EMERGING TECH
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Predictions 2023: What’s coming next in enterprise technology
Making predictions about enterprise technology is more challenging if you strive to lay down forecasts that are measurable. In other words, if you make a prediction, you should be able to look back a year later and say with some degree of certainty whether the prediction came true or not — with evidence to back that up.
In this Breaking Analysis, we aim to do just that with predictions about the macro information technology spending environment, cost optimization, security – lots to talk about there – generative AI, cloud and supercloud, blockchain adoption, data platforms (including commentary on Databricks Inc., Snowflake Inc. and other key players), automation and events, and we even have some bonus predictions.
To make all this happen, we welcome back for the third year in a row, Erik Bradley, our colleague from Enterprise Technology Research. As well, you can check out how we did with our 2022 predictions.
1,000+ inbound predictions from PR
Each year, tech vendor PR pros reach out to us to help influence our predictions. It starts as early as October. This year we received thousands of predictions from hundreds of experts in the industry. The chart above shows the breakdown of categories we received. As expected there was a heavy focus on cybersecurity. Cost optimization, cloud, DevOps and software were also popular topics. Digital transformation and software as a service got less attention. Erik Bradley points out that cybersecurity companies have a lot of cash, which may be why PR firms are working harder for them, and that security has been a top spending priority for multiple years. He is surprised that SaaS is only 5% and noted that a decade ago, that category would have received all the attention.
2023 predictions snapshot
Below is a quick look at the predictions we’ll explore in detail.
OK, let’s get into the details of each of the predictions.
No. 1: Tech spending increases ~4%-5% in 2023 but the ‘rubber band economy’ confounds
We’re calling for enterprise tech spending to increase between 4% and 5%. ETR surveys currently land at 4.6%. This year we’ve seen a consistently downward trend for spending expectations by chief information officers and IT buyers, as shown below.
The Fed remains in control and the market’s expectation is that it will ease up on tightening in an attempt for a soft landing. But there are many unknowns. A quarter-point may not be enough to cool inflation, and just as the Fed was late tightening, if it eases too quickly, the rubber banding effect will continue to confound forecasters.
We also note that the largest companies are the most conservative in cutting spend, while smaller firms are spending faster and growing at a much higher rate. As well, firms in Europe, the Middle East and Africa expect to outpace the U.S. and Asia-Pacific. Erik notes that the larger companies are being more cautious and that energy and utilities are spending more than anyone.
Watch the conversation on prediction No. 1 about the IT spending climate.
Enterprise tech spending expectations by sector
Below are some additional details from the ETR drill-down survey.
January 2023 ETR survey of 1,525 CIOs and IT buyers
Expected growth in 2023 IT spend
No. 2: Cost optimization remains a major theme in ’23 – Consolidating redundant vendors will be the top cost-saving technique
Saving money has been a major theme as we enter 2023. As shown below, the primary method that organizations plan to use for cost optimization is consolidating redundant vendors (36%), followed by cloud cost optimization (19%) and “other” at 15%. “Other” included hiring freezes, layoffs, delaying hardware purchases and ramping up off shore resources.
There was no evidence in the data that firms were looking at cloud repatriation as a favored technique to save money.
Alexander Feiglstorfer from Storyblok sent in a prediction that “All-in-one becomes extinct.” We only partially agree with that prediction. We feel all-in-one solutions will remain the norm for larger companies, while smaller companies will favor best-of-breed solutions.
We’re also seeing consolidation happening in functionality. Erik Bradley points to security as an area where that is clearly happening. As such, he points out that niche solutions will be less popular, while platforms will be more appealing in a spending climate where companies want to reduce the number of vendors they’re managing.
No. 3: Security leads M&A in 2023 – PANW, CSCO, CRWD, MSFT and ZS buy, OneTrust sells
Although the first part of this prediction is probably safe, we’re specifically calling out five companies that will be buyers and one company, OneTrust LLC, that will sell in 2023.
Erik explains the chart above. It’s based on ETR’s survey of emerging technology companies in the cybersecurity industry. ETR looked at the overlap between Palo Alto Networks Inc. accounts and various security vendors shown above, and have found that OneTrust and BeyondTrust Corp. have a high overlap in their overall net sentiment. We predict that Palo Alto Networks will make acquisitions in the near future, specifically in the authentication and identity space, as they need to move toward a zero-trust path. We also predict that other companies such as Cisco Systems Inc., CrowdStrike Holdings Inc., and Zscaler Inc. will also make acquisitions in this market in 2023.
In our view, the market conditions, with private company valuations down 10% to 40%, and funding drying up, make acquisitions more attractive for these companies, and there will be a lot of movement leading up to the RSA Conference in April. We would also expect mergers and acquisitions action for cybersecurity firms with a specialty in machine learning and artificial intelligence.
Watch the prediction about who is buying and who is selling in the cybersecurity market.
No. 4: Zero trust moves from hype to reality in 2023 – CISOs provide the proof, not vendor marketing
Chief information security officers tell us that zero trust, which was considered a major buzzword prior to the pandemic, has now become a priority focus for their organizations. A year from now, we’ll survey CISOs to quantify zero-trust adoption as evidence of whether this prediction came true.
We believe that CISOs are prioritizing zero trust because it has the best return on investment and enables business transformation projects to move forward. Once a zero-trust model is established and embedded into the operating model, organizations can go to market without the typical long delays to validate the security architecture.
Boards of directors in our view are beginning to understand zero trust and it is being redefined as a move away from hardware security toward software-defined security with authentication as its base. Hybrid work has been a key drive and is here to stay as zero trust aligns with a hybrid work environment.
As well, tying back to our previous prediction, we see companies such as Palo Alto and Zscaler making acquisitions to improve their software-defined authentication capabilities.
Watch the prediction on zero trust.
No. 5: Generative AI hits where metaverse missed
According to John Furrier, ChatGPT is a Netscape moment — meaning the first time we all saw the Navigator web browser, we realized a new era was upon us. From an enterprise perspective, according to Erik, natural language processing will take out data prep tools and broadly infiltrate enterprise technology.
The popularity of OpenAI LLC’s ChatGPT has been astounding and the following data from ETR underscore the mindshare it’s grabbing. ETR, for the first time, added OpenAI to its emerging technology vendor survey. The survey has been in the field for only a short time but already received 600 responses. OpenAI has shot to the lead, surpassing even Databricks with a 52% positive sentiment score.
Investors are excited about creating something competitive to ChatGPT and, according to AI expert Howie Xu, around $100 million investment will allow companies to create something similar.
AI is recession-proof — Scott Stephenson, Deepgram
ChatGPT is deep fakes for words… super useful for people who can’t write and increases productivity for those who can…. — David Moschella, author
Finally, Scott Stephenson of Deepgram Inc. sent us a prediction saying “AI is recession proof.” Erik commented that he likes that quote better than the comments from Yann LeCun, Meta’s AI czar who recently slammed ChatGPT. Erik stated that LeCun’s statements come across as sour grapes for a company that has spent an “insane amount of money” on the metaverse, which has been a dud, while Microsoft Corp.’s investments in OpenAI are, in his opinion, much more sound.
Watch the discussion on generative AI, ChatGPT, OpenAI and the future impact of NLP.
No. 6: The cloud expands to supercloud as edge computing accelerates; Cloudflare benefits in 2023
Since we began a community effort to define supercloud, the concept of a common experience across clouds, on-premises and to the edge has gained momentum. Technologists and customers alike see this trend and Cloudflare Inc. in particular is leaning into the concept and even using the name.
Below are some comments from the community and ETR’s Insight roundtables that prompted our next prediction.
In 2023, highly distributed IT environments will become more the norm as organizations increasingly deploy hybrid cloud, multicloud and edge settings. – Atif Kahn, CTO, Alkira Inc.
If my sources from edge computing are coming from the cloud, that means I have my workloads running in the cloud. There is no one better than Cloudflare. – senior director of IT architecture in financial services
Cloudflare’s market share continues to climb – to near 20% Pervasion in ETR’s most recent survey – and they are a leader in WAF, DDOS protection and bot detection… in addition their core edge networking functionality. – ETR survey analysis
We predict 2023 will see the expansion of cloud to the edge and supercloud (i.e. consistency across clouds continuing to evolve). Cloudflare in our view will be a major beneficiary of this trend. According to Erik, Cloudflare has overtaken Google LLC in terms of momentum in the market and is expected to be a big winner in 2023 as organizations increasingly deploy hybrid cloud, multicloud and edge settings.
Cloudflare is considered the best fit for the definition of supercloud as it brings all aspects together and is cloud-agnostic. It is already highly pervasive in networking and security and is considered the No. 1 leader in SaaS, web access firewall or WAF, distributed denial-of-service or DDoS, and bot protection.
It’s also taking share from competitors such as Akamai Technologies Inc. and is the only game in town right now. One possible area of weakness, according to one practitioner, is that Akamai has a stronger on-premises story. We like Cloudflare’s positioning of expanding the cloud to supercloud versus focusing on-premises.
Watch the discussion on cloud, supercloud and Cloudflare.
No. 7: Blockchain’s struggles to find a home in the enterprise continue, but devs will adopt it in 2023. Solidity and other open-source blockchain tools win.
Blockchain technology has been gaining a lot of attention in recent years, with many experts predicting that it will revolutionize the way we do business. However, despite the hype, it has yet to find a solid footing in the enterprise.
According to a senior IT architect in financial services, blockchain is still an open-source component that requires a lot of customization and development work in order to be integrated into a business.
There are some, however, who believe that blockchain will find a home in the enterprise in 2023. Ravi Mayuram, chief technology officer of Couchbase Inc., predicts that DevOps will begin to adopt blockchain, specifically Ethereum in the coming year. He argues that newer programming languages such as Solidity, the programming language for Ethereum, will become increasingly popular among developers, mirroring the boom in machine learning. Although this may be true, it remains to be seen whether or not blockchain will be adopted by the enterprise as a whole.
Erik is more skeptical about the future of blockchain in the enterprise. He argues that blockchain is a niche solution that requires a lot of custom work, and that it is unlikely to gain widespread adoption in the enterprise. He also points out that though blockchain is a database ledger, it is not clear why businesses would want to move to a different database ledger when they already have one that works well.
The bottom line is that, beyond crypto use cases, we predict that the lack of proven turnkey solutions, the high level of customization required and the lack of clear benefits over existing database ledgers will continue to hamper blockchain adoption in the enterprise, other than as a niche solution for specific use cases in financial services.
No. 8: AWS, Databricks, Google, Snowflake lead the data charge; Microsoft keeps it simple; dbt Labs disrupts legacy data prep tools
In the data platform market for analytics, machine learning and databases, Amazon Web Services Inc., Databricks, Google and Snowflake are leading the charge, with Microsoft making is easy to do business with its data tooling. Snowflake and Databricks are currently on a collision course, as they both aim to become the single source of truth in analytics.
We predict there will be a big focus on, and greater adoption, of open formats and languages that are popular in the data science and open source communities. For example Databricks’ emphasis on Delta Lake and Delta Sharing aims the company at Snowflake’s traditional EDW and more recent data sharing domains. Snowflake’s embrace of Iceberg and Python allow it to encroach on Databrick’s core served markets of data science and data engineering.
In 2023, these trends will accelerate as both companies attempt to expand their respective total available markets. Evidence will be seen in terms of more mature tooling, new capabilities and customer proof points.
CUBE contributor George Gilbert predicted dbt Labs LLC will be a new disruptor in the data business, as it’s essentially turning key performance indicators into application programming interfaces inside the data warehouse and simplifying the data pipeline. According to Erik additionally, dbt Labs is currently the No. 1 leader in the data integration market, with a 33% overall net sentiment to lead data analytics integration.
Google will remain focused on BigQuery adoption, but customers have complained that they would like to use Snowflake with Google’s AI tools yet are being forced to use BigQuery.
AWS will continue to stitch together its bespoke data stores, taking the “right tool for the right job” approach and filling the gaps.
Microsoft is simply making it cheap and easy to use their products, despite some complaints from the community about Cosmos.
Erik’s concern is that Snowflake and Databricks are fighting each other, allowing AWS and Microsoft to catch up to them. He believes that both companies need to stop focusing on each other and think about the overall strategy. He also points out that AWS and Azure are collecting their toll, as both Databricks and Snowflake run on top of them. He predicts that Snowflake and Databricks may make some sort of acquisition in the future.
Watch the full discussion on our predictions around the battle for data platforms.
No. 9: Automation makes a resurgence – UiPath and Microsoft’s Power Automate separate from the pack
We predict automation makes a resurgence in 2023, with ETR data showing an increase in spending momentum. UiPath Inc. and Microsoft Power Automate will lead, with UiPath separating itself from Automation Anywhere Inc. However, Microsoft Power Automate has a significant presence with its “good enough” approach.
The focus for robotic process automation and automation generally is shifting from back-office to front-office workloads, with software testing emerging as a mainstream use case. Machine learning and AI are becoming more embedded in end-to-end automations. Low-code is also becoming more prevalent, serving lines of business. This trend is expected to continue as organizations strive to automate as much as possible, particularly in light of recent layoffs in the tech industry. However, there is a challenge for companies like UiPath and Automation Anywhere to compete with Microsoft’s low cost and ease of use. To compete, these companies will need to have a 10 times better product that offers more powerful end-to-end use cases.
Surprisingly, a recent Cowen survey in the U.S. and Europe captured the following results regarding automation:
- Two-thirds of respondents are currently involved with or plan to assess RPA in 2023;
- 72% that are implemented or in proof-of-concept anticipate RPA spending growth. UiPath was the most cited vendor (68%) followed by Microsoft (41%).
At a starting point of $15 per user per month for Power Automate, it’s unlikely that Microsoft has fewer RPA deployments. We note the ETR data across 1,500-plus respondents shows almost the exact reverse in terms of account presence (60%/40% Microsoft over UiPath). But the Cowen data caught our attention. Nonetheless, firms like UiPath, Automation Anywhere and the others listed above have significantly broader enterprise-wide automation agendas and can offer greater benefits; albeit at higher software costs.
Watch the full discussion on our predictions around the automation.
No. 10: The number of enterprise tech physical events doubles. Big events get smaller. Digital becomes a first-class citizen
John Furrier provided much of the input for this next one. We predict that the number of physical events is going to increase dramatically – by two times at least in 2023. That might surprise people, but most of the giant events are going to get smaller. There are some exceptions, including AWS re:Invent, Snowflake Summit, Mobile World Congress and perhaps RSA. And there will be some others that grow, but generally we see a trend toward more smaller events and more regional and intimate road shows.
These micro-events are going to be stitched together and digital becomes a first-class citizen.
We predict that increasingly, brands will prioritize earned media and will begin to build their own news networks, going direct to their customers.
Watch the prediction on enterprise tech events doubling in 2023.
Bonus predictions with honorable mentions
Erik threw in the following bonus predictions.
Data prep tools headed for extinction
“I definitely think the data prep tools are facing extinction,” he says. He believes this will negatively impact companies such as Talend Inc., Informatica Inc. and other names like these. The problem he sees is that the business intelligence tools increasingly include data prep capabilities. An example of that is Tableau Prep Builder.
I definitely think the data prep tools are facing extinction – Erik Bradley, ETR
In addition, he cites advanced natural language processing being embedded in as well. Examples he cited is ThoughtSpot Inc., Tableau with Ask Data, and Qlik has Insight Bot. He believes all these minimize data prep complexities and will continue to improve over time. According to Erik, a regular business user can just self-query, using either the search bar, or even just speaking into what it needs, and these tools are doing more of the data prep.
Knowledge graphs break through in 2023
According to Erik, Neo4j is growing its pervasion in the ETR survey and is grabbing Mindshare, with more IT buyers citing it. AWS Neptune is another one that he seems to be getting its act together, and spending momentum is growing there. TigerGraph is also growing in the survey sample.
Knowledge graphs are ready to break through.
Real-time streaming analytics shine in 2023
The prediction here is real time streaming analytics moves from the very rich big enterprises to mainstream and more people will actually move toward real-time streaming this year. Because the data prep tools and the data pipelines have gotten easier to use, the return on investment on real-time streaming is more obvious.
Watch Erik Bradley’s bonus predictions for 2023.
Please by all means let us know how your predictions compare with these. As always we appreciate the collaboration and input from the community.
Keep in touch
Thanks to Erik Bradley, John Furrier and all the firms that sent in predictions over the past several months. There are too many to mention and though we only used a few, we do read them all.
Special thanks to Alex Myerson and Ken Shifman on production, podcasts and media workflows for Breaking Analysis. Special thanks to Kristen Martin and Cheryl Knight, who help us keep our community informed and get the word out, and to Rob Hof, our editor in chief at SiliconANGLE.
Remember we publish each week on Wikibon and SiliconANGLE. These episodes are all available as podcasts wherever you listen.
Email david.vellante@siliconangle.com, DM @dvellante on Twitter and comment on our LinkedIn posts.
Also, check out this ETR Tutorial we created, which explains the spending methodology in more detail. Note: ETR is a separate company from Wikibon and SiliconANGLE. If you would like to cite or republish any of the company’s data, or inquire about its services, please contact ETR at legal@etr.ai.
Here’s the full video analysis:
All statements made regarding companies or securities are strictly beliefs, points of view and opinions held by SiliconANGLE Media, Enterprise Technology Research, other guests on theCUBE and guest writers. Such statements are not recommendations by these individuals to buy, sell or hold any security. The content presented does not constitute investment advice and should not be used as the basis for any investment decision. You and only you are responsible for your investment decisions.
Disclosure: Many of the companies cited in Breaking Analysis are sponsors of theCUBE and/or clients of Wikibon. None of these firms or other companies have any editorial control over or advanced viewing of what’s published in Breaking Analysis.
Image: Kittiphan/Adobe Stock
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