Invest for insight, digitally-enhanced workers and new co-innovation

Big data analytics and cognitive AI spending will grow from $105 million in 2019 to over $150 million by 2023, representing a compound annual growth rate of 19 per cent and 28 per cent, respectively.

Side by side with this investment, New Zealand organisations must develop and employ semantic data models to contextualise their business ecosystem data. 

“NZ organisations will go beyond data-centricity into an even more holistic view that encompasses semantic data models as the core way to bring structured meaning to data,” IDC New Zealand says in a new report.

“Despite the high cost associated with achieving this, NZ organisations have indicated that this is an imperative that cannot be ignored because the business and its investors are demanding it.”

Thus, “invest for insight” is one of the top 10 trends local organisations will tackle over the next four years.

“Enterprises must become AI powered to participate in the economy of intelligence,” according to the IDC FutureScape: Worldwide Digital Transformation 2020 Predictions – New Zealand Implications.

The report further highlights why AI and related technologies will be top of mind across sectors.

IDC NZ predicts that in two years, with proactive, hyper-speed operational changes and market reactions, AI-powered organisations will respond to customers, competitors, regulators, and partners at least a third faster than their peers.

AI will be recognised across the organisation as a competitive differentiator for customer experience, business agility, productivity and faster innovation, driving the acceleration of AI solutions, according to the report by analysts Louise Francis, Monica Collier, Chayse Gorton, Richard Xu, Jefferson King, Liam Landon, Emily Lynch and Neha Ralhan.

ICT organisations will need to build data excellence and AI capabilities, the report states.

Enterprises, meanwhile, must monitor their business speed, improve dramatically their speed of response to customers, and adapt rapidly to all market changes. 

This means data must be managed holistically and efficiently across the enterprise and its ecosystems. 

Digital inclusion

The report calls on organisations to also focus on the impact of AI and automation on the general workforce. 

There must be a plan for retraining and reskilling, for those who will be affected by AI and automation to retain organisational knowledge, it states.

This call is related to another trend in the report about the future of work, the need to prepare for “digitally-enhanced workers”.

Since 2018 IDC says its research has found that NZ lagged in the deployment of all digital augmenting technologies. 

This, it adds, will change in the next two years as organisations expand the functionality and effectiveness of the digital workforce.

IT departments will grow their skill sets related to the use of digital technologies to augment the workforce and to manage the growing digital co-worker population.

IT support is expected to go beyond acquiring and managing technology. They must also begin to consider complications with security, privacy and compliance associated with augmenting technologies.

“Think humans, not machines,” IDC advises.

Augmented digital capabilities should not be presented as a replacement, but rather on how they will improve business processes and better achieve the needs of the organisation.

Non-stop transformation

Workforce transformation will never stop, according to IDC, so organisations need to focus on developing a culture that embraces change and aids continuous learning as well as encourages employees to push the boundaries.

The report also looks at the evolving way of working with different organisations, or “digital co-innovation”.

While co-innovation is not new for Kiwi organisations, the biggest change over the next three years will be the expansion of the ecosystem of collaborators, it states.

The report calls for fostering the right mindset in the organisation to accept collaboration amongst companies including potential competitors.

“In order to develop an ecosystem where co-innovation is standard, organisations must not be afraid to share information within the industry,” reports IDC NZ.

“Organisations will become more collaborative so talent needs to be exposed to a wider variety of work environments.”

The future of DX  

From 2020, IDC predicts that the focus of DX in leading New Zealand organisations will shift from the technology to the enablers of DX excellence,” says Louise Francis, country manager, IDC New Zealand.

“The future of culture, co-innovation, smart ecosystems, cybersecure platforms and the digitally enhanced workplace will be on DX Leaders agenda by 2023, or earlier,” says Francis, one of the authors of the report. 

In the near-term, almost half of organisations will have shifted from legacy key performance indicators (KPIs) to enhanced digital metrics by 2020, to gain a deep insight into the business value of DX.

The agility and scale required of organisations undertaking DX initiatives means that traditional metrics are no longer accurate indicators of performance,” she stresses.

“With DX spending in New Zealand set to grow to over 55 per cent of all ICT investment within the next two years, it will be critical for businesses to invest in data intelligence and metrics that resonate with the business. 

“This will provide businesses with the capability to move beyond islands of innovation to a holistic and embedded approach for accelerated value and enhanced competitiveness.”

The forecast

A look at IDC’s top 10 ICT industry predictions that will shape organisational strategies through to 2024:

• Future of culture: By 2024, leaders in 60 per cent of NZX listed organisations will have mastered “future of culture” traits such as empathy, empowerment, innovation and customer-data centricity to achieve leadership as scale.
• Digital co-innovation: By 2022, empathy among brands and for customers, will drive ecosystem collaboration and co-innovation among partners and competitors that will drive 25 per cent collective growth in customer lifetime value.
• AI at scale: By 2022, with proactive, hyper-speed operational changes and market reactions, AI-powered organisations will respond to customers, competitors, regulators, and partners at least one-third faster than their peers. 
• Digital offerings: By 2022, 40 per cent of organisations will neglect investing in market-driven operations and will lose market share to existing competitors that made the investments, as well as to new digital entries. 
• Digitally enhanced workers: By 2022, new Future of Work practices expand the functionality and effectiveness of the digital workforce by 30 per cent, fuelling an acceleration of productivity and innovation at practicing organisations.
• Digital investment: By 2022, DX spending will grow to over 55 per cent of all ICT investment from 45 per cent today, with the largest growth in data intelligence and analytics as companies create information-based competitive advantages.
• Ecosystem force multipliers: By 2024, 75 per cent of digital leaders will devise and differentiate end-customer value measures from their platform ecosystem participation, including an estimate of the ecosystem multiplier effects.
• Digital KPIs mature: By 2020, 45 per cent of companies have aligned digital KPIs to direct business value measures of revenue and profitability, eliminating today’s measurement crisis where DX KPIs are not directly aligned.
• Platforms modernise. Driven both by escalating cyberthreats and needed new functionality, 70 per cent of organisations will aggressively modernise legacy systems with extensive new technology platform investments through 2023. 
• Invest for insight: By 2023, enterprises seeking to monetise benefits of new intelligence technologies will invest over $150 million in New Zealand making the DX business decision analytics and AI a nexus for digital innovation. (Source: IDC New Zealand, January 2020)