Promising for the future

Summary of forecasts for 2023 from the perspective of the SAP community

Global IT spending will grow to a total of $4.5 trillion in 2023, according to the latest forecast from research and consulting firm Gartner. This corresponds to growth of 2.4 percent compared to the previous year. At the same time, this forecast falls short of the previous quarter's forecast, which called for growth of 5.1 percent. "Consumers and businesses face very different economic realities," said John-David Lovelock, Distinguished VP Analyst at Gartner. "While inflation is severely impacting consumer markets and leading to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the global economic slowdown." For enterprise IT spending, Gartner expects it to remain stable.

The shortage of skilled workers worsened last year, and there is no end in sight to the trend. As the industry association Bitkom found in a study, Germany currently has a shortage of 137,000 IT specialists across all industries. Jobs remain unfilled for an average of seven months, which not only slows down digitization projects, but also endangers entire companies in the worst case. The company's own employees are becoming the most important asset. As a result, continuing education and retraining programs, as well as training and professional services, will become key to future growth and development in the coming years.

2022 was an eventful year in many manufacturing companies. The pandemic subsided, but the challenges did not. Plants struggled with material availability and supply chain issues, energy prices skyrocketed, and the issue of workforce availability moved to the top of many plants' attention scales. How might this play out in 2023? Jörg Herbers, Managing Director of Inform, an optimization and AI specialist based in Aachen, Germany, ventures a forecast.

Skilled workers and production

No one knows what challenges 2023 will hold. But it is clear that flexibility in production capacity can form a major competitive advantage. For more and more production companies, this no longer just means sufficient machine capacity, but above all properly sized personnel capacity. The shortage of skilled workers is becoming a pressing problem for production companies. Systematic management of bottleneck situations means that workloads (requirements) and the availability of personnel capacity (coverage) must be planned much more precisely than in the past. This is where we reach one of the most difficult issues, because maintaining or even expanding workforce capacity in terms of volume and skills is anything but easy. Medium-term measures include, for example, training programs to proactively manage succession for qualified personnel, ideally also to keep small reserves against absences due to illness or staff departures.

In 2023, it will not be enough just to put out fires in personnel availability. Because labor market studies clearly indicate: Things will not get better. The Institute for Employment Research, for example, calculates that although the loss of personnel capacity in the labor market depends on immigration scenarios, it will decrease in any case. In 2023, digitization will, of course, not only advance in terms of working time arrangements, but also in other HR- and business-related processes. Any company that still sends out vacation applications, changes in working hours, overtime and bonus claims on paper or by internal mail in 2023 will have to think about which contemporary digital tools can be introduced and when.

In view of the current global situation, the topics of sustainability and energy efficiency are crucial items on the agendas of most companies. These have also come into focus in IT - and will become even more important in the coming year. "While companies are groaning under energy costs at the end of 2022, investments in more energy-efficient and thus more sustainable solutions must not be postponed," advises Marco Fuhr, Senior Consultant at Valantic Supply Chain Excellence. "Questions about data center energy efficiency will be asked much more often now, because the answers will save cash." Alongside this, artificial intelligence is on the verge of a breakthrough in 2023: as a tool for greater sustainability and, above all, for new business models. "In 2023, we will see more support from our colleague AI," predicts Thomas Lang, managing partner at Valantic. IT security in particular will benefit, Lang adds: "Artificial intelligence in the form of machine learning will play an even greater role in the automated detection and defense against cyber attacks."

Cybersecurity

DXC Technology outlined trends that will change the digital security landscape, and thus daily life and business, over the next five years: Both cybercriminals and cybersecurity experts will use artificial intelligence (AI) in an increasingly complex competition. In the context of cyber defense, AI has been used primarily to detect suspicious behavior patterns. However, due to the volume of suspicious clues and the number of false positives, cybersecurity specialists are often overloaded.

The good news is that in the future, AI-based security controls and response mechanisms will operate in an automated fashion, enabling faster and more accurate responses to cyberattacks.

AI and Machine Learning

"Artificial intelligence can detect and eliminate threats in an automated fashion, but the underlying processes are based on experience with past activities," said Mark Hughes, president of security at DXC Technology. "This experience encourages cybercriminals to come up with new types of attacks. It will be a challenge to keep up with this evolution. That's especially true when quantum computing comes into play, which can breach today's defenses in seconds."

There is an estimated shortage of 3.4 million cybersecurity professionals worldwide. Given the growing threats posed by advanced technologies, this number is likely to increase. The cyber skills gap opens up career opportunities for people of all ages and backgrounds. Cyber threats will continue to increase in pace and complexity in 2023 and beyond - but at the same time, they will also strengthen capabilities to leverage the latest technologies, approaches and talent to combat them. "The notion of a cybersecurity arms race is an apt analogy - the right side has to win," adds Mark Hughes, president of security at DXC Technology.

Benjamin Bohne, group vice president at Cloudera, said at the start of the new year that digital transformation is a must for all companies that want to increase operational agility, drive innovation and improve the customer experience. In the past, many decision-makers have relied on hyperscalers to do this, signing billion-dollar contracts with terms of three to five years. Gradually, disillusionment is spreading. Companies are discovering that the chosen path is expensive and that the return on investment comes much later than expected. They develop a new awareness of hybrid approaches and realize how important it is to be able to retrieve data from a cloud.

Last but not least, it's also about the ability to react flexibly to events that are beyond their control - for example, when data protection guidelines change and companies have to implement them. "We will therefore see more and more customers looking for alternatives to hyperscalers. To use the image of analysts at Gartner to describe it: We are at the top of the curve of a hype cycle. In the next two years, we will pass the peak, so hyperscalers are heading for the bottom and will come under increasing pressure as customers expect a return on their investment," explained Benjamin Bohne.

In addition, a rethinking of the cloud strategy is slowly to take place: Cloud Native will replace Cloud First and in this way enable completely new applications in companies.

Making profitable use of declining IT budgets

IT managers will continue to struggle with shrinking budgets in the coming months, and this trend is likely to continue. They need to anticipate exactly where an investment will take the company forward.

Companies want to further simplify their processes. Instead of working with many different manufacturers, they prefer to work with partners who offer multiple services from a single source. As a result, the technology sector will consolidate even more in 2023. Numerous providers are currently rapidly losing market value. Many smaller and start-up companies will be ripe for acquisition because they may be undervalued or have lost value since going public. Those who develop synergies with such smaller companies and start-ups to expand their product portfolio will be able to gain advantages.

Scott Zoldi, AI expert and chief analytics officer for analytics software provider Fico, ventures again this year to look ahead to trends in the AI world in 2023: Already, the problems of adopting AI software or AI tools are too complex or costly for some companies. For example, only about a quarter of companies are broadly deployed with AI systems. "As a result, it's very likely that by 2023, a few AI cloud service providers will emerge that will offer them to large enterprises as a package - similar to the Big Three of cloud computing services," Scott Zoldi says. These professional AI software offerings, easily accessible via API, will facilitate widespread AI adoption while ensuring proper AI governance.