We take a look back at the ten years through our not-so-dispassionate eyes through eight defining trends
We—that could refer to as broad as the global economy to as narrow as the Indian enterprise IT community—entered 2010 with a lot of doubt, apprehension and even fear. The second half of 2008 and almost the entire 2009 were filled with disbelief, panic, despair, readjustment and finally caution, in sequence. Sure, the subprime crisis in the US had started well before in 2007 but till October-November 2008, its impact on India was still being debated. And then, it came suddenly. Vendors of consumer technology were still planning big for the Diwali sales, and then it hit suddenly. The wide variance between shipping data and the purchase data—the two data points analysts (this writer included)—track has probably never been seen before—and after.
So, the mood was subdued; the expectations were modest, if not minimal. If measured by that account alone, the decade of 2010-2019 has been impressive. Sure, Indian IT—often identified globally by its exporting IT services firms—adjusted to single digit/lower double digit growths, as compared to 20% plus growths in the previous decade, marked by the spectacular rise of offshoring (read India) of both IT and business services, accepting it as the new normal but the story of Indian domestic technology market—and what we discuss here is a component of that, the B2B tech market, has surely been significant and defining.
A clarification before you jump to conclusions about the scope of the story. While it does begin by talking about market growth, recession and the numbers, it is not about the market per se. It is about trends in enterprise IT—technology, deployment, management, leadership, and the external trends that impacted it.
Recalling the mood prevailing at the start of decade was meant to provide a perspective on where we started from and where we have traveled to.
As a publication focused on the senior enterprise IT managers community, we have seen some of these changes from too close to be able to take a very dispassionate—and as some say, objective—view. Rather, we can just claim it to be an informed, and more accurately, an involved, view. Comprehensiveness is not even attempted.
We tell the story through eight distinct but not always mutually exclusive trends.
#1 Consumers influenced enterprise IT heavily—and in multiple ways
The decade began with a lot of talk on consumerization of enterprise technology. What it meant at that time was a very definite—and in hindsight, we can say very limited—trend of more demanding users within enterprises. It was taken from the word ‘consumerism’ in the marketplace.
In 2019, when we look back, we can easily say that consumers and consumer markets influenced technology decisions, deployments and management in enterprises in many ways.
First and most visible is the rise of mobile data and how it has impacted businesses, B2C businesses most definitely but even B2B businesses. Today, almost every part of the customer value chain—marketing research, branding and promotion, selling, customer service, support—has seen mobile app intervention. Today, it is no more an innovation; it is the new normal.
The second is application of new technologies to customer-facing functions. Chatbots today are the most visible applications of Artificial Intelligence. And all that has happened in this decade—the second half of the decade to be more precise.
The B2C platform businesses—where aggregators came from nowhere to disrupt 100-plus year-old stable industries—have become the poster boy of technology-led disruption. Every business—B2B businesses included—want to be like an Uber or an Airbnb.
Talking of India, one specific area that has seen revolutionary change is payment. What years of thrust by the previous government and some high-profile plans of this government could not achieve—diffusion of technology-leveraged financial services—has been achieved today by the concerted effort of government policymakers in relevant areas. Demonetization, pragmatic regulatory changes by RBI and efforts by pioneers such as Payment have made common people use electronic modes of payment. That has resulted in all B2C businesses optimizing their processes to the new paradigm.
And finally, within enterprises, the ‘consumerization’ of technology has moved from mere demanding users to organizations aping popular consumer app marketplaces like Apple Store and Google Play to make apps available to users on not just of their likings but much the same way as they get them on these platforms.
Indian consumer has always been less demanding. Unlike in mature markets, in India, the rise of consumer voice happened largely in these ten years and was driven by technology to a great extent. That is by far the single most big impact that technology has had on Indian business in this decade.
#2 Decade of the Cloud
As a concept, cloud as ‘Cloud’ made its entry into the enterprise space in the previous decade, especially after Amazon launched Amazon Web Services. But it is in the decade of 2010-2019 that cloud got wider recognition and by 2015, it was clear that the move towards cloud model is irreversible.
If one looks at Gartner Hype Cycle, cloud computing made its first appearance in 2008 and had moved to the Peak of Inflated Expectations by the next year. At that time, the biggest concern was security and the biggest advantage that was being talked about was being able to turn Capex to Opex. This is probably the only technology that CFOs pushed their CIOs to go for.
Like many new technologies, it took some time before people realized the real business advantages of cloud. To startups, it was a great equalizer. To CFOs in large enterprises, it was a great capex saver. To CIOs, it was a way to concentrate on what they were, for long, expected to do—think of providing business value to IT beyond automation-induced efficiency.
Cloud effectively sealed the way for large scale outsourcing, which was beginning to make its presence felt in India, induced by the halo of the global outsourcing wave in the previous decade, led from the front by Indian services firms. Cloud erased the last existing line in IT—between products and services. Microsoft, Oracle, Google turned services companies even as Amazon, a retailer made arguably the largest impact in B2B IT in the last 30 years.
After the hype, by the mid-2010s, pragmatism prevailed, as IT managers realized that moving everything lock, stock and barrel to a cloud of Amazon or IBM or Microsoft, was not the IT salvation. At least, it was not that easy. Hybrid cloud/hybrid IT made its debut. Private cloud made its appearance in Gartner Hype Cycle in 2012 while Hybrid cloud appeared two years later. It continues to rule the roost at the turn of the decade—that is today.
Cloud has moved from being a technology model to a business model enabler to an innovation catalyst to a philosophy. Nothing has impacted enterprise IT the way cloud did in these years 2010 to 2019. It is surely the technology—oh, wait, it is a model—of the decade.
#3 Digital Transformation was (and still is) the business zeitgeist
Interestingly, much of the decade was spent by pundits differentiating between IT and digital. Except that IT is a noun and digital is an adjective, we are yet to understand where exactly one ends and the other begins—or should one say just the reverse?
Digital was not a new word. It existed as an antonym of analog, owing its origin to binary digits but interpreted by the general public as something that shows a quantity—time, speed, volume, weight, temperature—in digits, as opposed to through movement of a needle.
Digital probably entered corporates through the consumer marketers’ route (as in digital marketing) and stayed, for some time, as an adjective of any major tech induced change on the consumer side but slowly spread in meaning to become the go-to word for any major change that involved any big or sharp change, as opposed to incremental change; that is when it made its now-famous association with transformation.
As expected, it was overused and abused by vendors, with more than a helping hand from obliging members from journalists and analysts.
But towards the later part of the decade, big transformational change did happen leveraging IT, which was very different in its basic nature from what was seen hitherto. For one, data slowly but steadily did become a decision driver, in all companies. Technology started moving beyond operational processes and began impacting products and business strategy (business models). Certain technological developments (discussed separately) brought manufacturing companies, so far, a little behind, to the forefront of technology-leveraged change. Established rules and equations of year-old industries got demolished by newcomers. Transformation was happening at all levels. Many companies started appointing digital officers or transformation officers.
If cloud was the most common on-the-ground change that IT organizations were initiating, digital transformation (often ‘leveraging’ cloud) became the most aspirational change for them. It remains a journey, even as we enter a new decade.
#4 Did IT become a little too important to be left to the IT managers?
If two of the already mentioned trends—consumerization of technology (more demanding users) and an overt fascination for big changes induced by technology/digital—resulted in non-tech users dreaming of carrying out technology-induced change themselves, what gave them ammunition to realize those dreams are the emergence of cloud, especially Software-as-a-Service (SaaS) model and the increasing shift towards user experience resulting in products that are far less intimidating for non-techies.
With many functions—such as marketing over the web and mobile and analysis of data, done by many different functional executives—becoming tightly interwoven with technology, it was becoming increasingly difficult to break them into tech and non-tech pieces and get the centralized IT department to do the IT part, for each process and sub-process. That is when SaaS made its debut. Not only did it remove the need to involve the IT team in every functional tech-leveraged work, it also removed a major organizational barrier by removing the need for new IT infrastructure and thus eliminating the need for capex approvals. As software became a service, the expenditure became another opex spend, well within the authority of the functional manager to approve those spends. This kicked off the rise of breaking away from the centralized IT. Smart vendors introduced freemium models (as in consumer services) which allowed these managers to get them familiar with the new applications and buy when they were absolutely hooked to it. Many companies used this strategy along with great UX to hook functional managers. This shift began in the latter half of last decade.
If anything, in the beginning of this decade, concerns started as there were challenges of integration later with enterprise IT systems and that is when corporate IT was needed. But by then, in the organizational power equation, the center of gravity had shifted substantially. Both the groups met halfway and what was considered exception—even rogue in some organizations—got legitimacy.
What made the debate alive again is the announcement by Gartner in 2012 that CMOs would spend more than CIOs on technology (later corrected to business technology).
While marketing was leading the rebellion, other functions too were seeing specialized vendors pitching to functional managers directly.
It culminated in the appointment of chief digital officers by organizations. though there was a tug of war between IT and marketing to be the legitimate claimant to the position, most organizations (especially in India) appointed neither IT nor marketing executives to the position but appointed senior core business executives to that position, whose brief was to drive organizational transformation. Many later called them simply transformation officers. Of late, we see IT managers getting appointed to that post in some organizations, with blessings from CFO who trusts them far more than he trusts marketing managers.
This probably remained the single most fear/worrying factor for the IT managers through the decade.
#5 Manufacturing caught up with Industry 4.0
Before this decade, information technology had been applied in ‘services’—that is the services businesses as well as the services components of manufacturing such as HR, finance, supply chain and warehouse management. Something called plant automation existed which used technology—often proprietary—to enhance efficiency of the production process, in what was essentially a closed loop system.
The advent of the likes of Internet of Things changed that dramatically, by connecting the manufacturing system to the enterprise IT, resulting in not just efficiency gains, but timely operational decisions and more importantly, informed decisions by the company management on manufacturing. This led to manufacturing companies leapfrogging to make strategic use of technology, the way services companies had done so far.
So important was the phenomenon that the top global think tank, World Economic Forum, coined a word for it—the Fourth Industrial Revolution, often written as Industry 4.0. Klaus Schwab, the founder and executive chairman of the WEF, defined it as “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” The biological part—the increasing application of these technologies in health as well as AI as an alternative to human thinking—is still not as interwoven, but the bridge between physical and digital has decisively been established. In fact, WEF even made it the theme of its 2016 annual general meeting at Davos, attended by heads of states, heads of businesses and top thinkers, so important was the change.
Technologies like IoT, combined with data analytics technologies, have not just impacted manufacturing companies, but have added value to other businesses as well but they have truly transformed manufacturing’s core value creation process.
There is a flip side to all great stories. Manufacturing systems—and similar physical systems like mining, refineries, transportation and other infrastructure systems—getting connected to enterprise IT and the world at large also means they are now no more isolated from the security vulnerability that IT systems have battled for decades. That is the new challenge.
While that is a continuous one-upmanship game with the evil, the value that accrued to manufacturing industries through technology in this decade is unprecedented and it is one of the megatrends that the decade will be remembered for.
#6 Artificial Intelligence was the buzzword
Artificial Intelligence (AI) is one of the oldest concepts in IT that attained popularity in terms of real application only now. The term itself was coined in the 1950s by John McCarthy. AI, in its comeback years in the 80s, aimed to replicate human intelligence in machines.
The new AI, as we see it today, started in the late 90s, to leverage huge computing power and the volume of data available. It essentially was about machines learning from data, which essentially is collection of real experiences. Not surprisingly, machine learning is often hyphenated with artificial intelligence today.
General purpose machine intelligence appeared in Gartner Hype Cycle in 2016, while virtual assistants, by far the most popular application of AI, made the appearance a year later, along with smart robots. In 2018, Artificial General Intelligence made the appearance while this year, Explainable AI and Adaptive Machine Learning were featured in the Innovation Trigger phase. If anything, it shows how dynamic the nature of and expectations from AI have been.
In India, enterprises went for low-hanging fruits. The virtual assistants, often called chatbots, in support and customer service lingo, have now become a common feature of most large consumer companies with complex conversations, such as banks, insurance companies and telcos. Another area where AI has got into horizontal applications across industries is IT itself—in security as well as in IT infrastructure management. Besides this, there have been some vertical-specific applications of AI.
But what gets AI to this list is the fact that today it is the most common aspirational tech intervention, which top management demands. And this is one area where there is scope for incremental investment and incremental accrual of business value.
It is likely to remain a hot technology for the next decade—probably moving from buzzword to a common tech intervention much like cloud. Ethics, a much-discussed aspect of AI, is likely to make it to the agenda, especially as the country has announced a national AI policy.
#7 CIOs became business savvy, but still remain problem solvers
As technology became core to business—products, processes and strategy—it became an imperative for a CIO to understand the business and talk the lingo. As the supply side involvement of CIO became less and less after outsourcing and cloud model set in, the demand side—creating value creation opportunities for business leveraging technology—expectation increased.
While in the initial years of the decade, the concept was limited to discussions on CIO platforms, the latter half of the decade saw many CIOs taking the business role far more effectively.
Today, many CIOs do understand the nuances of their respective businesses and the typical needs of their operational processes far better to do IT more effectively. But with the ability of digital technologies to positively transform business being constantly preached to the top management, there is a new desire to proactively use emerging technologies for creating business value. They call it use case.
No surprise, the CIOs are expected to not just understand the business but are supposed to find opportunities for applications of those technologies—the use cases—and help in creating that value. Understanding business thoroughly is just the minimum requirement. They also need two additional attributes—the ability to work on blank canvas and being constantly updated on the emerging technology landscape. This is often called outside-in thinking as opposed to the problem-solving orientation which is an inside-out approach. The expectation is: Someone else exactly defines the problem for them. They are excellent problem solvers.
This, precisely, led to many companies appointing business guys as head of digital transformation.
This ability to think proactively—understanding the business, identifying opportunities to intervene with right tech—is going to be the most important attribute of the successful CIO in the next decade.
#8 Security made it to the top of corporate agenda
While many buzzwords came and went through the decade, two tech areas saw some real action happening: Cloud and Security. Cloud was a decision; Security was an imperative.
Attacks got more sophisticated and targeted. Data breaches became a regular feature as millions of customers’ records were compromised. Some 18 of the top 20 data breaches of this millennium happened in this decade. That was the growth.
While the depth grew, so did the breadth. As people’s lives—from education to health, from commerce to entertainment—got more and more vulnerable, the potential vulnerability increased exponentially. And unlike intra-organization policies, businesses had to tread balancing security, privacy and customer convenience—thus making it a tricky game. Emergence of nation states as threat actors also impacted the enterprises.
But one of the biggest threats came from the digitization of manufacturing (refer Industry 4.0 above) which not only made the infrastructure and plants, untouched so far by threats potentially vulnerable, the usage of outdated information technology by many manufacturing OEMs made them especially exposed.
So serious are the risks from cyber threats that from last five years, two security risks—cyberattacks and data thefts—have been featuring among the top ten most likely global risks, ahead of all geopolitical, economical and societal risks and along with environmental risks.
It is not surprising that cyber security has become a top management agenda item. The increasing profile of cyber risks and the need for newer regulatory compliance have made the job of those in charge of security—the chief information security officers—more important. Many of them, who earlier reported to the IT head, have started reporting to Head of Risk. In some regulated industries like banking and insurance, it is a mandate by regulators. Security may not make fancy headlines but will become even more important, as privacy legislation sets in, in India.
The Misses & The Next-in-line
Why these 8? If you have glanced through it, without reading, you would have created a list, would have wondered why so many technologies are missing.
Hopefully, that question would have been answered after reading through the entire piece. To summarize: we were not looking for technologies or buzzwords, we were looking for trends that significantly impacted the way enterprise IT thinks and works in organizations.
That is why a big buzzword like Blockchain is nowhere. True, it was discussed a lot. It held a lot of promise. And we still believe it has potential to bring about revolutionary changes, in some areas. Yes, a few pioneering pilots were done, both by government/regulators as well as by private enterprises. But did it impact larger enterprise IT as a whole? Let alone impacting, it did not even touch.
You can think of many other such examples.
That brings us to what could we expect in the next decade. Difficult for sure (who knew that WEF would make one of these trends its theme for its annual meeting?) but let us try. One that is comparatively easier is privacy. India has already heard the footsteps; a legislation is in the making. Despite Indians not being bothered about individual privacy too much, we expect a big impact of personal data protection laws in everything, including security, business models, campaigns and so on. A long shot is ethics. India is not particularly known for ethics in practice, despite rich literature that preaches and showcases its value. But with technologies getting into our personal lives, there is no way organizations can overlook this aspect. A trend in tech usually starts with the technology companies—there are not too many new tech creators in India—and then percolates down to users. The eagerness to do something about ethics is already visible in the tech circle, with groups focusing on AI, IoT, usage of data, automated vehicles and many other areas. It is a matter of time that we see that in India.
Goodbye to this momentous decade and all the best to all of you for the next!