Pandemic-catalyzed DX: The Dawn of the Future Enterprise

It is a year into the COVID-19 pandemic and the world has had to adapt to the restrictions created by the need for quarantines and social distancing. As governments around the world embark on vaccination drives to restore normalcy, the digital economy has been a source of economic survival for businesses and consumers alike. Now, organizations are striving to become a Future Enterprise.

Meet the Future Enterprise

The Future Enterprise is IDC’s vision on how organizations must organize and invest to participate in increasingly digitally-centric markets. It is a framework for fostering a digitally-native culture that enables new synergies in ecosystems, generates revenue from empathy at scale, and demonstrates an ability to adapt operating models to complex customer requirements—all of which are enabled by an intelligent, empowered, and agile workforce.

The pandemic has underscored the importance of digital transformation in the eyes of CEOs who now find themselves at a decision point – to follow the same course of cost-cutting as previous recessions have dictated – or to flatten their own organization’s recessionary curve by leveraging technology.

The world is changing—and these changes are catalyzed by the pandemic. Digital transformation (DX) offers the most promising set of tools to enable business survival. Adaptation is no longer an option, but a necessity.

According to IDC’s Worldwide Digital Transformation Strategies Practice Research Director Shawn Fitzgerald, a Future Enterprise can be described as a “digitally determined organization where digital is achieved at a scale across its operations”. It innovates “at a pace that is an order of magnitude greater than traditional businesses”.

IDC predicted that by 2022, the digital economy will go mainstream with at least 50% of Asia/Pacific GDP coming from digital products and services.

Achieving Digital at Scale

IDC conducted a study on “realizing digital at scale” to provide “the next-generation framework for viewing digital transformation maturity across five dimensions.” The five key dimensions of the Future Enterprise are as follows:

  • First, Future of Culture: Leadership at scale
  • Second, Future of Customers: Empathy at scale
  • Third, Future of Intelligence: Insight at scale
  • Fourth, Future of Operations: Resilience at scale
  • Finally, Future of Work: Work model at scale

IDC forecast in its study that “empathy among brands and for customers will drive ecosystem collaboration and co-innovation”. This combination, according to the forecast, “will drive 20% collective growth in customer lifetime value.” The study also projected that, by 2025, “in a factory setting, more than half of A2000 enterprises will be prolific software producers”.

According to the study, “over 90% of new apps will be cloud-native, 50% of code externally sourced, and 1.5 times more developers employed.”

Taken in this context, IDC finds that DX will be a driving force for this adaptation. IDC research indicates that, by 2022, “50% of IT organizations will have transitioned from builders and operators to designers and integrators of digital solutions.”

The pandemic has created an environment where these changes are vital for business survival: “Proactive, hyper-speed operational changes and market reactions” are expected to be in place by 2022—and we are seeing many businesses already adopting such changes. Such changes will enable enterprises to “respond to customers, competitors, regulators, and partners at least 1/3 faster than their peers.”

Digitally-advanced businesses must evolve into “a broad, flexible, self-service mashup of digital tools” that will replace the walled-garden IT-as-an-Enabler model by 2024, by IDC’s predictions. These are the Future Enterprises.

IDC also identified the drivers for this modernization in that study: “Escalating cyber threats and needed new functionality.” IDC also predicted that “65% of organizations will aggressively modernize legacy systems with extensive new technology platform investments through 2023.”

Digital Adaptation in the Time of COVID-19

The world is working to create digital bridges that meet the needs generated by the struggle against this pandemic—one where social distancing, minimizing person-to-person contact, and building and maintaining good customer relations using digital channels is the norm.

Stopping the spread of COVID-19 requires adopting novel ideas and taking novel approaches to pandemic-spawned problems, like contactless payment, working from home, and seamless digital interactions and transactions. The global situation demands it if economies, livelihoods, and communities are to survive the global struggles to curb the pandemic.

Research by IDC shows that the biggest barrier to effective digital transformation is not technology, nor the lack of strategy or budget, but organizational culture. IDC Chief Research Officer Meredith Whalen said “leading companies are racing toward becoming future enterprises” in “a journey where taking operations and innovation to scale is the measure of success.” To thrive, organizations must build a culture that fosters change, which underscores the redefinition of commonly accepted values, processes, corporate structures, and metrics.

In a recent IDC survey, 42% of technology decision-makers indicated that their organizations plan to invest in technology to close the digital transformation gap. “The pandemic created a business necessity for increasing technology investment and accelerating digital transformation timetables,” Whalen noted. “What we are learning is that many of these initiatives that started as ways to mitigate the economic impact of COVID-19 have become permanent roadmap requirements for Future Enterprise success in the digital economy.”

IDC’s outlook for the Future Enterprise identifies three overarching initiatives that directly link technology investment to digital transformation efforts—creating digital parity across the workforce, designing for new customer demands, and accelerating automation initiatives.

Catalyzed Change

Before the pandemic, organizations had, on average, only 14% of their employees working from home. That percentage has increased to 45%, and many organizations anticipate that work-from-home employees will remain a large proportion of their workforces. Supporting hybrid workforces and ensuring that remote and work-from-home employees have the same sets of connectivity and productivity tools as their in-office counterparts will be essential to long-term success for businesses.

IDC predicts that, by 2023, 75% of the G2000 will commit to providing technical parity to a workforce that is hybrid by design, rather than by circumstance. By 2022, an additional $2 billion will be spent on desktop and workspace as a service by the G2000, as 75% of them incorporate employees’ home network/workspace as part of the extended enterprise environment.

New customer demands also play a key role in the DX required to compete among the Future Enterprises: 47.6% of all U.S. consumers are “very concerned” about their personal health as it relates to COVID-19, according to IDC’s recent U.S. consumer survey. This concern for safety has spurred many businesses to create new contactless consumer experiences, including curbside pickup. Enterprises will invest in design and user interface requirements for contactless process automation, with an emphasis on voice-based experiences and self-service options through mobile apps.

IDC predicted that, by 2023, 75% of grocery e-commerce orders will be picked up curbside, or in-store, driving a 35% increase in investment in onsite or nearby micro-fulfillment centers. This year, 40% of development activities will re-prioritize design and user interface to support contactless process automation.

According to IDC’s research, enterprises will increasingly adopt automated IT operations practices to support the greater scale required for digitally-driven enterprises. Robotic process automation (RPA), robotics, and artificial intelligence (AI) technologies will play a more important role in labor automation, while a continued focus on autonomous operations will drive investment in Digital Engineering organizations and digital operations technologies.

This means that, by 2022, 45% of repetitive work tasks will be automated and/or augmented by using “digital co-workers,” powered by AI, robotics, and RPA and that, by 2023, 75% of Global 2000 IT organizations will adopt automated operations practices to transform their IT workforce to support unprecedented scale.

The COVID-19 pandemic created unique situations for specific industries, including healthcare, hospitality, retail, and small and medium businesses (SMBs), requiring them to re-think the way they use technology to engage with customers.

On the front lines against COVID-19, health care providers now leverage telemedicine, which IDC predicts will become a permanent fixture of the industry, with nearly one-third of consumers interested in having a telemedicine option post-pandemic. Health care providers are expected to increase spending by 70% on connected health technologies by 2023.

Impact of COVID-19 on Economies

Hardest-hit by the pandemic, the hospitality industry will shift from people-based services: IDC expects 85% of hospitality brands to implement self-service technologies by 2021, changing how they engage with guests.

Another industry hard-hit by the pandemic, restaurants have turned to home delivery out of necessity. Post-pandemic, 30% of restaurants using third-party delivery platforms will deploy native delivery options to eliminate third-party fees, increasing profit by 25%.

The retail industry has seen increased adoption of contactless payments during the pandemic, and this will continue to be viewed as a customer experience imperative, causing 85% of retailers to offer at least two contactless payment options by 2023.

IDC predicts that at least 30% of small to medium businesses will fail, leading to a new wave of microbusiness-powered and ecosystem-first disruptors by 2023. These micro-businesses will be single employees who leverage the power of a digital platform to obtain and fulfill work.

IDC also predicts that, by 2022, the digital economy will go mainstream with at least 50% of Asia/Pacific GDP coming from digital products and services, with the Future Enterprise taking the lead.