IDC Directions 2014 maps out "third platform" disruptions in detail

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Brenda Cole and David Essex, Published: 20 Mar 2014

BOSTON -- The pillars of IDC's "third platform" of information technology were on the minds of attendees crowding the Hynes Convention Center ballroom for the IDC Directions 2014 conference yesterday. Conversations around “big data,” social collaboration, mobile computing and cloud platforms proclaimed that the merging of these technologies -- the conference theme for the past few years -- is disrupting entire industries, which in turn puts more pressure on IT professionals to adapt or fade away.

Frank Gens, senior vice president and chief analyst for Framingham, Mass.-based IDC, opened the day with a keynote that doubled as a call to arms. Focusing on the changing demands of the third platform, Gens outlined the five key battlegrounds that will determine the winners -- and losers -- in 2014's business innovation war.

According to IDC, 25% of all IT spending in 2013 went toward the third platform, a percentage that will only grow in coming years. "Virtually 100% of all the marginal spending growth in IT is now coming from third platform," Gens said. "Now that every vendor in the industry has their full attention on that marketplace, this year is going to be all about pitched battles in every single corner of the third platform to establish new leadership in this market."

The first battleground is core infrastructure, according to Gens. IDC predicts that the number of global cloud delivery centers will double in the next two years, with more vendors moving cloud capacity to developing marketplaces. This will lead to industry consolidation within the next four years, Gens added, with the dozens of cloud infrastructure providers that are active today shrinking to between six and eight conglomerations. 

Gens introduced Internet-connected items -- beyond smartphones and tablets -- as the next battleground. Manufacturers are introducing connectivity in some surprising products: jewelry, sports equipment and even toothbrushes, he said. The growth in connective devices ties directly into the Internet of Things (IoT), which Gens predicts will also see a boom in coming years.

"If you're trying to carve out a space in [IoT], I would say that if you have an industrial internet strategy, that's important -- but you better have a good consumer Internet of Things strategy or you're going to miss the action," he said.

The third theater of war on Gens' strategy map is platform providers -- specifically,Platform as a Service (PaaS). Developers of cloud applications will rely on PaaS to deploy and support their software – a significant development, he said, because IDC research indicates that 80% of new cloud apps in development will be hosted on the top six PaaS providers. Developers will only want to create apps for the most popular platforms. "It's like musical chairs," Gens said. "When the music stops, there are only so many seats left."

Industry-specific platforms are also on the rise. By 2016, more than 100 platforms targeting individual industries will be on the market, Gens said. Most significantly, big players in those industries -- GE, Disney and John Deere, to name a few -- are the ones leading the charge toward innovation and are often welcoming their competitors in as collaborators.

Gens' fourth battleground is cloud applications, with tenfold growth projected over the next four years. About two-thirds of them will be process or role-based business solutions, he added, and 75-80% of new cloud apps will be big dataintensive. "This is really the new treasure hunt for us in the IT industry," Gens said.

The final battleground is centered on Infrastructure as a Service (IaaS). Over the next two years, IDC expects to see a large increase in the number of specialized infrastructure services. "The last five years, anyone who's looked at the software industry have seen a huge flip," Gens explained. The enterprise was once the traditional beginning point for new software, but that starting line has moved to the cloud. "Software developers have said, 'If I have a new product, I can get it to market and scale is much more quickly if I introduce it first through a cloud service.'"

Cloud, big data forcing tectonic shifts in IT

Addressing an audience roughly evenly split between IT professionals, vendors and business users, other analysts followed Gens on the keynote stage to lay out the reasons why the third platform is a juggernaut that could squash anyone caught looking the wrong way.

Dan Vesset, IDC’s program vice president for business analytics, said that while big data and analytics is a $113 billion worldwide market growing 11% a year, 60% of organizations say they lack the analytics skills to take advantage of it. Vesset cited several examples of successful big-data projects, including runway monitoring devices at nearby Logan International Airport, and said companies such as General Electric are increasingly recognizing data as an asset with significant monetary value.  “There’s an opportunity to become a platform for a full range of applications from all different industries.
These companies are looking to figure out how to monetize the data,” he said.

Holding out Apple and Netflix as examples of companies that turned the threat of Internet content delivery into unprecedented opportunity, Danielle Levitas, IDC group vice president for mobility, consumer and digital media said demographic shifts will soon make mobile e-commerce the norm, opening new opportunities for location-based marketing. Younger generations are more willing than older ones to sacrifice some privacy for convenience, which should cause the market for mobile e-commerce to expand rapidly. Vendors and IT departments can rise to the occasion by ensuring that mobile applications put convenience, context and relevance first, Levitas said.

The third platform, especially cloud computing, are transforming not just IT but the industries it serves, bringing unprecedented threats and opportunities to both. That was the key takeaway from the talk by Scott Lundstrom, an IDC group vice president with responsibility for the financial, government and healthcare sectors. “I’ve been doing this a long time, and I’ve never seen a market where so much is changing so quickly all at once,” Lundstrom said. “This is a change or die moment.” Customers are in some cases becoming competitors of IT vendors by packaging some of their services in the cloud, he said, and line-of-business managers have displaced IT managers as the main purchasers of technology.

In the closing keynote, Robert Metcalfe, co-inventor of Ethernet local area network (LAN) technology, exhorted attendees not to forget the foundational networking technology on which the third platform depends. He said emerging gigabit Internet standards will help make the Web less asynchronous and more truly interactive as network latency is alleviated.