2013 Predictions: The Consolidation of IT

It’s that time of year again. The time of year where the world’s IT commentators offer their predictions for the following year. For the past few years, predictions have focused very much on cloud computing, ‘big data’ (a misnomer if ever I have heard one), mobility, social, and consumerization.

All of these technology trends are now having a profound effect on business. I expect that in 2013, these terms will be used less often as cloud/big data/mobility/social/consumerization fatigue kicks in.

2013 will bring us closer to 'the end of corporate IT', a process that has being going on for some time. Indeed, Nicolas Carr wrote about 'the end of corporate IT' in 2005. Cloud computing, social media, analytics and social media are accelerating this trend.

2013 itself, will witness the consolidation of IT, as IT departments shrink and convergence kicks in across the industry. By 2020, will IT departments exist? Will IT be fully embedded into business activities? Will IT have become a utility?

Here are my three predictions for 2013.

#1 IT departments will shrink

The use of cloud services will reduce the need for many traditional IT activities. Cloud services drive automation, self service, and self provisioning to the extent that the need for support services provided by IT departments will decline dramatically.

Consumerization and the use of devices chosen by the employee rather than the employer (BYOD) will also eliminate procurement tasks, traditionally performed by IT departments.

Business and consumer services are increasingly being delivered by apps from mobile devices. The development of basic apps will become a standard skill among the next generation of workers in much the same way as using mobile technology, and office productivity software are standard skills for today’s employees. In other words, a growing number of IT activities will become embedded in non-IT roles.

The complexity of technical tasks being performed by workers, without IT support, is growing while the skills needed to perform complex tasks are less difficult to acquire. This means that ordinary workers will soon be generating outcomes that were once the domain of IT staff. For example, a typical marketing manager will soon be able to develop a basic ‘Amazon style’ store for their company with little or no technical support.

CIOs and their teams will increasingly focus on enabling the use of technology across the organization. Their focus will be on ensuring that when employees use technology, they comply with policies and regulations. They will also seek to add business value by working with other employees and stakeholders to integrate new services and processes into their businesses. Furthermore, today’s developers and technical professionals will be forced to focus on ways that their skills can be used to foster innovation within diverse business activities.

#2 The IT industry consolidates rapidly as convergence occurs

A clear trend has emerged over the past several years whereby, IT firms seek to control and manage the complete user experience. Apple is the best example of this approach. But, others such as Oracle, Cisco and most recently Microsoft, which once focused on specific solution areas, are also becoming more vertically integrated, and offering end to end solutions to their customers. Some call this convergence. Who would have expected Cisco and Oracle to enter the server market a few years ago? Indeed, who would have expected Microsoft to sell hardware products just a year ago?

Infrastructure software and hardware products have become commodities. Growth in these markets will come largely from acquisitions. A growing number of independent IT vendors will struggle to survive as it becomes extremely difficult to differentiate their offerings. Today’s large IT vendors can be expected to acquire remaining point solution vendors that provide differentiated offerings.

There will also be fewer remaining large IT vendors, as they compete with each other for a greater share of shrinking markets for their traditional products and services. The market will be dominated by a handful of technology titans by 2014. These enormous firms will engineer the ability to enter new industries. They will ‘shape shift’ in the manner of some of their more successful and newer competitors. In addition to convergence within the IT industry, convergence between the IT industry and other industries will become more common.

Smart cities, smart grids and telehealth are examples of areas where convergence between IT and other industries will occur more frequently.

Examples of technology firms competing outside their industry include, Apple in the music industry, Google in the financial services industry and Microsoft in the gaming industry.

As technology firms seek growth outside their industry, non-technology firms will increasingly offer industry-specific cloud services. ADP is a very early example this trend. It is an HR services firm that has been offering HR-related cloud services for many years. Financial services firms, governments, retailers and many others are already beginning to offer their own cloud services without significant levels of support from IT firms. As mentioned earlier, IT is becoming embedded into everyday business activities.

Technology is destroying the traditional boundaries between industries. Some of the world’s most successful firms such as Amazon, Google and Apple recognize this. These firms use their brands, their customer relationships and their ‘state of the art’ technology to seamlessly move from one industry to another, terrorizing incumbents in the process.

#3 Apple’s relative decline becomes apparent

Apple has been a pioneer in the IT industry. The company’s phenomenal success has been driven by its focus on user experience and its lack of respect for industry boundaries. It will continue to grow, without a doubt, but the loss of its leadership position in the smartphone market will spread to the tablet market.

In recent months, the company has made a few notable errors. Dropping Google Maps and forcing its customers to use an inferior Apple version is a tipping point for Apple. This is the point at which the company ceased to focus on offering the user the best possible experience. It knowingly forced an inferior experience on its customers so as it could challenge the success of Google Maps.

When Apple launched the iPhone in 2007 and the iPad in 2010, there was a lot of marketing hype around these launches. Arguably, this hype was justified, given that these new products offered customers a new and refreshing user experience. However, the hype surrounding more recent launches has in no way been matched by reality. This damages Apple’s reputation among its loyal followers, who expect significant enhancements, or the use of breakthrough technology, with each Apple launch.

Samsung has already surpassed Apple as the world’s leading manufacturer of smartphones and Google’s Android ecosystem has many more users than Apple’s ecosystem. Apple continues to dominate the tablet market but, with increasing competition, this dominance will not last for much longer.

Apple will no doubt learn from these mistakes, and will continue to flourish for the foreseeable future. But, the errors that it has made have allowed competitors to take market share from Apple at a faster rate than most commentators predicted a year ago.

This brings us to one of the big questions in the IT industry today. Will Microsoft be successful in the world of mobility in 2013? The company has recently launched its own tablet as well as a completely new operating system, Windows 8. Windows 8 promises to offer a common user interface across devices, from traditional PCs to tablets to smartphones. It can allow the corporate user of Microsoft software to seamlessly transition between devices. This is potentially a major breakthrough that could put Microsoft in a very strong position.  The company is clearly beginning to shift its focus back onto the overall user experience.

Microsoft has the opportunity to regain some of its previous success, if it remains sufficiently focused on its customers, and does not allow internal disputes to slow its decision making. If these initiatives had taken place one year ago, Microsoft would stand an even better chance of success in the mobile world.

By 2020, the technology firms that remain will be those that can successfully cross industry boundaries while remaining focused on customer experience. This means that technology firms will need to target their offerings to non IT buyers (i.e. not the IT department) In the technology industry, Apple, Amazon and Google have done this.  Who else will demonstrate this capability in 2013?