Energy Industry Implications of Gartner’s IT Predictions

IBM Cloud Computing

IBM Cloud Services Graphic by IvanWalsh.com via Flickr

The beginning of a New Year is the traditional time for predictions or New Year’s Resolutions.  We see them in every industry category.  Gartner is out with a list of its own that includes some items that could have some profound implications for the changing energy industry.

Here’s the Gartner list and my take on the energy industry implications if they got it right:

  1. In 2013, the investment bubble will burst for consumer social networks, and for enterprise social software companies in 2014. If this means that we will not see the Facebook IPO until 2014 and by then it will disappoint all, I get it.  Social media has become a fad and Facebook has taught us that posting our rants and raves on the wall may get us attention but not respect. Since energy and utility companies are often late adopters this is good news.  Instead, I believe the real business potential from social media will be the tools for collaboration at work behind the firewall and the potential for collaboration across project teams, alliance partnerships and other secure settings to live into our virtual world of work future.
  2. By 2014, 20 percent of Asia-sourced finished goods and assemblies consumed in the U.S. will shift to the Americas.  We all hope this is true and evidence suggest that the combination of rising wages and costs in China, concerns over intellectual property leakage, low energy prices in North America and the market share growth of China exports will play factors in this trend.  For the energy industry fuel demand for power generation will be an important metric and managing the price position and risk in the portfolio to get to grid parity pricing will make a huge difference to sustainable growth of manufacturing at home.
  3. By 2015, 35 percent of enterprise IT expenditures for most organizations will be managed outside the IT department’s budget.  For many energy and utility companies the growth of IT has been faster than the investment in the core competencies of the business.  This has left many executives asking what business are we in?  Some of this is the horrible cost of enterprise software solutions and ongoing maintenance and configuration that means a permanent encampment for contracts from Accenture and other IT services firms.  IBM is putting a smarter planet name on it but the bottom line is the same we will be there for you until your money runs out!  The other IT problem beyond just cost is that the tail is wagging the dog in the functional organization of the enterprise.  Utility operations lost control of their legacy software years ago but have not seen its features and functionality replaced with better enterprise solutions.  Meanwhile, operating costs are creeping back up to backstop the lack of IT performance at the front line of the business.  Salesforce.com and other cloud-based software as a service business models are bearing down on SAP and Oracle and other enterprise solutions forcing them to compete at ‘grid parity’ with these new entrants.  It is healthy competition but do we have to wait until 2015?  Bring it on!
  4. By 2015, low-cost cloud services will cannibalize up to 15 percent of top outsourcing players’ revenue.  This is music to my ears, it accelerates the transformation predicted in #3 above and also means that big data will not be used as an excuse to further embed enterprise giants in the Fortune 500 when cloud-based, predictive analytics solutions will be faster, cheaper and maybe better since the modules used in the Apps Stores will be better suited to the tasks at hand and all connected to the common data warehouse.
  5. By 2015, mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4-to-1.  The sleeper in the move to mobile could actually be Microsoft.  If it can remove the bloat from Windows, turn Office into genuinely user friendly apps, add mobile access on touch screen and other devices and leverage the power of Dynamics and SharePoint and other acquisitions the Microsoft ecosystem is going to be tough to beat.
  6. By 2015, the prices for 80 percent of cloud services will include a global energy surcharge.  This shows Gartner’s lack of energy domain expertise.  It is more likely that those data centers will turn into net energy suppliers to the grid capturing the waste heat, automating virtually everything to enable energy efficiency and demand response and using their big data capabilities to perform revenue producing ‘side jobs’ that turn each data center into a profit center instead of big energy sink!
  7. Through 2015, more than 85 percent of Fortune 500 organizations will fail to effectively exploit big data for competitive advantage. Big data is seen by many IT firms as the functional equivalent of the Y2K printing press opening the door to new hardware, software and services demands.  Moore’s Law and SaaS is our friend along with cloud services to make it work.  This must be a subliminal pitch for some Gartner advisory service to Fortune 500 players because big data just does not seem to be a big deal to deal with.  Putting your data to work will not be nearly the challenging as deciding what to put it to work doing.  That problem is a management strategy and vision issue.
  8. Through 2016, the financial impact of cyber crime will grow 10 percent per year, due to the continuing discovery of new vulnerabilities.  As a guy who recently had his STRATFOR account and my American Express card hacked the cyber crime thing is here now.  I need no further predictions on this.  Those cloud based services we discussed earlier may be part of the solution for cyber crime if the cloud can be made more secure and less hackable.
  9. By 2016, at least 50 percent of enterprise email users will rely primarily on a browser, tablet or mobile client instead of a desktop client.  Email as we know it and use it seems ripe for transfiguration into a more robust collaboration platform that integrates more features than inbox and spam. The growth of tablets and mobile mean we have many more ways to access data, collaborate with friends, family and colleagues and put our data and ideas into action.  It’s time to re-imagine email to be that integrated gateway to productive collaboration.
  10. By 2016, 40 percent of enterprises will make proof of independent security testing a precondition for using any type of cloud service.  Only 40%?  I’d bet that by 2016 independent security testing will be ubiquitous and a condition precedent to using and cloud based service.  We can solve the cyber security and spam problem—and we must.
  11. At year-end 2016, more than 50 percent of Global 1000 companies will have stored customer-sensitive data in the public cloud. DUH!  This is likely to happen before the end of 2012 Gartner-baby!  We will not trust the cloud to be the disintermediator of our IT future unless it can keep secrets.