IDC New Zealand on the year ahead: ‘Every growing enterprise must become a digital native’

Become heavily cloud centric, in technology adoption and in skills, over the next several years — or find yourself stranded on the outskirts of digital transformation in your own industry.IDC New Zealand

2017 is the first year where we will see “the dawn of the DX (digital transformation) economy”, declares IDC New Zealand.

“By DX economy, we mean digital transformation will attain macroeconomic scale and impact. It will become the core of what industry leaders do and how they operate,” reports IDC New Zealand in FutureScape: Worldwide IT Industry 2017 Predictions – NZ Implications.

The report notes that with the rise of the digital economy, “Every growing enterprise must become a ‘digital native’ in the way its executives and employees think, and how they act.”

“The global economy will as a result be reshaped in the process,” according to the report authors Peter Wise, Arunachalam Muthiah, Louise Francis, Monica Collier, Chayse Gorton, Donnie Krassiyenko, Shane Minogue, Adam Dodds, Anastasia Antonova and Alex Yuen.

The IDC analysts say that in the DX economy, the interdependence of digital transformation, 3rd Platform (convergence of mobile, social, cloud and big data) and IT leadership will become the essential “trinity” for success.

On the horizon

They share the top 10 predictions New Zealand organisations need to prepare for:

The DX economy

By 2020, half of the NZX organisations will see the majority of their business depend on their ability to create digitally enhanced products, services, and experiences.

Building a digital disruption culture to challenge status quo and set new benchmarks will be important. Continuous creativity and out of the box thinking are must-haves in digital transformers, says IDC.

At the same time, DX will make it easier and cheaper for NZ businesses, particularly SMBs, to compete successfully against larger global competitors within international markets by allowing customers to connect and engage with businesses digitally.

3rd Platform default

By 2019, IDC predicts 3rd Platform technologies and services will drive over 75 per cent of NZ IT spending, growing at twice the rate of the market.

In recent years, the 3rd Platform technologies (cloud, mobile, social, and big data) have been joined by IoT, cognitive/AI, AR/VR, 3D printing, robotics, and next- generation security technologies which are collectively known as innovation accelerators (IAs). “These IAs are clearly no longer new technologies. In terms of adoption and maturity NZ is already at the forefront of some of these markets (mobile and cloud),” states IDC.

Mastering 3rd Platform technologies remains a top business priority, says IDC.

“Expertise in these technologies must be a key requirement when hiring and retraining IT and business staff. Given the growing demand for these skills and the pool of talent not meeting the growth in demand in NZ, a strategy for winning the ‘war for talent’ is essential.”

Cloud 2.0

By 2020, 50 per cent of all NZ enterprise IT infrastructure and software spending will be for cloud-based offerings. The cloud will morph to become distributed, trusted, intelligent, industry focused, and channel mediated.

IDC predicts that by 2020, cloud will be the most secure platform available in the marketplace, hence organisations which have yet to craft a significant cloud strategy should start soon. The economics and performance of cloud will evolve quickly in the DX economy.

IDC’s key advice: “Become heavily cloud centric, in technology adoption and in skills, over the next several years — or find yourself stranded on the outskirts of digital transformation in your own industry."

AI everywhere

IDC predicts in three years, 30 per cent of all NZ digital transformation initiatives ? and 100 per cent of all effective internet of things (IoT) efforts ? will be supported by cognitive/artificial intelligence (AI) capabilities.

There are many use case possibilities for cognitive/AI technologies and IT needs to partner well to gain access to options that make the most business sense for their organisations, says IDC.

New Zealand organisations may need to look globally for use cases and ask “What would it take for this to work in our organisation?”

Senior business executives and cross-functional steering committees need to be skilled with a working knowledge of cognitive/AI capabilities to develop new operating and monetisation model options.

Immersive interfaces

This year, IDC says 30 per cent of consumer-facing NZX companies will experiment with augmented reality/virtual reality (AR/VR) as part of their marketing efforts.

NZ consumer-facing organisations should start immersive interface explorations and initiatives by the end of 2017 to keep pace with the rate of exploration in other mature markets and lead competitors, says IDC.

“Apps like VR tours of dairy farms and city buildings, or game-like AR advertising platforms for shoppers, present differentiated engagement models for brands to interact with their customers. IDC expects more to emerge and hence tech buyers need to test them as they become available to understand their market impact.”

Industry collaborative platforms

By 2018, the number of NZ industry collaborative clouds will triple to more than 20; by 2020, over 70 per cent of NZX organisations will be digital services suppliers through Industry Collaborative Platforms (ICPs).

Industry technological disruption and disruptive new competitors are a big concern for end-users, says IDC. "CIOs are faced with the choice of continuous technology innovation versus the risk of becoming irrelevant to their customers. "

Many industries (e.g. resources, government, transport, utilities) source a substantial proportion of their tech-based innovations from technology partners and their ecosystem, so it becomes critical for NZ Service Providers to tailor their solutions to industry-specific needs.

DX developers

By end of 2018, over 50 per cent of NZX organisations will have dedicated digital transformation/innovation teams.

“Make hiring talented DX developers a top business priority immediately," advises IDC.

"IT must learn and/or acquire digital competencies in order to lead dedicated DX/innovation team.”

DX channel

By 2020, over 50 per cent of NZ cloud services providers’ revenues will be mediated by channel partners/brokers.

IDC’s advice to organisations: “Assess your current ensemble of channel services providers — consultants, integrators, resellers, brokers and managed services providers. Are they among the traditional players that will successfully transition to the 3rd Platform and DX economy?"

New benchmarks

By 2020, all NZ enterprises’ performance will be measured by a demanding new set of digital transformation-driven benchmarks, requiring 40 per cent to 60 per cent or better improvements in leadership, customer engagement, digital offerings, efficiency and agility KPIs.

To achieve these benchmarks, the IT organisation must equip itself with expertise to enable each of the five digital masteries.

Leadership mastery: CIOs and senior IT executives must master the three disciplines of innovation, integration and incorporation.

Relationship mastery: IT must build/acquire consumer engagement expertise.

Information mastery: IT must learn data mining skills as well as understand emerging cognitive/AI capabilities to turn data into the new currency for the organisation.

Operating model mastery: IT must deliver extreme agility and automation to achieve self- learning and self-healing abilities.

Worksource mastery: IT must enable and empower employees (full time and otherwise) with technologies to allow them to deliver their talent to full potential.

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On the horizon: 4th Platform

By 2020, a third of NZ health/life sciences and consumer product companies will begin to develop the first wave of products and services tightly integrating 3rd Platform technologies with the human body. "Augmented humanity" offerings are expected to become mainstream in the mid-2020s.

IDC foresees ethical and legal issues emerging with the rise of the 4th platform. “Technologies that so profoundly impact human health and performance will create a lot of controversy and debate, for good reasons,” it states. “New regulations will emerge and these will need to be monitored and managed closely.”

Businesses, therefore, need to understand the implications of the 4th Platform technologies on the organisation, customers, ecosystem partners and employees today and in the future.

'Augmented humanity' offerings to become mainstream in the mid-2020s: IDC New Zealand

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