Wednesday, May 25, 2016

Disruptions Facing the Tech World

My Views on some of the Disruptions facing the Tech World, and especially those that will affect India IT companies more than our global competition.

  1. Machines and Algorithms replacing Humans. There is an increased risk for not so high skilled L1 or BPO agents to be made redundant. there is risk also for some higher skills to be made redundant.
  2. Virtualized Everything – Networks, Compute, Storage, Hosting – Different and Limited Skills available with IT Companies worldwide,and especially with India Inc. required to Transform and then run new age IT sytems.
  3. XaaS. Managed App Services and Infra Managed Services can Shrink as organizations move applications and IT Infra (Servers, Storage, Compute) into the cloud. This risk is high for application workloads or Dev QA environments that will move into public clouds. for apps moving to private cloud or hybrid cloud there would still be enough IT support work available.
  4. XaaS presents a Big Opportunity to Re-Architect, Transform and Migrate Apps to Clouds.  This, however, is a very short window of opportunity, for a few years more at the most
  5. The big rik that XaaS poses for Indian IT companies is about Skills - many IT servies companies do not have enough High End Architecture Skills to Scale these servoces of moving apps to cloud as demand peaks in the next few years.
  6. Digital is Forcing Customers to Rapidly undertake Business Transformation, Move accelerated by Digital. Seek Indian IT players to provide ‘Biz Transformation’ and not mere Tech Transformation. Risk – we lack Positioning and capability for this. But this is the starting point and will define all following tech transformations and Ops (run) services
  7. Data Everywhere, Data will Rule. Whether IOT or Digital, Connected Systems are throwing up more data than ever, increasing Exponentially. Billions of Sensors and Devices will throw Zettabytes and Yottabytes (Billion Petabytes) of data! Opportunity – Analytics. Challenge. Skills Gap– we are not producing enough Data Scientists, nor developing Algorithms at the pace at which is done in Bay Area. Opportunity to acquire or invest in start-ups in this area.
  8. Startups, Born in Internet Cos, Algorithm based Cos dominate (likes of Google, Facebook and others) – This will lead to Skill and Talent Gap. Best of brains will increasingly be siphoned off by these cos. There will be increasing challenge to get good Delivery and Technical Execution Talent. The Industry will get Business Talent (B-Schools, MBAs), but a lesser number of Tech Experts. If the Industry does get these skills, they will be very expensive. This will put tremendous Pressure on Quality of Delivery, of Scale itself, of launching new services and on Margins. This will be exacerbated by a not so efficient middle layer of project managers (see an earlier post on this issue)
  9. Skills for Future will be very different from what we get engineers trained in today. Further pressure on IT Cos to become pseudo- CS engineering schools. This is usually short term, but the rapidly changing nature of IT will continue to outpace engineering schools curricula.
  10. Changing Nature of Business. Blurring Vertical Market Divides in our customer cos. Uber is in healthcare (mobile at home flue shots), GE in IT, Ford in IT. Companies will straddle Vertical rapidly. Opportunity if we have flexible IT Models and Commercial Models. Challenge if we cannot respond fast enough to their changing IT needs.
  11. Risk Sharing by IT Cos – Severely and Rapidly Shrinking Time to Market for our customers to release new services and products. Successful IT Services Cos will be ones to offer more skin in the game, more Risk Sharing in End Business Outcomes. This will force more Predictable Technical Solutions, Transformed Commercial Models, Stringent Scenario Planning, Selective Customer qualification and acquisition among other fundamental business model changes
  12.  Technology Changes and time to maturity will outpace ability to train armies of new skills – for example Market will force rapid time adoption of Blockchain, SDN NFV and New Mobility / Security (5G Ecosystem)  or Security Standards or Interoperability standards. Pressure on IT Services cos to build pools of new skills in shorter cycles. Cos might have to become selective in investing in technologies, as against carrying a wide catalog of skills
  13. IOT, IIOT, IOE – Will require new set of skills. That of Complex System Integration, Rapid Prototyping, Large scale deployments and others.
  14. Security – Exposure of Personal and Enterprise Data due to IOT/IOE, Connected Everything, increasing Cyber Attacks. Will demand newer set of Security Services – new algorithm based / Appliance based products will dominate. Opportunity for scaling Security Services. But India Inc.’s limited investment in core IP for Security could be an inhibitor for margins
  15. Bulk of India Inc IT Industry revenues are from Lagging Technologies, many are legacy or last century (C or Java can be considered in this league). Margins will come from leading new age technologies, Including Embedded Programming for IOT, Alogrithms for Virtual Reality or Cognitive Computing. Though these would take time to Mature or Scale, but the pressure will start to be visible in next 2 or 3 years.
  16. Crowdsourcing and Indvidual Contractors – increasingly, best of computing talent would freelance. This will pressurize Delivery and Execution.
  17. Algorithms Centric IT – India Inc.’s Lack of Core and Fundamental Innovation or R&D, lack of IP to scale – medium to long term impact, link to revenues from leading technology vs lagging tech. Cos that could succeed would be ones with Algorithms in AI or Biomimicry systems or Cognitive Computing etc.
  18. Changing nature of Application DevelopmentRapid Time to Market and Shrinking App / Product Life Cycles will force new Development Methods. Industry to transform to near 100% Agile and more rapid Agile for App Development. Could be highly Reusable Components, Ref Architecture based.  IT industry will be pressurized to invest more into teams developing these components, in labs and co innovating with OEMs.
  19. Changing Nature of all Verticals – Unbundling of Banks, Connected Manufacturing, 3D Printing forcing Manufacturing at the Edge, Moving of Mfr back to West and other similar Industry Shifts will force IT services re-haul.
  20. Alliances and Partners will be Coopetition ( Competition + Cooperation) – all OEM partners will have one or more ‘Products’ to replace current AD Services, or move to XaaS etc. However there will be opportunity to Run Support for many of these Technologies or Products.
  21. Changing Nature of Competition for IT Services Cos – from above, competition will be from every type of organization. Existing Customers( Banks, Mfr, Auto Cos GE Predix, Philips etc). see also
  22. IT Budgets disintermediating – moving to CMO, CDO, other emerging CXOs. They will source from Non – Traditional IT Cos, like Design and Ad agencies who are offering competing services using XaaS (Analytics – then Design – Execute – Measure – relaunch etc).
  23. Younger Highly Mobile, Tech Savvy Consumer – even more demanding, Driving Transformation. As we get into the 2020’s the next generation will force newer product and services standards, forcing IT cos to respond
  24. Increasingly Virtual Workforce – Need for more Virtual Collaboration. Environment / Pollution regulation might force even more restrictions on mobility. Employees might not want to commute long distances (Example in Bangalore IT staff could spend upto 4 hours a day Commuting). Pressures on Productivity and Efficiency would also force remove working, work from home and virtual collaboration even for basic Development. This would also force additional investments in Security and other processes. Add the increasing Freelancers and Crowdcoding, and we will have a large virtual workforce, sometimes globally distributed. 
  25. Macroeconomic Disruptions. Eurozone, BREXIT, Pressure on Sustainability, Regulatory Changes, Oil Prices Movement, Currency Instability and other would could also Disrupt status quo. There is a need for scenario building and planning for some of these variables.
Do let me know about your thoughts on the above. 


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