Hurwitz & Associates expects 2016 to be an interesting year with a combination of innovative new offerings and a resurgence of existing technologies in the forefront. 2016 will be the year when the old is new again; customers will continue to absorb and deploy technologies such as cloud, microservices, IoT, and advanced analytics. Businesses will select technologies based on the offering’s ability to provide both efficiency and the ability to improve customer relationships. We also expect to see continued consolidation in the market. Large enterprise vendors will continue to purchase innovative companies as both “tuck-in” acquisitions and a fast way to enter a new market. It will be a year of absorption and consolidation.
So, here are our top ten predictions for 2016:
1. Hybrid Cloud Management gets big. Yes, it is clear that the hybrid cloud is the winner. Now, how do you actually manage an environment that includes public, private, on-premises applications, data, and process? For the hybrid cloud to be successful there needs to be solutions that help customers manage their existing and new environments. We expect a flurry of announcements regarding hybrid cloud management by major cloud players. We also expect to see startups entering this space.
2. Machine learning and cognitive computing will underlie most new apps. More and more software companies will be embedding intelligence inside their applications. Ironically, most customers will not notice the impact and will have little ability to add their own value. Customers will begin to take it for granted that their applications will anticipate their needs. It will take several years before customers can use this sophisticated technology to create their own value.
3. The cloud market consolidates. Infrastructure as a Service is a commodity. Competing solely on price is not a differentiator nor is it a sound business model. The vendors that cannot add significant value in terms of scale and security will lose momentum. Trust will be the watchword for cloud in 2016. The winners will provide security, governance, scalability, and business process in a hybrid manner.
4. Clouds go vertical. As we mentioned, it has become difficult to distinguish cloud vendors in this consolidated market. Vendors will begin innovating on vertically focused cloud for highly regulated and security-sensitive markets. We have already seen this move for HIPAA compliant clouds and FedRAMP (government) compliant clouds and we expect this trend to accelerate.
5. Open standards rule… again. OpenStack has increasingly gained momentum over the past five years with more than 500 member companies. As the cloud market and the OpenStack offerings stabilize, the momentum will be unstoppable. Customer expectations for vendors to adhere to OpenStack will dramatically increase. The proposed acquisition of EMC by Dell (along with EMC’s stake in VMWare) will cause other vendors to double down on their OpenStack investments.
6. IoT projects move from pilots to production. 2015 was the year of testing the waters on IoT for many companies. Impressive initial success and the availability of cheap sensors means that companies will be moving forward with big projects in 2016. The consequence will be a demand for IoT security and advanced, near real-time analytics, edge devices to pre-process IoT data and the need to manage IoT data. We expect focused startups and an emphasis by the larger vendors on IoT security. The IoT will also bring Spark and its real time analytics capabilities into the forefront.
7. The year of PaaS will finally arrive. We had expected that Platform as a Service would become a market force for the last five years. The delay in adoption is due to to a lack of a standard platform and reluctance by customers to adopt PaaS for large-scale applications development. The market is changing with the increased adoption of Cloud Foundry by major vendors such as IBM, Microsoft, HP Enterprise, VMware, Intel, SAP and EMC. In addition, hybrid PaaS that allows companies to build applications across public and private cloud is having a major impact.
8. The acquisitions will keep coming for IT Vendors. While 2016 will not be the year of the mega-mergers, there will continue to be acquisitions of emerging innovative companies from the major vendors. In addition, there may be some interesting acquisitions in the SaaS market – the key area of cloud that is not a commodity. We anticipate larger vendors targeting SaaS players with large, highly satisfied user bases so that they can quickly compete in the SaaS market. Another important acquisition target will be for mobile capabilities.
9. Business Process as a Service (BPaaS) will become the rage. As more companies move to a hybrid cloud strategy, they are faced with a dilemma of having to decouple business process from the underlying application code and data. This will become a crisis for many businesses as they change to a more service oriented approach to creating new applications and software value. With the rise of containers and microservices, there will be a need to separate business process from code. This will be a hot area for startups.
10.Advanced analytics will remain out of reach for the masses. Despite significant efforts to bring advanced analytics capabilities to average business users, adoption will be challenging. Most business school students start their careers building models in Excel and having them transition to more advanced platforms will be difficult. Cloud-based platforms make the transition easier, but convincing businesses to make decisions based on advanced analytics from business users and not data scientists will be challenging.