Predictions about the future of enterprise tech are streaming to our inboxes, literally by the thousands. Most are thoughtful and we will review those prior to publishing our 2024 predictions later in January. As is our tradition, we try to make our own predictions more challenging by citing forecasts that are measurable and have either a numeric tied to them or a binary outcome. Our belief is if we 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 some empirical evidence to back that up.
In this Breaking Analysis we grade the 2023 predictions we made with ETR’s Erik Bradley. We look back at what we said in January about the macro IT spending environment, cost optimization, security, generative AI, cloud, blockchain, data platforms, automation and tech events.
First a quick scan of our 2023 predictions.
Global Tech Spending
In January we said tech spending would grow in 2023 between 4-5 percent. It turns out this was just a bit too optimistic but we got the themes right and came within one point, hence the A minus grade.
We correctly predicted the consistent downward pressure on budgets for the year and the pause in Fed tightening. We also correctly called that large companies would feel the pinch more than small firms as the data coming in today suggests that SMB will come right on our 4-5% figure, whereas the Global 2000 is showing less than one half that growth rate. Gartner is currently calling 2023 at 3.5% growth relative to 2022 for what it’s worth.
We said that EMEA would surprise to the upside but it didn’t. It came in right at the global number and APAC looks like it’s coming in at a half a percentage point above the global average. But we correctly predicted that government spending would significantly outpace overall IT spending and it did this past year.
So overall we got this call directionally correct, with the exception of EMEA and will give a grade of A-.
Cost Optimization as a Theme in 2023
The upside benefits of dynamically scaling cloud computing resources up has the equal and opposite benefit for customers as well – i.e. the ability to dial resources down. We clearly saw that in 2022 and projected continued cost optimization in 2023.
While this call was spot on, part of the reason for only giving ourselves a B is that we said consolidating vendors would be the primary means of optimizing costs, taking over for cloud optimization. The vendor consolidation trend was particularly acute in security but generally proved somewhat more difficult than forecast. Two other factors dominated spending strategies in 2023:
- Delaying new projects by far was the leading culprit of cost constraints;
- Combined with shifting budgets to Gen AI experiments.
We saw the latter steal from other budget buckets. Meanwhile the pressure on overall budgets remained in 2023 and as such these were two key trends that were not explicitly part of our prediction so we’ve taken the grade down to a B.
Security as an M&A Leader in 2023
We said that while the first part of this prediction is probably safe, the more challenging call is what we forecast specifically about the five companies cited, and a prediction that OneTrust would have an exit in 2023. Palo Alto spent $1B acquiring Dig Security and Talon. CrowdStrike took out app security player Bionic and Zscaler bought Canonic, a SaaS supply chain security firm. But the big news of 2023 was Cisco’s planned $28B acquisition of Splunk. Microsoft was active with new cloud security announcements but was focused on other areas for acquisitions.
As for the prediction of downward pressure on valuations, while true for many in the crowded security space like Cybereason, which saw a 90% reduction in its value in the spring, the likes of Wiz and Arctic Wolf saw upward momentum. And while OneTrust didn’t get acquired or IPO, it likely will in the coming year.
The last two items on this chart came in right on with AI a major theme for all cybersecurity firms. CrowdStrike’s Charlotte LLM announcement was particularly notable and as predicted the RSA conference last April was back in full swing.
So we took a B+ on this one.
Zero Trust Goes Mainstream
Related to our cybersecurity predictions we said that zero trust security would get real in 2023. While true, practitioners continue to tell us they struggle to operationalize the salient aspects of zero trust. And while it remains a priority and north star for most organizations, they continue to aspire for more mature implementations.
But because virtually all CISOs we talk to take this topic seriously and are on a zero trust journey, we grade ourselves a B+ on this prediction.
Generative AI Hits Where Metaverse Failed
Don’t look now, but Meta’s pivot from the metaverse to AI with Llama, combined with cost cutting has the company’s value pressing toward one trillion dollars again.
We pointed out last January that OpenAI’s momentum was unprecedented in the ETR spending data and predicted that would not only continue but also attract a spate of investment to competitive or adjacent platforms. It did. Anthropic was the most notable with investments from the likes of Amazon and Google driving a reported $20-$30B valuation. But others like Cohere, Stability AI, ScaleAI, Inflection and more benefitted from the considerable AI hype.
Perhaps a lock prediction but we nailed this one and earned an A.
The Cloud Continues to Stretch to the Edge – Tailwind for Cloudflare
We predicted that 2023 will see the expansion of cloud to the edge and the continued evolution of what we call supercloud. Cloudflare in our view will be a major beneficiary of this trend. Cloudflare overtook Google in terms of spending momentum in late 2022 and early 2023 as an indication of the company’s momentum. Cloudflare is considered a good 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 number one leader in SaaS, web access firewall (WAF), DDoS, and bot protection.
Cloudflare’s stock is up 98% year to date, compared to the red hot Nasdaq’s 42%. This was a good call and so we took the A.
Blockchain Struggles for Enterprise Relevance
At the time of this prediction, Erik Bradley argued 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 while 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.
So this part of the prediction we got right. We did however hold out hope that developers would embrace solidity as Ethereum continued to be the developer platform of choice. While crypto made a comeback in 2023 and Ether benefitted, there is no overwhelming evidence that enterprise developers are on board. In fact the data suggests many blockchain developers jumped to catch the generative AI S-curve.
So we should have stopped with Erik Bradley’s commentary but took it on the chin with this one and gave ourselves a C+.
Snowflake and Databricks Represent the Modern Data Platforms with Momentum
In the data platform space for analytics, machine learning, and databases, AWS, Databricks, Google and Snowflake are leading the charge with Microsoft making it easy to do business. Snowflake and Databricks continued on their collision course, as they both aim to become the single source of truth in analytics.
We predicted a big focus on, and greater adoption, of open formats and languages that are popular in the data science and open source communities. We also predicted that AWS would continue to make moves to simplify their bespoke data platforms, which it has albeit slowly.
While generally all true we took a B grade on this one because we didn’t call out the biggest theme of the year in data – i.e. bringing AI to data…and the scramble for Nvidia GPUs and other AI partnerships. Hence the penalty on our grade.
Automation Makes a Comeback in 2023 – Microsoft Power Automate & UiPath are Winners
We predicted that automation would make a resurgence in 2023 with UiPath and Microsoft Power Automate leading. While those two companies continued to show gains, we believe much of their success was due to other factors rather than market fundamentails. For example, UiPath’s momentum we believe has come from better sales execution while Microsoft has had a tailwind from its OpenAI partnership.
The fact is that AI is a two-edged sword for automation companies. On the one hand they can inject AI into their platforms to make them significantly more functional. The flip side is AI has the potential to cannibalize many of the mundane tasks that RPA and automation platforms are designed to address.
So we weren’t as forceful about that dynamic as we could have been. Moreover the move from back office to front office, software testing, end-to-end AI and low code adoption, while moving in the right direction was not an overwhelming trend in 2023. We were a bit early on this prediction so we gave ourselves a B-.
Events Come Roaring Back with a Twist
We correctly predicted that the number of physical events is going to dramatically increase in 2023, but many of the biggest events are going to get smaller. This was not the case with some events such as AWS re:Invent, Snowflake Summit, Databricks Data + AI Summit and some others. But traditionally large customer events from the likes of Oracle (Cloudworld) and Dreamforce were scaled down in size…as were many others. In addition we saw many more regional events and road shows take shape in 2023 as a means of driving customers intimacy locally.
As the “OG of Live Tech Event Coverage” we know a little about this topic. With theCUBE we’ve had a front row seat for thirteen years to see how events operate and this was an easy A+ for us.
So with that – add them up and divide by ten we earned a solid B+ this year, which seems to be our pattern. It seems hard given our quest for measurable predictions to break through a B+ grade but overall we feel pretty good about our calls.
Next up – our 2024 predictions which we’ll drop in late January after ETR releases the results of their spending intentions survey which is currently in the field.
Keep in Touch
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 EiC 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 | Comment on our LinkedIn posts.
Also, check out this ETR Tutorial we created, which explains the spending methodology in more detail.
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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.
