When defining a digital strategy roadmap for 2024 and beyond, it is crucial to understand the emerging technology trends. What are these trends?
In guiding clients to formulate their digital strategies and roadmaps, a primary consideration is the current technology trends in the market. As the world undergoes rapid changes, it becomes imperative to understand these shifts. The aim is to delineate a digital strategy and roadmap tailored to an organization's specific needs. This discussion will explore the five most significant trends observed by our team, relevant to organizations undergoing digital transformations in 2024 and the subsequent years.
In 2022-2023, there was a noticeable breakthrough, or a tipping point, in the adoption of ChatGPT, OpenAI, and other artificial intelligence solutions at the consumer level. This evolution has elevated the standards and anticipations regarding the capabilities of artificial intelligence and analytics for enterprises. With the broader consumer base now familiar with tools like ChatGPT and how OpenAI solutions such as DALL·E can be beneficial in their daily lives, there is a growing realization of the potential benefits for enterprise solutions. This insight has illuminated the possibilities of harnessing AI, analytics, business intelligence, and other long-standing technologies that have often been misunderstood or underutilized within organizations.
As we anticipate the developments of 2024 and beyond, we foresee significant advancements in the integration and utilization of AI within enterprise structures. This pertains not only to how enterprises themselves harness technology but also to how ERP vendors and other enterprise technology providers integrate AI into their offerings. With a more profound understanding of AI's potential, influenced by models like OpenAI and ChatGPT, expectations regarding enterprise technology capabilities have heightened. Therefore, 2024 is projected to be the pivotal year when artificial intelligence and analytics attain widespread adoption at the enterprise level.
Another trend anticipated to persist in 2024 is the escalation of digital transformation failures. While there are advancements and introductions of intriguing technologies in the marketplace, the implementation of these technologies often faces challenges, leading to an increasing rate of failures. Several factors contribute to this increase.
Firstly, many enterprise vendors are pushing their clients away from legacy on-premise systems towards cloud solutions, particularly within the ERP software sector. Established providers like SAP, Oracle, and Microsoft, which have extensive user bases for their on-premise ERP systems, are now compelling those users to transition to cloud solutions. This shift generates an artificial demand and a concurrent surge in the number of implementations. Many organizations, whether prepared or not, find themselves thrust into the process of digital transformation due to this vendor-driven change. As a consequence, organizations that are unprepared or that don't genuinely require a transformation end up facing greater challenges and potential failures.
Secondly, some of the newer cloud solutions lack the maturity of their on-premise predecessors. Although these cloud solutions can offer unique capabilities not present in on-premise solutions, they sometimes miss out on essential processes developed over the years for on-premise systems. Until these legacy vendors fully transition their functionalities and capabilities to the cloud, disparities between previous and upcoming technologies will persist.
Lastly, labor shortages, driven by the sudden and artificial demand for digital transformations, exacerbate the problem. There's a deficit of consultants familiar with specific technologies, primarily because numerous transformations are occurring simultaneously. This rush resembles the surge witnessed during the transition to Y2K, where the demand outpaced the available resources and consultants to handle the projects.
Based on these factors, the proportion of digital transformation failures is predicted to continue its upward trajectory. This trend, which began in earnest in 2023, is expected to further intensify in 2024 and subsequent years.
Another trend anticipated for 2024 and subsequent years is the decline in market share for ERP software vendors. While the ERP software category is not predicted to become obsolete, major ERP software providers are likely to witness diminishing market shares as they face competition from emergent software categories. Several factors and alternative software types contribute to this potential decline:
In summary, these represent three primary ways in which the conventional ERP software market could face challenges, losing market share to competing entities in the sector.
Another trend to monitor is the rising significance of software platforms. While I previously discussed this in the context of a software category eroding the market share of ERP software, it's crucial to emphasize that software platforms represent a forward-looking trend. This is not merely due to their impact on ERP vendors, but because numerous organizations are gravitating towards this approach. Instead of heavily investing in a singular technology provider, organizations are opting for software platforms that offer the flexibility to expand and incorporate new technical capabilities progressively. This strategy can present a lower-risk method of technology deployment, eliminating the need to overhaul all systems simultaneously.
Within the realm of software platforms, the "low-code, no-code" movement is gaining prominence. An increasing number of software vendors offer low-code or no-code solutions, enabling the deployment of new technologies with greater flexibility. This movement eliminates the need for extensive customizations or in-depth technical expertise to modify or support the software. Even though some consider the low-code, no-code movement to be its distinct category, it's increasingly integrated within ERP and other enterprise technologies.
In conclusion, anticipate a surge in the adoption and momentum of software platforms in 2024 and the subsequent years.
The fifth and concluding trend for 2024 pertains to IT labor shortages. Observations from 2023 indicate a burgeoning shortage of IT professionals, and this trend is anticipated to persist and intensify in 2024. While there is a broader challenge in securing skilled talent across various functions, IT, given its specialized and high-skill nature, stands out. This shortage is exacerbated by the simultaneous occurrence of numerous digital transformations and the rapid pace of technological change. Such a landscape makes it increasingly challenging for the workforce to stay abreast of evolving technological requirements.
Consequently, organizations will face difficulties in sourcing talent to not only maintain their current technological frameworks but also to support their digital transformation journeys. This impending challenge in acquiring the necessary IT skills and navigating the labor scarcity is predicted to be one of the most pronounced trends in 2024 and the subsequent years.
To summarize, understanding these overarching trends in the IT and digital transformation sectors for 2024 is crucial. For further insights into emerging technological trends, best practices, and lessons drawn from global digital transformations, one can refer to specialized resources and studies.
I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.
