The productivity gains by adopting the open source, API Centric way of operating, PaaS DevOps deployment again are overwhelming and I can’t imagine anyone building applications that have any success using other approaches in todays competitive environment. Organizations in 2015 will see more necessity to mainstream their digitization plans regardless of cost. I believe IT spend in 2015 will stabilize and rise significantly, around 5%.
Gartner predicts 2.1% growth overall with 5-7% growth in Software spending. This is astounding as the rapid improvements in productivity and efficiency would reduce costs substantially if adoption remained constant. However, there is tremendous demand for mobile, APIs, Cloud services and new innovative approaches to IT. The growth in IoT will help fuel a lot of corporate initiatives.
What I think is happening is that Enterprises are focusing more on the top level benefits of technology than they are on the bottom line cost reduction advantages. They are realizing that this new technology is not an option anymore, it is not something to research. This is life or death now. An article that supports this thesis is here.
Other Articles in this series on 2015 Megatrends:
Here is the list of all 2015 Technology Disruptive Trends
10. Cloud Security and Privacy – the scary 2014 will improve. Unfortunately privacy is going in the opposite direction
11. Platform 3.0 – disruptive change in the way we develop software will become mainstream
13. Big Data – 2015 may see a 10 fold increase of data in the cloud
14. Enterprise Store – Enterprises will move to virtual enterprises and recognize a transformation of IT focused on services and less on hardware
15. App consolidation – the trend in 2015 will be to fewer apps that will drive companies to buddy up on apps
Here is more description of these changes. Some of these I will talk more about in future blogs.