What’s Next For Corporate IT

Last month at Sequoia, we gathered a small group of forward-looking CIOs to chat about emerging trends. They came with one question ("What's next?"), reflecting their curiosity and growth mindset; we came with many possible answers, reflecting the uncertainty of our business. To simplify, we framed the discussion around "platform transitions", meaning major shifts in the landscape, and thought about how these changes are likely to impact corporate IT in the years ahead. 

How Change Happens

New platforms follow an S-curve of adoption. They take time to catch on, then accelerate faster than people imagine, before topping out as they hit saturation. In contrast, the human brain extrapolates linearly, assuming a constant rate of change. That’s why people tend to over-estimate changes over a two-year timeframe and under-estimate them over 10 years (hence Gartner’s famous “hype cycle”).

If we plot current platforms along this S-curve, we are currently at an interesting point. We have a group nearer the top of the curve, which are well understood, and another cluster at the bottom, which are potentially transformative but still highly uncertain.

Maturing Platform Transitions

More mature platforms include the familiar themes of SaaS (software-as-a-service), mobile, and cloud. Most corporate IT departments continue to think deeply about all three, and are in the process of rolling out different initiatives around them. Each has morphed from its early days, as our understanding of them has grown more nuanced. 

SaaS has moved on from the initial replacement cycle of on-premise applications (i.e., Siebel to Salesforce, PeopleSoft to Workday, etc.). Today's growing apps look unlike those that came before. They are light-weight "systems of engagement" that rely on consumer-grade design and strong integrations to spread virally within an organization. Examples include Clari, Drift, Front, and Zoom. 

Mobile is becoming the primary way many companies interact with their customers. It’s also often the best way to communicate with employees, particularly those not tied to their desks. That’s created new opportunities for apps like Crew for messaging or HomeBase for time-tracking. But for the most part, it’s a chance for companies to build their own app experiences that deepen customer engagement (e.g., check out what Ikea has done with AR).

Cloud services, from providers like AWS or Microsoft Azure, are capturing a large share of new workloads. But it’s not the best choice in every case, because of cost, security, and data residency requirements. So for the foreseeable future, we will live in a hybrid world of on- and off- premise apps, enabled by vendors like Cohesity (storage) or Cumulus (networking). This also mitigates lock-in and singe-vendor dependence, which are growing concerns.

Emerging Platform Transitions

It's impossible to capture all emerging trends, so we chose to focus on three of the most disruptive: artificial intelligence (AI), autonomy, and the blockchain. Most companies are nowhere close to rolling out solutions in these areas. But many CIOs are thinking about their business impact. 

AI is a huge opportunity to transform businesses by automating thousands of manual processes. A good rule-of-thumb from Andrew Ng is that any decision made by a human in under one second can now be automated. Vendors will likely provide compute, algorithms, and talent; companies will contribute their data, which is needed to train intelligent systems. Initial AI applications have been built on advances in image and voice recognition, and will broaden over time. 

Autonomy is more than self-driving cars. It's software-powered robots doing a lot of things that humans used to do, such moving things around warehouses, mining copper, delivering groceries, and providing physical security for office buildings. Automobile companies are on the leading edge of this trend, but there will be new opportunities in every industry.

Blockchain-based apps got a lot of attention from corporations after Kodak announced a token sale and doubled its market cap. But they are not for everything, and many of the "private blockchain" ideas make no sense (no better than a private database). The power of the blockchain is its decentralized trust model. It's most applicable for apps where the benefits of no trust/decentralization more than offset the efficiency gains from having a central body. For example, it could be helpful to consortiums (e.g., banks adopting Swift or reinsurance companies adopting a common settlement layer). 

Implications

For most CIOs, there’s a balance between here-and-now projects which deliver immediate value, and longer term initiatives that offer a path to competitive advantage. In practical terms, that means scaling proven technology like SaaS, mobile, cloud, for tangible productivity gains, while in parallel experimenting with emerging platforms like AI, autonomy and the blockchain. Most of these experiments will not lead anywhere, but a handful might be transformative in ways that are hard to predict. In corporate IT, as in investing, the future is only obvious in retrospect.