While we can’t see into the future and cannot predict all of the things that will occur, it would not be a big surprise if any of the following predictions were to develop during the year ahead. Scenario planning is all about considering likely possibilities and preparing for them accordingly. Brian Jackson, research director of Info-Tech Research Group, urges enterprises and leaders to consider seven scenarios when building a business strategy in the year ahead.
If an optimist sees the glass as half full and a pessimist sees it as half empty, the strategist must consider what scenarios are likely to play out in which the contents of that glass are either sufficient or not and prepare accordingly.Â
Technology leaders may look ahead to 2023 and see a year in which regulation will tighten the vice on what is not allowed and what must be tracked. Or they might look ahead and see the opportunities of disruptive emerging technologies that could transform business models. Both can be true at the same time, and it’s helpful to consider some of the scenarios that might arise if these trends gain steam in the year ahead.Â
I see seven different likely scenarios that hold ramifications for the technology sector. Whether or not these scenarios are good or bad is up to you, but it might be wise to consider how to prepare.
Scenario 1: The metaverse does what regulators can’t and breaks apart Facebook
I agree with Reuters’ Lauren Silva LaughlinOpens a new window that Mark Zuckerberg could split Meta into two companies; one focused on emerging technology development and the other the established ad-driven business model of Facebook and Instagram. When Zuckerberg started Facebook, it was a startup that attracted venture capital interest and was given a long runway to turn a profit. Its rapid growth in user base allowed Facebook the freedom to build a product and continue building engagement and worry about turning a profit at a later time. Facebook was operating at a loss for years before recording its first profit in 2009.Â
With Zuckerberg’s vision of â€œthe metaverse,â€ he seems to want the same latitude to flesh out the user base, find out what works for user engagement, and then worry about turning a profit later on. However, investors of the publicly traded firm are looking for a quarterly profit and aren’t as patient as those venture capitalists. At the same time, the pressure to depict Horizon Worlds as a product that’s ready for primetime led to embarrassing moments. For example, Zuckerberg’s avatar has been compared to the â€œMiiâ€ avatars created on Nintendo Wii consoles in 2006 and celebrating the release of legs in Horizon Worlds (prematurely) by seeing Meta’s CEO dance on stage was just weird.Â
The product has shown some promising signs, with best-in-class hardware sold to consumers at volume. But the overall vision needs more time to bake. To buy that time away from the prying eyes of investors, Zuckerberg splits the company and funds Meta with his own shares. A new CEO takes on the social media business, while the new private company seeks more patient capital.Â
With anti-trust regulators scrutinizing Meta anyway, this move alleviates some of that pressure by proactively restructuring.
Scenario 2: Generative AI creates conflicts between creators and platforms
In 2022, generative AI technology powered incredible new content creation tools for images (Midjourney, Stable Diffusion), writing (ChatGPT), and coding (Github Copilot). This is causing an existential crisis among creators as some artists realize that their unique drawing style has been used to train an algorithm without their consent. Now they fear the value of their original work could be diminished by AI-made works churned out at volume, or, worse yet, their artistic flavor could be used by extremists to promote violence and hatred. Creators organize efforts to create opt-out lists, to be excluded from algorithm training, and fight to have those lists respected by organizations creating the AI tools.Â
At the same time, platforms dependent on a constant stream of new content explore the opportunities of algorithmically generated content. For example, Spotify may explore AI-crafted music. Spotify’s business model creates tension with the musicians it features because the platform must pay the musicians in proportion to how often their work is listened to. For that reason, it aggressively expanded its podcasting content (famously paying Joe Rogan $200 million or more to exclusively podcast with Spotify) because it does not have to pay podcasters in exchange for listeners.Â
Follow the logic, and it makes sense that Spotify may train generative AI on different musical genres and use it to release new music that it owns. It could feature unlimited tracks that sound like Britain’s pop rock revolution in the â€˜60s or Spanish classical guitar, etc. Perhaps it incentivizes users to listen to these playlists by offering a discounted monthly fee.Â
Scenario 3: Mandatory modernization in healthcare
Since the 1980s, modernization in healthcare has been a focus for federal governments in developing countries. Progress has been slow, with most patients today describing their healthcare experience as fragmented and frustrating. With the COVID pandemic putting more pressure on hospitals to keep pace and following government lockdowns that were designed to avoid overloaded emergency rooms (and the resulting deaths), the desire to modernize healthcare is more acute.Â
Another driver of the modernization of healthcare is the vulnerability of hospitals to ransomware. While some ransomware gangs have released hospital victims from their clutches for free, not all are as kind. The vulnerability of being disrupted by a cyber attack will be a major motivator for governments to want IT overhauls.Â
Efforts are already underway to create federal-level data-sharing initiatives with a robust public health data infrastructure in the U.S., Canada, and the U.K. Expect to see governments invest more resources into these efforts and drive towards a patient-controlled model of managing healthcare data while also pushing for more efficiency in the system overall.
Scenario 4: Business process mining and discovery go mainstream
Digital transformation accelerated during the pandemic, and many more large enterprises digitalized entire process flows. They moved their backend systems into the cloud and broke down data silos. Now, many organizations are looking to shift into a different gear and coast on their digital investments rather than continue putting the pedal to the metal.Â
Vendors offering enterprise resource planning (ERP) systems recognized this over the past couple of years and have been preparing for it by acquiring or developing solutions in the business process mining (BPM) and business process discovery space. This software helps either maintain digital processes by illuminating how they are executed, or it can surface new undefined processes that take shape from the grassroots.
In 2023, major vendors will turn their acquisitions into tangible features that deliver value. Standalone BPM solutions might get pushed aside as a result.Â
Scenario 5: Zero-trust dominates the cybersecurity industry
The perimeter-based approach to managing cybersecurity is dead. A lot of zombies continue to lurch forth in this way, but the industry is already recognizing that it’s a losing proposition. Vulnerabilities are just too commonplace, and the nesting doll nature of modern software makes it too difficult to even track what’s in your environment. That’s why the U.S. requires all its federal agencies to adopt a zero-trust framework. This results in a trickle-down effect as suppliers to these big-budget organizations rush to follow suit to maintain their good standing.Â
Every cybersecurity vendor will talk about how its solution enables zero-trust in some way or another. There will be a big risk of the signal getting lost in the noise, but standards bodies that publish clear frameworks help cyber security professionals retool their approach.Â
Scenario 6: The recession hits IT hard
After years of low inflation, the recent high inflationary period could affect CIOs more than they anticipated. Spending power will be reduced, exacerbating existing supply chain problems in acquiring IT equipment. If economic troubles add to the financial problems, organizations could be looking to cut their IT budgets further, reversing current intents to spend more on IT.
If cuts are required, CIOs will be trimming from any IT functions that support the back office. They may replace costly custom solutions with a more commoditized cloud solution. Overall, IT will be more motivated to link its value directly to revenue generation or customer value creation.
Scenario 7: ESG compliance goes poorly, and tech vendors respond
In 2023, many jurisdictions require the largest companies to collect data on their carbon emissions and report on them. It’s all about making a push to protect investors from risk by creating a way to compare one organization’s carbon emissions output to another’s. Despite the requirement now being in place, there is little clarity on exactly how to deliver this type of report in the detail required. Large companies choose different voluntary frameworks that are in the marketplace, and some will do better than others. But many will be held to account by regulators and see negative consequences in the form of share price corrections, customer backlash, or even direct fines.Â
In the years ahead, smaller organizations have to start reporting on carbon emissions under the same regime. After the damage of doing it poorly is observed in some large companies, tech vendors work to integrate carbon reporting solutions into ERP and CRM software. Industry groups organize efforts to track carbon through the supply chain and make the necessary data available to regulated companies.Â
Eventually, new markets for carbon credits emerge, and companies that are able to prove their operations are carbon neutral or carbon negative find a new competitive edge.Â
Image Source: Shutterstock
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