2018 Technology Industry Outlook

Where do you see opportunities for growth in 2018?

The technology industry trends driving growth this year will include cloud computing; flexible consumption; cognitive computing; user-friendly tools, APIs, and apps; and data.

• Cloud computing. Important innovations are making cloud computing more valuable for companies as they seek to transform their operations and business models. These advances are helping accelerate deployments of artificial intelligence and Internet of Things solutions, while enabling deep, analytics-driven insights.¹
• Flexible consumption. Cloud is driving demand for flexible consumption (“pay as you go”) models. Connected devices and the Internet of Things have made more products suitable for “as a service” consumption—enabling lower unit costs and enhanced customer relationships.
• Cognitive computing, although still in its infancy, is helping companies enhance products and services, make better decisions, and improve operations. In particular, machine learning is helping companies find patterns (and anomalies) in large data sets.
• User-friendly tools, APIs, and apps are ensuring that in the future fewer people will need to know how various technologies actually work.
• Data. We’re seeing the breakdown of data silos and the emergence of tools that connect disparate information. Companies are getting better at extracting key business insights.
  

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Which strategies are tech companies using to facilitate growth?

Tech companies are relying on the tried-and-true, like M&A and divestitures, and testing out new strategies like “coopetition.”

• Buy, build, or partner. The complexity involved in designing today’s technology platforms requires deep expertise in multiple areas. To compete more effectively, would-be competitors are using “coopetition”—pooling their resources for mutual gain in areas where they don’t compete directly.
• Mergers, acquisitions, and divestitures provide a fast track to fending off competitors from both inside and outside the industry. Spinoffs and divestitures can help companies quickly scale or shed assets.
• Venture investing. Tech companies, through their venture arms, are actively investing in startups within growth areas such as artificial intelligence.
  

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What should businesses be mindful of as they plan for growth?

The most successful companies will be those who can “see around corners” and anticipate unexpected disruptors. This will increasingly involve looking beyond one’s own industry.

Other key areas to watch include:

• Cybersecurity. While the cloud and mobile devices are essential components of any company’s digital transformation, they do present a significant cybersecurity risk. New technologies, like AI-powered bots and robotic process automation, are beginning to play an increasingly important cybersecurity role.
• Regulatory environment. Technology companies face a host of regulatory challenges, ranging from privacy and security to taxation and data sovereignty. The power of the regulators is undeniable—their impact can literally be catalytic or catastrophic for businesses.

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References

¹ Dave Bartoletti, Lauren E. Nelson, Liz Herbert, Paul Miller, Charlie Dai, Andras Cser, Andre Kindness, “Predictions 2018: Cloud Computing Accelerates Enterprise Transformation Everywhere,” Forrester, November 7, 2017.