2024 in Insights: Everything we’ve learned
With 2024 ending, it’s worth checking in on everything we’ve learned from the CxOs, buyers and sellers of enterprise technology.
Here's everything we learned in 2024:
Some predictions don't quite work out. Yes, I went back into the archive to look at the trends to watch for 2024 published in January. Here's the breakdown:
Enterprise software is at a crossroads. Enterprise software disruption was a theme we returned to repeatedly in 2024. The seat-based business model isn’t going to fly when AI starts replacing people. Vendors are navigating the rise of marketplaces, models that can keep revenue growth going and balancing margins since genAI isn’t cheap. Most vendors want to be a platform, but we all know there are only a few. Enterprise buyers are pushing back on price increases because software vendors can’t keep gobbling up all the operating expenses.
What remains to be seen is whether enterprise buyers have any leverage. Broadcom’s acquisition of VMware caused a lot of complaints, but it’s hard to argue that the deal wasn’t a financial success.
Hyperscale cloud providers are only growing more powerful. Yes, cloud providers give enterprises more agility and save them money. But these hyperscalers hold a lot of power. AWS, Google Cloud and Microsoft Azure had banner years with annual run rates of $110 billion, $45.6 billion, and $156 billion, respectively*.
Oracle Cloud Infrastructure did too. What remains to be seen is whether a new breed of cloud providers focused on AI—or even hybrid approaches—can check the market power. AI is a cloud workload—especially since the technology is developing so fast—and looking down the road quantum will be a cloud-first workload too. Whether you standardize on one cloud provider or mix and match infrastructure will be your most important enterprise decision.
*Microsoft doesn’t break out Azure revenue so the run rate is calculated on commercial cloud revenue.
AI has impacted industries well beyond technology. AI has become a hot topic on earnings calls beyond the technology sector. GenAI and automation have fueled expanding profit margins at companies such as Lowe’s, Exxon, Rocket and Equifax. Those examples are just a few. The productivity boom from AI has expanded to multiple sectors.
Agentic AI has staying power. Agentic AI pushed generative AI aside for buzzword of the year, but the idea goes beyond vendor marketing. GenAI was a start, but being able to string together models into a flow that automates and executes work is a game changer. There’s a lot of work ahead, but agentic AI is off to a good start.
Here’s the digital labor analogy Salesforce outlined when it launched Agentforce 2.0 this week.
However, the spoils of the AI revolution largely stayed with the infrastructure layer. While AI is promising for multiple industries, the market cap expansion went to infrastructure players. We’re still in the picks and shovels stage of the AI revolution and that means Nvidia has been raking in cash.
The big question is when the AI spoils will spread beyond infrastructure.
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NOTEBOOK
We’ll have more to say about 2025 themes in the next issue first week of January, but here are some reads to ponder going into the new year.
🇺🇸 R "Ray" Wang walks through the 7 themes in tech with a new President taking over.
🪨 Blackrock released its macroeconomic and private market themes for 2025.
📊 Enterprise software will be volatile in 2025 as customers increasingly question value, complain about upsells and added charges and assess whether agentic AI provides an abstraction layer to their existing applications.
⚖️ The gap between generative AI's "build it and they will come" folks and the enterprises looking for actual business value may be widening. The next year will be interesting for generative AI trickledown economics.
💸 Artificial intelligence budgets will surge again in 2025, but good luck tracking expenditures with any precision as generative AI spending is lumped into other categories and driven by multiple departments.
🧠 In 2025, you'll have to get ready for "knowledge," AI governance will move to the forefront, enterprise software models will be revamped, decision automation will depend on humans in the loop and data strategies will be a pain point.
🎤 Artificial intelligence and generative AI will tax leadership, but ultimately raise the bar for decision making. Those were some of the takeaways from Cassie Kozyrkov, Founder Kozyr LLC, who delivered the keynote at Constellation Research's Connected Enterprise.
2024 IN CONSTELLATION INSIGHTS
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CTO/CIO/CDO | Technology | Supply Chain | Sustainability | Advisory | Speaker | #BT150 Honoree 2025
1dA great recap to a momentous year.