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Infrastructure Software
Dharmesh Thakker  |  January 17, 2017
Seven Tech-Industry Predictions for 2017

With the year’s big consumer-tech event, the Consumer Electronics Show, now finished up in Las Vegas, I wanted to focus on enterprise-tech—specifically, trends to watch this this year.

A year ago, did something similar and offered seven trends to watch in enterprise-IT for 2016. These related to unicorns (the stock-market, not the animal kind), fast-moving corporate data and StarWars-type technologies that could help companies combat cyber-attacks.

My track record wasn’t bad: Many “unicorn” tech companies did lose their luster; some huge software companies, like Microsoft and LinkedIn, felt the urge to merge; and open-source software is indeed starting to become the standard for enterprise infrastructure used by large organizations. Flush with my (limited) prognostication success, I’m back with some thoughts about where enterprise, B2B tech could go in 2017.

Cloud computing moves from the “core” into the “fog.”

Amazon’s meteoric ascent to the top of the hot cloud-computing market was driven by its ability to cheaply and effectively move core IT functions—including basic computing, networking and storage—out of company datacenters into the public “cloud”. With cloud computing, customers pay as they go for computing power, much as homeowners pay utilities for the electricity they consume each month. In 2017, however, I predict we’ll see the rise of “fog”, or “edge” computing, through which data thrown off by billions of smart, Web-enabled devices at the edge of computer networks (where they actually touch people) drives interesting applications. Think of self-driving Teslas, Nest-controlled smart homes, or robots powering smart manufacturing and oil-drilling. The migration of $300 billion in datacenter spend to the core cloud is clearly a big deal, but the emergence of edge clouds driving new revenues in industries previously untouched by advanced cloud technologies may be a significantly larger opportunity, and I expect to see early signs of this in 2017.

Microsoft Azure and Google Cloud–better late than never!

Despite stealing all the headlines, Amazon Web Services’ (AWS) $13 billion cloud business is barely scratching the surface on the total market for IT datacenter spending. In 2016 we witnessed a watershed moment when #1 enterprise player VMware essentially threw in the towel and agreed to partner, instead of compete, with AWS. (The deal will allow customers to use their existing VMware software to run some computing in Amazon’s cloud.) The deal will actually encourage cautious CIOs to go all-in with public-private cloud combos, as opposed to continuing to funnel IT spending into datacenters. This should help Microsoft Azure, another big cloud-computing player, since the company already has a big enterprise presence and a cloud program that CIOs can tap into. Clouds run by Google and China’s Alibaba could similarly benefit; I think this year we’ll see a sort of oligopoly of four or five big cloud providers, similar to the market for U.S. wireless carriers.

Data gone wild.

Corporations today are awash in data, from the billions of sensors proliferating in smart homes and buildings, to President-Elect Trump tweeting on matters big and small. Organizations have changed their attitude by making data the core of their digital transformations, rather than simply a by-product of running operations. I believe 2017 could be the year of the “Chief Data Officer”, as more and more organizations create C-level positions to manage this crucial information and figure out how to use it to their competitive advantage. A recent Forrester research survey of more than 3,000 executives focused on data and analytics found that 45% of the respondents’ companies already had a CDO, up from only a handful two years ago. As the office of the CDO grows in prominence, 2017 will witness increased adoption of critical “data middleware” – governance, cataloging, prep and discovery software – that rides on top of multiple clouds and databases and feeds into a plethora of analytics tools.

The second coming of silicon.

The exponential growth in corporate data, deeper analytics on complex image and voice data, and the expansion of edge computing are all stressing IT infrastructure to the extreme. Large increases in performance and decreases in cost cannot be accomplished by simple software-tuning, nor has Moore’s law kept up with the gains needed for new applications. As semiconductor behemoths ranging from Broadcom, Avago, Altera and others are busy merging and cutting costs, AWS, Google and others have taken matters in their own hands in terms of semiconductor innovation–as have a selective few startups like Innovium, Barefoot and Fungible. While funding silicon companies is not for the faint of heart, because of the high costs, the companies that succeed in raising cash and delivering building blocks for this secular cloud/application shift will be rewarded handily, and some will becomes the next generation silicon powerhouses.

Cybersecurity becomes key component of international relations.

We thought it was bad when the North Koreans hacked Sony to try to stop the release of a lighthearted movie about Kim Jong-il. In 2016, if you believe the CIA and the FBI, we saw the Russians hack DNC emails to try to disrupt the American presidential election. Clearly, cybersecurity is only becoming more critical to organizations as they try to guard against increasingly common and more-sophisticated attacks, from state and non-state actors. This year, as a result of the Russia/U.S. election episode, I think we’ll also see cyber-warfare become a bigger issue in international relations, and drive more geopolitical tension.

Building that wall.

On the topic of politics: One big headache for tech companies in 2017 could be increasing restrictions on immigration, if Trump carries through on his campaign promises. These policies, if applied to high-skilled workers, threaten to worsen the existing dearth of U.S. tech talent in areas like data science and software development/operations. That said, the rise of free, “open source” software and new workplace-collaboration tools mean that it’s easier for people to work together on tech projects from different locations, including overseas. 2017 will witness a larger number of companies deploying these types of highly distributed workforces and leveraging freely available, open-source building blocks contributed by developers worldwide. An unintended, but welcome, side effect may be a cooling of the housing and rental market in the SF Bay Area!

Cashing in.

The moribund IPO market showed signs of life in late 2016, with 21 technology companies ultimately debuting on U.S. exchanges last year. I predict we’ll see more IPO activity this year, both with high-profile, consumer “unicorn” tech companies like Uber and Airbnb as well as wonkier enterprise names. Those enterprise companies could include open-source juggernauts like data-management company Cloudera, database providers MongoDB and Datastax, and data-analytics company Elastic. Open source, to me, represents the de-facto delivery method of enterprise computing, and I think Wall Street will start to look beyond first-generation, open-source companies to newer models that can work.

So next year, if you’re an enterprise-IT executive or investor, keep your head in the cloud—and keep your eye on all that data floating around in the fog!

 

A version of this post originally appeared on VentureBeat

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