Forces such as AI, cognitive, digital engagement and cybersecurity will have a profound impact on the software sector, which is set to increase its share of the global economy. With AI becoming a reality, companies with access to the data needed to feed AI processes will deliver better customer experiences. Large cloud platforms will be well-placed to deliver on the promise of AI – but there will also be opportunities for smaller companies to leverage their abilities in new ways. Alongside these developments, we expect new regulation to be introduced for AI in light of its potential to disrupt employment and create new geopolitical risks.
Company specific thoughts:
A number of companies in this sector have built platforms with massive scale and/or potential reach – these include Microsoft (MSFT), salesforce.com (CRM), Shopify (SHOP), Workday (WDAY), ServiceNow (NOW), Splunk (SPLK) and Red Hat (RHT). These have also proven willing to sacrifice additional margin upside in the short term to invest for future growth opportunities as they embrace automation, machine learning, AI and/or hybrid-cloud adoption. The small advantages they are achieving today will compound quickly over time – and this will make it difficult for others in this sector to catch up.
Technology: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.