In continuing my tradition of offering predictions every year, let’s start with a review of my hits and misses on my 2017 predictions.
- The United States will see a level of divisiveness and social discord not seen since the 1960s. HIT.
- Social media companies finally step up and do something about fake news. MISS, but ethical issues are starting to catch up with them.
- Gut feel makes a comeback. HIT, while I didn’t articulate it as such, I see this as the war on facts and expertise (e.g., it’s cold today ergo global warming isn’t real despite what “experts” say).
- Under a volatile leader, we can expect sharp reactions and knee-jerk decisions that rattle markets, drive a high rate of staff turnover in the Executive branch, and fuel an ongoing war with the media. HIT.
- With the new administration’s promises of $1T in infrastructure spending, you can expect interest rates to raise and inflation to accelerate. MISS, turns out this program was never classical government investment in infrastructure, but a massive privatization plan that never happened.
- Huge emphasis on security and privacy. PARTIAL HIT, security remained a hot topic and despite numerous major breaches it’s still not really hit center stage.
- In 2017, we will see more bots for both good uses (e.g., customer service) and bad (e.g., trolling social media). HIT.
- Artificial intelligence hits the peak of inflated expectations. HIT.
- The IPO market comes back. MISS, though according to some it “sucked less.”
- Megavendors mix up EPM and ERP or BI. PARTIAL HIT. This prediction was really about Workday and was correct to the extent that they’ve seemingly not made much progress in EPM.
Kellblog’s Predictions for 2018
1. We will again continue to see a level of divisiveness and social discord not seen since the 1960s. We have evolved from a state of having different opinions about policies based on common facts to a dangerous state based on different facts, even on easily disprovable claims, e.g., the White House nativity scene. The media is advancing, not reducing, this divide.
2. The war on facts and expertise will continue to escalate. Read The Death of Expertise for more. This will extend to a war on college. While an attempted opening salvo on graduate student tuition waivers didn’t fire, in an environment where the President’s son says, “we’ll take $200,000 of your money; in exchange we’ll train your children to hate our country,” you can expect ongoing attacks on post-secondary education. This spells trouble for Silicon Valley, where a large number of founders and entrepreneurs are former grad students as well as immigrants (which is a whole different area of potential trouble).
3. Leading technology and social media companies finally step up to face ethical challenges. This means paying more attention to their own culture (e.g., sexual harassment, brogrammers). This means taking responsibility for policing trolls, spreading fake news, building addictive content, and enabling foreign intelligence operations. Thus far, they have tended to argue they are simply keepers of the town square, and not responsible for the content shared there. This abdication of responsibility should start to stop in 2018, if only because people start to tune-out the services. This leads to one of my favorite tweets of the year:
4. AI will move from hype to action, meaning bigger budgets, more projects, and some high visibility failures. It will also mean more emphasis on voice and more conversational chatbots. For finance departments, this means more of what Ventana’s Rob Kugel calls the age of robotic finance, which unites AI and machine learning, robotic process automation (RPA), natural language bots, and blockchain-based distributed ledgers.
5. AI will continue to generate lots of controversy about job displacement. While some remain optimistic, the consensus viewpoint seems to be that AI will suppress employment, most likely widening the wealth inequality gap. A collapsing educational system combined with AI-driven pressure on low-skilled work seems a recipe for trouble.
6. The bitcoin bubble bursts. As a reminder, at one point during the peak of tulip mania, the Dutch East India Company was worth more, on an inflated-adjusted basis, than twenty of today’s technology giants combined.
7. The Internet of Things (IoT) will continue to build momentum. IoT won’t hit in a massive horizontal way, instead B2B adoption will be lead by certain verticals such as healthcare, retail, and supply chain.
8. The freelance / gig economy continues to gain momentum with freelance workers poised to pass traditional employees by 2027. While the gig economy brings advantages to high-skilled knowledge workers (e.g., freedom of location, freedom of work projects), this same trend threatens low-skilled workers via the continual decomposition of full-time jobs in a series of temp shifts. This means someone working 60 hours a week across three 20-hour shifts wouldn’t be considered to be a full-time employee and thus not eligible for full-time benefits, further increasing wealth inequality.
9. M&A heats up due to repatriation of overseas cash. Apple alone, for example, has $252B in overseas cash. With the new tax rate dropping from 35% to 15.5%, it will now be ~$50B less expensive for Apple to repatriate that cash. Overall, US companies hold trillions of dollars overseas and making it cheaper for them to repatriate that cash suggests that they will be flush with dollars to invest in many areas, including M&A
10. 2018 will be a good year for cloud EPM vendors. The dynamic macro environment, the opportunities posed by cash repatriation, and the strong fundamentals in the economy will increase demand for EPM software that helps companies explore how to best exploit the right set of opportunities facing them. Oracle will fail in pushing PBCS into the NetSuite base, creating a nice third-party opportunity. SAP, Microsoft, and IBM will continue to put resources into other strategic investment areas (e.g., IBM and Watson, SAP and Hana) leaving fallow the EPM market adjacent to ERP. And the greenfield opportunity to replace Excel for financial planning, budgeting, and even consolidations will continue drive strong growth.
Let me wish everyone, particularly the customers, partners, and employees of Host Analytics, a Happy New Year in 2018.
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Disclaimer: these predictions are offered in the spirit of fun. See my FAQ for more on this and other usage terms.
Great read – happy new year to you too.
Thanks for the review of 2017 and your thoughts for 2018.
I would add that VC’s will be looking more into operations and culture of their portfolio companies given two independent issues in 2017: The “Me Too” movement and what has happened with Uber and Theranos. What these have in common is the importance of culture in organizations. While it is easy to understand the “Me Too” movement, Uber’s issues are part of culture of win at all costs and Theranos is culture of misleading its various stakeholders. Think about how much money in valuation was lost in 2017.
Great set of predictions Dave! I’m surprised you didn’t make a comment on the state of the market for 2018. Will the tax reform have a positive or negative impact on NASDAQ or SP500 for instance?!
Regarding your predictions around facts, my “prescription” is for everyone to buy and read Scott Adams’ latest book, Win Bigly (or how to live in a world where facts don’t matter). The book is well written and funny. And, if anything, it will allow logical folks like you and I to prepare better for 2018.
Happy New Year…and Analytically Yours,
Good read! Always one of my favorite articles of the year.
The one I’m least skeptical about but most interested in would be:
>> M&A heats up due to repatriation of overseas cash.
It’s an interesting case, but there is no reason to think that the money will be used for M&A. It could, but it’s not like there is any particular advantage (taxation etc) when spending that on M&A. So while it might be a logical use of a large sum of money, it’s not a sure thing. In fact many of these companies might be eying overseas assets moreso than US ones. Apples last purchase was London-based Shazam for example.