Ready or Not, the Digital Economy is Here

The world is, by nature, a place of disruption. That is very true now, half a year into the COVID-19 pandemic, with no vaccines yet available. Before this, businesses saw growth in the digital economy and planned for it. Plans move up at greater speed and with greater urgency.

In April last year, IDC observed that enterprises worldwide “are making significant investments in technologies and services”.  Particularly, there is great interest in those that enable digital transformation (DX). They are looking for ways to revamp their business models, products and services, and organizations. IDC predicted that the onset of the digital economy would begin in 2023. But the world cannot wait that long.

According to the Worldwide Semiannual Digital Transformation Spending Guide, IDC forecasts that global DX spending would “reach $1.18 trillion in 2019, an increase of 17.9% over 2018.” Well, that spending needs to be done now.

Necessary DX investments for the digital economy

Just over 16 months ago, IDC Customer Insights & Analysis Group program director Eileen Smith said “worldwide DX technology investments are expected to total more than $6 trillion over the next four years.” Smith noted that “strong DX technology investment growth is forecast across all sectors, ranging between 15% and 20%, with the financial sector forecast to be the fastest with a compound annual growth rate (CAGR) of 20.4% between 2017 and 2022.”

IDC Customer Insights & Analysis Group Research Manager Craig Simpson was quoted in the same report as saying that DX “is quickly becoming the largest driver of new technology investments and projects among businesses.” IDC anticipates that “by 2022, the digital economy will go mainstream with at least 50% of Asia/Pacific GDP coming from digital products and services.”

Moving timelines up

The pandemic forces the scheduled shift to the digital economy, across enterprises, into a higher gear. The demand for new business strategies is all creating a pathway for DX. Employees and customers alike are elevating their expectations from organizations.

In 2019, empathy among brands, and for customers, was a driver for ecosystem collaboration and co-innovation. Exhibiting empathy can lead to a 20% growth in customer lifetime value. On the other hand. more than 50% of A2000 enterprises are growing into prolific software producers. Developers deploy code daily. 90% of new apps are cloud-native. 50% of the code gets sourced externally. Additionally, there are 1.5x more developers in these organizations. Now, these things are likely to spell the difference between merely surviving the pandemic and thriving in a world that has been reshaped by COVID-19.

IDC predicted then that, by 2022, “50% of IT organizations will have transitioned from builders and operators to designers and integrators of digital solutions that come to define every product, service or process.” Businesses must leverage their digital solutions to reach customers. Furthermore, they have to secure their supply, product, and service delivery chains and maintain their relationships with their markets.

The world now depends on existing digital economy frameworks and applications to shop for groceries, access medical services, order food deliveries, work from home, and do business.

Evolving to survive in the digital economy

Enterprises now have to make drastic adjustments in light of quarantines and lockdowns. According to IDC, “by 2024, the IT strategy for 80% of the digitally advanced organization will evolve to a broad, flexible, self-service mash-up of digital tools to replace the ‘walled-garden’ IT-as-an-Enabler model”. Without a doubt, the walls surrounding the gardens have come crashing down. IT is now the most important enabler for both recovery and forward movement in business.

Now, more than ever, businesses need digitally-enhanced workers. They can’t wait until 2021 to adopt the new Future of Work practices. Specifically, they must “expand the functionality and effectiveness of the digital workforce by 30%” and fuel “an acceleration of productivity and innovation”.

The world cannot wait until 2023. By this year, IDC postulates that “over 30% of new enterprise IT infrastructure deployed will be at the edge rather than corporate data centers, up from less than 10% in 2019″. Nor can the world wait for 2024 for the number of apps at the edge to “increase by 700%.”

Enterprise platforms worldwide must now aggressively modernize their legacy systems. This is necessary to meet the needs for new functionalities and capabilities required by customers. Organizations need to upgrade “with extensive new technology platform investments” starting now. This is especially since increased activity in the digital space opens more opportunities for threats like malware and hacking.

Moving forward

Indeed, “2020 is the year where we will see the emergence of a new breed of digital disruptors,” as IDC has called it. The world needs these changes now, as much to survive this pandemic as to thrive after it.

Are you a tech vendor looking for a new way to engage with your audience during these extremely uncertain times? Be part of this year’s IDC DX Summit and connect with your clients using our exclusive platform, IDC Arena.