For the last three years, the IDC Directions annual conference has emphasized the 3rd Platform for IT, which consists of some combination of big data/ analytics, social collaboration for business, mobile and cloud computing/storage. But this year, the market research firm produced numbers that imply the 3rd Platform is really taking hold. It is disrupting entire industries, which in turn puts more pressure on IT professionals to adapt or die. Surprisingly, much of that adaptation is being done at the departmental level, rather than the organization’s centralized IT department.
Frank Gens, IDC senior vice president and chief analyst, opening keynote set the stage for the presentations to follow. According to IDC, 25% of all IT spending in 2013 went toward the third platform, a percentage that will only grow in coming years. “Virtually 100% of all the marginal spending growth in IT is now coming from 3rd platform,” Gens said. “Now that every vendor in the industry has their full attention on that marketplace, this year is going to be all about pitched battles in every single corner of the third platform to establish new leadership in this market.” Gens added that the 3rd platform is reinventing many industries, with six of the top 20 IT market leaders being disrupted by competitors.
Probably the main driver of the 3rd platform has been the (core IT infrastructure) shift from premises data centers and networking to cloud computing and storage with almost everything now being offered “as a service.” Cloud’s adoption has been driven by three major factors: scale, complexity and speed, The cloud offers scale that regular businesses do not have, which allows them to deliver more complex services faster.
Focusing on the changing demands of the 3rd platform, Gens outlined the five key battlegrounds that will determine the winners and losers in 2014’s business IT transformation.
1. Core Infrastructure (Data Centers)
IDC predicts that the number of global cloud delivery centers will double in the next two years, with more vendors moving cloud capacity to developing marketplaces. This will lead to industry consolidation within the next four years, with the dozens of cloud infrastructure providers that are active today shrinking to between six and eight large companies. Who they might be was not named (our guess is that Amazon, Google, Microsoft, Rackspace, IBM, and others will succeed in either private or public cloud, but not both).
2. Internet of Things (IoT)
Gens talked about Internet-connected things (IoT) — beyond smartphones and tablets — as the next battleground and indeed this was a major theme of 2014 IDC Directions with many talks on that topic. Manufacturers are introducing connectivity in some surprising products: jewelry, sports equipment, dog tags and even toothbrushes, Gens said. The growth in connective devices ties directly into the IoT, which IDC predicts will also see a boom in coming years. Here’s the press release for their IoT market forecast: http://www.idc.com/getdoc.jsp?containerId=prUS24671614
The coming IoT revolution is hyper-extending (using IDC’s words) the edge of the network and will fuel a major explosion in killer apps impacting every industry worldwide.
3. Platform as a Service (PaaS)
Developers of cloud applications will rely on PaaS to deploy and support their software, which is quite a significant development as Infrastructure as a Service (IaaS) and Software as a Service (SaaS) were the previous big cloud platforms offered.
IDC market research forecasts that 80% of new cloud applications in development will be hosted on the top six PaaS providers. Developers will only want to create apps for the most popular platforms. “It’s like musical chairs,” Gens said. “When the music stops, there are only so many seats left.”
Industry-specific cloud platforms are becoming more popular, especially since previous cloud platforms were industry neutral. IDC predicts that by 2016, more than 100 platforms targeting individual industries will be on the market.. Most significantly, big players in those industries — GE, Disney and John Deere, etc — are leading the way forward and are often welcoming competitors in as collaborators.
4. Cloud Applications
With the mass migration from premises data centers to cloud computing, IDC predicts a tenfold growth in SaaS/AaaS over the next four years, worth about $20B by 2017. About two-thirds of them will be process or role-based business solutions and 75-80% of new cloud apps will be big data intensive. These apps are being created by close to 18 million professional and hobbyist developers. They should not be underestimated, Gens added.
5. Infrastructure as a Service (IaaS).
Over the next two years, IDC expects to see a large increase in the number of specialized infrastructure services. “The last five years, anyone who’s looked at the software industry have seen a huge flip,” Gens explained. The enterprise was once the traditional beginning point for new software, but that has now moved to the cloud. Gens commented: “Software developers have said, ‘If I have a new product, I can get it to market and scale is much more quickly if I introduce it first through a cloud service.'”
Other Data Points from IDC Direcitons 2014:
- Cloud computing was an estimated $47.4 billion industry in 2013 and is expected to more than double to $107 billion by 2017.
- Clloud computing’s 23.5% compound annual growth rate is five times faster than that of the broader technology market.
- An IDC’s survey revealed that 41% of its 143 IT executive respondents said application modernization was important, followed by 38% who named big data/business analytics and 35% who noted security/risk management as the key areas their organizations will focus on this year.
- 80% of new cloud apps will be “big data intensive”
- Convenience will trump everything, including security and reliability!
- “For every mobile device that’s launched, there has to be a large data center behind it to enable it,” Rick Villars said. This led to a wave of “mega data centers” being built by the likes of Google, Verizon and others.
- As IoT gets built out along with wearable technologies, there will be a need to locate (satellite) cloud data centers closer to the premises, according to Villars.
- There are still no solid standards for IoT, especially provisioning, activation/de-activation, monitoring and management. The data standards and protocols are likely to be industry specific, e.g. health care, retail stores, finance, etc.
This year’s IDC Directions has no sessions on Software Defined Networking (SDN) or Network Virtualization. That was in sharp contrast to last year’s conference program. Perhaps, the conference organizers have recognized that the SDN/NFV industry is spinning (or drowning in hype)
In response to an audience question after his closing keynote, UT Professor of Innovation Bob Metcalfe, PhD, said that “software defined networking hasn’t really found it’s niche yet. Perhaps, it will be in managing the Internet of Things.” We couldn’t agree with him more.
Addendum: Internet of Things (IoT)
McKinsey Global Institute’s Disruptive Technologies report calls out the Internet of Things (IoT) as a top disruptive technology trend that will have an impact of as much as $6 Trillion on the world economy by 2025 with 50 billion connected devices. The Internet of Things is the next huge wave of growth of the Internet. Big growth numbers and expectations are dramatically expanding for the Internet of Things in Silicon Valley and globally. Valuations for IoT startups have also increased dramatically and caught Wall Street and the venture capital community by storm, including Google’s acquisition of Nest for $3.2 billion dollars and Jawbone’s pre-IPO valuation at $1.5 billion.
The author is available (under contract) to do a thorough report of IDC’s IoT presentations as well as IoT findings from TiECon 2014 on May 16.