 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. Predictions about the future of enterprise tech streaming into our inboxes, literally by the thousands. Most, if not all, are very thoughtful and we'll review those prior to publishing our 2024 predictions later in January. As is our tradition, however, we try to make our own predictions more challenging by citing forecasts that are measurable and have either a numeric tied to them or a binary outcome that can be shown. Our belief is that if we make a prediction, you should be able to look back a year later and say with some degree of certainty whether the prediction came true or not. With some empirical evidence, of course, to back that up. Hello and welcome to this week's theCUBE research insights powered by ETR. In this Breaking Analysis, we grade our 2023 predictions that we made with ETRs Eric Bradley earlier this year. We look back at what we said in January about the macro IT spending environment. We talked about cost optimization, security, gen AI, of course, cloud, blockchain, data platforms, automation and tech events. So first, here's a quick scan of our 2023 predictions. Not going to go into it heavily. We do 10 each year. I'll leave you to look over them at your leisure, but they cover a range of topics, as I just mentioned, but let's dive right in with global tech spending, something that we always try to cover. In January, we said tech spending would grow in 2023 between four and 5% globally. It turns out this was just a bit too optimistic, but we got the themes right and came within one point of the growth, hence the A minus grade. We correctly predicted the consistent downward pressure on budgets for the year and the pause in Fed tightening. We also correctly called that large companies would feel the pinch more than small firms as the data coming in today clearly suggests. For example, it shows that SMB will come right in on our four to 5% figure, whereas the global 2000 is showing less than one half that growth rate. Gartner, by the way globally is calling 2023 at a 3.5% growth relative to 2022 for what it's worth. We said that Amia would surprise to the upside, but it didn't. It came in right at the global number and APAC looks like it's coming in at a half a percentage point above the global average, but we correctly predicted that government spending would significantly outpace overall IT spending and it did this past year. So we pretty much overall got the call directionally correct with the exception of Amia and we'll give ourselves a grade of A minus. Now cost optimization continued as a theme in 2023, but was overtaken by other strategies to reduce expenses. The upside benefits of dynamically scaling cloud computing resources up has the equal and opposite benefit for customers as well, i.e. the ability to dial resources down. And we clearly saw that in 2022 and projected continued cost optimization in 2023, which happened while this call was spot on. Part of the reason for only giving ourselves a B grade here is that we said consolidating vendors would be the primary means of addressing cost pressures, taking over for cloud optimization. The vendor consolidation trend was particularly acute in security and benefited the likes of Palo Alto networks and CrowdStrike and maybe even some others in security, but generally proved somewhat more difficult than forecast in some of the other sectors. Two other factors dominated spending strategies in 2023 shown here. Delaying new projects by far was the leading culprit of cost strategies, cost constraint strategies. And that was, the second factor was also huge combined with shifting budgets to Gen AI experiments. In other words, the overall top line didn't grow. We saw stealing from other budget buckets to fund Gen AI. So the pressure on overall budgets remained in 2023 and as such, these were two key trends that were not explicitly part of our predictions. So we've taken the grade down to a B. Now, we called out security as a leader in M&A in 2023 and that definitely happened. We said that, well, the first part of this prediction is probably pretty safe. Sometimes people like to mail in predictions, but as I said, we always like to have some kind of numeric or other indication, a binary indication. So the more challenging call here is what we forecast specifically about the five companies cited and a prediction that one trust would have an exit in 2023. Palo Alto network spent a billion dollars acquiring Dig Security and Talon. CrowdStrike took out app security player Bionic and Zscaler bought Canonica SAS supply chain security firm. But the big news of 2023, of course, was Cisco's planned $28 billion acquisition of Splunk. Microsoft was active with new cloud security announcements but was focused on other areas for acquisitions. So kind of a miss there. As for the prediction of downward pressure on valuations, it's true that many in that crowded security space like Cyber Reason, for example, saw a 90% reduction in its valuation last spring, this past spring, but the likes of Wiz and Arctic Wolf saw upward momentum. And while one trust didn't get acquired or do an IPO, it likely will in the coming year. We think it's getting ready to do that. So the last two items on this chart came in right on with AI a major theme for all cybersecurity firms. CrowdStrike's Charlotte LLM announcement was particularly notable to us and as predicted the RSA conference last April was back in full swing. It was kind of insane. So we took a B plus on that one. And next we talk about zero trust going mainstream, very much related to our previous cybersecurity predictions. We said the zero trust security would get real in 2023. And while true practitioners continue to tell us that they struggle to operationalize the salient aspects of zero trust frameworks. And while it remains a priority and North Star for most organizations, they continue to aspire for more mature implementations. But because virtually all CISOs we talked to take this topic seriously and are on a zero trust journey, we gave ourselves a B plus on this prediction. Now the next prediction is all about generative AI. Generative AI hits where metaverse failed. Don't look now, but meta is pivot from the metaverse to AI with Lama two, for example, combined with its own cost cutting as the company's value pressing back up towards a trillion dollars again. We pointed out last January that open AI's momentum was unprecedented in the ETR spending data. And we predicted that would not only continue into 2023 but also attract a spate of investments to competitive or adjacent platforms. And it did. Anthropic was the most notable with investments from the likes of Amazon and Google, driving a reported 20 to $30 billion valuation is what they're going for now, evidently with the latest round, but others like Cohere, stability AI, scale AI, inflection and others benefited from the considerable AI hype. You know, maybe this was a lock prediction but we nailed this one and earned it A. Now the cloud continues to stretch out to the edge. But specifically we said, this is going to be a tailwind for Cloudflare. We predicted that 2023 would see the expansion of cloud to the edge and continued evolution of what we call super cloud. Cloudflare in our view would be a major beneficiary of this trend is what we said at the time. And we said Cloudflare at the time had overtaken Google in terms of spending momentum in the ETR survey data. That was in late 2022 and early 2023. And we saw this as an indication of the company's momentum. Cloudflare is considered a good fit for the definition of super cloud because it brings all aspects together across clouds. It's cloud agnostic. It is already highly pervasive in networking and security and is considered the number one leader in SAS web access firewalls, WAF, DDoS, and bot protection as well. So Cloudflare stock is up 98% this year, year to date compared to the red hot NASDAQs, 42%. So this was a good call and we took the A. Next we said blockchain struggles for enterprise relevance. At the time of this prediction, Eric Bradley argued, and I guess I should have listened to him, that blockchain is a niche solution that requires a lot of custom work and that is unlikely to gain widespread adoption in the enterprise. He also pointed out that while blockchain is a database ledger, it's not clear why businesses would want to move to a different database ledger when they already have one that works pretty well. So this part of the prediction, we got right. We did, however, hold out hope that developers would embrace solidity. I can't actually pin this one on Eric. This was kind of my prediction as Ethereum continued to be the developer platform of choice. And while crypto made a comeback in 2023 and Ether definitely benefited, there is no overwhelming evidence that enterprise developers are on board. Maybe we're talking about 10 to 15% of enterprise developers are embracing blockchain. In fact, the data suggests that many blockchain developers jump to catch the gen AI S-curve. So we should have stopped with Eric Bradley's commentary but took it on the chin a little bit with this one and gave ourselves a C plus. Okay, next, talked about Snowflake and Databricks representing the modern data platforms that had momentum in the data platform space for analytics, machine learning and databases, AWS, Databricks, Google and Snowflake are leading the charge with Microsoft trying to make it simple to do business. Think fabric and other platforms that they put forth but really Snowflake and Databricks continued on their collision course as they both aim to become the single source of truth and data and analytics. We predicted a big focus on and greater adoption of open formats and languages that are popular in the data science and open source communities. And we also predicted that AWS would continue to make moves to simplify their bespoke data platforms which it has albeit a little bit more slowly than some customers want. But while generally all of this was true we took a B grade on this one because we didn't call out the biggest theme of the year in data i.e. bringing AI to data and the scramble for NVIDIA GPUs and other AI partnerships hence the penalty on our grade. Okay, we also said last year that automation would make a comeback in 2023 with Microsoft Power Automate and UI path leading. And we predicted that automation would make a resurgence in 2023 with those two companies out in front and they continued to show gains. And we believe but we believe much of their success was due to other factors other than the market fundamentals which is essentially what we were predicting. For example, UI path momentum we think has come from largely from better sales execution while Microsoft really has had the tailwind from its open AI partnership. The fact is that AI is a two-edged sword for automation companies and RPA specifically on the one hand, these companies can inject AI into their platform to make them significantly more functional. The flip side is that AI has the potential to cannibalize many of those mundane tasks that automation and RPA platforms are designed to address which is why you see companies like UI path trying to extend out its platform and made acquisitions around process mining and other capabilities. So we weren't as forceful about this dynamic of this two-edged sword dynamic even though we've written about it a lot as we could have been. Moreover, the move from back office to front office which we're citing here and software testing and end to end AI and even low code adoption while moving in the right direction was not an overwhelming trend in 2023. So we were a bit early on some of these predictions and so we gave ourselves a B minus. Now last one, we said events are gonna come roaring back with a twist. This is something that we know a little bit about. We correctly predicted that the number of physical events is gonna dramatically increase in 2023. Granted, our evidence is anecdotal but we could see it in our business. Many of the biggest events we said are gonna get smaller. This was not the case with some events. AWS re-invent stayed pretty big. Snowflake Summit grew Databricks data and AI Summit grew. Some others also did pretty well. Actually, you know what? HPE's Discover and Dell Tech World actually were stronger I think than we had expected with more attendance. But anyway, traditionally large customer events from the likes of, for instance, Oracle with Cloudworld, remember Oracle Open World used to be huge. Just take out Moscone, Dreamforce was scaled down in size as were many others. In addition, we saw a lot more regional events and roadshows, we saw that from Mongo, we saw that from Palo Alto Networks and many others. Snowflake had their roadshows. Couchbase had roadshows. Pretty much every company had more roadshows. Really, these took shape in 2023 as a means of driving customer intimacy locally. Now, of course, as the OG of live tech event coverage, we know a little bit about this topic. With theCUBE, we've had a front row seat for 13 years to see how events operate. And this was an easy A plus for us. So with that, add them up, divide by 10 and we earned a solid B plus this year, which seems to be our pattern. It's hard given the quest for measurable predictions to see the breakthrough that B plus grade. I think we've had a B plus for the last three years. But overall, we feel pretty good about our calls. Now, next up, Eric Bradley and I are going to do our 2024 predictions. We're going to drop that in late January after ETR releases the results of its technology spending intention survey, which is currently in the field. Okay, that's it for now. I hope everyone is having a great holiday season, wishing you and your family's health, happiness and much peace. I'd like to thank Alex Meyerson and Ken Schiffman on production and on our podcast. Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters and Rob Hoef is our EIC over at Silicon Angle, who does the great editing for us. Thank you all. Remember, all these episodes are available as podcasts, wherever you listen, just search, breaking analysis podcast. I publish each week on formerly wikibon.com, soon to be the queue, research.com and siliconangle.com. You can email me if you want to get in touch, david.volante at siliconangle.com, getting as I say, thousands, literally thousands of inbound predictions this time of year. You can DM me at dvolante or comment on our LinkedIn posts and do check out ETR.ai. They get the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Research Insights, powered by ETR. Thanks for watching everybody and we'll see you next time on Breaking Analysis.