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The Future Of Digital Transformation For Organizations

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By: Nihad Hassan

April 9, 2021

As the world becomes increasingly digital, organizations' technology adoption continues to increase at a rapid pace. The world has significantly shifted towards adopting IT in all aspects of life, such as work, study, shopping, entertainment, and social life, since the start of the COVID-19 pandemic. To stop the spread of the disease, governments worldwide imposed physical distancing measures and enforced general lockdown many times over months. As a result, people became more dependent on technology in their daily life. On the business side, organizations accelerated their adoption of technology and shifted most of their activities to become remote to remain operational during the general lockdown. An IDG survey titled "Pandemic Business Impact Survey" published in July 2020 found that CEOs' top priority for IT was to increase the digital transformation, as 59% of respondents see the direct effects of COVID-19 are accelerating their digital transformation efforts.

The ongoing COVID-19 outbreak imposes budget concerns on businesses to tighten their spending; nevertheless, the same was not right with spending on digital transformation needs. Research published by IDG estimated that global spending on digital transformation technologies and services was forecasted to grow 10.4% in 2020 to reach $1.3 trillion. All indicators point that 2021 will witness a similar (maybe more drastic) increase in digital transformation spending.

This article sheds light on the digital transformation term and gives examples of the projected digital transformation technologies that will impact business organizations worldwide.

What is digital transformation?

It is about adopting IT (e.g., tools, processes) in all business aspects to improve business performance and enhance customer service. Implementing digital transformation within a company requires close collaboration between all departments and aligning business objectives and philosophy with modern rapid application development models.

Digital Transformation Drivers

In the past few years, most enterprises did not take the necessary steps to entirely incorporate digital transformation into their business processes. However, the COVID-19 pandemic has changed their thinking dramatically (and also changed their work culture) and forced IT leaders to reprioritize their IT plans to include remote work practices to remain operational during the general lockdown.

We can recognize the following areas where the COVID-19 pandemic speeded the adoption of digital technologies in the business world:

  1. Teleworking becomes the norm worldwide. As many governments imposed a long lockdown period, companies adopt the work-from-home model on a large scale to keep their workforce and remain in business. The workforce's vast shift to adopt the work-from-home model during the pandemic is expected to turn permanent in the future work environment in the post-COVID-19 era.

  2. Customer service and supply chain, in addition to internal communications within companies, have been completely digitalized. A global survey of executives conducted by McKinsey found the digital acceleration speed during the months of the pandemic in customer interactions and procurement was equivalent to what would be expected over a term of about three to four years.

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Figure 1 - Digital acceleration speed rate of customer interactions during the COVID-19 pandemic – Original image source: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever

  1. There was a boost in creating digital products worldwide. The McKinsey survey estimates a seven-year increase, on average, in the rate at which companies are developing these products and services.

Aside from the COVID-19 impact on digital transformation, most organizations worldwide and before the pandemic were moving steadily down the digital transformation road by increasingly using the following emerging technologies:

  1. There was increased adoption of multi and hybrid clouds in the business environment. Adopting cloud technology is expected to increase in the future, according to many statistics.

  2. A massive increase in Internet of Things (IoT) devices is projected over the next few years. The number of IoT devices is expected to reach 75 billion in 2025.

  3. The volume of data generated from mobile and other IoT devices will increase at an explosive rate. A skill gap is projected to appear in technologies such as big data analytics, artificial intelligence (AI), and machine learningg (ML). These modern computing specializations will become necessary for most organizations' IT departments.

  4. In the future, we will witness an increase in IT outsourcing. Outsourcing providers will use digital systems to reduce costs and deliver their services faster and smarter. The current concept of outsourcing is using third-party people who have the adequate tools to offer the service; this will change in the future to become services provided using tools and supported by a human.

  5. Organizations will increasingly adopt virtual workspaces that are not located in a specific physical place. Hence, employees will have access to different servers in different geographical areas to do their regular job as if they were working traditionally in a physical workspace.

Summary

The digital transformation concept is on a hot debate for a while, and it was adopted by a considerable number of organizations worldwide. However, the COVID-19 pandemic significantly accelerated ITs' adoption by several years in a very short time.

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