The final post in this series is below and it contains a list of important Industry Vertical Trends for 2008. These represent trends that will have an impact on the IT industry and are significant enough to warrant increased attention during the 2008 calendar year. We will be watching these from our role in HorizonWatch.
Top Industry Vertical Trends
1. Energy & Utilities: As a result of recent deregulation legislation, the industry as a whole is changing structurally. Existing utility companies are being forced to merge, acquire other companies, and develop partnerships to remain competitive. There is an emerging opportunity to build intelligence into infrastructures through advanced data collection, networked devices, control systems, and automated meters to address clients’ primary business issues, improve overall energy and CO2 efficiency, provide real-time monitoring, develop standards, enable adoption of green technologies and provide key insights to decision-makers. Emerging intelligent grid technologies include sensors, smart metering, network automation and control, analytics, and communications technologies such as broadband over power lines (BPL) and WiFi/WiMAX. Over and above this is the focus on developing non-fossil fuel sources.
1a) Intelligent Utility Networks: The Intelligent Utility Network represents the transformation of the grid into an interactive energy-management system. The proliferation of sensors and existing technology such as smart meters, analytics, Services Oriented Architecture, high speed communication network and digitally-enabled equipment have made this possible. Building intelligence into the grid provides the information backbone to better understand our energy use and empowers utilities, regulators and consumers to better manage their energy environment and practices.
2. Healthcare Integration: Fueled by unsustainably high costs, unacceptably poor quality and an ever growing demand for services, the U.S. healthcare system is in the midst of a retail-like transformation where the convergence of high quality individualized information delivered to the point of decision can shape behaviors, reduce costs and influence outcomes. The following lists some of the initiatives we are watching:
- Business Intelligence/On Demand Analytics
- Personalized / Customized Healthcare
- Pay for Performance / Quality
- Cross - Ecosystem Collaboration
- Electronic Health Care Records
- Streamlined Benefit/Payment Systems
3. Pharma: Pharmaceutical companies are facing important industry challenges and they must transform their businesses if they are to prosper into the next decade. Those that can leverage technology and adapt their discovery, development and sales processes to support a diverse product portfolio and emerging global markets will realize financial gains and continued growth. Also, by improving product and price transparency, companies can improve their public reputation. Perhaps the biggest challenge for the pharmaceutical industry is its ability to transform the culture of its workforce. Widespread change will require a significant disruption in business models, as well as the integration of knowledge, technologies and processes from many different sources.
3a) Life Sciences: The Life Sciences market is at a crossroad as certain segments are starting to mature. Innovation is vital for meeting consumer demands and seems poised to explode thanks to technological advances and increased competition.
4. Future of Banking: Global forces are disrupting the traditional banking industry and banks are facing new patterns of competition that didn’t exist five years ago. Armed with a powerful web of information, customers are becoming less constrained by conventional views of who their financial provider should be. National borders and industry boundaries are collapsing, and increasing collaboration amongst firms continues to both exert pressure on and create new opportunities for traditional banks. Here are some of the trends we are watching.
- Branchless Banking... The consumer's preference for online sales and services continues to grow. The online channel has grown as the dominant source for transactions, service, and sales of banking products.
- Core Banking
- Payment Security - Biometrics
- Mobile Phone payments
4a) Microfinance: Four billion people form the base of the economic pyramid (BOP) -- those with annual incomes below $3,000 (in local purchasing power). Over 3 billion people live on less than two dollars a day and only 17% of them have financial services. These people do not have a bank serving them.
5. Telecommunications: The traditional telecommunications industry includes companies that engage in fixed-line and wireless telecommunication networks for voice, data and video services. This traditional telecom industry is undergoing a massive transformation, including infrastructure and business processes. This is a result of an increasing convergence of telecom, media & entertainment, and information/technology industries all which have very different business models, cost structures, value propositions, and skill requirements Telecom service providers are pushing to speed time to market of value added services, lower operating costs to drive profitability, and increase retention and drive new revenue. So 2008 will be a year that traditional telecom businesses increase their focus on a drive for new business models and architectures.
6. Media & Entertainment: M&E companies face daunting challenges as they prepare for the future of their industry. The combination of new technologies and economic pressure on core operations raise the stakes for making the right business decisions, as well as avoiding the wrong ones. As new devices and delivery formats offer more active, customized experiences to the end user, media firms have found that the traditional methods of creating value are insufficient to remain competitive. As mentioned in trend 5 above, industry lines are blurring. As an example, telcos and cable companies are getting into each other's business and competing across triple play offerings (phone, internet, TV).
- Content providers looking to distribute content across three screens-- mobile, computer, TV-- and to avoid being locked in by service providers' "walled gardens" where possible
- New businesses are springing up all over the place to support any time, any place, any device viewership, e.g., Slingbox and Joost
- User-generated content continues to explode (e.g. video)
It is important to note that the trend here is towards integration and convergence of technologies, applications, and trends. Consumers are driving adoption and innovative uses of these many of these technologies. User-generated content is increasing. Blogs, amateur filmmakers and others are creating content that complements -- or perhaps threatens -- traditional media outlets. Included are things like Social Networking sites (Myspace, Facebook, AOL/AIM, etc), Virtual Worlds for Social Networking (Second Life, Active Worlds, There, etc.), Virtual Worlds for Kids and Teens (Habbo Hotel, Webkinz, ClubPenguin, etc), Earth Mapping (e.g. Google Earth, Microsoft), Console Gaming (Xbox, PlayStation, etc), Massive Multiplayer Online Role-Playing Games (World of Warcraft, Everquest, etc), and Web 2.0 features (tagging, pictures, video, blogging, commenting, etc.).
7. R&D / Product Development: The trend is to transform global R&D and PLM processes to align with and push the business strategy (e.g. by identifying the right products / optimizing the product portfolio) and at the same time identifying operational/maturity improvements for managing the “business” of R&D and PLM, thereby increasing effectiveness and efficiency. Today every company needs to look at the R&D / Product Development processes and determine if those processes need to be transformed. New product development is at the heart of any innovative company focused on growth. Innovative companies that leverage Web2.0 tools in their development processes will be the ones maximizing their growth.
Some companies are using Web 2.0 tools to 1) leverage mass customer contributions, 2) provide open architectures for others to build on as they like, and 3) handing control over key product decisions directly to users. Large companies require a global R&D strategy. High speed communication technologies open the possibility for global R&D. Although the project management on a global scale has its challenges and specific problems, R&D activity serves local markets best when the activity is also located in those local markets. A global R&D strategy needs to consider:
- The need to tap into sources of knowledge and information where ever they might be located on the globe.
- The need to transfer that knowledge to other R&D centers and other parts of the organization.
- The need to coordinate activities between various R&D centers to ensure that knowledge is used appropriately.
- The need to balance the allocation of priorities and resources globally based on strategic need rather than proximity.
- The need to develop global products with customization to meet local markets.
8. Intelligent Transportation Systems: All levels of governments are slowly recognizing the toll urban congestion is taking on our economies and our environment. Intelligent Transportation Systems improves transportation safety and mobility and enhances productivity through the use of advanced communications technologies. Intelligent transportation systems encompass a broad range of wireless and wire line communications-based information and electronics technologies. When integrated into the transportation system's infrastructure, and in vehicles themselves, these technologies relieve congestion, improve safety and enhance productivity. We are watching ITS trends in three specific areas:
- Congestion Charging: Using IT to reduce urban congestion, resulting in 1) reduced travel times, and 2) decreased demand for fossil fuels
- Automatic Fare Collection: Using IT can automate the collection of fares and speed public transportation queue lines
- Advanced Transport Information Management: Using IT to build an integrated multi-modal transportation information system that can provide agencies and citizens with an integrated, real time transportation information system
9. Defense – Network Centric Operations: These are operational Systems in defense, security and intelligence organizations require comprehensive information management systems to facilitate better decision making. These systems can provide a huge competitive advantage to accomplish mission objectives - whether military, peace keeping, or homeland defense in nature.
10. Trusted Identity: Identity has a social and business issue that goes well beyond technology, requiring innovative ideas. Focus on identification and strong authentication, on full life cycle of identification, focus on cross industry. There are four targeted key industries: Finance (online banking), Healthcare (Patients and Providers), Government, and Travel.
11. Small Medium Enterprises: The fact that SMB is growing is no new trend, but it does remain a very significant trend. In fact, SMB is the largest fastest growing sector for IT spending – driven by increased sophistication with new delivery models. Business Solutions represents one of the largest opportunities - $83B and Midmarket services spending growth is increasing twice faster than that of large enterprise – driven by BRIC countries.
As always, we are interested in your ideas and comments related to this list of trends. Please feel free to enter your feedback below.