Having some digital transformation fatigue on your team? You’re not alone: Here’s what else to watch for in the year ahead, digital leaders.
Ongoing digital transformation across industries became a given in 2019. At the same time, digital transformation fatigue also became very real.
Looking ahead, 2020 will be a year of some reckoning for digital initiatives – and that’s ultimately good news. “2020 will still see the rapid scaling of digital initiatives across industries,” says Steve Hall, partner and president of global technology research and advisory firm ISG. “In many areas, CIOs and organizations have prepped their organizations for change but haven’t made the full leap to transforming their culture to fully embrace the change.”
Digital transformation trends for 2020
When thinking about 2020, IT leaders should be prepared not only to lead a greater cultural shift in the enterprise, but also to prepare for DT-centric shifts in the IT service provider sector, get real about data governance, embrace AI and insight-driven innovation, and explore more fully the benefits of public cloud adoption. Let’s dig into these trends and takeaway advice for IT leaders:
1. Digital operating models become mandatory
ISG’s Hall predicts rapid adoption, including integrated cross-functional teams. “CIOs need to lead the culture change within organizations and create the digital backbone and underlying capabilities to power the transformation,” Hall says. “CIOs who hold back or resist the change risk losing the trust of their boards and significantly impacting the long-term health of their enterprises.”
2. More data, more problems
Big data is about to get even bigger. “The big data problem – the increasing volume, velocity, and variety of data – isn’t new, but it’s compounding. Now we have mobile data, sensor data, voice data… the list goes on,” says Ankur Laroia, managing director at BDO Houston. “The amount of data that needs to be stored doubles every six months, and it’s increasingly in unstructured formats that make it difficult to integrate and synthesize into something meaningful.”
Cheap storage makes massive data collection possible, but not necessarily recommended. There’s been talk of the importance of data governance for years, but it’s no longer negotiable. “We’re starting to see a shakeout as those that have invested in data governance and analytics leapfrog their competitors,” Laroia says. “Building an insight engine will be a top priority in 2020 – because it’s necessary to survival.”
What’s more, new regulations like the General Data Protection Regulation (GDPR) demand more careful data management, according to analysts at Technology Business Research Inc. (TBR). As a result, data lakes will be falling out of favor. “Without proper planning and management of data streams going in, numerous accessibility issues can result,” says Laroia. “Not only are they incredibly complex to get right, but over-preservation of data can result in significant data privacy and compliance risk.”
3. AI takes center stage
Even once all that data is wrangled, making sense of it at scale in a usable way will require some help from our machine friends. In fact, say digital experts, AI will be the key to delivering business outcomes with digital transformation. “AI is one of the technologies that will help standardize the digital transformation market and turn the wildly loose use of the term ‘digital’ into tangible business results,” the TBR analysts wrote in a September 2019 Digital Transformation Insights report. AI will permeate all functions, from sales and marketing to HR and finance.
Machine-learning algorithms have also matured and expanded over the past year. “IT leaders should incorporate them into their business-driven data analytics strategy in 2020 to more quickly and effectively synthesize and present insights gleaned from the massive amounts of enterprise data – far more than teams of human data scientists can ever hope to assimilate,” says Rahul Singh, managing director with Pace Harmon. “This will provide their business stakeholders with a competitive first-mover advantage.”
Machine learning and AI can also be leveraged within modern data architecture paradigms to automate and mitigate the data governance problem – from aggregation and cleansing all the way through to extraction in an analytics-ready format, says Laroia.
4. M&A shakes up IT services
Merger and acquisition activity in the IT outsourcing industry has accelerated as traditional IT service providers are acquiring engineering and digital marketing firms to bring new capabilities to their clients. Three-quarters of the 2,200 tech acquisitions made in the last year were analytics firms, digital solutions providers, engineering firms, or digital agencies, according to Hall.
“This record pace of acquisitions will continue to reshape the landscape for CIOs and the service providers they partner with,” Hall says. “The M&A activity will be a major source of disruption for CIOs as they are challenged to recognize potential synergies, but more importantly, to integrate digital capabilities into their product lines.”
5. New digital transformation allies emerge
Those service providers that don’t acquire their way to digital prominence will partner to do so. “No vendor can do it all, despite many positioning themselves as end-to-end service providers,” TBR analysts wrote in their September 2019 Digital Transformation Insights report. “Technology partners are and will remain an integral part of India-centric and consulting vendors’ go-to-market strategies, especially as clients seek off-the-shelf, minimally customizable solutions.”
While alliances within the sector are nothing new, the digital transformation era may see vendors teaming up on marketing and developing dedicated, branded spaces within their innovation hubs or design studios, says TBR senior analyst Patrick Heffernan. Some consultancies will likely need to become ‘frenemies’ and create three-way federated partnerships where each party plays to its strengths and provides depth in domain and delivery expertise, the report adds.
What about cloud and digital transformation trends? Let’s explore:
6. Public cloud adoption expands
Over the past few years, most of the focus on moving to the cloud has been around adoption of IaaS, PaaS, and SaaS as companies look to leverage the efficiency, scale, and elasticity of cloud services to optimize their spend and reduce cycle times, Pace Harmon’s Singh says. In 2020, the focus will shift more to enabling innovation.
“Cloud service providers have been building out intelligent automation and service capabilities on analytics, AI and machine learning, and customer engagement, to name a few, which enables enterprise IT organizations to accelerate adoption of these capabilities and quickly drive business value,” Singh explains. IT leaders will want to look at how they can leverage public cloud capabilities to accelerate value rather than investing time and money building them internally, he advises.
7. New digital transformation metrics will emerge
“The reality is, many digital transformations fail because companies aren’t integrating their business and technology strategies from the start,” says ServiceNow’s CIO Chris Bedi. “But it’s imperative that CIOs know how to quantify their progress with AI and digitization technologies and understand how to effectively communicate this value to key stakeholders.”
In 2020 and beyond, Bedi predicts, CIOs will develop more methodical evaluation criteria for digital projects, focused on measuring proficiency across three key areas:
- Velocity: The speed of processes and how quickly work gets done
- Intelligence: The ability of analytics to automate and improve decision effectiveness
- Experience: Experiences that drive the right behavioral and economic outcomes
8. IT takes the long view on digital insights
Unfortunately, many early digital initiatives were reactive responses to a need in the moment. At this point in time, however, it makes more sense to take a step back at the start of new projects to ensure they deliver maximum value.
“IT leaders should embrace what we call ‘insight-first” innovation,” says BDO’s Laroia. “’Insight-first’ innovation focuses not only on solving the immediate need, but also on maximizing the long-term potential of organizational data. By intentionally building in data capture, every digital initiative presents an opportunity to improve and democratize business intelligence across the enterprise.”
The Enterprises Project