Digital agenda 101: Accelerate your digital investments

Today’s business environment is very different from anything else we have ever seen. The pandemic has upended economies and continues to slow growth even as it accelerates another major disruption — the Fourth Industrial Revolution.

The Digital Transformation (DX) of industries, which was taking place in fits and starts before COVID-19 struck, is now gaining momentum as businesses turn to new technologies to overcome the constraints of operating in a pandemic.

According to IDC¹, worldwide investment in DX will reach US$2.3 trillion in 2023 – the first time DX will account for over half of IT spending (53%).

Decisions about the technologies and services to invest in will be shaped by the immediate need to respond to the pandemic as well as the longer-term need to position businesses for the opportunities and challenges in its aftermath.

The digital fires that raged in the early days of the pandemic have settled somewhat, with most businesses having rolled out the rudimentary tools and infrastructure needed to keep the lights on.

This offers some breathing space for businesses to refocus on the fundamentals of DX and find the “North Star” – the business’s main goal for DX and what it expects DX to deliver. This focus is crucial as it forms the basis for building consensus, setting expectations and guiding technology investments. Some examples of the goals that businesses have set out for DX include:

Employees are a key group of stakeholders in DX, and transforming the future of work will be an important goal as businesses seek to attract and retain talent and strengthen operational resilience. As part of a longer-term transformation strategy, businesses will need to invest in technologies that will create what IDC calls “digital parity”² for employees.

The pandemic has shown that the future of work will need to take into consideration home and remote working sites. According to IDC, the percentage of employees working from home (WFH) has increased from an average of 14% to 45%, and many organisations expect WFH employees to remain a large proportion of the workforce going forward.

Digital parity means ensuring that remote and work-from-home employees have the same sets of connectivity and next-generation productivity tools as their in-office counterparts. IDC expects that by 2022, an additional US$2 billion will be spent on these technologies to incorporate employees' home network/workspace as part of the extended enterprise environment.

Another important area to focus on is the customer experience, and the need to design for new customer demands.

To address COVID19-related safety concerns, many businesses are creating new contactless consumer experiences. This will require investments in contactless process automation, creating voice-based experiences and providing self-service options through mobile apps. IDC expects that by 2021, 40% of development activities will reprioritise design and user interface to support these developments.

Beyond the transformation imperatives driven by the pandemic, there are also other aspects of the customer experience that businesses are looking to transform through investments in big data, real-time analytics and reporting, and Artificial Intelligence (AI).

AI, in particular, will play an important role across the DX stack. It enables the creation of algorithms and models that are able to learn from data and apply it to make informed decisions or recommendations.

By building system-based capabilities to understand behaviours and spending patterns, predict trends and anticipate needs and wants, businesses will be better positioned to make real-time and predictive decisions to improve efficiencies, deliver new value, and stay ahead of the consumer.

Another business imperative that is driving DX is the need to optimise business operations to improve efficiencies and reduce costs.

To achieve this and deliver the scalability required for a digital enterprise, businesses will need to invest in automation technologies such as Robotic Process Automation (RPA), robotics and AI. Increasingly, these will power “digital co-workers” that will automate repetitive work, reducing reliance on manual labour and improving efficiency and accuracy in the execution of these tasks.

While specific investment decisions may differ depending on the priorities of DX, especially at the higher layers of the technology stack, it is safe to say that the cloud is a foundational piece that underpins almost all transformation efforts.

Cloud technologies deliver the agile, scalable and cost-effective infrastructure that businesses need to support their DX initiatives without the risks associated with high up-front investments. The cloud also provides access to many next-generation technologies as a service – e.g. AI as a service, ML as a service, blockchain as a service – allowing businesses to experiment and keep up with the rapid pace of innovation.

Investing in cloud is, therefore, an important early step in the DX journey. According to IDC, global spending on cloud services and infrastructure is expected to reach US$370 billion³ by 2022.

Another important technology investment that businesses cannot afford to stint on is cybersecurity. As businesses transform digitally to support a dispersed workforce, increase customer touchpoints, and automate their operations, the growth in the attack surface presents a formidable challenge for security. At the same time, there is the danger of sacrificing security for speed as new processes and products are being rolled out at breakneck pace.

According to a report⁴ in CSO Online, nearly 80% of global executives rank cyberattacks and threats as one of their organisation’s highest risk management priorities.

The need to invest in security has never been greater. In a survey⁵ by Altimeter, cybersecurity is the second biggest investment priority (35%), after cloud (37%).

The pandemic has made it necessary for many businesses to invest in technology and accelerate DX to mitigate the disruption to their operations. Many of the initiatives that were introduced now look set to become a permanent part of the DX roadmap.

But it is important, before marching ahead, to ensure that there is clarity surrounding the business goals that will be driving DX through the current crisis and beyond. Only by aligning investments with these goals can businesses really unlock value through DX and accelerate through the turn.

 Let us help to chart your DX roadmap.

¹ IDC, Worldwide digital transformation spending guide.

² IDC, IDC announces key technology investment trends for the future enterprise, October 8 2020.

³ IDC, Worldwide public cloud services spending guide, February 2019.

⁴ CSO Asean, What is security's role in digital transformation?, August 7 2020.

⁵ Altimer Group, The state of digital transformation, 2018-19.