In just over a year, the coronavirus pandemic has clearly made organisations and business owners realise what many years of events could not: the need for Digital Transformation. While Digital Transformation has been a key priority since pre-Covid days, it has now become the need of the hour with companies racing to transform digitally as they enhance agility, speed, and data-driven decision making.
With record-breaking unemployment levels and millions of shuttered businesses, the pandemic brought in new expectations and challenges for businesses to survive and thrive in this increasingly digital era. Businesses have had to go through a great deal of learning and bring in major changes to their business models to overcome diverse challenges such as maintaining client relationships, facilitating employee communication, managing cybersecurity threats in a remote working environment. However, for Entrepreneurs who have been able to prepare their companies well and ride the Digital Transformation wave, the pandemic has been easier to navigate and stay ahead of the curve.
In a BCG survey of more than 5,000 managers and employees, over 80% said that digital was helping them get through the economic slowdown that the pandemic created.
Based on our own research and insights from Entrepreneurs and Investors within the Digital ecosystem, the following top trends will shape the Digital Transformation growth opportunity in 2021 and beyond:
Remote work drives increased IT infrastructure Spend
The sudden changes brought by the pandemic flipped many business models on their heads, with traditional IT models being unable to cope with market changes quickly enough. Almost overnight, the pandemic turned people all over the world into virtual workers. This birthed the need for revamping IT infrastructure for companies. This transformation has accelerated investment in digital devices, services, and infrastructure to support data and remote work. Worldwide IT spending is projected to total $3.9 trillion in 2021, an increase of 6.2% from 2020, according to a forecast by Gartner. The pandemic-driven remote working environment has also accelerated demand for cloud modernization, leading companies to further investments in the space and put a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic.
AI and IoT adoption creates white space in supply chain management
The supply chain industry is embracing emerging technologies rapidly as intelligence, speed, and efficiency have become the most determinant factors. Covid-19 has exposed the fragility of traditional systems used in supply chain management, as historic data becomes less relevant and reliable in exceptional times. Luckily, emerging technologies such as AI and IoT are better placed to help subdue these challenges. AI and IoT are changing how delivery and fulfillment companies are handling their operations, helping automate many mundane tasks and allow the companies to focus on more strategic and impactful business actions. The game is changing quickly, in how global logistics companies are accelerating investment in AI and IoT solutions to manage enormous volumes of data, run operations, and serve global customers, more efficiently. As per a report from Allied Market Research, the global supply chain management market size was valued at $15.85 billion in 2019 and is projected to reach $37.41 billion by 2027, growing at a CAGR of 11.2% from 2020 to 2027. The rise in complexity and extra costs is also leading companies to adopt technologies such as cloud-based supply systems for transportation management. According to data from ResearchandMarkets, the cloud supply chain management market is expected to reach $8.61 billion by 2025 from the present estimate of $4.58 billion in 2019 at a CAGR of 11.09% during the forecast period.
Digital Experience Design and Consulting to grow faster
The impact of the coronavirus crisis has forever altered user behavior and has forced enterprises to up their games in order to keep pace with this change. Customer experiences that were previously considered to be great have no longer been good enough and almost all businesses have been thrust into reorganizing their approach to customers. According to a report by Forbes Insight and Arm Treasure Data, 74% of consumers are somewhat or very likely to buy from a company based entirely on their experience – regardless of the price or product. Organizations are now rethinking their business and operating models and investing in digital experience design firms. According to marketsandmarkets, the global digital transformation market size is expected to grow from $469.8 billion in 2020 to $1009.8 billion by 2025, fueled by increasing penetration of mobile devices and apps and the increasing adoption of cloud services due to the pandemic.
Interactive, Engaging Mobile Apps re-defining Digital Experience
The pandemic has increased dependency on smartphones, which in turn has expanded opportunities for IT industries to provide mobile apps for various applications to the users. People who work from home use mobile apps for video conferencing and communicating. Students use mobile apps to attend online classes. People watch more entertainment through streaming services and play games. With people trying to maintain distance from other people and avoid venturing outdoors in the face of the pandemic, these mobile applications have been helping users to avoid tactile transactions. On-demand mobile apps are used to order food, groceries, vegetables, medicines, and an array of other items that can be safely left at the doorstep. As per Statista, consumers are likely to download 139 billion mobile apps from the Google Play Store alone by the year 2024. This rise in mobile application development continues to accelerate, even after the pandemic threat abates. Mobile app development companies are also incorporating applications with features that allow brands to make use of technologies, such as cloud computing. Cloud-based mobile apps usually take up little or no space on users’ devices and are famous for their responsiveness and the fact that they don’t need to be stored permanently on the device.
Streaming Video Platforms and Analytics Services growth leaps
Video and game streaming platforms witnessed a flux of new users on the back of the lockdowns due to the pandemic. With most of the cinema halls, malls, parks being shut down and people being afraid to venture out, there have been very few options to entertain ourselves. People invariably seek to find means to entertain themselves in the safe confines of their homes, which led to the rise of video streaming, both in terms of the number of users and the amount of time spent on the platforms. According to data from Statista, revenue in the Video Streaming (SVoD) segment is projected to reach $71,237m in 2021. Streaming companies are also increasing their bandwidths and video qualities and, by scaling on the cloud. The global streaming analytics market size was valued at $6.32 billion in 2018 and is expected to grow at a CAGR of 28.9% from 2019 to 2025, according to Grand View Research.
Cloud Security and Cyber Deception Technology gain importance
While organizations have been quick on their feet to enable employees to shift their operations to the cloud, they have also had to deal with several security challenges associated with it. Owing to the rising threats of cyber attacks, especially during the pandemic, there is an increasing need for organizations to detect and mitigate advanced risks that have already breached the network. The demand for security, which was already high with the rapid adoption of the cloud, is now accelerating even further in the face of the pandemic. This is also boosting the adoption of deception technology. Deception technology aims to prevent a cybercriminal that has managed to infiltrate a network from doing any significant damage. If an intruder triggers a decoy, then the server will log and monitor the attack vectors utilized throughout the engagement. The deception technology market was valued at $1335.5 million in 2020, and it is expected to reach $2814.16 million by 2026, registering a CAGR of 13.3% over the forecast period, 2021 - 2026, according to a report by Mordor intelligence.
In today’s world, extremely rapid technological advancement is not a barrier. Companies have been quickly gaining access to sophisticated technologies needed to expand revenues and capabilities by acquiring or investing in specialized technology domains to unlock growth opportunities. While building technology at the pace required to sustain innovation today is an area where emerging Digital Tech and Software companies have an edge, access to investments, large global markets, and marquee clients are typically hard to replicate pillars mid-sized Digital Transformation and IT Services companies have built over more than a decade. Enterprises that know how to reach and leverage this innovation efficiently, particularly from new investments and partnerships, are reaping the benefits of new growth.
"We predict that direct investment in digital transformation will grow at a healthy CAGR of 15.5% globally between 2020 and 2023, while non-DX ICT investment will contract at a CAGR of -1.4% over the same period.” according to IDC's global president, Crawford Del Prete.
Today, digitally transformed companies have an edge over others both in terms of revenue growth and profits; in the future, accelerating Digital Transformation will be imperative for companies to see continued growth and build a sustainable competitive advantage.