The world is changing faster than ever. The Internet of Things (IoT), mobility, cloud, big data, augmented reality, blockchain, and social media are driving companies to the next level of digital customer engagement and IT-enabled business processes, products, and services. In virtually every industry, digital technologies are bringing about unprecedented transformation and changing our work and lives in ways we have never anticipated.
A Short History of Digital Transformation
Digital transformation is an actively discussed topic these days, but this was also true in the late 1990s and again in the mid-2000s. We started to computerize processes almost 30 years ago, and we have already implemented digital activities in our organizations.
First, digital channels, or websites, connected companies and their customers. After that, digital processes emerged to support customer interactions. As companies’ digital ambitions quickly grew, they soon needed dedicated digital teams to manage new social and mobile channels. This enabled organizations to leverage digital data on their own activities and interactions. Connected to customers, suppliers, and other stakeholders, companies realized that they operated in digital networks.
To make better use of the vast amounts of information, companies started to connect all processes and devices into networks. Seeing potential in connectivity, organizations focused on digital platforms connecting all system players rather than the traditional method of doing business through intermediaries. Companies began to experiment with new digital ways of doing business, trying to leverage data more effectively, create greater agility, and retain talent.
Riding the Digital Transformation Wave
Practically all digital transformation initiatives of today are being built on so-called 3rd Platform technologies and solutions, including mobile, cloud, big data/analytics, and social technologies. Innovation Accelerators—IoT, robotics, 3D printing, next-generation security, and others—depend on the 3rd Platform and expand its capabilities. In the rapidly scaling digital marketplace, they have become the key growth drivers for many companies.
Digital technology is integrated into every aspect of today’s companies, and those businesses that fail to set an efficient digital strategy and maximize the impact of digitalization risk being left behind. The Russell Reynolds Associates survey shows that media, telecom, and consumer financial services were the most disrupted sectors in 2015, with retail and technology close behind.
Digital technologies transform industries in completely new ways, offering fundamental improvements in personalization, efficiency, and safety. However, we have only started exploring the digital opportunities, and this digital transformation has only just begun. In the near future, digital innovations and initiatives will take us into new transformation phases, bringing exciting changes to our lives and reshaping the global economy.
What the Future Holds for Digital Transformation
In its IT industry predictions for 2017 and beyond, IDC announced that digital transformation will attain macroeconomic scale over the next three to four years. By 2018, the number of IoT devices is expected to double, spurring the development of 200,000 new apps. By 2020, spending on cloud services will be more than $500 billion, three times the current level. Worldwide investment in digital transformation initiatives will reach $2.2 trillion in 2019, almost 60% more than this year.
Gartner also believes that digital transformation will continue to fuel our future. By 2021, Gartner expects, the physical, financial, and healthcare worlds will become so digitalized that 20% of all activities we do will involve at least one of the top-seven digital giants. Mobile apps and payments, smart agents, and digital ecosystems will make the digital giants part of our everyday lives.
According to Forrester and its 2017 digital business predictions, transformation budgets will increase enormously next year. Digital transformation will tip from experiences to operations, and many firms will invest billions in operational excellence. Digital businesses will finally build holistic customer experiences, breaking down the gaps between web, mobile app, and offline engagement.
Clearly, all of the digital transformation predictions have one thing in common: change. Digitalization is creating more opportunities than ever before, but at the same time, it requires a new mindset and readiness to embrace change. Both companies and individuals need to accept the new reality of constant change to find a place in the developing digital world.
