Why Digital Innovation Needs to Be a Priority
Gartner’s annual survey of CIOs is always worth reading. Apart from identifying emerging trends in technology, it also looks at how CIOs are addressing problems in the wider enterprise that are not focused on technology, but which might have technology solutions. This year is no exception and with COVID-19 still running rampant in the U.S. and Europe, CIOs have been faced with the challenge of enabling large numbers of workers to work from home.
This year’s 2021 Gartner CIO Agenda survey (behind paywall) gathered data from 1,877 CIO respondents in 74 countries and all major industries, representing approximately $4.7 trillion in revenue/public-sector budgets and $85 billion in IT spending. The report is not just focused on COVID, as many recent reports are, but also on what happens when the pandemic has passed.
According to the research, enterprises that accelerated their investment in digital and are using emerging technologies will come out of the pandemic stronger than those that failed to invest. More to the point, 2021 will be a race to digital with those organizations that can maintain the momentum built up during their pandemic response coming out as top players in the market. And the conclusions?
In order to direct investments and people toward new business priorities, top performers are leaning into this shift more than typical or trailing performers, with 63% of top performers stating funding for digital innovation has increased and only 52% of typical performers reporting the same. Organizations that have increased their funding of digital innovation are also 2.7 times more likely to be a top performer than a trailing performer.
Adaptation Beyond Survival
Ultimately, though, it is the measures that organizations were obliged to take to survive the pandemic that will carry them into next year and beyond, said Eric Newcomer, chief technology officer at Mountain View, Calif.-based WSO2.
The influence of remote work is accelerating the need to digitize – to have more available online, do more online and support more online. Open-source is part of what gives enterprises that advantage. “The revolution started by Google wasn’t just that they could run huge enterprise workloads on consumer-grade hardware – but that they were using open-source software that could be built and layered on the hardware,” he said.
This model succeeded because it was fast, robust and cost-effective. Trends like embedded AI, connected IoT and the return of private cloud are also driving the need for an open ecosystem. In this sense, we are seeing the industry go down the open-source path to achieve digital innovation and it won’t go back.
“It's one thing to talk about being agile and cloud-based – it is quite another to change the culture of an organization for this to actually happen,” he said.
“Under a more decentralized model brought forth by COVID-19, companies will need to adopt a culture of trust to stay productive and effective in the remote work era. Implementing a new infrastructure is more than just the adoption of new technologies – internal processes and people must also support an ecosystem of digital innovation.”
In sum, while many businesses can operate digitally, those that are not as advanced will eventually ground to a halt. Even though many companies had many components of a digital infrastructure in place in 2020, it was built around individuals coming into the office daily. Next year, there will be a new status quo
operating model – those that can adapt quickly will become the new market leaders on the other side of the pandemic.
Digital By Default as the New Way of Work
Right now digital is the default work mode because it has to be. But when we emerge from the pandemic, the world will be different. In many instances we will never go back to the old way, and digital-first experiences will become more commonplace in the way we live, work and shop. People won’t want to give up the ease and convenience of digital by default, said Bridget Perry, chief marketing officer ofGermany-based Contentful.
One sign of the need for digital innovation is the emergence of digital-native direct-to-consumer brands. They combined a customer-centric approach with agile digital capabilities, and as a result, raised customer expectations and disrupted traditional industries. Digital transformation is a journey that typically starts with a few digital projects that are often disconnected and managed in silos. Gradually, a company connects the dots, investing not just in projects but in a platform for building omnichannel experiences. That means letting go of legacy systems to adopt next-generation technology that supports digital-first capabilities.
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“Companies need to cultivate people with a new set of skills and empower them with streamlined processes and next-generation tools,” Perry said. “Look for people with what we call a 'builder ethos' — a drive to solve customer problems by building something new — and empower them with flexible technology and a bias toward action and iteration.”
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Look Ahead at What's Next in Transformation
Companies were beginning to suffer from transformation fatigue when the pandemic struck. Success rates for complex large-scale change programs struggle to surpass 25%, and after years of false starts and missed opportunities, everyone was tired of exploring technology to address disruption, said Jon Knisley, principal for automation and process excellence at San Francisco-based FortressIQ. COVID-19 breathed new life into stalled digital innovation programs and many have been reclassified under the automation umbrella.
Automation is the new transformation for many companies. With long-term economic concerns top of mind, this interest in automation is not surprising. Citing Brookings Institute research, Knisley said that during all three recessions in the last 30 years,88% of job losses took place in “routine” occupations that could be automated.
But the C-Suite needs to look beyond technology if they want to modernize. Most transformation to date has focused on the front-office and improving customer experience at the expense of operational excellence. As a result, organizations don’t fundamentally understand how they operate well enough to make technology-driven improvements in the back office.
“The next normal is going to demand that businesses adjust their operating models like never before," he said. "CEOs need to prioritize digital innovation if they are to survive long-term." He added that the pandemic exposed weaknesses in business operations and service technologies, and companies are increasingly focused on resiliency and ensuring the operational building blocks are in place to weather the next disruption.
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Is Digital Just a Buzzword?
Digital transformation is a buzzword that often gets lost in translation. This is not to say that digital innovation isn’t important – it has been the lifeblood of businesses during COVID-19, said Dustin Sapp, president of Colorado Springs, Col.-based Formstack.
But it isn’t enough to throw money at a problem and buy the latest digital tools. Instead, CEOs should be focused on solving problems. The objective of digital transformation isn’t just transferring data from paper to digital, or being able to run a business off of a computer. It’s about identifying what problems and inefficiencies employees are experiencing and implementing technology solutions that will solve those problems. It’s also about empowering employees with tools to make their lives easier.
“That should be every CEO’s priority in 2021 – making their employees’ lives easier by empowering them with easy-to-use, self-service tools that will allow them to simplify processes and solve customer problems in a more timely and efficient manner,” Sapp said.