While digital transformation has been a trend for some years, emerging technologies have made this movement even more important. Companies are rethinking their business models to become more digital and competitive. They face an ever-increasing cadre of startups and established organizations, all of whom are also trying to keep up to date on digital transformation trends to achieve a competitive edge.
Digital transformations also enable organizations to pause and identify which strategic approaches are worthwhile in today’s environment and where they should direct their energies. For instance, organizations that are struggling to build their own IT services can assess whether some internal legacy tech should be replaced with technologies from software-as-a-service (SaaS) providers.
Digital transformation is an important component of a modern organization’s business operations. But some organizations that have begun digital transformation journeys have struggled to unlock value from it, according to McKinsey. A recent study found that McKinsey research shows that organizations that “launched some flavor of digital transformation,” have only experienced a third of the expected revenue benefits on average.
Digital transformations encompass culture and organizations as well as the latest technologies. Chief information officers (CIOs) must work directly with CEOs and other business leaders to align on the cultural changes needed to make a digital transformation successful.
And while no one digital transformation strategy will be like any other, here are some recurring trends that help organizations engage in successful digital transformation initiatives.
Digital transformation trends that drive a competitive advantage
Trend: Artificial intelligence and machine learning
We’re entering year two of widespread adoption of generative AI tools. As such, organizations are increasingly interested in seeing how they can apply the whole suite of artificial intelligence (AI) and machine learning (ML) technologies to improve their business processes. A recent IBM Institute for Business Value survey found that three out of four CEOs say competitive advantage depends on who has the most advanced generative AI.
It is increasingly apparent that in the coming years, AI will demonstrate many use cases where it augments human activities and streamline tasks versus eliminating large swaths of the workforce. For example, generative AI as a prompt engine will improve efficiency by dramatically reducing the time humans take to create outlines, come up with ideas and learn important information. It will also create smarter chatbots that can tackle simple questions, which will improve the customer experience while freeing up customer service reps to take on larger-order problems.
Also, machine learning will be an incredibly powerful tool for data-driven organizations looking to take better advantage of their data analytics practices. For example, applied ML will help organizations that depend on the supply chain engage in better decision making, in real time. This will enable them to effectively deal with environmental and market conditions that could slow delivery of raw materials, finished goods, or both. But organizations still need humans to decide what actions to take based on what the ML-analyzed data shows.
Like AI and ML, automation will be a huge driver of human productivity. Organizations undergoing digital transformations are likely to uncover wide swaths of manual work that can and should be automated. For example, robotic process automation (RPA) can automate e-commerce activities such as order processing, inventory management and customer issue resolution.
Trend: Cloud computing
Organizations have spent the past few years migrating to the cloud. Whether they use the public cloud, private cloud or multicloud environment, they are removing the onerous step of maintaining their own data centers. cloud service providers use cloud technologies to maintain uptime and security, so organizations can focus on their core businesses.
By virtue of moving many services online, organizations are at greater risk of digital attacks. It is likely that an organization’s existing security posture built for legacy systems for a less distributed workforce will struggle in the modern environment. One way organizations are taking cybersecurity head-on is through the adoption of the ‘shift-left’ movement. This approach involves moving cybersecurity considerations to the beginning of the development cycle, embedding them more directly in the code.
Another way organizations are experimenting with advanced security measures is through the blockchain, which can enhance data integrity and secure transactions.
Trend: Edge computing and the Internet of Things
More distributed devices will require increased interconnectedness to drive value. The Internet of Things (IoT) enables technologies to connect and communicate with each other. For instance, manufacturers can use IoT in their factories to know when their machines need repairing, known as preventive maintenance. Edge computing makes IoT more efficient and powerful by bringing enterprise applications closer to data sources such as IoT devices or local edge servers.
Trend: Industry-wide transformations
Digital transformations affect different industries in unique ways. For instance, hospitals and healthcare providers used the pandemic to rethink their entire practices. They diverted money and resources to establish powerful tele-health services like video conferencing and enhance patient access to health records. But doing so required a significant investment in data protection and cybersecurity enhancements as a data breach containing sensitive medical information could be catastrophic.
Financial services providers increased their usage of APIs to be able to tap into greater ecosystems and connect with more partners. And consumer organizations have found ways to extend the customer experience digitally, like when Wimbledon created AI-generated spoken commentary on video clips on the Wimbledon app and website.
Trend: Low-code or no-code
Digital transformation is completely changing technology development through the advent of more visual coding approaches. Low-code helps the DevOps team by simplifying some aspects of coding and no-code can introduce non-developers into the development process. This approach exemplifies how digital transformation combines technology advancements, like creating visually oriented coding, with cultural changes. This shift makes development more accessible to non-technologists, breaking down silos and encouraging everyone to participate in building products and solutions.
Trend: Remote work
The move towards a distributed workforce was already happening before the pandemic. While some companies are ordering workers to return to the office full-time, plenty are opting for hybrid work or fully remote workplaces. As such, they need to rethink their workflows, how they track elements like productivity and attendance, as well as how they implement the digital technologies needed to do their jobs. For example, organizations may need to set up a more robust and powerful virtual private network (VPN) to enable employees to log in and access sensitive documents.
Make digital transformation trends work for you
While every digital transformation journey will be different, there are several emerging technologies and organizational approaches that will have an outsized impact on nearly all of them. Conducting a digital transformation takes time and resources and is never truly finished. So, organizations should try to approach them with the latest trends and tools in mind to avoid costly and unnecessary alterations further down the road.
While digital transformations require investment and ultimately change how an organization conducts its business, there are many benefits if done correctly. Those organizations that succeed at digital transformations will stay ahead of the competition, drive better relationships with employees and customers and be better prepared for what may come.
Emerging technology and social forces are creating new customer experiences that result in changing expectations and demands and disrupt business models. IBM Consulting’s professional services for business help organizations navigate an increasingly dynamic, complex and competitive world. We help them align digital transformation with their business strategy to create competitive advantage and a clear focus on business impact.
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