According to research conducted by Harvard Business School, digital leaders — enterprises that embraced Digital Transformation — saw their three-year average gross margins at 55%, compared to only 37% for digital laggards — the companies that were not prepared to transform their businesses digitally. And when it came to earnings, digital leaders posted an average net income of 11% while digital laggards only had 7% net income. In today’s highly competitive business environment, Digital Transformation is no longer optional — it is an imperative, a necessity in order for enterprises to remain competitive or even just to stay afloat.
To keep up with Digital Transformation, enterprises must understand where it is going. In this post, we explore five important trends that will help enterprises discern where the digital revolution is heading this 2018.
#1 The Internet of Things — a Catalyst for Everything Else
The Internet of Things (IoT) is becoming a huge part of daily of life as it enables smart homes and internet-enabled appliances, smart cars, and wearable technology. However, in recent years, its impact on enterprises has been generating a lot more attention as the IoT enables enterprises to transform their businesses, become more efficient and profitable, and create new opportunities. Because of the endless possibilities that the IoT offers for both consumers and enterprises, it is expected that the number of IoT-connected devices will grow to 23.1 billion this 2018, compared to 15.4 billion devices in 2015.
Aside from greater connectivity, operational efficiency, and innovation, the Internet of Things is also driving other technological advancements, especially in analytics and computing.
Analytics. The massive amount of data generated by connected devices is providing enterprises from every industry — from manufacturing to advertising, retail, and healthcare — with greater business insights into the effectiveness and efficiency of their operations. However, this massive amount of data can only be utilized by more powerful analytics tools. In 2018, analytics tools will continue to evolve, enabling them to gather and analyze greater amounts of data from connected devices. The IoT is not only revolutionizing industries, but also analytics.
Computing. The IoT is not just pushing the boundaries of connectivity, but also the speed at which it connects devices and processes information. IoT devices not only provide users with real-time information, they also need to receive real-time response from the users. That is why the IoT is driving the development of Edge Computing. Since IoT devices need instant data processing and response, it is no longer practical for IoT devices to send and receive data from a central cloud repository. Instead, Edge Computing utilizes a method of placing nodes at the edge of cloud networks or cloud computing systems. These nodes are placed near the sources of data, such as the IoT devices, enabling them to gather, analyze, and process data faster. With the proliferation of IoT devices, more and more computing power and capabilities will be pushed further away from a central cloud repository to the extreme edges of the network.
#2 Blockchain Steps Out of Bitcoin’s Shadow
Towards the end of 2017, all the buzz was on Bitcoin’s skyrocketing price and whether or not it’s a bubble. Throughout 2017, however, enterprises have been looking at possible industry applications of blockchain technology, the enabler of Bitcoin and other cryptocurrencies.
Blockchain technology is a decentralized public domain where every cryptocurrency (such as bitcoin) transaction is recorded and can be traced to the buyer and seller. This means that blockchain provides a digital ledger of all transactions of every participant for the public to see without the need for a central authority. It is a self-managing system that cannot be tampered with by any single party.
This year, the expectation is that blockchain will finally be adopted, and not just studied, by other industries: from financial to peer-to-peer sharing applications to governance, supply chains, the Internet of Things, and healthcare among many others. As authors Don and Alex Tapscott says, “blockchain … can be programmed to record not just financial transactions but virtually everything of value.”
#3 Enterprises Dive Deeper into Artificial Intelligence
Artificial Intelligence (AI) has entered the consumer mainstream thanks to virtual personal assistants such as Siri, Google Assistant, and Alexa. For enterprises, AI has enabled smarter and predictive analytics with the help of machine learning. However, the current features and capabilities of AI are just the tip of the iceberg compared to its full potential.
This year, enterprises will dive even deeper into realizing the potential of AI for mainstream and business applications: from connectivity to robotics to automation and data analytics. For instance, AI will enable enterprises to connect and communicate with their customers faster through email, social media, and other means through automation without compromising the quality and personalization of their interactions. AI health assistants will be providing basic healthcare to patients on their mobile phones. These AI assistants will ask patients about their symptoms and provide them with information about their condition. Utilizing natural language processing and machine learning, the AI assistants will be able to provide patients with personalized healthcare. Furthermore, by capturing patient data, AI assistants will also be able to aid doctors in their diagnoses.
Armed with more powerful AI applications, enterprises will be able to make further strides into improving their bottom line through better marketing, more accurate and timely analytics, more efficient production and operations, and overall better governance, among countless other possibilities.
#4 UX Stays in the Spotlight
Greater connectivity, combined with more powerful smartphones, has forever changed the way people live their lives, from online shopping to communicating online to participating in the sharing economy. Greater connectivity and technologies have also impacted the business sector by enabling greater collaboration across the organization and with third parties, giving better visibility into operations and processes, and enabling faster decision making.
But there is another critical factor in the ongoing shift to digital means of transacting, communicating, and doing business. A more effective and engaging User Experience (UX) is crucial to making the shift to digital services. Without a friendly and easy-to-use, yet effective and reliable user interface (UI) providing a pleasant user experience, it will be difficult to get consumers to switch to online commerce and business users to adopt new enterprise applications.
In 2017, there was a great focus on delivering better user interfaces and providing engaging user experiences. It will continue this 2018 as UI and UX are proving to be crucial for the adoption and utilization of consumer and enterprise applications in this ongoing shift to digitalization.
#5 Security Evolves with Technology
New technologies such as the IoT always come with new security threats and risks. To combat these risks, enterprises are also developing and implementing new ways to improve their security measures. According to a report published by PricewaterhouseCoopers, 67% of enterprises have an IoT security strategy in place or are in the process of implementing one in response to the widespread adoption and application of the IoT.
This year, security measures will continue to evolve with new features and capabilities being introduced. For instance, threat detection capabilities will be embedded into individual platforms to secure the individual processes of a business. Big Data and Artificial Intelligence will also enable enterprises to harness data and business intelligence to develop proactive and predictive approaches to security.
Embrace Digital Transformation this 2018
Digital transformation enables organizations to open up new sales channels, find new markets and opportunities, increase revenues, and improve efficiency. But to fully embrace digital transformation, enterprises must start with connecting and managing data to ensure that high quality data is supplied to the enterprise. With a steady supply of quality data, enterprises can fully embrace and reap the benefits of digital transformation.