Enterprises under pressure to go 'digital' for survival

by CXOtoday News Desk    Oct 16, 2013

Digital leaders2

Digitalization is indeed the new buzzword in the industry - unleashing unique opportunities and innovative ways of doing business. However, not many business sectors have undergone a complete digital transformation in the actual sense today, observes research firm Gartner which also predicts that in 2014 and beyond most industry verticals will face accelerating pressure to transform and the only way for them to survive and stay competitive is by embracing digitalization.

“Transformation remains a critically important phenomenon across all industries. Many industries will face intense challenges in 2014 and beyond, and will have no choice but to radically change their established business models,” said Kimberly Harris-Ferrante, VP and distinguished analyst at Gartner.

Industry specific requirement

According to Harris-Ferrante, last year saw many industry decision-makers focusing on adopting new technologies to improve business operations by addressing developments in social, mobile, cloud and information. Today, by contrast, leaders are significantly shifting their business models and processes.

She believes that the trend is driven in part by the challenges of consumer empowerment and market commoditization, which in many ways are greater than in the past, and are particularly difficult for traditional enterprises to address. The need to digitalize the business and be customer-centric is also crucial, and requires new approaches to information delivery, communication and transactions.

According to the Gartner report, business leaders and CIOs must carefully assess their industry-specific strategic requirements, including the demands of consumers and business partners, to map out transformation plans based on new technology availability, consumer preferences and market conditions.

The pressures of consumerization continue to disrupt many enterprises, forcing them to change their traditional business processes and operational models. The necessity to adopt digital business models transcends all industry verticals, and its diverse impacts are creating business opportunities that were not possible in the past.
-Kimberly Harris-Ferrante, VP and distinguished analyst at Gartner.

Industry specific observations:

Gartner predicts why some of the key industries will be forced to embrace digitalization. Here are some observations.

- By 2016, poor return on equity will drive more than 60 per cent of banks worldwide to process the majority of their transactions in the cloud.

- By year-end 2017, at least seven of the world’s top 10 multichannel retailers will use 3D printing technologies to generate custom stock orders.

-  By 2017, more than 60 per cent of government organizations with a CIO and a chief digital officer will eliminate one of these roles.

- By 2017, 40 per cent of utilities with smart metering solutions will use cloud-based big data analytics to address asset-, commodity-, customer- or revenue-related needs.

- By year-end 2015, inadequate ROI will drive insurers to abandon 40 per cent of their current customer-facing mobile apps.

- Full-genome sequencing will stimulate a new market for medical data banks, with market penetration exceeding three percent by 2016.

- By 2016, 60 percent of U.S. health insurers will know the procedure price and provider quality rating of shoppable medical services in advance.

- Through 2017, K-12 online education spending will increase 25 per cent, while budgetary constraints will keep spending on traditional instructional categories stagnant.

- By 2018, 20 per cent of the top 100 manufacturers’ revenue will come from innovations that are the result of new cross-industry value experiences.

- Gartner has also observed that by 2017, 15 per cent of consumers will respond to context-aware offers based on their individual demographics and shopper profiles.

- By 2015, 80 percent of life science organizations will be crushed by elements of big data, exposing poor ROI on IT investments.

Harris-Ferrante believes the necessity to adopt digital business models transcends all industry verticals, and its diverse impacts are creating business opportunities that were not possible in the past and therefore enterprises must respond immediately in order to build the right business and IT road map for future market demands.