Trends 2016: Digital Enterprise Transformation

Stephen DeAngelis

December 2, 2015

The 2016 prediction season has kicked off with International Data Corporation boldly releasing predictions and discussions in the following areas:

Leadership

Energy

Finance

Government

Healthcare

IDC FutureScape : Worldwide Healthcare 2016 Predictions

Manufacturing

Retail

IDC FutureScape: Worldwide Retail 2016 Predictions

Technology

Over the coming weeks, I’ll address some of these areas as they relate to digital enterprises, big data analytics, supply chain, technology, and marketing. The first topic I’ll discuss is digital enterprise transformation. Most analysts believe that companies must transform into a digital enterprise if they hope to survive and thrive in tomorrow’s business environment. “Technology is intertwined in nearly every aspect of business today,” writes Pierre Nanterme (@PierreNanterme) and Marty Cole, respectively Accenture’s Chairman/CEO and Group Chief Executive for technology, “with information technology fast becoming a primary driver of market differentiation, business growth, and profitability. … Every business is now a digital business.”[1] Boston Consulting Group analysts, Philip Evans and Patrick Forth, see the new connected world as the third wave of digital disruption; but, they believe this new wave will be a tidal wave. “Digital disruption,” they write, “is not a new phenomenon. But the opportunities and risks it presents shift over time. Competitive advantage flows to the businesses that see and act on those shifts first. We are entering the third, and most consequential, wave of digital disruption. It has profound implications not only for strategy but also for the structures of companies and industries.”[2] And Bernard Marr (@BernardMarr) insists that some executives are so unsure about the digital future that they withdraw into denial. He warns, however, “If you’re still saying, ‘Big data isn’t relevant to my company,’ you’re missing the boat.”[3]

If you think that all this talk about digital transformation is hype, Thomas Igou (@tomigou) provides you with a wake-up call. “Everyone talks about Change,” he writes. “But is it really a necessity? Well, a good statistic to keep in mind: 88% of Fortune 500 companies in 1955 disappeared from the list in 2014. That means only 12% of these top 500 companies managed to go through the past 50 years (mostly) unscathed. Do you know where your company will be in 50 years?”[4] Robert Parker (@RobertEParker), Group Vice President for IDC Manufacturing, Retail & Energy Insights, and Leslie Hand (@lesliehand), Vice President for IDC Retail Insights, who presented IDC’s Top Ten 2016 Predictions in the area of Worldwide Digital Transformation, agree that digital enterprise transformation is an imperative for most businesses. The very first prediction they make in that area states that digital transformation is rising on the corporate priority list. Below are their Top Ten 2016 predictions:

By the end of 2017, two thirds of the CEOs of the G2000 enterprises will have digital transformation (DX) at the center of their corporate strategy.
By 2017, three out of five of companies with a DX strategy will deem it too critical for any one functional area and create an independent corporate executive to oversee the implementation.
By 2018, 80% of B2C companies will have created immersive, authentic omni-experiences for customers, partners, and employees. 60% of B2B centric companies will have done the same.
The top new investment area through 2017 will be contextual understanding and automated next best action capabilities.
In 2016, 65% of large enterprises will have committed to become information based companies, shifting the focus from resources, labor and fixed capital to relationships, people, and intangible capital.
By 2018, 75% of the G2000 will have deployed full, information based, economic models or ‘digital twins’ of their products/services, supply network, sales channels, and operations.
By 2020, 60% of G2000 companies will have doubled their productivity by digitally transforming many processes from human to software based delivery.
In 2016, the level of connectivity related to products, assets, and processes will increase 50% for all industry value chains.
The sharing economy will give rise to the ‘networked free agent’ and skill based marketplaces resulting in more than 10% of work being sourced in this fashion in mature economies by 2019.
By 2018, IDC expects at least 20% of all workers to use automated assistance technologies to make decisions and get work done.

There are a couple of themes running through all of those predictions. The first theme is connectivity. Digital enterprises are going to better connected both internally and externally through the emerging Internet of Things. The second theme is big data analytics. If Parker and Hand are correct (i.e., the majority of large corporations are going to advertise themselves as information-based companies), those corporations must implement systems that can provide better insights and predictive analytics. To me, that means they are going to have to implement cognitive computing systems. Because cognitive computing systems can integrate and analyze both structured and unstructured data, they can become the single source of truth around which corporate strategies can align and move forward. A third theme that runs through several of the IDC predictions is the importance of marketing content and customer experience. Many marketing professionals note that, in today’s omni-channel retail environment, companies must provide both value (in terms of content) and a seamless experience to consumers on the digital path to purchase. Cognitive computing systems can help in every one those areas. Not only can cognitive computing systems handle many variables than older systems some, like the Enterra Enterprise Cognitive System™ (ECS), a system that can Sense, Think, Act, and Learn®, can handle ambiguities and conflicts that arise when confronted by myriad regulations, policies, directives, and tribal knowledge. And because they use natural language processing they will become the preferred automated assistance technology discussed by Parker and Hand.

Although predictions always wander into unknown territories, the trajectory of business is fairly clear. We are entering what some analysts have called the era of algorithms in which artificial intelligence and automation are going to transform the business landscape forever. Companies that don’t transform are likely to find the landscape so changed that they can no longer navigate it. If the timelines indicated by Parker and Hand are accurate, successful companies should already be on the path to digital enterprise transformation.

Footnotes
[1] Pierre Nanterme and Marty Cole, “Every Business is a Digital Business,” Accenture Technology Vision 2013.
[2] Philip Evans and Patrick Forth, “Borge’s Map: Navigating a World of Digital Disruption,” bcg.perspectives, June 2015.
[3] Bernard Marr, “4 Ways Big Data Will Change Every Business,” Forbes, 8 September 2015.
[4] Thomas Igou, “Is Change a necessity?” Copperberg, 10 November 2015.

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