Analyzing the future at IDC Directions
International Data Corporation (IDC), has a neat, paradoxical tagline: “Analyze the Future.” Their Directions conference, held today in Santa Clara, is an annual tradition of future forecasting that goes back over 50 years. I’ve worked with IDC for almost 20 of those years and have seen how their analyses and reports not only predict what happens, but can even influence market motions. For example, plenty of startups have cited IDC research on emerging technology trends in order to secure their funding. Even the taxonomy that they curate plays an important role in naming and categorizing new spaces.
So why does IDC research carry such weight? They spend a lot of time with established enterprises to garner insights into the technology trends that will make a difference in business. When investors see that enterprises are moving in the direction of a new way of doing things, they’re more comfortable with opening their purse strings.
Today’s Directions conference was once again a great source of insights into what’s happening in enterprise and what’s to come. While there were far more sessions than I could attend, I’ve pulled together some of the interesting data points on digital transformation (DX) and cloud to share with you:
Digital transformation
In broad terms, per Wikipedia, DX is “the change associated with the application of digital technology in all aspects of human society. The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support traditional methods.”
This is a big deal. Major enterprises everywhere are taking a hard look at their businesses. They’re looking for ways to not just innovate, but in many cases reinvent what they’re doing by applying new digital technologies. IDC predicts:
“By the end of 2019, DX spending will reach $1.7 trillion worldwide, a 42% increase from 2017.”
Meredith Whalen, SVP, for Industry, Software, Services and Customer Insights Research at IDC, dove deeper in her session on “Getting Past the Digital Deadlock.” One point that jumped out at me was that 80% of DX is not driven by the CIO. Typically, special project teams, separate “offices of DX,” and other parts of the business outside of IT are the ones most often driving the changes in big enterprises. Similarly, 80% of the funding for these projects comes from either the business units (BU) or a combination of the BU and IT. That leaves only 20% that’s funded purely by IT.
What this all means, is that these changes are fundamental to enterprises, so much so, that the biggest category of spending is on operating model transformation (52% per below):
At Frame, we see fundamental digital transformations happening with our customers as well. Even in traditional businesses like retail, manufacturing, and publishing we’re seeing deep changes. Jostens is a great example of how a company with over 100 years of history can continue to lead by adopting cutting edge digital solutions. In Jostens’ case, that transformation involves delivering the latest Adobe publishing software to any device from the cloud. Read more about how Jostens Monarch has reinvented how yearbooks are done here.
“Cloud First”
The future of the cloud was naturally another hot topic at the conference. One interesting “cross-over” data point surfaced when Mark Thomason, IDC Research Director, covered “New Priorities in a Multicloud World.” He found that today, most enterprises say they are “Cloud First” when it comes to evaluating their approach to new digital initiatives. “Cloud” in this case includes both public and private cloud, but this was the first year that “Cloud First” surpassed “Cloud Also.”
What was perhaps even more interesting (and not too surprising) was that there was a huge difference in how enterprise C-level executives felt vs. IT and line-of-business (LOB) personnel. Over 50% of C-level execs said the posture of their company was “Cloud First,” while less than 30% of IT and LOB personnel felt that way. It shows that business leaders definitely want to move to the cloud but there are still real challenges that IT has to deal with to realize that vision. At Frame, we try to do everything possible to make it easy to move to the cloud — making the execs, IT and LOB personnel happy. Multiview Financial Software is great example of this, read more here.
Cloud adoption, who’s on top?
In a survey of over 6000 professionals in 31 countries, the top company to get credit for supporting overall adoption of cloud services was… Microsoft. To the room’s surprise, Amazon wasn’t 2nd or 3rd, but 8th:
I think that this reflects the reality that vendors like IBM, Cisco, and Oracle have deep roots in enterprise. Today, they too have cloud strategies that they’re aggressively pursuing with their historical clients. This, of course, is a survey of individual perceptions — when it comes to public cloud adoption/usage in aggregate, there are plenty of studies showing Microsoft and AWS in the top two slots.
Why or why not Cloud?
IDC shared why enterprises are choosing cloud and why they are hesitating. Interestingly, the top reason for both was the same thing: security. Here’s how it broke down:
Cloud Drivers:
- Improve IT security
- Improve business agility
- Simplify and standardize IT infrastructure and app platforms
Cloud Inhibitors:
- Security concerns
- Lock-in
- Cost
We see this at Frame as well. For many of our customers, the inherent security of our approach to delivering Windows applications from the cloud is what’s most attractive. It’s also the top question we get asked from those taking their first steps with the public cloud.
Managed Cloud Services
David Tapper, IDC VP covering Managed Services, anchored one of the last sessions of the day. I felt that this session spoke most directly to what Frame is all about.
Firstly, his research shows that the worldwide market size for Managed Cloud Services will grow from $28 billion in 2016 to $63 billion in 2021. But the 2021 number still reflects only 21% market penetration. This means we’re still at the very early stages of the cloud revolution.
Secondly, David discussed how Managed Cloud Services come at the intersection of custom professional services and pure DIY IaaS management. The need for managed cloud service providers that form a key part of the “digital supply chain” is especially strong for mid- to large-sized enterprises.
And finally, I learned that David is a fan of skyscraper design and architecture. I couldn’t help but think about our customer KPF that specializes in exactly that…small world.
Your digital transformation and cloud adoption
We’d love to talk with you about your goals and vision for DX and cloud adoption in your business. Send us a note at info@fra.me or request a demo and we’ll show you just how easy DX and the cloud can be.
