Digital transformation is a state of being; it is not something with definitive beginning and ending points, but a constant state of motion.
Digital transformation is more than a buzzword; it is a fundamental change in the way business is conducted and innovation approached. It is no longer an option; it is an imperative for long-term business success. Companies do not have the time to think about how to embrace digital transformation. They must embrace it—now.
Forrester defines digital transformation as harnessing digital assets to continually improve customer outcomes while increasing operational agility. Digital transformation is a state of being; it’s not something with definitive beginning and ending points, but a constant state of motion. And building a technology road map for digital transformation presents greater difficulty than it might seem at first glance. There are lots of shiny distractions in the tech world!
It is about much more than just technology. Successful transformation also requires experience and a fresh perspective on how digital impacts customers. When technology and experience are delivered through a flexible platform, it enables companies to begin the journey from automation to artificial intelligence. Add in human experience, innovation, and curiosity and you have an approach to digital transformation.
The drivers tend to be disruption from market newcomers or innovation from rivals seizing the opportunity to win new customers. And often what is perceived as digital transformation may actually be digital optimization. Digital business transformation is when companies pursue net new revenue streams, products and services, and business models. This can include the creation of new digital business units or digital acquisitions. Sometimes the new business models can lead to ventures in adjacent markets or new industries, elaborates Gartner analyst Hung LeHong.
Digital transformation has been on top of government CIO agendas in 2018. Cloud solutions, cyber security, and analytics are the top technologies targeted for new and additional spending by public sector CIOs, while data center infrastructure is the most commonly targeted for cost savings, according to a survey from Gartner, Inc.
“Digital transformation revolves around data. To be successful, public sector CIOs need to focus on expanding their data and analytics capabilities and creating a data-centric culture, by increasing the availability of open data and APIs for internal use and public consumption,” said Rick Howard, research vice president at Gartner. “Building out data analytics infrastructure is fundamental to improving government program outcomes and services to citizens.”
Enterprises embarking on the complex and error-prone process of digital transformation are finding that networking is the most difficult piece of legacy infrastructure to transform. Not only was it the last hardware-centric component to go virtual, but it also requires a highly coordinated plan to upgrade key network components without affecting critical functions.
“The fact remains that there can be no digital business model without a flexible network architecture. And many organizations are forging ahead with only a scant idea of how the network should change,” says distinguished analyst, Arthur Cole.
One of the fundamental aspects of network transformation is the way in which, data itself is evolving. In the old days, data was mostly transactional and came from internal sources such as ERP and CRM solutions. In the new world, most data will be unstructured and will come from a variety of sources, including the cloud and the rising legions of customer devices. This means networks will have to become increasingly fast. They must dynamically support both broadband and narrowband connectivity and extend far beyond the data center or even the cloud provider, all while accommodating increasingly bursty workloads.
This is expected to create a multibillion-dollar global network transformation market by the next decade. Research and Markets estimates that demand for digital-facing systems, solutions, and services will climb more than ten-fold from today’s USD 6 billion to nearly USD 67 billion by 2022, representing compound annual growth on the order of 62 percent. Much of this will be driven by increased deployment of IT as a service offerings and a growing dependence on virtual infrastructure. It will also lead to greater collaboration between network vendors and providers in order to craft increasingly optimized solutions for key industry verticals.
According to IDC, worldwide spending on digital transformation is expected to top USD 1.3 trillion next year, a nearly 17 percent jump over 2017. That curve is expected to continue through at least 2021 when the market is expected to top USD 2 trillion, the vast bulk of it going toward the technologies that alter business models and operations, as well as the information that drives improved decision-making and new product development. At the moment, the key decision is what kind of technologies best support these goals, with IDC’s Eileen Smith saying that it is largely coming down to two classes: 3rd Platform tools like cloud, big data, and mobility, and innovation accelerators such as the IoT, AI, and cognitive computing.
“Perhaps the two biggest challenges in digital transformation are crafting the strategic vision to guide the process, at least through its initial stages, and maintaining the necessary focus among management, the workforce and the partner/supplier ecosystem. Few organizations will be able to accomplish this without setbacks, of course, but by laying out the big picture, the enterprise at least has the proper framework with which to guide technology and process development and resolve the disputes that will inevitably arise,” asserts Cole.
Gartner and Forrester have independently conducted surveys to gauge to what end is technology spending spiraling upward. The Gartner survey, conducted and released by PointSource, suggests a great deal of confusion over what technology bets to make going forward. “Senior managers and above picked a different technology each time when asked what their biggest differentiator will be in 2018,” the PointSource authors relate. In addition, executives seem unsure “what their top initiative is, what will be most helpful in driving internal growth and what they are investing the greatest amount of budget in.”
94 percent of executives in the survey – in other words, just about everyone – say they have increased focus on digital growth within the last year, and 90 percent say digital plays a central role in their overarching business goals. Everyone is being told to go digital, and the reaction is to throw ever-growing amounts of money at technology solutions. “It is not uncommon for organizations to end up with technologies that do not work, are difficult to use or butt heads with other systems,” the report continues. “Sometimes, decision makers are not taking the proper steps to support new technology investments. Worse, they may be purchasing flashy solutions simply because they have bought into hype or a competitor’s move.”
Quite a bit of investment is going toward the newest, flashiest of the flashy stuff. At least a quarter of companies plan to invest more than 25 percent of their budgets in AI, blockchain, voice-activated technologies, or facial-recognition technologies, the survey shows. However, it looks like expensive new technology is going to be thrown into organizations not prepared to make the most of it. More than half of companies, 53 percent, do not feel prepared to effectively use AI, blockchain, or facial-recognition technologies. Do they have the skills to develop, integrate, and deploy these solutions where they make the most sense? Is there even a solid business case established to justify these investments?
The survey researchers conclude that organizations are forging ahead with massive digital investments, even though they do not fully understand what technologies they need.
What is happening – and has been happening for decades as new technology hits the shelves – is too many executives think that throwing the latest shiny new technology on top of their organizations is going to magically translate into revenues and growth. Technology is but a tool that enhances, enables, and energizes a business that is already forward-thinking, open to innovation and a great place to work. Technology alone won’t remove the plaque from cranky, calcified processes, and smash unproductive, soul-crushing hierarchies.
The survey conducted by Forrester of 1559 business and technology decision makers found that digital transformation efforts are running into roadblocks amid confusion, delusion and resistance to change. 21 percent of firms thought their transformation was done and dusted. Another 22 percent are investigating or not transforming at all. And while 56 percent of firms are transforming, their level of investment and scope of transformation are still mostly small. For example, only 34 percent of banks and insurers are even bothering to transform marketing and only 45 percent are transforming customer care — too few given consumers’ of mass adoption of mobile devices. It seems to be a war between old-school technophobe leaders and the technology innovation that represents a completely different way of doing business.
While the idea of digital has been around for years now, Indian firms are still at the beginner stage of digital maturity. Indian CIOs are slow to embrace digital transformation. They are still delivering traditional IT capabilities. But digital businesses require a different type of leadership, one that focuses on leveraging digital technologies to serve customers.
New 5G and IoT technologies and applications will not work if telecoms carriers do not master AI in their network operations. This is the conclusion of a new report from Enterprise IoT Insights.
The telecoms industry is heavily invested the development of AI and machine learning (ML) based technologies. The need for carriers to automate is urgent, notes the report. “The amount of data is about to explode,” says Dimitris Mavrakis, research director at ABI Research. The notion carriers will gain control by re-defining their networks in software is wrong. “It is supposed to get simpler with SDN and NFV. It won’t; it will get more complicated.”
5G and IoT networks bring new levels of efficiency and complexity, and AI is the means to master the emerging ecosystem. AI promises to bring logic and order to the incoming chaos, and a way for operators to deliver on the promise of 5G and IoT networks, and reap the whirlwind of unilateral digital transformation.
The report finds AI is the missing link for telecoms carriers to realise and enable the so-called fourth industrial revolution, and the final element in a holy trinity of digital transformation tools alongside SDN and NFV. More than this, it is their only recourse.
“Telecoms networks are a springboard for the wider digital transformation of society, and AI is crucial if that transformation is to be ordered and dynamic, amid the rising chaos of 5G and IoT technologies,” opines James Blackman, Enterprise IoT Insights. 2018 will be a pivotal year, as carriers move beyond AI in their core networks, invariably for marketing and sales functions, to increasingly deploy AI at the edge of their networks, for smarter network management and optimization. However, as with other aspects of their own transformation, carriers are faced with familiar challenges, in the form of staff, skills, and culture.”
Roz Roseboro, senior analyst, Heavy Reading has elucidated in her paper how digital transformation will drive change across the telecom sector around the world. She elaborates that increased agility with lower costs and more satisfied customers are benefits that will be welcomed everywhere. The impact of digital transformation in emerging markets could be even more profound than in mature markets, due to the multiplier effect it can have on economic growth.
While the exact amounts can be debated, it is widely accepted that increased broadband penetration leads to faster economic growth. Given that emerging markets have the lowest penetration rates in the world, it stands to reason that they would see the most benefit from increased broadband growth. As shown in the figure, Ovum Forecaster shows that emerging markets in 2017 had mobile penetration rates much lower than those in mature markets. (Mobile penetration is the best measure of broadband availability in emerging markets given that there is very little fixed broadband in those markets.)
Indeed, the IMF projects that the GDP of emerging and developing markets will be twice as fast in emerging and developing markets than in mature markets. In 2018, it expects advanced economies’ GDP will grow by 2.3 percent, while emerging markets and developing economies will grow by 4.9 percent. The same holds true for next year, with 2.2 percent and 5 percent growth rates respectively.
There are many components to digital transformation, and everyone describes it a bit differently. Some of the more common components are automation, open source, analytics, cloud, and DevOps/agile. Operators around the world are embracing some combination of these components to achieve tangible benefits. Automation offers the promise of dramatically reduced cycle times for network configuration and service creation, allowing operators to lower their OpEx and achieve faster time to market for new services. Leveraging open source can potentially lower their CapEx and allow operators to more quickly benefit from innovations coming from a broad base of developers. Analytics can give operators critical insight into network and customer behavior, giving them the ability to better optimize their networks and deliver more targeted, relevant offers to their customers. The cloud, which incorporates many of the other components, provides a more cost effective platform to deliver services and potentially open up new avenues for third parties to participate in the telecom ecosystem. Lastly, DevOps/agile development can help operators move with greater agility and flexibility, also with an eye towards lower costs and more rapid service deployment.
All of these benefits are certainly welcome in any market. However, in emerging markets, where price sensitivity is pronounced, digital transformation can have an even greater impact on operators’ ability to offer services profitably. By being able to leverage new technologies, operators may be able to accelerate the many National Broadband Plans and other efforts to bring telecom/ICT services to underserved populations. Bringing these groups into the digital world can lead not only to more revenues for operators, but also more effective delivery of government services — not to mention the possibility of increased productivity and new business opportunities. Digital transformation can and should drive growth across the value chain to help emerging markets reach their full potential.