Educating Employees Key to Stopping Vulnerabilities

2024 Enterprise Trends Series #4

ETR Insights 

| February 02, 2024

ETR Insights presents an interview with the Vice-President of Information Technology for a large tech enterprise whose company expects a 3% to 4% increase in IT budget for 2024 driven by rising SaaS and software service costs. They note the impact of inflation on wages and software prices, suggesting some vendors might be exploiting the situation. They plan to continue leveraging generative AI, though they find that it offers a limited benefit for some use cases versus its implementation costs. Security remains a priority, with investments in SSO, MFA systems, and employee education being tantamount. Meanwhile, this organization is reconsidering its spending on observability and monitoring tools. Read on to learn more about why our guest favors large public cloud vendors over a private cloud, the importance of monitoring SaaS providers around security, and why Oracle and other legacy ERP vendors will lose share as more innovative cloud-native providers advance.

Vendors Mentioned: Amazon (AWS) / Datadog / Elastic / Google / Microsoft / New Relic / Okta / OpenAI / Oracle / Splunk

Economic Overview

The organization anticipates IT budget growth of 3% to 4% in 2024, primarily on escalating costs of SaaS and other software services, which is negating any benefit from moderating hardware expenses. The organization is focusing on hiring in specific strategic areas but is otherwise seeking to streamline operations. “We have done some rationalizing over the past 12 to 18 months to bring us more in line with the current economic conditions, but for the next 12 months, we're probably going to make do with who we have, get more efficient by applying the technology we have, improving our business processes, ‘sharpening our pencils,’ and being smarter about how we work.”

Inflation. Software price increases in excess of 15% suggest some vendors are taking advantage of inflation. “It really depends on the segment and the type of software or service you're talking about, but I think they're probably taking it a bit too extreme.” Our guest notes lengthy sales cycles and a trend of clients delaying or canceling substantial software investments, as well as rising staffing costs. “Groceries, homes, and everything else are expensive, so it puts pressure on the labor side expectations in terms of increases to have people keep up with the rate of inflation.”

Enterprise Trends Commentary

International Conflict + COVID-19. This company’s operations remained largely unaffected by regional conflicts and other geopolitics in 2023; however, COVID-19 was much more impactful. “During Covid, there was a lot of money in the economy, a lot of job growth, some of it rational, some irrational, a lot of hiring going on, and a lot of demand for all sorts of goods and services, and that put a lot of strain on an industry to be able to keep up with that demand.” Our guest adds that hardware supply and demand trends have since normalized.

Anticipated 2024 Industry Trends. Generative AI is transforming all business operations. “Applying ChatGPT-like solutions to all sorts of problems, driving better automation, saving time, and leading to better outcomes, I would say that is by far the number one priority for many organizations.” Cleaner, more organized data will allow for better decision-making and customer service and will be critical to any implementation of generative AI. Another priority is digital transformation, specifically migration to the public cloud platforms, in ways that allow organizations to best leverage the enhanced security and capabilities these platforms offer. Finally, our guest is also looking to coordinate their security apparatus better. “How do you automate having the software talk to the hardware to respond quickly to threats?”

The company primarily utilizes Microsoft's version of ChatGPT, enhancing it with customized conversational interfaces. They have yet to explore 365 Copilot or other alternatives. Regardless of OpenAI's internal challenges, they remain confident that Microsoft will continue to support the program.

ETR Data: According to data from ETR’s January 2024 Technology Spending Intentions Survey (TSIS), spending on OpenAI within the ML/AI sector remains incredibly strong despite some softening vs. initial levels of spend captured in July 2023. The vendor continues to grow its Pervasion in our work as well, approaching Microsoft. Peers Meta Llama and Anthropic are also seeing elevated spend, in line with big names like Databricks and the public cloud vendors.

Overhyped Trends. Paradoxically, our guest also sees generative AI as the most overhyped trend, stating, “You shouldn't just bring it in because you're worried about everyone else having it and you're not. It all still has to come back down to having a viable business case, eventual return on investment, and making sense for whatever your business is.” This V.P. of I.T. expects excitement around GenAI to temper and implementation to even out in 2024.

Cloud Adoption. The company maintains a commitment to cloud migration. “We're probably around 65%+ in the cloud. We'll continue that probably another 5 to 10 points.” However, returns are diminishing, and the sector is otherwise maturing. “The more that you have in there and the more experience you have, the more efficiently you can run it at a lower price point. It will slow down, but that's to be expected with any type of transition like this.” They presently prefer large cloud providers like AWS, Google, and Microsoft, with proven operability at scale. “Azure continues to innovate, and in some cases, they're strategic partners with us.”

Security Trends. Our guest focuses on strengthening SSO and MFA systems, vulnerability management, patching, and endpoint management. They already have zero trust security in place. “Maybe a little bit more is being invested in the education of employees because they are the biggest threat to an organization. A lot of vulnerabilities get introduced through phishing attempts, texts, or social engineering. There are some additional investments that we're doing there.” They are actively deploying “honeypots” to detect unauthorized network access and updating Web application filters to better protect against DDoS attacks and other vulnerabilities. For them, observability and monitoring tools like those from Splunk, New Relic, Datadog, and Elastic continue to be prohibitively expensive. “But I think the great thing is there are a lot of other players coming into the market. I would imagine there are going to be many organizations that are going to look long and hard at their spend for their log aggregators and figure out if there's a better, more efficient, and productive way to get the same value out of it and not compromise on their security.”


Okta Breach. Customers should be vigilant when using SaaS because security isn't inherently guaranteed and requires continuous improvement. “At the end of the day, that service is being run by people. They need to up their game, maintain great observability and response, and be able to know that things are happening when they happen.” SaaS vendors, too, have been subject to workplace attrition. Our guest compares selecting a security vendor to navigating the stock market, where unexpected losses can occur. “I think it comes down to asking how people operate, not just assuming they do, but asking for evidence. Based on the answers that you get and the evidence they can provide, you can make a more informed decision.”

Standout Vendors. With any excess funds, our guest would prioritize application modernization to enhance efficiency and data collection within his company. They praise the more innovative cloud database providers, praising their low entry barriers, scalability, and potential for integrating artificial intelligence and machine learning. “That is very exciting and promising, not only because of the opportunities that it opens up, but it also can let organizations save money [on] licensing costs.” They also look to security vendors to enable better governance and oversight through more zero-trust frameworks and enhanced visibility into network traffic. Conversely, expensive legacy database and ERP system vendors with outdated approaches, “like Oracle,” will be abandoned in favor of more cost-effective and modern cloud solutions.

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