The world is undergoing the most disruptive set of changes ever experienced, and they will transform everything. Called Digital Transformation (DT or DX), digitization or Industry 4.0, it is being accelerated by the explosive growth of data (actionable data will grow by 9.6x by 2025) and devices (connected devices will grow by more than 50% to 30 billion by 2020, and 80 billion by 2025).
“Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets,” stated IDC Research Vice President Bob Parker. “Enabled by the 3rd Platform technologies of social, mobile, analytics, and cloud, digital transformation represents an opportunity for companies to redefine their customers’ experience and achieve new levels of enterprise productivity.”
A recent survey found that digital transformation drives significant business performance improvements, including: 33% increase in speed to market; 40% increase in customer satisfaction; and, 37% increase in new business revenue. Another recent study illustrates not only the significance of digital transformation, but also the advantages of committing to DT as quickly as possible. A survey of more than 2,000 senior executives from nine major industrial sectors and 26 countries, reported that respondents expect to increase annual revenues by an average of 2.9% and reduce costs by an average of 3.6% per year.
First Mover Advantage
However, the “first movers” who combine high investment levels with advanced digitization, are “already gaining a nearly insurmountable advantage over competitors.” Representing just 4% of the respondents (71 companies), first movers “are far more likely to be forecasting both revenue gains of more than 30% and cost reduction of more than 30% at the same time.”
However, the benefits come with challenges, such as the need for culture change, increased complexity, new technologies and skills, a substantially faster pace of decision-making and the consequences of not making the right decisions at the right times in the right places. A recent survey of more than 2,700 IT and business decision-makers by Wakefield Research and Juniper found that companies are not prepared for the impact of digital disruption.
Key findings included:
- 45% of ITDMs believe a quarter or more of their IT workforce will not have the skills they need to succeed five years from now;
- 84% of both ITDMs and BDMs admit their organization would perform better if their current C-Suite were more tech-savvy; and,
- more than half of respondents indicated their company’s IT infrastructure would be very or somewhat likely to create an obstacle in accelerating a new product or service.
The survey did reinforce the benefits of automation investments to increase business agility and stay ahead of the disruption curve. Most respondents (70% of ITDMs and 72% of BDMs) say they’re excited by the opportunities that network and IT automation create for their company. Of the ITDMs already using software-defined networking (SDN) or network functions virtualization (NFV), nearly all (93%) say it’s given them a significant edge over their competitors.
The bottom line is that businesses must go digital or die, but many still don’t understand the urgency. Almost half (47%) of companies haven’t started on digital transformation; and 33% are developing their plans for digital transformation, but won’t execute in the next 12 months. Given what we’re seeing from early adopters and ‘fast movers’, that’s cause for both pessimism and optimism, depending upon which side of the fence you’re on.