The Future is 5G: Five Ways the Combination of IoT and Mobility Drives Digital Transformation
Digital Transformation (DX) is changing the way enterprises operate and interact with stakeholders. Knowing how to elevate current initiatives and move them forward effectively will be key to creating and executing a Digital Transformation strategy. One way to accomplish this goal is to combine technologies to maximize their value.
Digital mashups, which are combinations of 3rd Platform technologies and Innovation Accelerators, aim to deliver new digital experiences and products to improve decision making and to deliver enhanced experiences – two foundational goals driving DX initiatives. 5G is an enabler of digital mashups in that it is the connectivity platform for next-generation innovations such as Augmented Reality/Virtual Reality (AR/VR), robotics, wearables, mobile devices, and the Internet of Things (IoT).
As the next generation of cellular technology, 5G will create the foundation for person-to-person (mobility) and machine-to-machine (IoT) communications across the wireless wide area network. As the technology becomes a reality over the next 2-3 years in developed markets, it will impact not only consumers, but how enterprises use the connectivity to transform their businesses.
Becoming Digital-Native: Digital deadbolts you should watch out for
Every digital transformation journey starts with the best intentions and clear objectives. So what gets in the way? Why are so many organizations experiencing digital impasse? Find out the 5 primary reasons with IDC's Sandra Ng.
Driving the Competitive Agenda with DX Technology Capabilities
IT must support innovation across the business: this is the charter, the mission, the mandate, and the imperative for IT and for IT strategy. Now, CIOs and LOB executives must deliver products and services at the speed of the digital age. But organizations are smothering under a forest of silos, and history has shown that silos are major barriers to great user experience, collaboration, speed and efficiency. A new approach to digital transformation is needed before businesses stagnate under the burden of redundancy and inconsistency. To succeed, companies must industrialize their approach to create robust technology
capabilities. In IDC’s view, adaptable capabilities — DX technology capabilities — are the engine for a flexible, transformational business strategy.
Download the IDC Executive Brief "Driving the Competitive Agenda with DX Technology Capabilities"
Becoming Digital Native: The Path to Digital-Native Thinking
IDC defines a digital native enterprise (DNE) as an entity that scales its operations and innovates at a pace that is greater than traditional businesses. DNEs are characterized by their accelerated appetite for innovation. Adopting the mindset and gameplan of DNEs may be difficult for traditional organizations, but IDC's Sandra Ng, Group Vice President, Practice Group, IDC Asia/Pacific, offers advice for those looking to make the shift.
5 Things That Are Dragging Down Your Digital Transformation
IDC predicts that by 2022, 80 percent of revenue growth will depend on digital offerings and operations. Getting there requires getting past the deadlock created by outdated KPIs, organizational silos, limited expertise and other challenges to digital transformation.
By Meredith Whalen, Senior Vice President, IT Executive, Software, Services, and Industry Research
Since IDC conducted its first digital transformation (DX) benchmark in March 2015, we have seen progress in the number of organizations that have digitally transformed. Yet, despite this progress, we find most organizations are at an impasse. Fifty-nine percent of organizations worldwide are running digital projects and making progress, but they are not transforming the overall organization.
From the beginning, there have been numerous obstacles impeding digital transformation, including legacy culture, process and financial incentives. Now, a new set of challenges has cropped up that only manifest themselves after an organization begins its digital journey, and grow on the underbelly of a DX initiative, creating a drag on an organization’s transformation. They are: outdated KPIs, siloed organizational structures, tactical digital plans, silos of innovation, and limited expertise.
If any of this sounds familiar to you, read on as we explore why they are a drag on progress and how to overcome them.
New KPIs for the new digital enterprise
The tools an organization uses to communicate its digital success to employees, investors and the board of directors do not necessarily reflect the way in which a digital enterprise operates. Organizations need KPIs that can communicate the real-time nature of the future enterprise. As long as organizations use traditional KPIs to measure new digital businesses, their investors will penalize them.
To effectively and successfully communicate to employees, investors and partners, a new set of KPIs that capture the capabilities of a digital enterprise are in order. The new digital KPIs need to include financial, business and operational KPIs. And they need to be developed for each part of your new digital business. Categories of KPIs need to include:
- Leadership represented by KPIs associated with innovation rates
- Customer Engagement represented by KPIs focused on customer advocacy
- Information Monetization represented by KPIs focused on data capitalization
- Operating Model represented by KPIs focused on business operations
- WorkSource Transformation represented by KPIs focused on the workforce.
Digital is business as usual
One of the fundamental challenges of digital transformation is the need to change legacy culture and processes, which is embedded in the organizational structure. Organizations are experimenting with a multitude of structures. A recent study by IDC reveals that digital organizational structures need to evolve to keep transforming the organization. We categorize DX organizational structures into the following archetypes.
- Digital Special Projects. For those organizations that are just beginning their digital journey, this team is a central group that typically reports to the CEO and is exploring digital for the company in a structured and formal way.
- The Office of Digital. For those organizations that are ready to move their digital strategy to the next phase, they put together a more formal centralized group that typically reports to the CEO and is focused on providing governance around the digital strategy.
- The Embedded Digital. This archetype embeds digital resources into the various lines of business that are digitally transforming. There typically is still a central “digital” group that orchestrates digital for the company and provides common core platforms and digital expertise.
Ultimately, enterprises need to evolve to the embedded digital business model. This model moves an organization to the state where digital is “business as usual.” The embedding of digital capabilities into the lines of business, gives the business a greater sense of ownership around the digital strategy.
If you are wondering where the separate digital business unit is, we do have an archetype for that as well. However, it only occurs in less than 10 percent of organizations and is focused on creating disruptive and innovative offerings as opposed to transforming the organization.
IT organizations need to embark on their own journey of transformation, evolving to understand the needs of customers and to be able to rapidly develop new innovations. If the IT organization is not evolving, it may wind up impeding the overall digital transformation of the organization. In a study of IT organizations, IDC found that IT organizations in companies that are just beginning their digital journey still exhibit many of the traditional qualities of IT. They primarily employ waterfall practices; their biggest challenge is finding partners to work on digital transformation; and they still measure the length of projects in terms of months, not weeks. In contrast, IT organizations working in companies that are far along on their digital journey have significantly transformed. These organizations primarily employ agile and design thinking practices; they are focused on creating new DX business models; and they measure their project lengths in 90 days or less.
A modular and scalable digital roadmap
Too many organizations are not making progress because they have built a tactical digital roadmap, focused on achieving near-term goals. The challenge is that digital strategies evolve and the roadmap needs to be able to evolve with them.
The development of a digital roadmap should start with a visioning session about how one’s industry may transform in the coming years. How will autonomous vehicles change the insurance industry? How will 3D printing change the retail industry? How will robotics change the hospitality industry? From there, one can build a roadmap that backs into that future scenario.
A key element of the roadmap is to incorporate use cases. Use cases allow the roadmap to be modular in that the use cases that can be swapped in and out as they emerge. The roadmap also needs to span across multiple horizons. Horizon 1 of the roadmap consists of the use cases being deployed today and the underlying technology to support them. Horizon 2 of the roadmap includes the use cases being incubated. Horizon 3 imagines the possibilities.
A data-centric digital platform
The absence of a singular technology architecture is holding back many enterprises in their digital transformation. This is primarily driven by the fact that digital IT environments are often established separate from the traditional enterprise IT platform. IDC is anticipating a large build out of digital platforms in the next three years. Before this build out takes place, we recommend technology executives rethink their approach and develop a technology architecture that is integrated and spans across IT, digital, and business domains.
If the ability to transform data into insights and actions is going to be the means for competing in the digital economy, the digital platform needs to be optimized around this task. At the heart of a digital platform should be what we are calling the “Intelligent Core.” This is where the algorithms, the code and the models live that enable you to turn data into insights and actions. The foundational services do not go away. IT governance, architecture, integration, and development services are the enablers for this new digital platform.
New digital capabilities around customers, data, and scale
As organizations evolve to a digital enterprise, new capabilities need to be developed. Capabilities are the “what” an organization does to deliver value. Digital capabilities require the bringing together of technology, talent, governance, processes, and data. IDC believes too few organizations are actively working towards developing new digital capabilities. Rather, they are preoccupied with building the piece parts.
We believe the three most important capabilities to focus on creating will be experiential engagement, data monetization, and operating a digital business at scale.
- Experiential Engagement capabilities allow an organization to create and continually innovate exceptional, immersive customer experiences that resonate and engage with the customer and that allow the customer to engage with the organization in an easy, frictionless, and pleasing experience.
- Data Monetization capabilities allow an organization to take data and turn it in to a revenue stream for the organization.
- Scaling a Digital Business. As an organization scales its digital business, it will be moving too fast to run traditional operational process like lean. If an organization wants to deliver hyper-personalized digital services, it will need to implement more autonomic processes, while driving down costs as volume increases.
Beyond the digital deadlock
We expect the next 2-3 years for many organizations will be an internally focused period — a time when organizations expend a lot of focus on internal systems, processes, and culture to“get digital done.” Once organizations move past this, they will be able to focus on recognizing the benefits of innovation. IDC predicts that by 2022, 80 percent of revenue growth will depend on digital offerings and operations.
Digital transformation is a 10-year process. We predict digital transformation of 75% of enterprises will take until 2027. It is important for an enterprise to keep pace with the major milestones your peers are hitting. If you are like most organizations, you are making progress in your individual digital programs; but you are not making progress on the greater goal – digitally transforming the entire enterprise. Use the framework presented here to identify which areas are slowing down your digital transformation and begin taking the steps address them.
Why Your Organization Should Create a Digital Innovation Graph
Technology’s effect on business at a macroeconomic scale signals a new digital economy. The continuing emergence and evolution of this digital marketplace means that enterprises will be measured by their ability to hit and exceed a whole new set of demanding performance benchmarks, and enterprises must become digital natives in the way its executives and employees think and work in order to be successful.
To better prioritize DX initiatives, enterprises need to ask themselves this important question: what are our customers trying to build or accomplish that we have the expertise and ability to help? Look outside in, and make the entire DX mission customer-centric, and your company will be able to plot which internal DX initiatives should take priority.
Keep track of where your organization is – and where it should go – with DX to answer that customer-centric question by building a Digital Innovation Graph. This organization-specific tool will become a blueprint that helps define how your enterprise should grow to become a digital native that best serves your target market.
Download the IDC ebook "Why Your Organization Should Create a Digital Innovation Graph"
Becoming Digital-Native: IDC's DNE Performance Scorecard
Because the DX era calls for new rules and new ways of thinking, traditional metrics for success will no longer do. IDC has released the industry's first DNE performance scorecard to help organizations realize achieve successful DX outcomes on time, and on budget.
IDC's Strategic Predictions that will help Asia/Pacific Organizations Become a Digital Native Enterprise
IDC reveals how key predictions on Digital Transformation (DX), Future of Commerce and Artificial Intelligence, among others will affect Asia/Pacific organizations in the next three years.
On its 10th year of tracking 3rd platform technologies, IDC reveals that at least 60% of the Asia/Pacific GDP will be digitalized, with growth in every industry driven by digitally-enhanced offerings, operations, and relationships over the next three years. Furthermore, IDC expects that by 2020, investors will use platform/ecosystem, data value, and customer engagement metrics as valuation factors for all enterprises. This tipping point in the DX economy is described by IDC as becoming “Digital Native Enterprises.”
IDC predicts that organizations slow to adopt a digital-native operating model will compete for a rapidly shrinking piece of the global economy. 62% of Asia/Pacific enterprises are digitally stuck, and to lead in this DX economy, organizations must become a digital native enterprise (DNE). A DNE is one that is able to scale its operations and innovate at a pace that is an order of magnitude greater than traditional businesses. It is driven by a customer-centric and empowered workforce that embraces risk taking as it seeks to continuously innovate. Technology and data are its lifeblood, fueling more efficient operations, new revenue streams and customer loyalty,” says Sandra Ng, Group Vice President of Practice Group, IDC Asia/Pacific.
According to Ng, the top predictions that will impact the ICT industry and both technology buyers and suppliers in Asia/Pacific in the next 36 months are:
- Data-centricity: By 2020, revenue growth in half of A1000 firms from information-based products and services will be triple the growth rate in the balance of the product/service portfolio.
- Digital business: By 2018, 60% of CIOs will put experimental engagement, data monetization, or digital business at scale at the top of their agenda.
- AI everywhere: By 2019, 40% of digital transformation initiatives will use AI services. By 2021, 75% of commercial apps will use AI, over 90% of consumers will interact with customer bots, and over 50% of the new industrial robots will leverage AI.
- HD interfaces: By 2020, human-digital (HD) interfaces will diversify, as 20% of field-service techs and over 20% of infoworkers use augmented reality, nearly 30% of new mobile apps use voice as their primary interface and 30% of consumer-facing A1000 will use biometric sensors to personalize experiences.
- Digital assistants: By 2019, personal digital assistants and bots will execute only 5% of transactions, but they will influence 15%, driving growth among the organizations that have mastered utilizing them.
- DX platforms: By 2020, 50% of all enterprises will have fully articulated an organization-wide digital platform strategy, and will be in the process of implementing that strategy.
- Cloud 2.0: Distributed and specialized: By 2021, enterprises' spending on cloud services and cloud-enabling hardware, software and services will reach US$75 billion, leveraging the diversifying cloud environment that is one-third at the edge, over 15% specialized (non-x86) compute, and 80% multicloud.
- Risk and trust: By 2019, 60% of CIOs will refocus cybersecurity around authentication and trust to manage business risks, initiating the retirement of systems that cannot ensure data protection.
- Open API ecosystems: By 2021, more than half of the A1000 will see an average of 40% of their digital services interactions come through their open API ecosystems, up from 5% in 2017 - amplifying their digital reach far beyond their own customer interactions.
- Blockchain and digital trust: By 2021, at least 25% of the A1000 will use blockchain services as a foundation for digital trust at scale. By 2020, 25% of banks, 40% of supply-chain and 20% of healthcare organizations will use blockchain networks in production.
These top 10 strategic predictions for the Asia/Pacific market are presented in full in the following reports: IDC FutureScape: Worldwide IT Industry 2018 Predictions —APeJ Implications; IDC FutureScape: Worldwide Digital Transformation (DX) 2018 Predictions – APeJ Implications; and IDC FutureScape: Worldwide CIO Agenda 2018 Predictions – APeJ Implications.
To learn more about other IDC FutureScape documents on the latest technology and industry predictions for WW and the Asia/Pacific region, please visit the FutureScapes Library.