Tech Trends 2014 Inspiring Disruption Tech Trends 2014 Snapshot Disruptors Enablers CIO as Venture Capitalist Technical Debt Reversal CIOs are borrowing from the playbooks of venture capitalists and reshaping how they run the business of IT Understanding, containing, and mitigating technical debt can be a platform for a renewed level of trust and transparency with the business Cognitive Analytics Cognitive analytics offers a way to bridge the gap between big data and the reality of practical decision making Industrialized Crowdsourcing Today, technology makes crowdsourcing possible on an industrial scale, with potentially disruptive impacts on both cost and innovation Digital Engagement Social Activation The power of social activation is unleashed when others advocate an organization’s message in their own words to their network Cloud Orchestration CIOs should be making deliberate investments in developing advanced integration and data management capabilities to support cloud-tocloud and cloud-to-core models In-memory Revolution With more and more parts of the business becoming digital, the CIO has an opportunity to build a new legacy for IT The sweet spot for in-memory technology is where massive amounts of data, complex operations, and business challenges demanding real-time support collide Wearables Real-time DevOps Wearables hold possibilities for driving down costs and increasing competitiveness. What could it mean for your organization? Early adopters of real-time DevOps have the opportunity to profoundly impact their IT shop, accelerating IT delivery, improving quality, and better aligning with the business Exponentials Artificial Intelligence Robotics Cyber Security Additive Manufacturing Advanced Computing Exponentials represent unprecedented opportunities as well as existential threats. Explore five with far-reaching, transformative impact. Disruptors CIO AS VENTURE CAPITALIST COGNITIVE ANALYTICS INDUSTRIALIZED CROWDSOURCING DIGITAL ENGAGEMENT WEARABLES CIO as Venture Capitalist Thinking like venture capitalists to reshape business Like venture capitalists, CIOs should actively manage their IT portfolio in a way that drives enterprise value and evaluate portfolio performance in terms that business leaders understand—value, risk, and time horizon to reward. CIO as Venture Capitalist Bits & Bytes CIOs spend more than twice as much time as they’d like as an operator of IT services and just over half the time they’d like on strategic IT initiatives 1 Gartner estimates that a “‘run the business’ focus often consumes up to 60% to 70% of all IT spend, thereby starving innovation and the investments necessary to grow or transform the business.”2 Garter states that “approximately 90% of enterprises fail to execute against their strategies; the dismal track record behind strategy execution is not a failure of the strategies themselves, but of enterprise-level program management”3 Lessons from the front lines Growth and change – At Cisco, line-of-business CIOs actively manage a portfolio of assets with an understanding of cost, return, risk, and strategic importance A view from the Valley – Hummer Winblad Venture Partners provides a VC perspective on how CIOs can shift focus from cost, compliance, and maintenance to being in the business of “new.” CIO Journal by Wall Street Journal, “The four faces of the CIO,” October 28, 2013, http://deloitte.wsj.com/cio/2013/10/28/the-four-faces-of-the-cio/, accessed December 19, 2013. 2 Colleen M. Young, The CIO’s role in executing enterprise strategy, Gartner, Inc., November 21, 2013. 3 Ibid. 1 CIO as Venture Capitalist Where do you start? 1 2 3 4 Inventory your portfolio: Consider technology procured inside and outside of IT Evaluate your portfolio: Define the risk, value, and strategic importance of each item Double down on winners: Take intelligent risks, and be prepared to pull the plug Direct line of sight to revenue: Vet technologies & discuss investments with the business Bottom line There’s a lot to learn from the portfolio mindset that VCs bring to their work: balancing investments in legacy systems, innovation, and even bleeding-edge technologies; understanding—and communicating—business value; and aligning talent with the business mission. Venture capitalists operate in a high-stakes environment where extraordinary value creation and inevitable losses can coexist inside a portfolio of calculated investments. So do CIOs. Cognitive Analytics Applying technology to enhance human decisions Inspired by how the human brain processes information, draws conclusions, and codifies instincts and experiences into learning, it is now possible for machines to learn from experience and to penetrate the complexity of data to identify associations. Cognitive Analytics Bits & Bytes The volume of unstructured data is growing by 62% a year1 The Human Brain Project aims to build a working model of the brain by 2023 using neuromorphic computing, or machines that learn like the brain2 Lessons from the front lines Changing the world of health care – As part of an integrated ecosystem, WellPoint used cognitive analytics to provide patient treatment recommendations Coloring outside the lines – Qualitative data transformed into actionable insights drove design changes for one consumer goods company Intelligent personal assistants – New companions have factored in past behavior and preferences when responding to commands Safeguarding the future: Energy well spent – Curtiss-Wright endeavored to improve power plant safety through use of a predictive intelligence system which can foresee future issues 1 2 HP Autonomy Whitepaper: Transitioning to a New Era of Human Information, http://www.frost.com/prod/servlet/cpo/270213756 http://www.scienceworldreport.com/articles/10537/20131028/human-brain-project-neuroscientists-count-on-technology-evolution.htm Cognitive Analytics Where do you start? 1 2 3 4 5 6 7 8 Start small: Prototype a cognitive analytics platform with the cloud & open-source tools Plant seeds: Invest in next-generation data scientists & business domain knowledge Tools second: Explore what you have as tools evolve and consolidate Context is king: Decide which domains to target and work through a concept map Don’t scuttle your analytics ship: Supplement, don’t replace, traditional analytics Divide and conquer: Break initiatives into small, accessible projects Know which questions you’re asking: Stay grounded in the business “so what” Explore ideas from others: Look outside your company and industry Bottom line As the demand for real-time support in decision making intensifies, cognitive analytics can help businesses address some key challenges: It can improve prediction accuracy, provide augmentation and scale to human cognition, and allow tasks to be performed more efficiently (and automatically). Cognitive analytics offers a powerful way to bridge the gap between the promise of big data and the reality of practical decision making. Industrialized Crowdsourcing Harnessing the power of the crowd Enterprise adoption of the power of the crowd allows specialized skills to be dynamically sourced from anyone, anywhere, and only as needed. Companies can use the collective knowledge of the masses to help with tasks from data entry and coding to advanced analytics and product development. Industrialized Crowdsourcing Bits & Bytes Goldcorp is a mining company that shared its top-secret geological data with the crowd, offering $500,000 for finding six million ounces in untapped gold. This $500,000 investment yielded $3 billion in new gold in one year1 The number of people online is projected to increase from 2.4 billion today to 5 billion by 20202 Lessons from the front lines Crowding store shelves – One retailer used Gigwalk to improve processes and reduce the risk of lost sales Crowd wars: The “fan”tom menace – Pringles teamed up with Star Wars to launch a Tongal-enabled contest for fans to design the next Pringles television commercial Civic crowdsourcing – The cities of Boston and Chicago and the Khan Academy crowdsourced tools and services at a fraction of the cost of traditional approaches Have patents, will innovate – GE partnered with Quirky for product development and innovation recommendations, shortening invention timelines from years to weeks 1Peter Diamandis, How a $500K investment netted $3 billion in one year, February 13, 2013, http://www.xprize.org/blog/ceo-corner/2013/02/13/how-a-500k-investmentnetted-3-billion-in-one-year, accessed January 7, 2014. 2Doug Gross, "Google boss: Entire world will be online by 2020," CNN, April 15, 2013, http://www.cnn.com/2013/04/15/tech/web/eric-schmidt-internet/, accessed January 20, 2014. Industrialized Crowdsourcing Where do you start? 1 2 3 4 Scope: Focus on a clear and specific problem to solve Focus on gaps: Identify and target gaps in your organization’s abilities Keep an open mind: Let your employees orchestrate the crowd Get ready for what’s next: Start thinking now about policies and processes Bottom line Crowdsourcing is still in its early stages, but today’s online platforms are sophisticated enough to provide substantial benefits in solving many kinds of problems. It’s important that your organization has the ability to embrace new ideas that may be generated by your crowdsourcing initiatives. That means industrializing not just for scale and reach but also for outcome. Digital Engagement Reshaping and rewiring the customer experience Digital engagement involves using technology to design more compelling, personally relevant, engrossing experiences that lead to lasting, productive relationships, higher levels of satisfaction, and new sources of revenue. Digital Engagement Bits & Bytes In 2013, for the first time, US adults spent more time online and on mobile devices than consuming TV, radio, or print1 The media and entertainment industry has been leading the charge 2 In the longer term, 3D printing may bring about a rise in digital-only products that can be downloaded and produced by customers Lessons from the front lines The one-stop digital shop – Adobe transformed its website into a seamless product marketing & e-commerce site, increasing revenue by 39 percent since the project started Driving new savings, sales, and loyalty – A leading auto manufacturer identified tens of millions of dollars in potential savings with a new, global digital marketing approach Calling all content – Verizon launched its Digital Media Services division to provide a digital media supply chain solution for media and entertainment companies Reimagining the online experience – Intel re-architected its existing website to create an engaging, innovative, and scalable experience for its users and vendors 1 Emarketer, "Digital set to surpass TV in time spent with US media," http://www.emarketer.com/Article/Digital-Set-Surpass-TV-Time-Spent-with-USMedia/1010096#cS7GHCclhaKGYp0k.99, accessed December 19, 2013. 2 Deloitte Development LLC, 2014 outlook on media and entertainment: Interview with Gerald Belson, http://www.deloitte.com/view/en_US/us/Industries/industryoutlook/9ced365249afa310VgnVCM3000003456f70aRCRD.htm, accessed December 31, 2013. Digital Engagement Where do you start? 1 2 3 4 5 Web, mobile and social content enablement: Engage seamlessly across channels Self-service and governance: Mix global control with localization Ease of access: Make content easily accessible across multiple channels Digital IP and asset management: Proactively plan for digitalization Cost reduction: Streamline the distribution and management of digital content Bottom line Beyond efficiency and cost savings, digital engagement presents new ways to enhance customer loyalty and competitive advantage – riding the wave of changing behaviors and preferences for contextual interactions. And with more parts of the business becoming digital, the CIO has the opportunity to build a new legacy for IT—a responsive, forward-looking organization, an enabler of innovation, and a driver of digital engagement. Wearables Enabling businesses with digital information Hands-free, heads-up technology has the potential to reshape how work gets done, how decisions are made, and how you engage with employees, customers, and partners. While consumer wearables are in the spotlight today, we expect business to drive acceptance and transformative use cases. Wearables Bits & Bytes Deloitte predicts that smart glasses, fitness bands, and watches should sell about 10 million units in 2014, generating $3 billion1 Gartner predicts that worldwide revenue from wearable electronic devices, apps, and services for fitness and personal health is anticipated to be $1.6 billion in 2013 increasing to $5 billion by 20162 Lessons from the front lines A new vision for training – CraneMorley’s training software delivered via smart glasses allowed car dealership salespeople to learn vehicle technology on the go The doctor is in (your stomach) – Medicine usage and health is tracked through a system that includes both a body-worn patch and a small ingestible sensor Wearable wardrobe – A large range of products from smart socks to sensing diapers are driving the “quantified self” movement Hands-free patient care – Philips Healthcare explored how surgeons could use a headset display to view a patient’s vital signs or medical history hands free 1 2 Deloitte Consulting LLP, TMT Predictions 2014, 2014. Angela McIntyre and Jessica Ekholm, Market trends: Enter the wearable electronics market with products for the quantified self, Gartner, Inc., July 1, 2013. Wearables Where do you start? 1 2 3 4 5 6 Imagine “what if”: Identify advances if workers had data at the moment they need it Kick the tires: Experiment with platforms and organizations Become an early adopter: Team with manufacturers to explore possibilities Simplify. Simplify. Simplify: Create “glanceable” awareness of information Anticipate data and device management: Consider how to manage these devices Engage the workforce: Ask employees to participate in the imagination process Bottom line As consumer devices, wearables represent a very personal buying decision in which aesthetics and fashion are almost as important as function. But in the workplace, experience and engagement matter. Rethink how work could get done with the aid of an ever-present computing device that delivers the desired information when it’s needed. Local Ratings Industrialised Crowdsourcing Wearables Digital Engagement Cognitive Analytics CIO as Venture Capitalist Assess Trial Adopt Trial Disruptors Very Ready Not Ready Assess Enablers TECHNICAL DEBT REVERSAL SOCIAL ACTIVATION CLOUD ORCHESTRATION IN-MEMORY REVOLUTION REAL-TIME DEVOPS Technical Debt Reversal Reversing technical debt to support growth For most organizations, technical debt comes with the territory, an unavoidable outcome of decades of technology spend. Understanding, containing, and mitigating technical debt can be a platform, not only for a stronger IT foundation, but for a renewed level of trust and transparency with the business. Technical Debt Reversal Bits & Bytes An average of $3.61 of technical debt exists per line of code, or an average of more than $1 million per system1 Gartner states that current global IT debt is estimated to stand at $500 billion, with the potential to rise to $1 trillion by 20152 Lessons from the front lines Countdown to zero technical debt – NASA’s approach to mitigating technical debt gives new life to a mission to Mars Express delivery of quality – USPS improved application quality and implemented project standards to remediate technical debt Cleaning up shop – DB Systel employed development tools to detect architectural risks and correct them accordingly Combating system complexity – A technical maturity analysis and subsequent rationalization effort by the Military Health System saved the organization over $50M 1 2 http://www.castsoftware.com/research-labs/technical-debt-estimation Andy Kyte, “Measure and manage your IT debt,” Garner, Inc., Originally released August 9, 2010 and last reviewed June 19, 2013; Technical Debt Reversal Where do you start? 1 Assess the status of code for all significant investments: Calculate your debt 2 Find out how future investments are dependent on your legacy systems: Consider whether your architecture is ready for new initiatives. 3 Think through the availability of talent to support debt remediation: Factor talent into your debt analysis to define priorities and timelines 4 Hold developers accountable: Consider rewarding developers on the quality of code 5 Spread the wealth (and the burden): Use communities to identify and address debt 6 Determine your debt repayment philosophy: Accumulation should be a conscious decision Bottom line While it’s important not to get obsessed with technical debt, it’s also critical to understand and plan for it. Every new project automatically comes with technical debt as a cost of doing business. Reversing technical debt is a long-term investment, but if left unaddressed, it can bankrupt your ability to build for the future. Social Activation Not just passive monitoring—it’s active influencing Companies can activate their audiences to drive their messaging outward – handing them an idea and getting them to advocate in their own words to their own networks through social channels. Social Activation Bits & Bytes 69% of executives thought social business would be critical to their organization in the next three years1 27% of global time spent on the Web is via a social media channel2 84% of global respondents of a recent Nielsen study trust word-of-mouth recommendations from friend and family – the most highly rated among digital and traditional methods3 Lessons from the front lines Community outreach – Parallels cultivated a passionate community of customers through its “influencer” and “advocate” programs The social TV experience – FOX launched an engaging second screen experience using social media and the voices of its dedicated viewers Unleashing the power of social – Hartz introduced a multifaceted social media strategy designed to educate and foster relationships with pet enthusiasts 1 MIT Sloan Management Review in collaboration with Deloitte University Press, Social business: Shifting out of first gear, http://dupress.com/articles/social-business-study/, accessed December 31, 2013. 2 Experian, Experian Marketing Services reveals 27 percent of time spent online is on social networking, http://press.experian.com/United-States/Press-Release/experianmarketing-services-reveals-27-percent-of-time-spent-online-is-on-social-networking.aspx, accessed December 31, 2013. 3 Nielsen, Global trust in advertising and brand messages, http://www.nielsen.com/us/en/reports/2013/global-trust-in-advertising-and-brand-messages.html, accessed December 31, 2013. Social Activation Where do you start? 1 2 3 4 5 Focus: Avoid extending initial efforts across too many desired outcomes Insight: Understand existing communities, channels, and content Perception: Uncover what people really think and feel about your brand Audience: Gather, monitor, and enlist targeted community members over time Campaigns: Focus on the ideation, creation, and monitoring of social experiences Bottom line Social can drive real business performance through measurable, sustainable results, but it requires a shift in mindset – with a focus on perception, engagement, and activation. In today’s recommendation economy, educating and empowering your audience can lead to impactful, long-lasting results. Cloud Orchestration A new class of cloud offerings CIOs should be making deliberate investments in developing advanced integration and data management capabilities to support cloud-to-cloud and cloud-to-core models. Build the components to orchestrate the cloud today, and you’ll be ready to adopt more compelling services tomorrow. Cloud Orchestration Bits & Bytes Forrester predicted that by the end of 2013, enterprises will use an average of 9.6 software-as-a-service (Saas) applications1 A recent Gartner survey shows that over 70% of organizations that are using or planning to use cloud services expect internal IT organizations to assume the role of cloud services broker2 Lessons from the front lines Hybrid high tech – A software and hardware company created disciplines around cloud-to-cloud and cloud-to-core integration: tools, architectural standards, and a dedicated team to drive growth and adoption Linking the network – LinkedIn integrated a cloud-based platform to enhance sales and CRM capabilities and build a scalable solution for future orchestration Orchestrated banking – SunTrust Banks sought an integrated, scalable cloud solution to expedite the delivery of services to customer – and pave the way for future cloud adoption Espresso with a shot of cloud – Nestlé Nespresso SA transformed its home-grown, complex ERP system with a more scalable architecture and integrated cloud solution 1 Stefan Ried, The Hybrid² integration challenge, Forrester Research, Inc., May 1, 2013, http://www.forrester.com/The+Hybrid178+Integration+Challenge/fulltext/-/ERES94881, accessed December 31, 2013. 2 Michele Cantara, Hype cycle for cloud services brokerage 2013, Gartner, Inc., July 31, 2013 (revised October 28, 2013). Cloud Orchestration Where do you start? 1 2 3 4 5 6 Petition for a new cloud business model: Voice opinions on pricing & orchestration Build an integration foundation: Lay the groundwork for a cloud-to-core environment Connect the dots: Understand how each application defines its dataset Read the fine print: Understand your rights to data ownership, portability, and migration Build a strong chain: Consider the performance of each cloud service in the process Explore edge architecture: Connect enterprise core, private, and public offerings Bottom line As enterprises use disparate cloud offerings to handle critical business processes, the desire to link these offerings to core legacy systems and data grows. CIOs who have the disciplines of data management and integration architecture in place will be positioned to create harmony out of the existing landscape and to leverage orchestration services when they arrive. In-memory Revolution Crunching massive amounts of data in real time As in-memory technologies move from analytical to transactional systems, the potential to fundamentally reshape business processes grows. Technical upgrades of analytics and ERP engines may offer total-cost-of-ownership improvements, but potential also lies in using in-memory technologies to solve tough business problems. In-memory Revolution Bits & Bytes With the removal of disc I/O, in-memory vendor claims vary from a thousand-fold improvement in query response times1 to transaction processing speed increases of 20,000 times2 The shift from physical to logical data storage reduces the hardware footprint, allowing more than 40 times the data to be stored in the same finite space3 Lessons from the front lines Communicating at light speed – T-Mobile US, Inc. enlists a multi-channel approach to connect with customers made possible with in-memory technology Reinventing production planning – A leading aerospace company used in-memory computing to increase on-time delivery by 45% Drilling for better performance – Pacific Drilling tracked performance using a single in-memory data platform for both advanced analytics and an upgraded ERP system Next-generation ERP – SAP and Oracle take on in-memory updates Neil McAllister, “Oracle's Ellison talks up 'ungodly speeds' of in-memory database. SAP: *Cough* Hana,’ The Register, September 23, 2013, http://www.theregister.co.uk/2013/09/23/openworld_ellison_keynote/, accessed January 2, 2014. 2 Hey SAP, SAP HANA® performance: Efficient speed and scale-out for real-time business intelligence, https://www.sap.com/bin/sapcom/downloadasset.sap-hanaperformance-pdf.html, accessed January 2, 2014. 3 Eric Savitz, "IT revolution: How in-memory computing changes everything," Forbes, March 8, 2013, http://www.forbes.com/sites/ciocentral/2013/03/08/it-revolutionhow-in-memory-computing-changes-everything/, accessed January 2, 2014. 1 In-memory Revolution Where do you start? 1 2 3 4 5 6 Understand what you’ve already bought: Define benefits and gaps Push the vendors: Get them thinking about – and investing in – solutions you can use Ask for roadmaps: Ask product developers for detailed roadmaps to guide the future First stop: analytics: Find immediate opportunities by fueling advanced analytics Focus on one or two capabilities: Prioritize high-potential functions for buy-in Watch competitors: As competitors experiment, be ready to adopt new capabilities Bottom line On one hand, in-memory technology enables significant gains in speed, with analytics number-crunching and large-scale transaction processing able to run concurrently. At the same time, it has opened the door to real-time operations, with analytics insights informing transactional decisions at the individual level in a virtuous cycle. The result? Opportunities for continuous performance improvement are emerging in many business functions. Real-time DevOps Empowering the business of IT Real-time DevOps bridges the gap between development and operations, supercharging the investments that currently exist in siloed automation by integrating the end-to-end delivery model. Real-time DevOps Bits & Bytes Gartner “found that only one-third of companies surveyed were either in-process or planning to implement DevOps, and close to 44 percent of respondents were still trying to figure out what DevOps means.1 A survey of 1,300 Senior IT decision makers revealed that only 39% had already invested in DevOps2 Lessons from the front lines A new policy for IT – A leading insurance company centralized its application development center and created a services-based IT model Moving at the speed of commerce – John Lewis PLC launched a new e-commerce platform with the help of increased communication between operations and development teams Supporting IT’s health and well-being – West Virginia’s Department of Health and Human Resources adopted automated build and deployment processes to better support its mission A healthy dose of collaboration – A leading healthcare provider streamlined collaboration across its enterprise to accelerate delivery of new business solutions Laurie F. Wurster, et. al., “Emerging Technology Analysis: DevOps a culture shift, not a technology,” Gartner, Inc., August 8, 2013. Computer Associates, "TechInsights report: What smart businesses know about DevOps," https://www.ca.com/us/register/forms/collateral/techinsights-report-whatsmart-businesses-know-about-devops.aspx, accessed January 3, 2014. 1 2 Real-time DevOps Where do you start? 1 2 3 4 5 6 7 Establish the need: Conduct benchmarking to identify areas for improvement Build new skills: Develop your core team’s hard and soft skills Employ services thinking: Break down complex systems into modular services Lay down the bases: Begin automating individual components Connect the dots: Link components into a stream of continuous integration Get vendors on board: Build on vendor successes to accelerate improvements Make the leap to test-drive or behavior-driven design: Move from build-to-run to build-to-verify 8 Look beyond cost & speed: Recognize benefits from enhanced delivery models 9 Commit: Make hard changes instead of falling for one-off, surface-level investments Bottom line By arming IT with the tools to automate and integrate their core disciplines, realtime DevOps has the opportunity to profoundly impact the IT shop – accelerating IT delivery, improving quality, and better aligning IT with the business. Local Ratings In-Memory Revolution Technical Debt Reversal Real Time DevOps Cloud Orchestration Social Activation Assess Trial Adopt Trial Enablers Very Ready Not Ready Assess Exponentials ARTIFICIAL INTELLIGENCE ROBOTICS CYBER SECURITY ADDITIVE MANUFACTURING ADVANCED COMPUTING AI can simulate reasoning, develop knowledge, and allow computers to set and achieve goals The next robotics frontier is machines which can perform tasks that involve gathering and interpreting data in real time Companies should be prepared to survive in an environment where threats by cyber criminals are commonplace Breakthroughs in speed, resolution, and reliability demonstrate potential not only for scale, but also for unlocking new possibilities The combination of computing and network advances result in profound civic and commercial implications This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. For more information on the contents, case studies, and next steps featured in this presentation, please reference the full Tech Trends 2014 Report. As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2014 Deloitte Development LLC. All rights reserved.