Technology megatrends can be controversial. These shifts in behaviour or attitude that have a global impact and cross multiple industries are discussed at length in mainstream and specialist media, but for those who work in the business it can take a while for new tech to actually make a difference. Entrepreneurs and business owners are often too busy managing the day-to-day running of their operations to have time to ponder future trends.
And yet, they ought to. Those companies that stay ahead of the curve will be able to spot opportunities and potentially be worth more, make more and grow more. In a rapidly changing global environment, megatrend analysis is critical for companies seeking to drive sustainable growth and remain relevant as competition increases and new ideas disrupt entire industries.
Consultancy firm Accenture published a report earlier this year about the need for companies to differentiate themselves in the post-digital era. In a world where every industry already has a large arsenal of digital tools, it claimed companies will need to adopt a new set of emerging technologies in order to stay competitive. The firm has dubbed these as DARQ technologies and they include: distributed ledger technology (DLT) or blockchain, artificial intelligence (AI), extended reality (XR) and quantum computing.
“New technologies have always acted as catalysts for change. Why? Because they consistently deliver extraordinary new capabilities for businesses. Each of the four technologies that make up DARQ will be used individually by businesses across the economy to differentiate their products and services,” says Paul Daugh, Chief Technology and Innovation Officer at Accenture.
It seems industry has yet to catch up with this view. When you speak to owners of small to medium sized businesses in the TMT sphere, not many of these technologies are on their radar.
Corporate finance firm Evolution Capital conducted a small poll with key decision-makers in IT about which megatrends are likely to affect them in 2020 and beyond. Of those that responded, the majority (66.7%) said they were not investing in any DARQ technologies at all. Just 16.67% said they were investing in blockchain technology whilst a third said they were actively investing in artificial intelligence.
Nigel Cook, founder and MD of Evolution Capital, says businesses ignore megatrends at their peril. “Not many saw the smartphone revolution coming. And yet these days we take for granted the fact that we have the equivalent of a computer in our back pockets. It may not seem essential today, but investing in future megatrends is crucial for businesses that want to stay ahead of the curve.”
Neil Bellamy, head of Technology, Media, Telecoms & Services at Royal Bank of Scotland, adds there are still plenty of technology trends that have further potential.
“Cloud services remains one of the hottest sub-sectors in TMT, despite the concept of cloud computing being around for a long time,” says Bellamy.
He explains that more businesses are looking to to buy in consultancy and digital delivery of services, such as cloud computing, in a bid to make their companies less asset-heavy. Across all sectors, from retail to leisure to manufacturing, the trend has been shifting towards digitalisation for some time – not only because it is a more cost-effective way of doing business but also due to customer demand.
“If companies don’t move with their customers, who are increasingly asking for faster and more efficient delivery of services, if they don’t pick up on the change in trends, they risk falling behind,” adds Bellamy.
What is more, by investing in the right emerging technologies, businesses will become more attractive to buyers and will be in a better position to take advantage of the continued consolidation that is predicted within the TMT sector.
The recent TMT Finance World 2019 conference confirmed that M&A activity remains buoyant within the tech sector. A major theme that emerged from the conference, which took place last month, was that competition for the best assets was intensifying.
With digital transformation increasing the volume of data large TMT companies need to process, and the shift to off-premises cloud computing, buyers need to be selective and understand how to acquire at speed, as well as navigate increased regulatory scrutiny, global political uncertainty, the impact of 5G, unsettled markets and questions about trade and tariffs.
The conference highlighted three key trends that will drive deal-making in 2020 and beyond.
- Sub-sector confidence, especially fibre, towers and datacentres – driven by mobile and big data analytics.
- Outsourcing – of cloud especially. There is a clear trend towards enterprises not wanting to own or operate their own datacentres, and outsourcing is fuelling both data centre operators to scale up through acquisition or specialise in particular layers.
- Cybersecurity – As companies rely more and more on cloud-operated infrastructure, cyber security is playing an ever-increasing role in securing a deal, due to the need for multiple suppliers providing security at both datacentre, software and service levels. We should see a healthy level of smaller consultancies or cyber security specialists being acquired as a result of the need for this skillset.
Technology megatrends will be the theme of the Evolution Capital Christmas luncheon for tech entrepreneurs, taking place on December 5 at Mosimann’s in London. We will be discussing the challenges the sector has faced and look at how the predicted trends will shape our vibrant industry going forward.
The next decade will bring huge change on a global scale: from Brexit, to climate change, to major shifts in the digitisation of industry, the TMT market is certainly in for an interesting ride and as advisers to a number of firms in this sector we are looking forward to the journey.