5 Strategic Predictions for 2017

Digital business innovation creates disruptive effects that have a wide-ranging impact on people and technology. However, secondary ripple effects will often prove to be more disruptive than the original disruption. Digital strategists must actively identify secondary effects when planning change.

Gartner’s top predictions for 2017 and beyond examine 3 fundamental effects of continued digital innovation:
1. experience and engagement
2. business innovation
3. the secondary effects that result from increased digital capabilities

These predictions help our clients understand not only the radical changes they face in the digital world, but also the outcomes that will reshape the very ways in which we value what we do and the nature of future IT investments. For purposes of this article, please consider using these predictions as planning assumptions on which to base your strategic plans. You can also evaluate the near-term flags that indicate whether a prediction is trending toward truth or away from it.

At the core of future outcomes is the notion of digital disruption. Disruption has moved from an infrequent inconvenience to a consistent stream of change that is redefining markets and entire industries. Last year, we said that digital changes were coming fast. The growth of IoT and smart machines was supported by predictions that massive numbers of devices and robots would soon enter mainstream markets.

And this year, the acceleration continues, but it shows strong signs of leading to some secondary effects that may not be as well-anticipated. An example is the astonishing rise of Pokemon Go by little more than word of mouth — and the emergence of new marketing schemes based on augmented reality (AR) and virtual IoT “things”. Pokemon Go’s virtual Internet monsters encourage us to look for unanticipated consequences of the rise of IoT.

We also note that, by 2020, half of large enterprises will be making business-critical decisions using discredited information. This is another unintended consequence of the pace of change being so high. With little ability to audit sufficiently the collection, distribution, and vetting of data, it is inevitable that some discredited research or information will be consumed faster than our ability to recognize it as outdated, irrelevant, or inaccurate.

But lest we feel disruption is only a negative effect, we should examine how even negative disruption can lead to positive change.

By 2022, IoT-enabled service models could save a trillion dollars a year in maintenance and service costs. This prediction aligns with the idea that, with such a large number of devices ($2.5 million per minute in IoT spending, and 1 million new IoT devices sold every hour by 2021), we can only expect that those devices and connections will create new ways to make money.

Digital innovation can often be a very risky and not particularly rewarding endeavor; it requires investments that more often fail to pay off, while generating huge risks for the company. Those seeking to capitalize on the risk must take note that the technologies we speak about carry different kinds of business value. Some will support companies gaining a temporary competitive advantage, while others have the potential to create new markets. The practical approach for action, then, is to recognize disruption, to prioritize the impacts of that disruption, and then to react to disruption in order to capture value.

Let’s examine 5 high-level trends that emerge from these predictions.

Strategic Planning Assumption #1
By 2020, 100 million consumers will shop in augmented reality.

Near-Term Flags:
By YE16, more than 150 million people worldwide will download the Pokemon Go app, fueling consumer appetite for immersive AR experiences.

By YE17, 1 in 5 leading global retail brands will use AR to enhance the shopping process, resulting in dramatically higher levels of customer engagement.

By YE18, smartphones will continue to drive more than 90% of AR-related experiences; HMDs will remain a niche market limited to enterprise-use cases and a segment of the consumer population.

Strategic Planning Assumption #2
By 2020, 30% of web browsing sessions will be done without a screen.

Near-Term Flags by Year-End 2017:
More than 5 million Apple iPhone users will use AirPods to communicate vocally with their mobile devices (this is less than 1% of the iPhone installed base of 550 million users).

Room-based screenless devices such as Amazon Echo and Google Home will be in more than 10 million homes.

A new search engine optimization (SEO)-like service industry aimed at helping companies develop information and marketing systems tailored to voice and VPA-mediated dialogs will be generating more than $250 million in annual revenue.

5% of consumer-facing websites will feature audio interfaces (including voice-enabled social chatbots).

Natural-language recognition and voice synthesis will reach the point where it becomes difficult to distinguish between humans and machines in common sales and service dialogs where transitions between machine and human operators may occur seamlessly.

Strategic Planning Assumption #3
By 2021, 20% of all activities an individual engages in will involve at least 1 of the Top 7 digital giants.

The current top-seven digital giants by market capitalization are Google, Apple, Facebook, Amazon, Baidu, Alibaba, and Tencent.

By the end of the decade, 80% of all new vehicle models in mature markets will have data connectivity, and 30% of connected vehicle models will have built-in, function-level, over-the-air software update capabilities. In addition, by 2020, nearly 40 million cars will be using Android Auto and 37.1 million will be using CarPlay. (See “Predicts 2016: Automobiles Become Digital Endpoints in the Era of Smart Mobility”, https://www.gartner.com/doc/3169224?ref=ddisp)

Our health and fitness lives are also being connected through wearables and connected medical devices (such as blood glucose monitors). Notable trends include:
• One hundred 70 million patients a year will be able to use Apple’s HealthKit through Epic’s MyChart application — the most-used patient portal in the US.
•  In 2020, 477.75 million wearable electronic devices will be sold, generating revenue of $61.7 billion. Of that, $13.7 billion will be spent on fitness-related wearables. (See “Forecast: Wearable Electronic Devices, Worldwide, 2016”, https://www.gartner.com/doc/3187421?ref=ddisp)

Near-Term Flags:
By 2018, more than 10 billion things will be connected in the combined consumer and business worlds.

By 2020, 20% of homes will be connected homes containing more than 25 things accessing the Internet.

By 2020, 85% of users’ connected-home solutions will be linked to a certified ecosystem.

Strategic Planning Assumption #4
Through 2019, every $1 enterprises invest in innovation will require an additional $7 in core execution.

Near-Term Flags:
By 2018, IT service providers’ modernization engagements to support digital innovation deployments will increase by at least 30% over 2016 spending levels.
• By 2018, CIOs will prioritize bimodal transformation investments to implement successful pilots, in part funded by ongoing cost takeout of current operations.

Strategic Planning Assumption #5
Through 2020, IoT will increase data center storage demand by less than 3%.

Near-Term Flags:
Through 2017, many advanced IoT projects will remain at the pilot or business-unit stage, inhibiting cross-sharing of large quantities of data across the organization.

Through 2018, there will be no significant new regulatory requirement to store multimedia sensor data for longer than is true today.

Through 2019, storage system vendors will not see an upward breakout in growth from IoT applications.

While these are just a few of our predictions for 2017, they highlight the potential for continued changes — both negative and positive.

This excerpt is from the Gartner report, “Top Strategic Predictions for 2017 and Beyond: Surviving the Storm Winds of Digital Disruption.” For more information about the report, please visit https://www.gartner.com/doc/3471568?ref=SiteSearchsthkw=Top%20Strategic%20Predictions%20for%202017%20and%20Beyond%3A%20Surviving%20the%20Storm%20Winds%20of%20Digital%20Disruption&fnl=search&srcId=1-3478922254.

About Gartner Analysts

Contributing Analysts: Daryl C. Plummer, Martin Reynolds, Charles S. Golvin, Allie Young, Patrick J. Sullivan, Alfonso Velosa, Benoit J. Lheureux, Andrew Frank, Gavin Tay, Manjunath Bhat, Peter Middleton, Joseph Unsworth, Ray Valdes, David Furlonger, Werner Goertz, Jeff Cribbs, Mark A. Beyer, Alexander Linden, Noah Elkin, Nick Heudecker, Tom Austin, Angela McIntyre, Fabio Chesini, Hung LeHong