The clever Gameplan of the New Year

IT Trends 2020

  • People’s and society’s expectations, the economic situation and last but not least our awareness of the state of the earth have changed rapidly in the last year and require new strategies for the success of technology and digitalization (‘Purpose Economy’). 
  • Technology trends from the IoT, AR/VR and KI/ML sectors will be increasingly combined and used together in 2020.
  • Cloud-Native architectures are the predominant choice for new applications.
  • Successful digital strategies implement a portfolio management of digital products and services to deliver the promise of a ‘digital purpose’.

After the years of technology experiments until 2018, some companies entered the “digital flow” with their digitalization strategy in 2019 and were able to successfully implement digital projects. Although some industries are already generating profits with digital services or have achieved significant savings with industry 4.0 and smart logistics solutions, digitalization will remain an investment segment for most enterprises in 2020. Investors and employees are therefore increasingly asking the question of meaning in 2020: What is the company’s goal with digitalization and how does it fit in with the company’s overall sense of purpose? The impact of the technology trends 2020 therefore depends more than ever on the environment. We therefore consider the combination of all three dimensions:

  • People, society, economy and environment
  • Technology trends
  • Digital strategy, portfolio management & architecture

If Chief Digital Officers (CDO) or CEOs are able to understand the interplay of these three dimensions, they can credibly make the promise of a ‘digital purpose’ and deliver it visibly. This makes the ‘digital purpose’, which was also the topic of this year’s PERSPECTIVE conference, not only a realistic goal but also the categorical imperative of every CDO and corporate strategist in 2020.

Mankind, Society, Economy and Environment in a Transition Process

In 2019, the organizations specializing in demography revised their forecasts for the development of the world population significantly upwards. The figure is expected to exceed eight billion by 2023. By 2050, it is expected that around 2 billion more people will live on the African continent. At the same time, climate change will further spread the deserts there. People who are aware of these connections do not only participate in the Fridays for Future movement but are also the target group for modern digital products for many companies. Companies that not only make climate compatibility or other altruistic goals their business, but actually supply corresponding products, will differentiate in 2020 from those that do not take up a position or do not even publish their CO2 balance. At the same time, the society is polarizing into a second group that is not even interested in these issues and has made large SUVs the best-selling vehicle group in Germany.

However, people’s expectations in 2020 will also change at other levels. The tolerance for unstable beta products will decrease significantly. Digital services have to be available in the same way as physical services. What use does an e-scooter in urban mobility have if its cloud service is not available at the moment you want to unlock the vehicle? No matter if the battery is empty, the scooter is physically broken or the ‘cloud’ is not working, the effect is always the same: The service is unusable for the moment.

The demands on ‘user experience’ are also increasing. And this does not mean user interfaces but the further development of interaction paradigms. Speech interfaces must become much more context-sensitive in order to adapt to situations in industry or, for example, when driving a car. Simple dialogues such as ‘Drive to next service area with charging station but no further than 20 minutes away’ must also be understood by semi-autonomous vehicles in 2020 (see also Crisp Analyst Views on the subject). Business software should offer a ‘consumer-grade’ user experience in 2020.

Whether with speech or in a text-based bot, we will encounter artificial intelligence more and more frequently in 2020. However, the cognitive systems that replace or complement humans are now being measured by the abilities of humans. In summary, we see the following trends in the environment of technology and digitalization:

Mankind 2020

  1. Consumers question the ‘purpose’ of large companies.
  2. People are increasingly polarizing: Climate, humanitarian or pacifist goals influence the consumer behaviour of a growing stratum of the population. At the same time, large SUVs have the strongest growth in Germany.
  3. Tolerance for deficiencies in digital products drops to almost zero.
  4. AI-based user experience in daily life becomes a differentiator.
  5. Autonomous driving is no longer expected to be a gadget but rather suitable for everyday use.

A comparable change in expectations not only takes place at the individual level but also at the social level.

Society 2020

  1. Companies must justify their digital intentions in order to gain acceptance in society and among investors. A large part of German society is sceptical about digitalization, whether because of unclear privacy about the use of AI or because of threatened jobs around industry 4.0 solutions.
  2. Deepfakes demand trustworthy sources of information. Deepfakes, together with ‘alternative truths’ and ‘fake news’, will continue to influence politics and commerce in 2020.
  3. AI polarizes society. The digital strategy of companies needs to provide appropriate information and promote trust.
  4. A new generation of consumer-ecosystems is emerging that competently exchanges information on digital issues. At the same time, another part of the society is not dealing with the topic at all.
  5. Public discussion about meaningful sharing of data is on the increase. E.g. learning from health data can save lives or learning from motion data can make autonomous vehicles safe. Politicians have understood the need for large, anonymized volumes of data and are making them public. Gaia X is a first example of that.

The changes in Germany’s economic situation and in the environment will also have a major impact on digitalization and technology trends in 2020. Here are the three most important drivers:

Economy and Environment 2020

  1. Under financial pressure fewer digital products are produced than in the previous year. Digital products come from profitable companies because they require investment. Further automation with industry 4.0 solutions often brings rapid savings, even in companies under financial pressure, such as the automotive industry.
  2. Government subsidies can accelerate technology adoption. Increased promotion of e-mobility not only benefits vehicle manufacturers but also restores momentum to the whole energy revolution. A new hype of environmental technologies aimed at overall efficiency or fossil fuel avoidance could emerge in 2020. This also includes, for example, synthetic BtL fuels.
  3. Climate change requires creative use of technology. The cultivation of crops that consume fewer resources in densely populated regions is an example that we have examined in a Crisp Analyst View.

All in all, people, society, the economy and the environment form the changed framework conditions for the success and adoption of digitalization and technology. We have presented these factors as a kind of playing field for the technologies, architectures and strategies involved:

The „Digital Purpose“-Game 2020

People & Society & Economy & Environment

The success of the CDOs or CEOs in 2020 will depend crucially on how cleverly the six players are moved on the pitch. The pure technology segments IoT, AR/VR and KI/ML will be combined in modern architectures. Almost without exception, a cloud-native architecture will be used for new applications in 2020. In the following are the most important technologies in detail:

Internet of Things

  1. Digital twins abstract the interaction with physical things. Applications act less directly with IoT devices than with consolidated platform services which synchronize all changes of the physical and digital twins.
  2. 5G is still a disaster in Germany. Compared to other countries, regulation hinders 5G expansion instead of stimulating it. Larger industrial enterprises will experiment with 5G campus networks in 2020 and some will start production.
  3. More and more intelligence on edge devices. Machine learning and local analytics tasks are increasingly running locally but controlled centrally by a device management.
  4. IoT reaches all industries. Even those industries that have not yet had much contact with IoT find useful use cases. Others, such as the automotive industry, are becoming much more focused on IoT, driven by autonomous driving.

Augmented Reality/Virtual Reality

  1. Virtual Reality achieves market breakthrough with consumers. While many products – ranging from cars to houses – have come out with 2D illustrations such as glossy brochures in the past, customers now expect a 3D VR preview of their future investment.
  2. Virtual Reality often uses deep learning. The time of deterministic, previously firmly modelled worlds is over. Virtual Reality 2020 takes into account the interactions of other people and random events. There will hardly be VR without Deep Learning but Deep Learning without VR.
  3. Augmented Reality only spreads in large industrial companies. It will take another 18-24 months before solutions that are already in use at Siemens, for example, can reach SMEs.
  4. Augmented Reality becomes suitable for full-time use. Up until now, wearing AR optics in everyday life was far too tiring. This is due to the weight of the AR glasses on the one hand and on the other hand also due to the computing speed of the augmentation. If augmentations tear away from the real object during a fast head movement, this is very irritating and tiring. In 2020, both limitations will be technically eliminated. However, the broad adoption will not take place until 2021.

Artificial Intelligence/Machine Learning

  1. Data sharing & AI governance increase the quality of results. Only if even competing car manufacturers share the anonymous transaction data, will so much data be generated that not a single schoolchild will ever be hit by an autonomous car. In addition to the amount of data, the term AI Governance summarizes the framework conditions with regard to anonymization, data quality, transparency, balance and ethics. Politicians in Berlin have also realized the importance of AI Governance and initiated the Gaia X Platform which will not be established by the end of 2020. More successful, however, are machine learning models traded and reused on AI marketplaces.
  2. Liability issues and how to deal with mistakes will be clarified in 2020. Although not final, we expect at least the first binding statements from the technologists and the courts. For their part, AI users must clarify which deficiencies are acceptable for their individual use cases and where the deficiencies may be.
  3. Automatic learning increases the quality of chatbot. With cloud-based language assistants, this has already taken place for a long time. The merging of applications and a permanent, automatic further learning also becomes the standard in other areas.
  4. Systems will interaction with multiple speech assistants. Just as today you can log into many web applications with the identity provider of your choice and, for example, use a Facebook or Microsoft ID, you will be able to bring the language assistant of your choice into the applications. A car, for example, talks to one person via Alexa and to another person via Siri or Cortana.

Cloud Native

  1. Public Cloud providers further extend their lead with special-purpose hardware. Already in 2020, the hyperscalers (AWS, Azure, Google) will deliver a large part of their various cloud services on specially designed hardware, such as TPU, GPU, FPGA. As a result, private cloud and edge data centres have a further efficiency disadvantage. Neuromorphic hardware and quantum computing are the innovations of the coming decade, not the coming year.
  2. Security, Privacy, Maintainability, Reliability and Scalability as Build-In Features. If these features are not built into applications right from the start, it will hardly be possible to operate them properly later on. The paradigms change considerably from Enterprise Computing. For example, in 2020 microservice architectures should implement a ‘zero trust’ approach instead of migrating legacy enterprise concepts such as firewalls and VPNs into the cloud.
  3. Containers are everywhere. Kubernetes to become a PaaS alternative. Not only in large quantities in public cloud infrastructures but also on small devices with 1 to 2 gigabytes of RAM, containers are used massively distributed. In addition, advanced cloud users can use their own operations of open-source frameworks on the container cluster of a hyperscaler as an alternative to its PaaS services. At the beginning of the development of a digital product, PaaS services should be used to quickly reach the market. Later, the step back to the IaaS level with own operations for large volumes could be cheaper. The Kubernetes marketplaces make these steps possible.
  4. Demands on architects increase. Threshold for application logic drops. Distributing the right services to the topology of IoT, Edge and Public Cloud is not easy and may change continuously. Describing dynamic infrastructure in code will prevail in 2020. On the other hand, the implementation of simple application logic through Low Code tools is becoming more and more attractive.

Digital Portfolio

  1. Several digital products form a portfolio. Just as in the real world, products are announced, available or discontinued and no longer available. Only this happens much faster in the digital world. Confusion and frustration of the customer are inevitable if no professional portfolio lifecycle management is established.
  2. Digital portfolio management combines technology and strategy. In order to give the digital strategy, the necessary grounding, CDOs should have the role of a portfolio manager in the team.
  3. The Digital Portfolio Manager synchronizes all product owners. The high speed of agile development can get out of control with enthusiastic product owners. Double or missing functionalities in different products can cost money and confuse customers.
  4. The overall impression of the digital portfolio delivers the digital purpose promise. It is not the individual apps that can change the brand and perception of the company in 2020; it is the sum of the offers.

Digital Strategy

  1. Profitability and digital purpose are challenges. CDOs switch from cost center to profit center mode. In the future, digital products and services must be financed from the revenue of existing elements out of the digital portfolio.
  2. Digital strategy becomes part of the corporate strategy. The digital strategy has ‘grown up’ and becomes part of the corporate strategy. Especially in traditional companies, this is the chance to renew the entire corporate strategy.
  3. Preparation for economically difficult years. Digitalization in booming years is easy. In an economically tense situation, however, companies must not remain stuck exclusively in tactical automation and cost-cutting strategies.
  4. Technology remains an important enabler. If architects, developers, product owners and portfolio managers become more and more operational, there will be less time for scouting for new technologies. Part of the digital strategy should therefore always be to look for new technologies that enable disruptive business models. These include, for example, blockchain outside of cryptocurrencies.

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