Today, digital transformation (DT) is much more than the “digital” in its name. It’s the alignment of technology investments, strategic initiatives and business and operational models that make digital transformation purposeful and effective.
In my research, I’ve tracked technology trends and also where tech investments were aimed and prioritized. The goal is to understand how technology is enabling business modernization and where those investments were targeted and why.
Business modernization is influenced by the effects of disruptive technologies on markets, and customer and employee behaviors
For the past five years when I was at Altimeter, I’ve published the “State of Digital Transformation.” Every year, the report tracked the industry’s progress, direction and and also opportunities.
Among the catalysts driving digital transformation, innovation in customer experience (CX) always ranks at the top. In 2019 specifically, I learned that cultivating new markets and opportunities, as well as staving off competitive threats also rounded out the top three catalysts for DT. This year in particular, innovation in employee experience (EX) and regulation and compliance debuted in the top five catalysts for DT.
What’s clear is that the key drivers of digital transformation are aimed at more than just modernization. Businesses are investing in innovation to more effectively compete in existing and emerging markets.
Top technology investments shaping digital transformation roadmaps
The same technology affecting markets can also create new pathways to build bridges to them. This is where the “digital” in digital transformation takes center stage. I sought to understand where executives were prioritizing technology investments related to top DT catalysts.
With every new technology trend comes new ways to solve existing business problems. At the same time, there are also new opportunities to innovate. This is why DT is bigger than just information technology. It allows technology and business groups to collaborate around better and more inventive outcomes.
In the last survey, I documented the incredible array of innovative technologies that enterprise organizations are simultaneously tracking, testing and deploying to stay ahead of disruption.
In 2019, we identified the top ten tech investments, as follows:
37% – Cloud
35% – Cyber Security
34% – Artificial Intelligence
28% – Big Data
26% – Internet of Things (IoT)
25% – Real-time analytics and reporting
23% – Mobile solutions
21% – eCommerce platforms
17% – Cross-functional collaboration platforms
17% – Machine learning
Cloud: Cloud leads the array of technologies defining digital transformation roadmaps (the top priority among 37 percent of respondents). According to IDC, global spending on cloud services and infrastructure is expected to reach $370 billion by 2022. This isn’t surprising considering that enterprises have been slowly but surely migrating away from on-premise to cloud technologies for over a decade now. At the same time, new enterprise offerings are cloud-native for almost every facet of the organization, including CRM, ERP, analytics and other enterprise apps. Given today’s rapid pace of innovation, the preference for the control and peace of mind offered by on-premise technologies is quickly being supplanted by the cost-effectiveness and agility offered by cloud technologies.
Cybersecurity: The more digital that a business becomes, the more susceptible it becomes to cyber hacking and crimes. And with GDPR defining the data protection and privacy agenda of the European Union as well as influencing countries all around the globe, cyber security is only growing in importance.
Data, data, data: At the same time, data has been dubbed the new oil. While many debate the merits of the comparison, data can yield incredible returns for organizations that effectively prioritize and organize around it. Take for instance investments in big data, real-time analytics and reporting, and machine learning. In making these investments, organizations acknowledge the importance of system-based capabilities to understand behaviors and patterns. Doing so becomes a competitive advantage to make real-time and even predictive decisions about improving efficiencies, delivering new value, and staying ahead of the consumer.
Artificial intelligence (AI): Whereas digital transformation initially represented the “digitization” of aging and outdated business processes and platforms, AI represents the rise of digital intelligence and automation. AI will play an increasingly important role across the digital transformation stack. As the technology matures, it will become the artificially intelligent engine of many business systems, allowing for cross-linking to previously disparate platforms and processes, faster, with greater accuracy and competence. With AI, machine learning will also facilitate more capable algorithms to parse data, learn from that data and then apply it to make more informed decisions at the speed of markets.
The pace of innovation is only accelerating. Disruptive threats and competitive opportunities will also be shaped by the next-generation disruptive technologies we’re already seeing on the edges. In our research, we observed that DT roadmaps are already expansive. But as next generation technologies advance, organizations will have to allow for their experimentation now.
Up and coming disruptive technologies
14% – Blockchain
11% – 5G
10% – Wearables
10% – AR/VR
9% – Quantum
7% – Autonomous technologies
7% – 3D printing
5% – Drones
4% – Edge computing
While lower on the list of investments today, these potentially disruptive technologies are not to be relegated to mere “buzzword” status. They are still developing and represent significant areas of future, transformative initiatives.
For example, IDC predicts huge blockchain impact on digital transformation as soon as 2021. Bain expects the IoT market to grow to $520 billion by 2021 in consumer and B2B applications. And with that surge in mobile data, 5G will become a critical pillar in ensuring faster, always-on and available connectivity. In 2018, the Computing Technology Industry Association (CompTIA) found that 20 percent of businesses already have a mixed reality project underway.
Experts also anticipate the inevitable end of Moore’s Law, which gives way to new, more capable computing architectures such as quantum computing. Existing chip technologies are nearing theoretical limits, but quantum will allow for the handling of unprecedented computing complexity.
The list of technologies defining digital transformation roadmaps is indicative of the broad swath of the still-developing technology landscape. The sheer number also points to the considerable resources and agility that organizations need in order to be innovative and adapt.
Investments in disruptive technologies serve as a scalable business foundation for competitiveness and business growth
While the moniker may imply differently, digital isn’t the only solution for digital transformation. Instead, digital is an enabler for meaningful and holistic modernization and growth. It’s where and why companies apply these technologies that defines DT’s purpose and overall promise. Exploring these initiatives allows us to connect the dots between how organizations intend to amplify market competitiveness and stoke innovation.
As you can see in the following list, long-term and short-term initiatives center on organizational agility and also human factors, namely evolving generations of customers and employees.
Digital transformation is modernizing operations, creating cultures of innovation and uniting the enterprise to compete and grow in the name of evolving customers and employees
As digital transformation matures, it becomes so much more than disruptive technologies and IT roadmaps. And, it becomes so much more than any one effort. Meaningful digital transformation is a collaborative, enterprise-wide effort focused on business model, market, and operational innovation.
Increased market pressure, new market opportunities and evolving customer and employee behaviors, expectations and preferences have all raised the bar for what organizations must do to survive and thrive. With aim and purpose, mature digital transformation strategies are prioritizing business growth and performance via CX and EX, with technology serving as enablers toward those goals. These strategies are supported by a new generation of cross-functional leadership that includes the C-Suite, IT and innovation groups, key stakeholders, business groups and boards/shareholders. Under this paradigm, DT becomes a collaborative, enterprise-wide effort.
Those that align disruptive technologies with agile operational models and open and innovative mindsets will find that digital transformation will not only modernize how companies work and compete, but also help them effectively adapt and grow in an ever-evolving digital economy.