Digital transformation is the underlying theme of many of the 2018 and beyond IT predictions made recently by analyst firms Forrester, Gartner and IDC. Technologies such as cloud, AI, data analytics, big data, blockchain, IoT, conversational interfaces, DevOps and cybersecurity will also force CIOs to perform a juggling act. The rapid evolution of these technologies combined with the business opportunities they unlock will create a pressure cooker for CIOs, become an everyday topic of discussion for C-suites and possibly even a preoccupation of boards of directors.

1. CIOs are at a Crossroads, Representing Both Challenge and Opportunity

Forrester believes that CEOs will make digital business a top priority in 2018 and CIOs will lead the digital transformation at most companies. In a November report, “CIOs Make the Chief Digital Officer Obsolete,” Forrester summed up: “In 2018, boardroom discussions will focus on digital. Key questions will revolve around platform-based business models, new partnership ecosystems, and new ways to organize for success. CIOs will build new skills and competencies to help drive this change.”

The challenges for CIOs during this period will demand that they step up, expanding their digital skill sets and employing technologies with both eyes focused on business value. Forrester predicts that CIOs will need to orchestrate the underlying technologies and supplier relationships for companies to manage their platform-based business approach. CIOs would also be smart to leverage cloud computing and open source software, and build on containers, APIs and microservices.

CIOs also may need to develop new leadership skills to direct their company’s digital transformation. That includes displaying a laser-like customer focus, attracting the necessary talent, restructuring their organizations and developing the culture required to deliver tangible business results. Doing so, Forrester said, “will present CIOs with the opportunity of a lifetime, allowing them to demonstrate the level of trust and performance that their senior peers and boards require, and positioning them as leaders of the digital transformation — even the enterprise.”

IDC’s November “Worldwide CIO Agenda 2018 Predictions” offers predictions that dovetail with Forrester’s view:

By 2020, 60 percent of CIOs will implement an IT business model and culture that shifts focus from IT projects to digitally oriented products.
By 2020, 60 percent of the CIOs who have crossed the digital divide will prevail in C-suite turmoil in competition to become digital business leaders for their enterprises.

Advice to CIOs: Find a leadership coach. Choose one or two lieutenants you trust to delegate important roles to. Find a senior product manager-type person in your company to help you become more knowledgeable about generating business value. Make a point to talk to your CEO about the advantages of digital transformation. Develop a plan for adopting a new digital governance model. What should your digital platform look like?

2. Digital Transformation Becomes Real for Most Companies in 2019-2020

We’ve been hearing for a couple of years that companies are digitally transforming their businesses. The truth is that those companies represent the leading edge and they are a small minority. Most CIOs are still stuck doing more with less, the hangover from the last recession. CEOs: Your CIO needs more budget to position your company for digital success over the next few years. IDC predicted that “through 2019, 75 percent of CEOs and their enterprises will fail to meet all their digital objectives, dragged down by conflicting digital transformation imperatives, ineffective technology innovation, cloud infrastructure transition and underfunded end-of-life core systems.”

That’s a lot of failure. CEOs and CIOs are going to need to work together to make digital transformation a reality. It’s not just about updating your technology, it’s about business innovation.

Key points on digital transformation from IDC’s CIO 2018 predictions:

By 2019, 60 percent of CIOs will complete infrastructure and application replatforming using cloud, mobile and DevOps, clearing the deck for accelerated enterprise digital transformation.
By 2019, 60 percent of IT organizations will have deployed digital transformation platforms supporting new customer- and ecosystem-facing business models.
By the end of 2019, digital transformation spending is expected to reach $1.7 trillion worldwide.

3. AI is No Panacea

Forrester named one of its 2018 prediction reports “The Honeymoon for AI Is Over.” Conventional analytics are undergoing full disruption, largely because AI is perceived to be the solution to both programming analytics and solving the big data riddle. And while it’s likely that AI/machine learning will be able to help with both problems, you can’t just snap your fingers and make it so. Harnessing AI successfully requires specialized engineering talent, quality data, objective planning and some trial and error. According to a Forrester survey, 70 percent of respondents say their firms will have implemented AI in the next 12 months. They chose decision management as their most important use. One of the key points to remember is that the decision-making abilities of it machine learning tool can’t over calm a lack of quality data. Forrester warns: “Don’t be fooled by vendor claims that more intuitive human-to-machine interfaces are [a magic potion] that reduces the need for data and metadata management and curation.”

Quick AI predictions from IDC:

By 2019, 40 percent of digital transformation initiatives will be supported by cognitive/AI capabilities, providing timely critical insights for new operating and monetization models.
By 2020, 85 percent of new operation-based technical hires will be screened for analytical and artificial intelligence skills, enabling the development of data-centric digital transformation projects without hiring new data-centric talent.

4. One-Third of Enterprises will Abandon Big Data Repositories in 2018

Has your company built a large data lake that hasn’t delivered any significant business value? Well, 2018 may be the year when you rethink that decision, according to Forrester.

On the other hand, Forrester believes that AI will be able to resolve the longstanding issue of the boundary between structured and unstructured data because of vendors including Digital Reasoning, Expert Systems and Stratifyd.

As you make your move to digital transformation, having more actionable data based on your pool of big data, especially unstructured text data, could deliver book valuable business insights. This might not be the best time to give up on big data. Especially if you’re actively engaged with AI.

5. Blockchain: Confusing, Skills Gap, Steeped in Hype—but Full of Potential

Blockchain will begin to show next year just how difficult it will be to employ but, at the same time, that it’s worth exploring.

“By the year 2020, the banking industry will derive $1 billion of business value from the use of blockchain-based crypto-currencies,” states Gartner’s October “Top Strategic Predictions for 2018 and Beyond.” “When compared to the estimated $7.6 trillion that is the industry gross output of the world’s banking industry, $1 billion may not seem like much. However, the value is more about the tacit endorsement of crypto-currency as a legitimate option by the banking industry.” Cryptocurrency is just one application of blockchain.

Advice: Build your blockchain ecosystem early, Forrester recommends in its 2018 prediction report, “Be Ready to Face the Realities Behind the Blockchain Hype.” “The blockchain terminology will remain confusing,” Forrester noted. “The term ‘blockchain-inspired’ is already a common descriptor for software that has some of the characteristics of blockchain or reflects some of the principles of the blockchain network, but isn’t a blockchain in the true sense.” There is a growing skills gap pertaining to software engineers and security professionals who have experience with blockchain. It’s a nascent technology; make sure your team sets realistic goals.

6. IoT Hits Prime Time, but it Might Not Be Ready

By 2020, IoT technology will be in 95 percent of new product electronics designs, Gartner said. IoT’s growth is very rapid, even for the computer industry. But that growth comes at a cost. The technology has not overcome what many believe to be rampant security vulnerabilities. “Through 2022, half of all IoT security budgets will be spent on fault remediation, recalls and safety failures rather than protection,” Gartner predicted.

Forrester is far more positive about the business advantages of IoT in its report, “IoT Moves from Experimentation to Business Scale.” Its predictions are also more detailed in the several areas where IoT might gain traction in 2018. But the security issues are not lost on Forrester, either. The research firm predicted: “IoT will be at the center of broader and more damaging cyberattacks. The Mirai botnet was a harbinger of future IoT security-related attacks and breaches. … Most firms still haven’t shown a consistent commitment to mitigating IoT-specific threat vectors.”

Advice: IoT is an accident waiting to happen. For B2C companies, the consumer backlash could be fierce if there is a major incident. Make 2018 be the year that you start plugging up those IoT security vulnerabilities and protection gaps.

7. Most Companies Won’t Comply with GDPR in 2018

The European Union’s General Data Protection Regulation (GDPR) takes effect May 25, 2018. Forrester predicted in its November report, “A Year of Reckoning,” that 80 percent of companies will fail to comply with the GDPR. Perhaps more to the point, Forrester additionally predicts that 50 percent of those non-compliant firms will do so intentionally, “meaning they have weighed the cost and risk, and are taking the path that presents the best position for their companies.” The other half of the 80 percent will try to comply but will fail.

Advice: It seems likely that some large company will be made an example of. You don’t want that to be your company.

Takeaways

Those are the standout IT-related issues for the C-suite in 2018 and beyond. If you weren’t tuned in to some of them, knowing is half the battle right? Well, probably not. These are tough challenges. Each organization has its own strengths and weaknesses. But generally speaking, if you parse this list by investing time and budget on the first four while minimizing the potential downsides of last three, you’ll be doing very well.

— Scot Finnie