Digital transformation, which is now commonly known simply as DX, is not anything new. And yet because it is not a tangible solution or piece of technology, we still talk about it like it’s on the same level as hovercrafts and robots — something to aim for and dream of. But DX is here and many businesses have already embraced it. It is an enabler, using digital technologies and business models to improve performance and drive organizational change.
In fact, IDC predicts that by 2024, over 50% of all IT spending will be directly for digital transformation and innovation. However, while that’s all very well and good, you need to know what you’re aiming for to make that spending worthwhile. Gartner has already predicted that in 2021 they expect DX initiatives will take traditional enterprises on average twice as long, and cost twice as much as anticipated.
So what does DX in 2021 look like, and how can you make it worth your while? Well first, let’s see what the top strategic trends will be.
The technologies to watch out for
Everything-as-a-service (Xaas). For most digital-native organizations, “as-a-Service” offerings combining hardware, software and services traditionally sold separately into a single offering have already become the norm. We’ve had SaaS, PaaS, IaaS … but now it’s time for XaaS. This operating model can look different for every company, but it typically involves leveraging agile principles to deliver technology services more efficiently and therefore more quickly. To do this, services will reside completely on the cloud, allowing virtual access to almost everything.
To do it right, Xaas may require an organizational services restructuring, but this should be seen as a great opportunity. By co-opting XaaS best practices, organizations can build their own blueprint for delivering IT services to their peers — so in addition to cutting costs and increasing efficiency, an organization can also transform and become more agile as a whole.
Artificial Intelligence-as-a-Service (AIaaS). You didn’t think XaaS really covered everything in its Everything-as-a-Service moniker did you? AIaaS deserves separate recognition, and not only because AI is now becoming so prevalent it is used by over 75% of consumers and the capabilities associated with it run deep.
Everywhere we look, technologies are being connected and creating data, with the hope that all of that data will be used to power the future of customer experience or business optimization. But AI has not made it to the forefront of business technology just yet, because up until now it has required experts and big budgets to incorporate it successfully.
That’s what AIaaS is all about — making new technology accessible across the board, regardless of company size and budget. It allows companies to use the power of AI without having to procure the expertise to manage it. And with machine learning, business intelligence, cognitive computing and digital assistants all important aspects of AI, AIaaS suddenly has a huge relevance for services and improving day-to-day lives.
For example, healthcare organizations can use data prediction services to help identify patterns and possible outcomes for frequently seen situations; smart devices can use personal data gained to create a digital footprint to enhance targeted marketing; and financial institutions can use machine learning to detect fraud.
Distributed cloud. We now know that moving services to the cloud is a huge trend. But sometimes having everything up in the cloud can be challenging — that’s why we’ve had public clouds, private clouds, and the continued efforts but not true success of hybrid cloud. It looks like 2021 will be the year of the distributed cloud — delivering public cloud services to different physical locations, while still keeping management and operations off-premise. The benefits of this are that it provides a much more flexible environment for low-latency scenarios, keeps data costs low and helps accommodate data residency laws.
It also means organizations will be able to support edge-based computing systems and IoT devices that have to occur near the data source. This can improve reliability and the amount of data able to be processed, which ultimately results in more scalable services. And most importantly, it saves organizations from having to manage their own private cloud, which can be costly and resource-intensive.
Cybersecurity mesh. Cybersecurity continues to be of utmost importance to organizations, especially as we see these new advancements in centralized services. And with the remote work wave of 2020 still continuing to rise, businesses are facing new logistical and digital cybersecurity perimeters. The “cybersecurity mesh,” as termed by Gartner, then is seen to be a practical approach to ensure secure access and use of cloud-located applications and distributed data.
The idea here is that identity becomes the central security perimeter, meaning that anyone can access any digital asset securely, regardless of where both the asset and the person are located. To do this requires a distributed architectural approach to cybersecurity control — placing modular, responsive policies at the heart of the structure and ensuring orchestration is centralized.
The benefits are that security standards can be maintained while providing higher levels of accessibility. But with this comes the challenge of hackers too, so watch this space, as I’m sure we’ll see new offensive and defensive measures come on the market soon to prepare for cyberattacks.
AI engineering. The final technology trend to look out for in 2021 is AI engineering, specifically in the realm of supply chains. Three out of four executives surveyed by Accenture believe that if they don’t scale AI in the next five years, they will be on the brink of business outage. AI engineering offers a route to scalability, making AI part of the development operations (DevOps) process rather than isolating it to specialized projects. It does this by focusing on the governance and lifecycle management of AI and decision-making models, to streamline the prototype-to-production journey.
While maybe not as exciting as the smart assistants and predictive models often associated with AI, supply chain management is crucial to business success. Don’t underestimate this one just because it was the last on the list.
Applying these technologies to business
You probably know it well — every year, there’s a new list of trends, must-dos and technologies to embrace. It can be exhausting trying to keep up and, if not applied correctly, it’s sometimes not even worth the effort. But it’s important not to give up. Forrester data tells us that until now, only 15% of companies prioritized digital transformation, and that U.S. technology investment is likely to drop 1.5% overall in 2021.
Those numbers need to rise. If 2020 showed us anything, it was that those businesses that could move their employees to remote work and handle change effectively were the ones that came out on top. By focusing on buying models such as as-a-Service and data-inclusive technologies like AI, you will be enabling your business to be able to shift, rationalize, and still ensure value delivery in 2021.
So how do you enhance your IT portfolio and meet these business needs? Well, most importantly it calls upon leadership to really analyze and advocate for technologies that work for businesses. This could be through looking for ways to improve agility, productivity or competitive advantage, but regardless of the end goal, transformation will not succeed without clearly defined teams, skills and strategy. Right now, organizations must focus on modernizing their core capabilities to seamlessly sell, engage and support their customers.
Once these modernization basics are in place, and companies have a foundation that supports continuous improvement, then it becomes the right time to look at investments for new digital solutions. And business size shouldn’t be a deterrent. Smaller businesses have the benefit of being able to be more agile, as there are less cumbersome processes and teams to overhaul.
In case it’s not clear by now, there are lots of opportunities out there. The key is to be adaptive, and embrace systemic risk in 2021 planning When customers tackle their transformation plans, make sure they are thinking about not only the technical issues that may arise, but also the pivots that may be required from changing consumer trends, new security trends, and even the increasing impacts of ethics and morality.
Uncertainty is a great breeder of “if only” thinking. If your customers found COVID-19 highlighted gaps in their businesses or simply reinforced their strategic direction, take this chance to help them make the changes they wish they already had. This is a real opportunity for all businesses to either invest in new capabilities or partner with organizations that can speed needed services to fulfill both customer and internal demand.
And finally, remember who your customers are and why they value you. When you’re growing a business or trying to stay afloat, it can sometimes be easy to lose sight of your end goal. So maintain that core value, keep doing research and using data to check back in on how aligned you are with your customers’ needs, and most importantly, use your transformation as an opportunity to strengthen relationships and uncover new growth opportunities that may not have existed otherwise. Leverage your innovative approach to help customers navigate the new workplace of the future — and be right there with them.