idc futurescape: digital transformation 2018 predictions … · 2018-11-29 · this is an excerpt...

IDC FutureScape: Digital Transformation 2018 Predictions —

Asia/Pacific (Excluding Japan) ImplicationsAn IDC Excerpt

Daniel-Zoe Jimenez, Research Director, Digital Transformation APEJ Practice lead

Sandra Ng, Group Vice President, ICT Practice

January 2018

Please refer to www.idc.com for the worldwide report #US43154617 & #AP42740217 © IDC

http://www.idc.com/

This is an excerpt of IDC FutureScape: Worldwide Digital Transformation 2018 Predictions – APEJ Implications , Doc#AP42740217, an update

to IDC's 2017 Digital Transformation Predictions. It delivers an outlook view of the ICT industry as it relates to tech buyers' road map,

priorities, and requirements in 2018–2021. It contains regional forward perspective and implications of the 10 prediction statements. Both IT

and business impacts are included to give a cross-functional understanding of the tech buyer marketplace.

We advise decision makers to approach each prediction in three steps:

▪ Assess its relevance: Should I pay heed to this prediction? Does this prediction apply to me? Can I reasonably enough ignore it? What

do I risk if I ignore it? Strategy is, after all, as much about what you decide to do as what you decide not to do.

▪ Assess its urgency: Does this prediction apply to me now or in the future? If it applies in the future, when do I have to get started to

deliver enabling capabilities as needed?

▪ Assess its resource requirements: What resources do I need and at what costs? What would I have to forego or postpone to achieve the

capability? What do I have to speed up to achieve it? What priority does this prediction have relative to other projects consuming

resources?

© IDC 2

In This Excerpt

IDC FutureScape:

Digital Transformation Worldwide & APEJ Implications — Fig. 1

3© IDC

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Prediction 1: By the end of 2019, digital transformation (DX) ICT spending is expected to reach US$556 billion in Asia/Pacific

(excluding Japan) (APEJ), a 33% increase from 2017.

Prediction 2: By 2019, all digitally transformed organizations will generate at least 45% of their revenues from "future of

commerce" business models in APEJ.

Prediction 3: By 2020, investors will view digital businesses differently, with specific measures based on platform participation, data

value, and customer engagement accounting for over 50% of enterprise valuations in APEJ.

Prediction 4: By the end of 2018, at least 25% of organizations will have a fully staffed digital leadership team versus a single DX

executive lead to accelerate enterprisewide DX initiatives in APEJ.

Prediction 5: By 2019, personal digital assistants and bots will execute only 5% of transactions, but they will influence 15%, driving growth

among the organizations that have mastered utilizing them in APEJ.

Prediction 6: By 2020, the revenue growth in half of A1000 firms from information-based products and services will be triple the growth rate

in the balance of the product/service portfolio.

Prediction 7: By 2020, 45% of new operation-based technical positions hires will be screened for analytical and artificial intelligence (AI) skills,

enabling the development of data-centric DX projects without hiring new data-centric talent in APEJ.

Prediction 8: By 2020, 25% of A500 companies will have developed digital training programs and digital cooperatives to compete more

effectively in talent wars.

Prediction 9: By 2019, 40% of DX initiatives will be supported by cognitive/AI capabilities, providing timely critical insights for new operating

and monetization models in APEJ.

Prediction 10: By 2020, 50% of all enterprises will have fully articulated an organizationwide digital platform strategy and will be in the process

of implementing said strategy in APEJ.

Note: The size of the bubble indicates complexity/cost to address. Source: IDC, 2018

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DX Investments

Future of

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DX Success

Metrics

DX Leadership

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DX Talent

DX Skills

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DX Platforms1

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✓ Sense, Compute, Actuate: The New Data-Centric Paradigm

✓ Accelerating DX: Technology-Centric Transformation Altering Business and Society

✓ Pace of Change: Technology Capabilities Enabling Sustainable Change at the Speed of

Digital Business

✓ Human Versus Machine: The Impact of AI and Automation

✓ The Future Workforce: Global Demand for Digital Talent

✓ DX Delta: Leaders and Disruptors Widening Performance Gap

✓ Platform Disruption: Unleashing Digital Innovation's Power for Scale

For additional details on the aforementioned drivers, please refer to IDC FutureScape:

Worldwide Digital Transformation 2018 Predictions (IDC #US43154617, October 2017).

© IDC 4

DX: Worldwide Drivers

▪ DX is no longer a theoretical topic but is now being executed within many organizations in Asia/Pacific. IDC research shows that many

organizations in the region are stuck in their respective DX journeys. Although these organizations are executing digital projects and

making progress, they are not digitally transforming adequately to move the DX needle organizationwide.

▪ IDC’s 2017 Asia/Pacific DX MaturityScape Benchmark shows that majority of organizations are still in the early stages of DX maturity,

with 39.9% in stage 2 (or opportunistic) and 24.8% in stage 1 (or ad hoc) of the five stages.

▪ IDC’s research shows that there are five challenges (digital deadbolts) holding these organizations back from achieving digital maturity:

• Outdated key performance indicators (KPIs). Digital businesses need new sets of metrics to understand progress and guide

investment.

• Siloed DX initiatives. A lack of coordination across business functions impairs a company’s ability to maximize potential and

move quickly.

• Tactical plans. Companies lack a clear road map for investment.

• Limited expertise. Digital dictates a new set of capabilities that enterprises find difficult to cultivate.

• Islands of innovations. There are too many initiatives involving too many technology providers; organizations must look at a

digital platform to optimize resources and innovate more rapidly.

▪ The APEJ region remains the most competitive market in the world, with China leading in areas such as ecommerce, digital apps, and

payments. India is charging ahead with its ambitious "Digital India" program, whereas Singapore has its progressive "Smart Nation"

plan.

▪ The investment push from Asian governments is, on average, more aggressive than that in other parts of the world. This top–down

approach is effective as it sets the tone for the market and helps generate technology demands and investments from both consumer

and business fronts.

© IDC 5

DX: APEJ Situation Analysis

IDC FutureScape: DX APEJ Implications – Fig. 2

6© IDC


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Prediction 1: By the end of 2019, DX ICT spending is expected to reach US$556 billion in APEJ, a 33% increase from 2017.

Prediction 2: By 2019, all digitally transformed organizations will generate at least 45% of their revenues from future of

commerce business models in APEJ.

Prediction 3: By 2020, investors will view digital businesses differently, with specific measures based on platform participation, data


Prediction 4: By the end of 2018, at least 25% of organizations will have a fully staffed digital leadership team versus a single DX


Prediction 5: By 2019, personal digital assistants and bots will execute only 5% of transactions, but they will influence 15%, driving growth

among the organizations that have mastered utilizing them in APEJ.

Prediction 6: By 2020, the revenue growth in half of A1000 firms from information-based products and services will be triple the growth rate

in the balance of the product/service portfolio.

Prediction 7: By 2020, 45% of new operation-based technical positions hires will be screened for analytical and AI skills, enabling the

development of data-centric DX projects without hiring new data-centric talent in APEJ.

Prediction 8: By 2020, 25% of A500 companies will have developed digital training programs and digital cooperatives to compete more

effectively in talent wars.

Prediction 9: By 2019, 40% of DX initiatives will be supported by cognitive/AI capabilities, providing timely critical insights for new operating

and monetization models in APEJ.

Prediction 10: By 2020, 50% of all enterprises will have fully articulated an organizationwide digital platform strategy and will be in the process

of implementing said strategy in APEJ.

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DX Success

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DX Skills

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▪ IDC expects DX investments in technologies to continue to increase

significantly over the foreseeable future. By 2019, DX investments will

reach US$556 billion in APEJ, representing a 33% increase from 2017.

▪ The breakdown by DX dimensions in 2019 will be:

• Operating model DX: US$359.3 billion

• Omni-Experience DX: US$114.4 billion

• Information DX: US$66.0 billion

• WorkSource DX: US$11.3 billion

• Leadership DX: US$4.3 billion

▪ These monetary allocations are directly inverse to how successful

companies approach and develop successful DX capabilities. Leading DX

players start with a top–down DX strategy (Leadership DX) with clear goals

and objectives, develop and retain the right digital talent (WorkSource

DX), and use enterprise data (Information DX) to drive new business model

development that engages stakeholders (Omni-Experience DX) while

creating robust digital business process capabilities that operate with

speed, scale, and agility (Operating Model DX).

▪ Investments in 3rd Platform technologies (cloud, big data, social, and

mobility) in 2019 will be 12% and innovation accelerators (IAs) (next-

generation security, augmented reality/virtual reality [AR/VR], IoT,

cognitive, robotics, and 3D printing) 88%.

▪ Furthermore, in 2019, services spent will represent 41%, followed by

hardware (33%) and software (26%).

© IDC 7


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Prediction #1: DX InvestmentsBy the end of 2019, DX ICT spending is expected to reach US$556 billion in APEJ, a 33% increase from

2017.

8© IDC

IT impact▪ Rationalizing legacy applications is a critical step in preparing the enterprise for DX.

▪ Continue to educate and understand technologies that support speed, scale, and agility and their role in the DX deployment.

▪ Strategic sourcing for technologies and services is a required core competency for DX readiness.

▪ Business unit heads must appreciate and embrace technologies. The ability to contextualize technologies to deliver differentiated value to customers and the organization is going to be essential in the DX economy.

▪ Business unit heads and their staff are typically at the forefront of the organization, either serving customers or collaborating with ecosystem partners. The changes in the DX economy are significant and can be difficult with new business models and changing consumption patterns.

Business impact


2017.

9© IDC

Guidance for Technology Buyers

▪ Developing a DX technology journey map as part of an organization's overall DX road map is required to ensure process and technology efforts are synchronized.

▪ Although expected investment levels are material, they should be evaluated and implemented as part of value-based DX strategy execution for creating sustainable and dynamic process capabilities.

▪ Evaluate technologies in a targeted manner to enable business outcomes; enterprise criteria should include both getting results and optimizing time to value for the organization.


2017.

▪ IDC defines the future of commerce as the application of 3rd Platform

technologies and IAs to fundamentally change the way commerce is done

between individuals, organizations, and things, and deliver outcome-based

products and/or services through business model innovation.

▪ According to IDC’s 2017 Asia/Pacific C-Suite Barometer Research, the inability

or limited ability to create new business models is one of the top 3 challenges

CEOs are facing today. Organizations have been/are digitally disrupted, albeit

at a different pace. To win against digital disruptors, organizations must

evolve with new business/operating models. Some of these models are

evolving into what IDC expects will become the future of commerce. These

changes are becoming apparent in how organizations create (information-

driven value chains), deliver (information-based products and services), and

monetize value (dynamic monetization). Some of the manifestations of these

future of commerce models are:

• Me-commerce

• Consumption-based "sharing economy" monetization model

• Data monetization and capitalization models

• User community engagement and monetization model

• Outcome-based pricing model

• Risk–reward sharing model

© IDC 10


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Prediction #2: Future of CommerceBy 2019, all digitally transformed organizations will generate at least 45% of their revenues from

future of commerce business models in APEJ.

11© IDC

IT impact▪ The future of commerce models is emerging thanks to the application of 3rd Platform

technologies and IAs, such as mobility, cloud, big data and analytics, AI, and IoT. Orchestrating these technologies requires a mash-up approach that can optimize and scale.

▪ The knowledge of country-specific customer and data privacy regulations is critical to ensure that these new business models can be adequately launched in specific geographies and integrated into the relevant business processes.

▪ The experiential element of the platform to support future of commerce models means that IT must ensure the user experience (UX) is modernized and differentiated for the targeted customer and user personas.

▪ Business leaders should assess how to evolve the business with innovative models and focus on creating, delivering, and monetizing value. New technologies will play a key role in the creation of a new business model, and partnering with IT on common goals is critical.

▪ Creating a new business model requires a fundamental cultural and operational transformation. It requires overhauling management and employee perspectives on how to deliver value and finding the best way of capitalizing on it.

Business impact



12© IDC


▪ Define a strategy and vision for the future of commerce. Anchoring upon the organization’s mission, identify, define, and envision how the organization will create and deliver value in the future. Identify unmet consumer wants/needs and explore how digital technologies can align the vision with these needs.

▪ Set strategic priorities for the future of commerce. Map out and analyze the business models currently in use by the organization. Work backwards from the customers, and identify opportunities to apply DX to improve business performance by adjusting business model parameters that push the organization toward the vision.

▪ Define metrics for each prioritized initiative. Traditional business metrics are not enough for a successful DX. Organizations need to establish new DX-oriented metrics and KPIs, such as product/service innovation rate, customer advocacy, and data capitalization (e.g., platform-related revenue as a percentage of total revenue).



▪ IDC research shows that many of the 62% of organizations in APEJ in stages 2

to 3 of the DX maturity (out of 5) are stuck and unable to make significant

progress enterprisewide.

▪ This DX impasse is attributed to five digital deadbolts, and the use of

ineffective metrics to measure organizations' performance is one of them. In

fact, IDC research shows that at least 67% of organizations are using only

lagging and/or traditional indicators. Traditional metrics (e.g., revenues, cost

efficiencies, and other indicators used that track past performance) are no

longer enough to measure success given the agility required to succeed in

the digital marketplace. To be effective, organizations should use a blend of

standard and new KPIs that are aligned with the DX goals. This blend of

traditional and new indicators will guide organizations in their success and

help them achieve the gold standard.

▪ DBS Bank, for example, has introduced new metrics and KPIs, including a KPI

for the bank's managing directors (around 250 of the bank's senior

leadership) to run at least one customer journey road map with their teams to

improve an existing function or service faced by the bank's customers.

▪ Also, investor perceptions of the future value of companies (hence, the

current stock price) are rapidly changing, with a new emphasis on key

indicators of digital success. Some of these new measures are based on

platform participation, data value, and customer engagement.

© IDC 13


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Prediction #3: DX Success MetricsBy 2020, investors will view digital businesses differently, with specific measures based on platform

participation, data value, and customer engagement accounting for over 50% of enterprise valuations

in APEJ.

14© IDC

IT impact▪ New metrics will help IT leaders understand the scope and organizationwide impact of DX and

facilitate an in-depth analysis of IT investments. Digital innovations must be built with the ability to self-evaluate based on the new metrics and adjust.

▪ Data will be more than efficiently managing storage; IT will have to take a value-based approach to how data is governed and managed.

▪ Scale will be a critical success factor in supporting the extended platform ecosystem.

▪ Traditional metrics are not enough to measure the impact of DX across the organization. New metrics will help make correct and effective decisions to drive company DX strategies, goals, and objectives.

▪ Business users should incorporate new metrics that help assess if information assets have been optimized for decision making, operations, and DX revenue generation drive through the incorporation of information into the product mix.

▪ Business stakeholders must work with IT to ensure new metrics can help them flag deviations from business strategies, objectives, and plans.

Business impact



in APEJ.

15© IDC


▪ Develop an organization-specific checklist that includes essential questions that business and IT leaders should answer to determine what metrics will help them better track DX success and failure.

▪ Develop data requirements, guidelines, and feedback loops for DX performance reporting. The use of new metrics may require organizational changes in reporting structures and methodologies that will lead to some friction before, during, and after they are used across the organization.

▪ Establish and communicate the new success metrics and KPIs for all significant DX investments and initiatives to the relevant stakeholders. Aligning KPIs with departments may require structural, cultural, and ecosystem changes.

▪ Organizational metrics should combine standard metrics, such as revenue or cost savings and DX performance metrics. Differentiate leading from trailing indicators that capture financial, business, and operational performance measures.



in APEJ.

▪ In Asia/Pacific, the pace of DX has accelerated but organizations in

the region are still lagging behind their U.S. and Western

counterparts. Although 65% of organizations in Asia/Pacific claim

to have a DX strategy, only a few have an effective DX

organizational structure. This is hindering their ability to make

progress in their DX journeys. The pace at which DX is developing

and its relative immaturity are evident in that there is still no

universally accepted standard for organizing DX initiatives and

teams.

▪ IDC’s 2017 Worldwide Digital Leaders’ Sentiment Survey showed a

high correlation between higher digital maturity and the

organizational archetype we labeled as "the embedded digital

business." This organizational approach has a clear digital leader,

but efforts are managed by a digital dream team that includes

representation from all functional lines of business (LOBs).

Regional examples include CIMB and Johnson & Johnson.

▪ IDC expects that by the end of 2018, at least 25% of the

organizations (almost thrice the current count) in APEJ will have a

fully staffed digital leadership team to accelerate enterprisewide

DX initiatives. This DX leadership team will be composed of

executives from across multiple functions and will report to the

CEO office.

© IDC 16

Note: The size of the bubble indicates complexity/cost to address.Source: IDC, 2018

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Prediction #4: DX LeadershipBy the end of 2018, at least 25% of organizations will have a fully staffed digital leadership team

versus a single DX executive lead to accelerate enterprisewide DX initiatives in APEJ.

17© IDC

IT impact

▪ IT organizations must play a role in these embedded structures but not lead.

▪ LOB influence in technology buying decisions is already growing and will become even more prominent.

▪ Organizations will look to IT to ensure scale while optimizing overall spending.

▪ This organizational model (digital embedded into the business) will provide the various functional areas and LOBs with higher ownership around the digital strategy and drive further collaboration, contributing to the success of DX effort across the organization.

▪ Increased ownership and responsibility on the digital strategy and its effective execution will require many business leaders and functional areas to focus on critical digital skills. Although IT is expected to support the ongoing technology transformation, LOB executives are also becoming more tech-savvy and will need to continue to evolve their skills to stay competitive.

Business impact



18© IDC


▪ DX is a team sport and requires collaboration across all business domains to make DX efforts successful enterprisewide. Having a DX leader is critical to establish governance and influence LOB, IT, and other functions by facilitating communication between business, operations, and technology. However, to accelerate DX organizationwide, organizations should evolve into having a fully staffed digital leadership team. Assessing your DX maturity and readiness will help determine which model is best suited for your organization today.

▪ DX is a multiyear journey so you should create an effective DX road map. IDC’s research shows many organizations are not developing long-term digital road maps; instead, they typically create tactical road maps that are focused on near-term strategic goals. When determining the best organizational model for your organization, consider what you want to accomplish next and throughout your DX road map. This will also help you identify the right organizational structure.



▪ Organizations in APEJ are increasing the level of control for customers, and

business-to-business (B2B) organizations can have over their own experience,

allowing for more customized choices and personalization. The growing scale

of customer interactions and touch points is bringing more complexity when

managing extreme personalization and customer requirements. To avoid

uncompetitive cost structures and enhance services while delivering a great

customer experience, organizations are using virtual agents, digital assistants,

and chatbots increasingly. These intelligent assistants use AI/cognitive

technology to automatically adjust experiences to the user’s preferences and

context. Several examples in APEJ are Oversea–Chinese Banking Corporation

(OCBC), DBS Bank, and SK Telecom.

▪ Also, IDC expects that within two years, 25% of the world’s population will be

using chat apps, and APEJ will account for more than half of the world’s chat

app users. China, India, and Indonesia will contribute the most number of

users. As a result, we will see more brands and marketers in APEJ turning to

personal digital assistants to help automate and cultivate brand experiences

in a more one-to-one conversational style. Examples of this are Unilever’s

Knorr Auntie Reply, Alibaba, WeChat (e.g., Chumen Wenwen), and many

others.

▪ IDC expects that by 2019, personal digital assistants and bots will execute

only 5% but will influence 15% of transactions, driving growth among the

organizations that have mastered utilizing them in APEJ.

© IDC 19


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Prediction #5: Digital AssistantsBy 2019, personal digital assistants and bots will execute only 5% of transactions, but they will

influence 15%, driving growth among the organizations that have mastered utilizing them in APEJ.

20© IDC

IT impact ▪ New digital-related skills sets will continue to be in high demand to support the scale of customer interactions and mass personalization occurring through different channels.

▪ Data integration and training AI/assistive technology/cognitive will be critical to ensure virtual assistants are fully leveraged. The technology needs to interoperate in real time with various systems dependent on industry, but modernization and integration are fundamental to success — this isn't an edge technology that stands on its own.

▪ Data scientists and skilled business analysts are critical resources. AI/assistive technology is an area in which IT must know the business well.

▪ Leveraging personal digital assistants and bots to drive higher conversion in transactions and improved customer services also requires a new set of skills in sales, marketing, and product organizations.

▪ The success of contextual sales through AI/cognitive assistants will be highly dependent on the accuracy of the data being fed into the engine and its integration with other data sets. Effective data management and governance are prerequisites. In many cases, the LOBs or an executive outside of IT will be responsible for this.

▪ Business expertise and skills need to be combined with technical skills to successfully implement these assistants.

Business impact



21© IDC


▪ Plan beyond rote conversational commerce.

▪ Design for the customer genome to engage the shopper.

▪ AI accelerates consumer instrumentation, information, and interaction. Therefore, enterprise AI is critical.

▪ Integrate IA, IoT, voice, and AR/VR strategies.

▪ CIOs will have to become more entrepreneurial, functioning similar to start-up CEOs.



▪ Data-centricity is core to DX. In Asia/Pacific, many organizations are evolving

toward becoming information-based companies, shifting the organizational

focus to relationships, people, and intangible capital. Organizations are not

only leveraging data for improved decision making but also to enhance

products and services and/or for monetization purposes. Although the latter

continues to be very small in the region, there are some interesting examples

of data as a service (DaaS). For example, large enterprises in the telco and

financial service sectors, such as StarHub, the National Australia Bank, and

DBS Bank, are leading in this aspect.

▪ On the other hand, the creation of information-based products and services

is proliferating. In fact, according to IDC’s 2016 Big Data MaturityScape

Survey, 16% of organizations considered the creation of data products as

their main goal of investment in big data and analytics initiatives in the

coming 12 to 18 months. Some of the customer-centric use cases that are

being explored for future of commerce business models include:

• Assisted purchase

• Instructive guide

• Augmented experiences

• Preventive advisory

• Personal insights/improvement

▪ IDC expects that by 2020, the revenue growth in half of A1000 firms from

information-based products and services will be triple the growth rate in the

balance of the product/service portfolio.

© IDC 22


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Prediction #6: Data-CentricityBy 2020, the revenue growth in half of A1000 firms from information-based products and services will

be triple the growth rate in the balance of the product/service portfolio.

23© IDC

IT impact▪ IT has to play a critical role in terms of bringing together the different data siloes (or work with

a designated chief data officer) to effectively address these.

▪ Information-based products and services need well-defined processes to manage data traceability, integration, aggregation, quality, security, valuation, and so forth.

▪ IT should implement an information architecture with governance at the senior executive level. Capitalizing on data in the form of information-based products and services or data monetization should be high in the agenda when creating the information architecture.

▪ Not all information-based products and services can be monetized directly. However, by embedding themselves into consumers' life activities, these products and services can deepen customer insights and increase advocacy.

▪ The organization’s mindset needs to evolve, and the CEO needs to develop and promote a culture that treats information as a key asset.

▪ LOBs must view developing and promoting such a culture as a top strategic priority as becoming an information-based organization is turning into one of the leading competitive differentiators in the DX economy.

Business impact



24© IDC


▪ Enable design models and artifacts creation to explore new products or business models, providing the enterprise with an environment focusing on experience.

▪ Commit resources for the reskilling of workers to use the new platforms and technologies. Create and colocate cross-functional product teams to encourage collaboration and knowledge sharing.

▪ Assess opportunities to leverage existing data and information initiatives; focus on meaningful but limited initiatives before investing in larger ventures. Use a prototyping approach as a way to communicate and collaborate with all stakeholders.

▪ Pay particular attention to data privacy and governance as the advantages of sharing private data begin to outweigh the benefits of privacy because of the ability of AI/intelligence to enhance all aspects of daily life and business.



▪ DX requires new skills sets, and analytics and AI are in high demand. To

accelerate enterprisewide DX initiatives, IDC expects APEJ organizations

will continue to focus on reskilling and specifically screen new

operations-based technical staff candidates for analytics and AI skills.

New hires will be expected to either have these skills on hand or the

right aptitude to acquire them through training programs as they will

have to analyze large volumes of data and apply AI capabilities to

optimize or automate processes.

▪ Data capitalization is core in the DX economy, and AI is a game-

changing technology to achieve this goal. In Asia/Pacific, the use of

AI/cognitive technologies is rising. China has the largest number of

academic research publications released, is poised to outspend other

markets by 2030, and expects to create a US$150 billion industry by

then. India and Singapore are also trying to compete. In Singapore,

Marvelstone Group, the private investment firm, plans to launch the

world's largest AI hub in 2018.

▪ Given the growing importance of analytics and AI for organizations,

and DX projects in particular, IDC expects the demand for these skills to

continue to grow and operations-based technical staff candidates that

possess those skills to be favored. However, this requirement will

remain a lower priority in Asia/Pacific compared with in more mature

regions, such as Europe, the Middle East, and Africa (EMEA) and North

America.

© IDC 25

Note: The size of the bubble indicates complexity/cost to address.Source: IDC, 2018

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Prediction #7: DX TalentBy 2020, 45% of new operation-based technical positions hires will be screened for analytical and AI

skills, enabling the development of data-centric DX projects without hiring new data-centric talent in

APEJ.

26© IDC

IT impact▪ AI is impacting all business and IT systems. Embedding AI in almost all IT and business

systems/solutions will drive accelerated improvement/enhancement cycles through continuous learning and automation.

▪ Organizations are increasingly focused on creating analytics AI capabilities enterprisewide. IT will be key to evaluating technical skills but will not be the final decision maker. IT’s role will focus more on collaborating with these new DX business resources and IT infrastructure.

▪ New hires will be focused less on IT and more on business execution. However, IT may need to support ongoing training efforts to ensure this new breed of employees can maintain and expand their analytical and AI skills as technologies advance.

▪ Analytics and AI-related skills will continue to be in high demand within various business areas to support the large portion of DX initiatives that are AI-dependent as well as capitalize on the vast amounts of data that organizations already have.

▪ Business users need to increase focus on collaborating with IT to create data value and accelerate DX efforts.

▪ To ensure continuous improvement and learning from past initiatives, discoveries, and learning, organizations should create an analytics and AI center of excellence. This will also encourage collaboration between businesses, IT, and data scientists.

Business impact



APEJ.

27© IDC


▪ Develop a hiring plan that will allow new technical subject matter experts to balance their core technical responsibilities in operations with the overall organization's DX requirements.

▪ Take advantage of the organization's investments in digital training programs, internally or at nearby educational institutions, and integrate ongoing training with hands-on learning environments, such as fabrication laboratories and learning factories.

▪ Create a governance plan to provide guidance on priorities between core job-related tasks and DX tasks as new hires take on DX responsibilities.



APEJ.

▪ IDC’s research shows that many organizations are stuck in their DX efforts

because of the lack of a digital mindset. IDC’s 2017 C-Suite Barometer for

Asia/Pacific shows that 78% of organizations see change management, lack

of executive commitment, and limited organizational capabilities to

accelerate DX.

▪ The lack of digital skills and capabilities continues to be a top challenge for

organizations in Asia/Pacific, and they see themselves competing for these

skills both internally and externally. According to IDC's 2017 Digital

Transformation Leader Sentiment Survey, key challenges in DX include the lack

of understanding of what DX is and how to begin as well as the lack of digital

skills in the workforce. These highlight the need for training for not only

current and newly hired staff but also for education as part of a broader

community-based curriculum for students in high school.

▪ In fact, according to the same survey, 88% of organizations are planning to

invest in retraining to support their DX efforts. In the region, many

organizations are increasing investments in training programs.

▪ For example, DBS Bank announced in 2018 that they will invest more than

SGD20 million over the next five years in a program to train its 10,000

employees in Singapore in digital banking skills and technologies. Also, Aviva

launched a Digital Garage in Singapore to drive collaboration, and learning.

▪ IDC expects that by 2020, 25% of A500 companies will have developed digital

training programs and digital cooperatives to compete more effectively in

talent wars.

© IDC 28


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Prediction #8: DX SkillsBy 2020, 25% of A500 companies will have developed digital training programs and digital

cooperatives to compete more effectively in talent wars.

29© IDC

IT impact ▪ The lack of a digital mindset and especially the shortage of skilled workers will delay DX initiatives, resulting in less-than-optimal results as organizations progress in their DX journeys.

▪ Talent wars will continue and impact salaries, driving an increase in compensation for the most sought-after skill sets, such as AI, machine learning, analytics, and robotics, as companies compete for the best talent.

▪ An unintended consequence is the widening of the gender salary gap among IT staff members. Women have historically been underrepresented in Science, Technology, Engineering, and Mathematics (STEM) programs at the high school, college, and graduate school levels, which have prepared students for these types of careers.

▪ Focus on creating a digital mindset in the organization. Manage change. Senior managers should rethink values, culture, organizational structures, and skills to succeed. Manage the transition from a knowledge worker to a digital worker. There will be a level of uncertainty to be managed and navigated by managers and staff members alike.

▪ Assess specific needs to determine training objectives. Identify what processes, systems, and platforms workers must master to optimize their abilities to collaborate across teams as well as increase their productivity and capabilities to meet corporate objectives.

▪ Use immersive training and gamification. Modern training techniques, including short training modules followed by quizzes, are effective in increasing attentiveness, retention, and ongoing staff performance.


Prediction #8: DX SkillsBy 2020, 25% of A500 companies will have developed digital training programs and digital

cooperatives to compete more effectively in talent wars.

▪ AI/cognitive investments continue to grow worldwide and in the

Asia/Pacific region. IDC's 2017 APEJ Cognitive/AI Adoption Survey

shows that adoption of cognitive/AI solutions is set to grow

rapidly in APEJ. Although today only around 11% of organizations

in APEJ have adopted AI solutions (compared with 38% of such

organizations in the United States), more than half of the

organizations are planning for adoption within a five-year

timeline.

▪ Many of these investments in these technologies are to enable DX

efforts. For example, Baidu, DBS Bank, KPJ Healthcare, OCBC,

Jiangxi Hongxin, and the Singapore government are aggressively

investing in this space to drive new competitive benchmarks in

the next decade.

▪ Also, we are expecting increased investments in AI/cognitive as

organizations will need to have an intelligent data core based on

the premise of comprehensive awareness, human decision maker

augmentation, and machine decision-making automation.

Creating an intelligent core requires a major rearchitecting effort.

Although this will be challenging, it is key for the enablement of

the new digital operating models, which will increasingly require

self-healing and self-learning processes. At the center of the new

operating models, value is created from data and insights and

realized with competitive monetization models.

© IDC 30


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Prediction #9: Cognitive/AIBy 2019, 40% of DX initiatives will be supported by cognitive/AI capabilities, providing timely critical

insights for new operating and monetization models in APEJ.

31© IDC

IT impact ▪ Cognitive/AI systems require strong data pipelines to "fuel" these solutions, and hence, the ability of CIOs/core IT to effectively capture and manage data effectively is critical.

▪ Cognitive/AI systems are essential ingredients for the creation of an intelligent core. Also, these technologies are key for scaling up customer personalization, a fundamental capability for success in the DX economy. CIOs/IT groups must partner with chief marketing officers (CMOs)/other chief "x“ officers (CXOs) to successfully achieve this.

▪ IT skills for cognitive/AI and other digital-related technologies are hard to find in APEJ, particularly in combination with business and process-level acumen. This shortage of talent will continue to hinder the uptake of these technologies in APEJ.

▪ Tech CXOs are attracted to the potential and new possibilities with cognitive/AI, but the challenge is the working knowledge of these technologies.

▪ CEOs and strategic CXOs with a strong goal to stay ahead of the competition and a quest for developing new marketspaces must prioritize cognitive/AI capabilities as a top innovation investment in the next three years.

▪ The exploration of new use cases will require new partnerships with cognitive/AI vendors, developers, and consulting firms. An assigned executive to lead this initiative will be important to drive it strategically and build it for long-term competitive reasons.

Business impact



32© IDC


▪ Perform a skills gap assessment to determine the skills you possess internally and those you will require in the next three years. Focus on attracting and retaining the right skills.

▪ Create an AI center of excellence to encourage discovery, learning, and cross-organizational collaboration between businesses, IT, and data scientists.

▪ Mastering cognitive/AI must be high on the list of priorities for your internal developer teams or in collaboration with external partners in the next three years.

▪ Cognitive/AI and machine learning offerings should be among the key criteria in selecting strategic platform-as-a-service (PaaS) suppliers, including industry cloud platforms.



▪ DX platforms are a new enterprise IT architecture/foundation for DX — a new way of

designing, sourcing, integrating, and running IT that accelerates digital innovation at the

scale and pace required to compete in the DX economy.

▪ IDC defines the DX platform as the future enterprise IT architecture, enabling the rapid

creation of externally facing digital products, services, and experiences while aggressively

modernizing the internal "intelligent core" environment in parallel. IDC believes that

organizations that can "rearchitect for scale" on a DX platform design will stand out as

most likely to emerge as a digital-native enterprise in the critical period of the next three

to four years.

▪ The DX platform is primarily an externally facing, application programming interface

(API)–enabled platform with the key objective of creating a network or an ecosystem of

connected customers, partners, and suppliers that use (and pay for) the information and

services available to them. A defining element of the DX platform is that it is data-driven,

with an expanding variety of data pipelines plugged in from outside the enterprise and

that data (along with the enterprises' own data) fueling the AI-driven models and code

that form the basis of the enterprises' core intellectual property (IP) in the digital

economy.

▪ Although some enterprises have digital platforms in place for isolated functions, such as

digital marketing or supplier management, less than 5% of APEJ enterprises have an

integrated enterprisewide DX platform design or implementation in place.

▪ Markets such as Australia and New Zealand (ANZ) and where large multinational

corporations (MNCs)/early technology adopters are present will have greater complexity

in migrating to this architecture because of legacy challenges.

▪ Although most of the APEJ markets will not be bound by legacy systems, they face other

barriers, such as lack of expertise and understanding of this architecture and its need to

deliver digital at scale.

▪ However, the intense battlefield in APEJ will push organizations to move forward.

Aggressive brands from China and disruptors will set the pace.

© IDC 33


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Prediction #10: DX PlatformsBy 2020, 50% of all enterprises will have fully articulated an organizationwide digital platform strategy

and will be in the process of implementing said strategy in APEJ.

34© IDC

IT impact▪ Running parallel digital and IT environments is important to manage the migration. Delivering

digital to scale requires IT to be well-managed and the environment well-orchestrated from back end to front end and from enterprise to the partner ecosystem.

▪ The architecture defined to underpin the DX platform strategy will be a key enabler for the longer-term success of the whole enterprise.

▪ IT should be a critical part of the digital team that defines and builds the intelligent core of the DX platform.

▪ DX platforms are meant to cut across all workflows and business processes, evolving/transforming old IT to new digital capabilities. Business unit heads and their departments need to be part of this process and adjust habits and processes to make the transformation work in a sustainable fashion.

▪ Business leaders should focus on scale as the underlying design principle for this platform, with a clear understanding that the exponential growth of data "feeding" the platform will mean that the key differentiator for the organization will be the algorithms, codes, and models that sit within the intelligent core. This platform will be the driving force behind new processes that are created or redefined across the organization.

Business impact



35© IDC


▪ The ability to deliver digital at scale is critical to win in the DX economy. Siloed initiatives, no matter how successful and creative, can only bring a limited impact. To accelerate DX, an enterprisewide scale is essential. Hence, the boards of directors, CEOs, and CFOs need to understand this and commit to the investment level that is in sync with the organization’s DX strategy and desired end goals.

▪ Ensure the DX platform is not owned solely by IT. Although IT will definitely be an integral part of the team driving the DX platform, it should also span the digital and business teams. Hence, it looks very different from the traditional IT architectures that CIOs and enterprise architects might have historically put in place.

▪ Focus on scale as the underlying design principle for the DX platform. The rate and extent to which your organization can roll out the DX platform should be directly correlated to your organizational DX maturity across the IDC-defined dimensions of Leadership, Omni-Experience, Information, Operating Model, and WorkSource.



© IDC 36

Predictions at a Glance — APEJ Implications

1. Prediction 1: By the end of 2019, DX ICT spending is expected to reach US$556 billion in APEJ, a 33% increase from 2017.

2. Prediction 2: By 2019, all digitally transformed organizations will generate at least 45% of their revenues from future of commerce

business models in APEJ.

3. Prediction 3: By 2020, investors will view digital businesses differently, with specific measures based on platform participation, data


4. Prediction 4: By the end of 2018, at least 25% of organizations will have a fully staffed digital leadership team versus a single DX


5. Prediction 5: By 2019, personal digital assistants and bots will execute only 5% of transactions, but they will influence 15%, driving

growth among the organizations that have mastered utilizing them in APEJ.

6. Prediction 6: By 2020, the revenue growth in half of A1000 firms from information-based products and services will be triple the

growth rate in the balance of the product/service portfolio.

7. Prediction 7: By 2020, 45% of new operation-based technical positions hires will be screened for analytical and AI skills, enabling

the development of data-centric DX projects without hiring new data-centric talent in APEJ.

8. Prediction 8: By 2020, 25% of A500 companies will have developed digital training programs and digital cooperatives to compete

more effectively in talent wars.

9. Prediction 9: By 2019, 40% of DX initiatives will be supported by cognitive/AI capabilities, providing timely critical insights for new

operating and monetization models in APEJ.

10. Prediction 10: By 2020, 50% of all enterprises will have fully articulated an organizationwide digital platform strategy and will be in

the process of implementing said strategy in APEJ.

▪ IDC FutureScape: Worldwide Digital Transformation 2018 Predictions (IDC #US43154617, October 2017)

▪ The DX Platform: Rearchitecting for Scale (IDC #EMEA43147617, October 2017)

▪ Measuring Digital Transformation Performance: Introducing the IDC Digital Native Enterprise Scorecard 1.0 (IDC #AP43037517, September 2017)

▪ Planning for Digital Transformation — How to Establish a Business-Centric IT Strategy That Drives Optimal Ecosystem Experience (IDC #AP40158416, March 2017)

© IDC 37

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© IDC 38

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idc futurescape: digital transformation 2018 predictions … · 2018-11-29 · this is an excerpt...

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