2015 Technology Industry Outlook
Interview with Paul Sallomi
Enterprise quests for greater efficiency and competitive advantage through IT will drive significant tech sector growth in 2015 and beyond, says Paul Sallomi, Vice Chairman and US Technology Leader, Deloitte Tax LLP.
Where do you see opportunities for growth in the sector?
Consumer hunger for new technologies has been driving tech sector growth for years. Going forward, enterprises will take the lead as they harness new technologies to improve efficiency and strengthen competitive advantage. Consider the Internet of Things (IoT). It is moving out of the hype phase and landing at the center of enterprise applications in everything from industrial equipment and supply chain management to retail shopping experiences. The rise of enterprise IoT use will drive increased demand for network infrastructure, sensors, software applications, and all technologies needed to operate IoT applications including data analytics.
The growth of IoT will also create significant demand for cyber security services. As the proliferation of sensors and smart devices mounts, companies will need to protect data and secure access points between product technology stacks and other company systems.
Enterprise needs will also fuel the growth of Artificial Intelligence (AI). Despite futuristic hype, AI is already on the ground in many industries. Banks, for example, use machine learning to identify behaviors that predict fraud. Media companies have coupled natural language technology with analytics to draft content on data-heavy topics such as corporate earnings and sports scoresi.
The cloud is also poised for significant growth, especially among enterprises. Between this year and 2017, the enterprise cloud market is expected to grow from $70 billion to more than $250 billionii. The growth will be driven to a great extent by enterprises becoming more adept at integrating, aggregating and orchestrating cloud and on premise assets.
iDavid Schatsky, Craig Muraskin, Ragu Gurumurthy, “Demystifying Artificial Intelligence.” Deloitte University Press, November 4, 2014
iiJagdish Rebelo, “Enterprise Cloud Computing: Future Market Size, Growth and Competitive Landscape.” IHS Quarterly, Q2 2014 http://www.ihs.com/tl/quarterly/videos/enterprise-cloud-computing.asp
"Between this year and 2017, the enterprise cloud market is expected to grow from $70 billion to more than $250 billion."
What should businesses be mindful of as they plan for growth?
In the tech sector, focus will be the watchword. Being a large technology conglomerate could become a competitive disadvantage. The recent wave of divestitures underscores the reality that the focus of an enterprise with too many components can become diffused. Investors will continue to pressure conglomerates to zero in on the parts of their enterprises that truly drive value and separate the rest. Technology companies must understand the resulting evolution of their competitive landscapes and determine where best to play. As conglomerates divest operations, for example, existing focused players may find themselves suddenly competing against newly nimble players that had been previously entrenched in larger organizations. Divestitures, however, will also bring new M&A opportunities. The end game isn’t about being small. It’s about being focused.
Talent should also be on tech sector radar. Innovation has, and always will be, the engine of technology growth. However, the shortage of talent will continue to rise. Tech companies need to double down on employee recruitment and retention. They should also foster internal collaboration and networks so ideas can emerge freely from wherever they are in the corporate structure. The same holds true for crowdsourcing and external networks. Given talent shortages and the rapid pace of technology change, tech enterprises can’t rely solely on developing and hiring new talent. They will need to draw in expertise and creativity from wherever it happens to be.
What is the next big thing? What markets do you see as emerging in the sector ?
I can’t imagine anything bigger than the Internet of Things. IoT is a blank canvas for innovation and new use cases are emerging almost daily. Retailers, for example, are developing IoT applications that recognize customers in stores, provide them customized offers and then redeploy staff to restock inventory and eliminate long waits at check outs. Manufacturers are developing IoT solutions to gain visibility into supply chains so that they can be managed as seamless end-to-end processes. The advance of enterprise IoT applications will drive exponential growth in the consumption of sensors, bandwidth, storage, computing power and analytics.
Digital disruption is another major trend that will create new tech sector opportunities. The ubiquity of bandwidth, low-cost computing, data and storage has created a new breed of network-based businesses. These businesses aren’t tied to physical assets. Their value stems from the ability to connect providers with creators. The success of companies capitalizing on the sharing economy is a harbinger of tech sector opportunities in the future.