The Trends of 2018: Our Predictions

The continuing shortage of skilled workers is making it more difficult for any CIO to implement a digital agenda. These bottlenecks can be at least partially overcome with further automation of many horizontal and vertical processes. Given this context, AI and robotic process automation (RPA) will continue to have the greatest impact on the CIO agenda of the future. APIs allow easy integration of the basic technologies (such as those for speech recognition) provided by cloud providers, facilitating technical implementation of AI and RPA.

This is where a big trend comes into play: the resurgence of discussion about the right IT architecture. While companies are not questioning their ERP installations, they are questioning whether those installations are also suitable for implementing functions related to digitalization. Instead, more and more companies are relying on specialized platforms. A kind of middleware or integration platform is installed as a connecting element; it, in turn, can use APIs to integrate various external services from the ecosystem. Such an architecture allows the reliable environment of an ERP installation to be combined with the rapidly changing requirements of a digital platform.

The most important enabling technology, cloud computing, has certainly made its most noticeable leap towards acceptance and use this year. It can be rightly claimed that 2017 was the year of the public cloud’s final breakthrough into the European B2B world. The many offers of both European and American providers to use data centers in (continental) Europe have certainly contributed to this breakthrough.

PAC believes that, of the many new developments that CIOs will have to deal with in the coming year, the following ten trends stand out:

1. Automation paves the way for artificial intelligence

The enormous importance of AI is best explained by the extensive opportunities for automation of internal and external processes (robotic process automation, RPA). Even today, dialogs between robots and people in a format similar to WhatsApp can scarcely be distinguished from interaction between humans. Next, image and video processing will be integrated into procedures so that, in the near future, it will be possible to recognize faces and moods. Autonomous driving is also inconceivable without AI.

However, in order for AI to be effective, the underlying processes must be clearly focused on automation. Start-ups are pressing ahead in this area. An example of this is the banking and insurance industry, in which fintechs and insurtechs are already using AI to automate customer onboarding, KyC (know your customer) processes, and claims processing.

2. ERP's place in the business comes under threat

Digitalization has reached the agenda of many companies, and brings with it the question of the right architecture for the future. Today's ERP-centric installations are being put to the test, especially in terms of their IoT capability, and the verdict does not always favor ERP platforms. Companies are therefore beginning to reduce the scope of today's back-office environments to core functions related to HR, FI, CO, and MM and installing IoT platforms, proprietary developments, and cloud platforms (such as CRM and services) for digital transformation. Middleware and APIs are often used to link applications with each other. All in all, companies hope that this will lend more flexibility and openness to their IoT strategies.

3. Taming the multi-cloud sprawl

As cloud adoption grows, the phenomenon of multi-cloud environments is becoming increasingly prevalent, since many companies rely on multiple cloud platforms. In some cases, companies deliberately pursue multi-provider strategies in order to become independent of individual providers. However, multi-cloud installations are often unintentional, resulting from the uncoordinated purchase of cloud platforms, especially by the “LoBs” (lines of business). Whether planned or unplanned, the trend towards multi-cloud environments creates challenges. Such environments complicate administrative tasks (such as contract management and invoicing) and make compliance, data protection, and transparency much more difficult to achieve. Last but not least, multi-cloud environments jeopardize data integration and interoperability, impeding the development and operation of new data-based business models and customer services. For CIOs, the task is to either prevent nascent uncontrolled multi-cloud growth from the outset or tame it and integrate it, in turn, into internal and hybrid cloud installations.

4. Cloud poses new security challenges and opportunities

PAC has identified five major security trends that CIOs will have to consider in the coming year:

1. Securing the cloud: The shift of business-critical back-end applications to the cloud is gaining momentum because specialized operators claim that today’s cloud operations meet the highest regulatory and technical security requirements. However, especially in public environments, security is a never-ending story, and hackers are always on step ahead.
2. Security from the cloud: Security can increasingly be procured as a use-based service.
3. Cloud-powered security: Virtually unlimited access to cloud-based computing and storage capacity is creating new opportunities for analyzing security-relevant data. Combined with artificial intelligence, this allows new security services to be bundled.
4. Compliance: The legislators in Europe have recognized that business, public authorities, and society will not be digitalized without cloud computing and the corresponding regulations. Not least because of the tremendous risks generated by the rising usage of the cloud in the context of digitalization, new directives have been issued, and the most impacting one for sure is GDPR. The NIS Directive should also be mentioned here.
5. Protection of IoT environments: This security field will be particularly challenging for companies because new platforms such as the connected car, industrial control systems, and embedded systems require protection.

5. Deep learning takes root in the business

Deep learning is the latest trend in advanced and predictive analytics. The idea behind it is to use neural networks that recognize patterns and relationships in complex data such as text or language in order to learn from them and gain insights for classification. This can greatly improve the quality of cognitive applications such as voice control, translation, or image recognition. Since large amounts of data are required and the algorithms have a large number of parameters, the analyses are computationally intensive and require parallel or cloud infrastructures, or GPU computing. The objective is to achieve even better, more accurate, faster, and automated support for decision making, which is purely fact-based and free from the subjective influence of human estimations.

6. Blockchain goes beyond banking

Companies from various industries are currently working on blockchain-based applications. Examples are the food industry (certification of origin), logistics (traceability of goods, digital delivery documents) and manufacturing (protection against counterfeiting, 3D printing licensing). Many European insurers and financial service providers have already launched DLT pilot projects to secure and finance international trade, for example. 2018 will see a large number of new blockchain applications transferred to productive operation. CIOs should explore the potential of private blockchain platforms for their companies if parts of the business model are based on transactions involving valuable content.

7. New ecosystems emerge around IoT

Electromobility is one of the most extensive IoT tasks because it involves data collection, security, data protection, billing, connected cars, artificial intelligence, image processing, autonomous driving, and much more. The interplay of all innovations will lead to considerable shifts in many industries. This is already evident from the efforts many OEMs are making to provide customers with mobility services tailored to their individual circumstances (vans for family outings on weekends, small cars for visits to the doctor). Completely new ecosystems are being created in which, for example, tier 1 suppliers cooperate with mechanical engineering companies and IT providers to design new solutions for the networked car. For CIOs in many companies, this means entering into collaboration with new partners.

8. Digital twins extend their reach

Digital transformation in the German manufacturing industry is increasingly focused on the digital twin because it integrates all phases of a product life cycle, making the digital factory of the future possible. This starts with research and development, where the behavior and benefits of the product in the field can be simulated along with the production process itself. In production, for example, the specific characteristics of small batch sizes can be documented in detail in the digital twin, so that the manufacturer always knows precisely which products were manufactured when, where, how, and for which customer. The concept of the digital twin becomes particularly interesting after the delivery of the physical products. Digital twin allows new AR and VR (augmented reality, virtual reality) services to be implemented so that, for example, maintenance and repair work can be carried out by untrained personnel.

9. DevOps as a Service enters the mainstream

DevOps is the continuation of agile software development in the areas of testing and commissioning based on highly automated deployment processes.

Ultimately, DevOps systematically implements the idea of delivering iterative improvements and innovations in a cyclical, continuous process. What will make DevOps particularly attractive for user companies in the coming years is the supporting tools, which have enjoyed extremely rapid technical and functional development and which automate the individual process steps more and more intensively. ‘DevOps-as-a-service’ concepts, which integrate several solutions under one roof and thus solve the problems many DevOps teams have in coping with many different solutions and interfaces, in turn ensure a particular boost in the use of these tools.

10. Augmented reality finds a home in sales and marketing

Augmented reality will find increasing use, especially in sales and marketing. AR allows products and services to be visualized and presented in a seemingly lifelike manner, independent of time and place. Above all, it allows virtual and physical worlds to be combined. The technologies are becoming increasingly sophisticated, evolving into what is known as the immersive experience. The connection between the physical and virtual worlds is becoming even more intense.

The CXP Group agenda 2018 is shaped around our trend predictions for the coming year and the topics that we think will help you add more value to your strategy and market propositions. Our offering will help you grow your market understanding, strengthen your sales pitch and raise your profile with prospective clients. Click here to view our full agenda.