At a time when technologies and market conditions can change on a dime, it doesn’t make sense for companies to craft five-year strategic plans. Here’s what they should do instead
Digital transformation reality check: 10 trends
2019 is the year when CIOs scrutinize investments, work even more closely with the CEO, and look to AI to shape strategy. What other trends will prove key?
Looking back at the last decade of digital transformation – the use of technology to radically improve performance or change the enterprise – the one constant has been an ongoing shift in focus and priorities. Looking forward to 2019, a number of trends are emerging that IT leaders will want to consider as they make their plans for the new year.
Are you on the same page as your peers? Let’s find out:
1. CIOs conduct digital investment checks
This year, many digital projects suddenly matured from experimentation to enterprise implementation. In the year ahead, business leaders are likely to scrutinize their digital investments more closely.
“Enterprises were benefitting from a strong economy and an infusion of capital due to tax benefits. This resulted in a number of pilots being blessed,” says Jimit Arora, partner with Everest Group. “As budgets normalize, we expect more scrutiny on CIOs having to demonstrate the value from the investments to date. Fundamentally, while we continue to see strong spending in the arena of digital transformation, there will be a greater burden of proof on demonstrating value realized.”
[ Read our related story Digital transformation: Are you using outdated IT metrics? ]
2. Advanced analytics take center stage
Leading IT organizations have been working hard to put the right systems and processes in place for more meaningful use of data. “Enterprises are increasingly recognizing that they need to leverage data and insights to adapt to dynamic market conditions, drive continuous innovation, and accelerate the speed of doing business,” Arora says. “With the foundations in place, 2019 is expected to be a year of meaningful progress for data initiatives. The combination of IoT, AI, and cloud will enable accelerated approaches to harness data for growth and efficiency initiatives.”
In fact, advanced analytics is the number-one digital investment with enterprises planning to increase related deployments by 75 percent over the next 12 to 18 months, according to research from The Hackett Group, with a particular emphasis on data visualization tools and machine learning.
However, “many business leaders are struggling with where to start and how to operationalize these powerful tools,” says Richard Pastore, senior director and IT research advisor for The Hackett Group. “In some companies, pockets of analytics deployment are happening in isolation, an approach that will limit or undermine value. What companies need to do is to invest time and resources to devise an analytics roadmap to guide and propel them from today’s proofs of concept to a fully operationalized, self-sustaining analytics delivery model.”
3. AI drives IT strategy
“AI as a workload is going to become the primary driver for IT strategy,” says Daniel Riek, senior director, AI, Office of the CTO, Red Hat. “Artificial intelligence represents a transformational development for the IT industry: Customers across all verticals are increasingly focusing on intelligent applications to enable their business with AI. This applies to any workflow implemented in software – not only across the traditional business side of enterprises, but also in research, production processes, and increasingly the products themselves. The improved scale of automation achievable with AI will quickly become critical for a company’s competitiveness building and will make AI a strategy-defining technology.”
Rapid advancements in natural language processing and other AI-enabled capabilities are making it possible for enterprises to drive improvements not only in intelligent assistants like Siri and Alexa or customer service chat but also in the ability to analyze and process the vast amounts of unstructured data that companies are amassing.
That will enable more predictive analytics, drive increased efficiency, and enhance decision making, according Rahul Singh, managing director and leader of Pace Harmon’s IT Strategy and Transformation practice. “This type of cognitive automation will help companies garner efficiencies in both day-to-day operations as well as end-to-end processes, including customer service and compliance,” Singh says.
4. IT focuses on the foundation
The most successful digital transformations are driven by business, rather than technology, goals, which has led to greater involvement of business unit and function owners having a greater say in IT strategy.
What’s more, many of the leading transformational technologies – like cloud computing or robotic process automation – lent themselves to rapid and independent adoption by business users. That phase of digital transformation served a purpose. “It educated business users on the power of technology to drive value in their business,” says Cecilia Edwards, partner with Everest Group.
However, it created challenges in the creation of a comprehensive, integrated, and secure IT foundation. That is beginning to change. “Enterprises that are accomplishing results beyond just cost to include business and strategic impact, are dramatically reducing the amount of shadow IT in which the business units are engaged,” Edwards says. “They have formed strong partnerships between IT and the business units so they work together to maximize the business impact of the technology they collectively choose to deploy.”
5. The IT talent crisis grows
As the pace of digital innovation picks up and tech unemployment remains low, CIOs will need to redouble their efforts to retrain their existing workforce to meet an increasing need for emerging technology skills. “Companies will need to reimagine the existing supply chains for talent across the entire hire-to-retire lifecycle,” Arora says. “Orchestrating ecosystems across outsourcing service providers, start-ups, academia – will become increasingly critical.”