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IDC Directions shifts focus to third-platform 'accelerators'

Analyst firm says third-platform technologies, such as IoT, will grow quickly on a massive scale to drive digital transformation, and businesses must be ready.

The third platform is ramping up to scale in unbelievable numbers, and businesses better get on board, or they...

will be left in the dust. This was the common theme at IDC Directions, a conference held at Boston's Hynes Convention Center and sponsored by the Framingham, Mass., research firm.

General session keynote speaker Frank Gens, IDC senior vice president and chief analyst, focused on third-platform technologies and the role they will play in the digital transformation of businesses. "If you want to compete and grow, you need to become expert in third-platform technologies, but you will also need to use them and help customers use them in the use cases that matter, which is about digital transformation," he said.

But you also better speed it up, because the pace is quickening. Those who don't keep up risk the same fate as first-platform dinosaurs, such as Digital, Cullinet and Wang Laboratories.

"The pace of new offerings is unbelievable, compared to what we're used to," Gens said. "Over the next several years, you're going to see a scale like you won't believe, and these types of scale offer two existential questions: Are we equipped to handle the numbers? If not, what do we need to do to get ready for the increase of scale?"

Third-platform technologies are centered on cloud, big data, social business and mobility. These are driven by "innovation accelerators," including the Internet of Things (IoT), 3D printing, augmented and virtual reality, robotics, cognitive systems and next-generation security. Gens said this is the technology base for growth over the next several years.

Third-platform spending on the rise

IDC predicted that second-platform spending -- PCs, Ethernet and so on -- will continue to decline year by year, while third-platform spending will continue to increase each year. Third-platform spending exceeded second-platform spending for the first time in 2015, and will almost double it by 2020. Overall, second-platform spending is expected to decrease by 5.1% from 2015 to 2020, while third-platform spending will grow 12.7%.

Gens defined digital transformation as the way by which businesses will use third-platform technologies to add value and competitive advantage by creating new offerings, new business models or new relationships. There are customers for this in almost every industry; for example, manufacturers are using third-platform technologies to add new services around their products, and make them "smarter" and connected products. Health is a huge area for digital transformation, and financial services are using third-platform technologies to reduce waste, fraud and abuse, Gens said.

Companies are in the early stages of the digital transformation, but this is expected to change rapidly, as well. An IDC survey on the state of enterprises' digital transformation showed that the majority of respondents are just starting projects, with 32% each characterized as digital explorers or digital players, while 22% are more advanced digital transformers (14%) or digital disrupters (8%). IDC expects the latter number to double to at least 45% by 2020.

"This means that the digital transformation will drive the IT spend in the next few years, and you will need to know what the primary business use cases are," Gens said.

IoT is one area that will be prominent in the digital transformation. Gens said more than 20,000 products were introduced at CES this year, and the largest percentage of products were IoT-related. These ranged from a $400,000 Ford GT connected car, with 50 sensors and 24 processors that generate 100 GB of data an hour, to a $100 sensor-driven smart thermometer, with 16 independent infrared sensors. With the price of sensors dropping so dramatically, the next generation will probably have 30 or 40 sensors, Gens said.

"All of these things together are forming a massive and expanding perimeter, a smart edge of continuous sensing for both enterprise and consumers," Gens said. "There will be about 30 billion of these devices by 2020, and there will be 10 times growth of apps and services around these devices." A developer community will grow around this to gather the data, make sense of it and turn it into something valuable.

To that end, the other side of the digital transformation is a cognitive or artificial intelligence (AI) back end that senses what those devices experience, finds patterns and algorithms, and generates recommendations or behaviors to create a more worthwhile product or service.

For example, IBM and Medtronic connected Medtronic's insulin pumps and glucose monitors to IBM Watson to detect and anticipate hypoglycemic events with a high degree of accuracy early enough to be able to do something about it.

"If you put the IoT and the cognitive story together, we're really talking about what happens when you connect a continuously sensing, expanding perimeter of things with this collective, deep-learning back end of AI. We believe you're talking about a new foundation for the next generation of solution and services, of killer apps," Gens said. "If in a few years, you are in the solutions business, and you're not taking advantage of that expanding edge and the collective-learning back end, you're applications and services will look very quaint."

Startups proliferate

The confluence of IoT and the cognitive back end will create an expanding ecosystem of developers. There are already thousands of developers at work on third-platform services, mostly startups who are the spring of growth driving the digital transformation.

However, Gens said that many large companies have also launched digital transformation centers in one form or another, including CVS Health, Capital One, Home Depot and Caterpillar.

"Many more have launched DT centers or groups within their companies," Gens said. "These groups will double the number of developers and double the capacity for digital innovation in the company."

We are on the threshold of jumping to a massive new scale in transformed marketplace, Gens said in summation. To take advantage of this and not be left behind like the old first-platform relics, businesses need to become focused on the third-platform technologies; connect these technologies to real use cases and make them relevant; and connect with the developers who are the "kingmakers" in the new industry.

The companies that lead the digital transformation must transform themselves, however. "If we have the best cloud, the best AI, the best IoT, but we haven't changed our own companies to be able to compete and operate them at these scales, then we are going to be like Wang," Gens said. "We need to not only offer these technologies to customers, we need to use the third-platform technologies to drive our own digital transformation."

The third platform and IoT

Vernon Turner, an IDC senior vice president, took to the stage at IDC Directions to explain how the Internet of Things relates to the third platform. Turner called IoT an accelerant that will fuel many of today's third-platform technologies, including 3D printing, robotics and cognitive computing. "It will create content, [and] it will connect the unconnected," he said.

Conversely, each third-platform pillar will play a role in IoT, Turner added. The cloud will be central in collecting data sources and scaling out applications, as well as connecting endpoints, activating applications and establishing networked IoT platforms. Social media -- perhaps the most underrated component, he said -- will be the vehicle through which people receive much of the IoT content, while mobile will drive connections. "Without a good mobile network, none of this will happen," he said.

Turner said IDC views IoT as a $1.46 trillion global market opportunity by 2020, and advised attendees to make sure they build fully integrated IoT systems instead of isolated applications. "This is not a paintball competition," he said.

The other keynote speaker at IDC Directions, Kitty Fok, managing director of IDC China, gave essentials of doing business in China and explained the role of key players, such as provincial governments and state-owned enterprises. Fok urged attendees not to let China's recent economic troubles discourage them about the potential for growth, which was a still-healthy 6.9% in 2015. 

Executive editor David Essex contributed to this article.

Next Steps

What's the future of IoT?

Is the third platform for real?

How can you take advantage of the third platform?

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