It’s that time of year again, when the pundits look into the future and offer predictions for what’s in store for the New Year and beyond. Frank Gens, chief analyst at IDC, has been looking in his crystal ball to foretell the top technology predictions for the next three to five years.
Spoiler alert: If you’re a business executive or line-of-business (LOB) decision-maker, what he foresees might have a big impact on your job. Whether it is a positive or negative impact is, as always, up to you to determine.
What Gens predicts is that businesses will need to undergo a complete “digital transformation,” or DX, to prosper in the coming DX economy.
Digital transformation means “using technologies such as mobile, cloud, big data analytics, IoT, artificial intelligence and robotics to create competitive advantage through new offerings, new business models, and new customer, supplier, and distributor relationships.” (The IDC predictions are revealed in this webcast and summarized in this Forbes article by Gil Press).
Companies will need to “transform or die,” says Gens, because those who fail to make the digital transformation will be disrupted by those who do.
DX Brings Big Changes for C-Level and Business Executives
Now, I find the idea that all businesses must “embrace DX or die” to be a bit over-dramatic, but hidden within IDC’s hyperbole are a number of important data points of which business leaders should take note. Here are two predictions that are especially important for LOB execs.
- By 2018, line of business executives will control more than 45 percent of all IT spending worldwide, and over 60 percent in the U.S.
- By 2018, 67 percent of the CEOs of Global 2000 enterprises will have DX at the center of their corporate strategy.
These predictions could have huge potential impacts on the future relationships between IT, business decision makers and the C-Suite.
In an enterprise that’s digitally transformed, gone are the days when the IT department just keeps the lights on in the datacenter. IT will be in charge of tapping into insights from IoT and data analytics to innovate new revenue-producing products and services, and developing new and better ways to deliver more personalized customer service.
Because IT becomes critical to business innovation, and technology and data are front and center in the DX enterprise, I believe we’ll see a shift in how executives oversee IT roles and responsibilities. As digital transformation becomes the focus of a company’s overall strategy, CEOs and LOB executives will be directly involved in DX initiatives and responsible for recruitment of the best software talent. You can bet if DX becomes central to an organization’s overall corporate strategy it will have a material ability to accelerate the career of executives ready to drive that transformation.
In many cases we can also expect to see LOB executives directly supervising software development organizations to ensure alignment between technology innovation and production. This is because the DX economy will be driven primarily by code, and a business’s ability to compete—its innovation capacity—will depend on the size and talent of its development teams.
One big challenge today is that trained technology workers are in critical short supply. So, one of the key first steps of any DX initiative is to understand the technologies you will need to implement and hire the right talent quickly. That means the LOB team has to actively (and proactively) engage with IT and C-level executives to clearly define priorities. They’ll have to collaborate to determine what elements of DX they want to implement first, which technologies they will require, and assess the necessary talent resource gaps and open requisitions in first half of 2016.
The Primacy of Data
Underpinning digital transformation is the importance and value of data. I plan to write a follow-on blog focusing more on this subject, but for now just remember when your company moves toward DX, it’s critical to clearly assess where you have strong pools of data to help expand existing business initiatives or establish new ones. Equally as important is understanding where your company has big data gaps that are going to slow you down.
In both instances, it’s vital to build plans for optimizing the quantity and quality of data obtained and developing tactics for what needs to be implemented. For instance, deploying tens of thousands of IoT devices is only worth the ROI if the data pool collected can be analyzed, and generates insights or a new innovative service that moves the business forward. Data for data’s sake is not the goal.
DX Is Coming
One thing you can be sure of: Digital transformation will shake up existing business structures, so get ready for new ways of thinking and doing!
DX is like a train. The LOB decision maker, whether she likes it or not, is on the track and the train is coming. Her bosses care about digital transformation, so understanding and driving this initiative is important. She can jump on and become the conductor of the train or she can get run over, or maybe jump on late and hang on for dear life. Pro tip: The final two options are not good career moves.