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Spending on Chatbots Will Soon Outstrip Mobile Apps

 

 

It’s all about clouds, bots and Internet of Things this year—with a dash of cybersecurity and dose of General Data Protection Regulation.

Those were among the themes that consulting firm BDO outlined in its 8 Tech Predictions for 2018.

For those who’ve been sleeping on chatbots, consider that in just three years’ time, BDO predicts that half of enterprises will invest more on bots than they will in mobile apps. That’s likely because mobile apps have been around for a while, relatively speaking, so the market for them is far more mature. But the rapid rise of artificial intelligence-powered chatbots indicates a critical shift in how consumers and employees will interact with artificial systems in the not-so-distant future.

Globally, the chatbot market is tipped at $1.25 billion by 2025. On top of that, BDO expects global spending on cognitive and AI systems will swell to more than $46 billion by 2020, a substantial increase over 2017’s $12.5 billion investment levels.

Although cloud computing already seems ubiquitous, there’s room for continued growth, and according to BDO, the market for cloud infrastructure is “set to explode.” That’s saying a lot. Recent reports show Walmart has been building in own private cloud network to catch up with Amazon, long known for its dominance in this arena. That dovetails with BDO’s expectation that private clouds, in addition to hybrid ones, will grow in number and market share as companies take advantage of the cloud services offered by the likes of Amazon Web Services, Google Cloud, IBM Cloud, and Microsoft Azure.

Investments in traditional data centers are shrinking in direction correlation, expected to total 47.3% ($22.8 billion) of the market in 2020, down from its 57.1% ($25.2 billion) market share in 2017. BDO sees public cloud growing from 26.2% ($11.6 billion) to 32.5% ($15.6 billion) over the same timeframe; private cloud is set to reach 20.2% ($9.7 billion), up from 16.7% ($7.4 billion).

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Speaking of the cloud, though it’s been essential in enabling the Internet of Things (IoT), BDO expects that this year will deliver IoT devices that rely on edge computing rather than the conventional cloud. Think local: edge computing processes data on the device itself or a local computer or server instead of sending the data to a traditional data center.

That means using edge versus cloud offers a number of benefits, first of which is a reduced reliance on the cloud, which in turn enables greater data security and privacy. And by processing data at the device level, businesses can analyze their data in real time, gaining insights to execute informed decisions that much faster. Companies that embrace edge computing can better manage their IoT-generated data as well, according to BDO.

[Read more about retail chatbots: A Third of Consumers Say Retail Chatbots Interactions Would Up Their Spending]

Edge and fog computing—a similar technology that processes data at the local area network-level—are expected to account for 18 percent of spending on IoT infrastructure, a market whose value BDO predicts will total $1 trillion by 2020. What’s more, enterprises and government agencies will use edge computing to collect and process data for 5.6 billion IoT devices by that year as well.

Given the increase in the frequency and complexity of cyberattacks, chief information security officers will shift some of the security burden to outside vendors like managed security service providers and cyber software-as-a-service firms, BDO predicts. The total cybersecurity market, which stands at $137.9 billion, is expected to reach $231.9 billion by 2010.

Thanks to the introduction of the European Union’s General Data Protection Regulation (GDPR) last May, enterprises are now paying far greater attention to data governance, a trend that will gain momentum this year.

“In 2018, data governance will no longer be an issue only for the IT department, but one involving and affecting every aspect of a business,” said BDO. Areas of business most likely affected? Marketing, for one. Just this week, Forbes published “The Role of Marketing in GDPR,” Adweek mused on “Why GDPR is Actually a Good Thing for Brands,” and Microsoft’s GDPR Compliance Manager hit general availability. How companies use, store and send data will continue to be scrutinized.