ISG Provider Lens™ Digital Business – Solutions and Service Partners Archetype Report 2020
A Decade of Revolutionizing Businesses using Digital Transformation is Paving the Way for New Partnerships and Hyper-Personalized Services in 2020
With the availability of digital technologies that can be innovatively leveraged and hyper-personalized to the needs of users, enterprises are trying to determine ways in which they can reap profitability and ensure return on investment (ROI). Digital technologies have multiplied the possibility of such opportunities. Concurrently, enterprises are focused on addressing the challenges hindering the adoption of these technologies and on improving productivity or adding new revenue streams or enhancing customer experience. With the adoption of “digital” at its peak now, some observers might call this a “post-digital” era; in the last decade, we have seen significant changes in the digital paradigm almost every year.
At the beginning of this decade, digital transformation was focused around four technologies, namely, social, mobile, analytics and cloud (SMAC), with most of the deals in 2011 focused around one or more of these four technologies. The subsequent year, 2012, saw the emergence of mobile apps targeted to improve customer experience, and an increase in adoption of bring your own device (BYOD) policy in workplaces. This year also saw a focus on millennials; organizations targeted this consumer segment and workspaces were re-aligned to the needs of this population group. Also, enterprises began to leverage big data and analytics to optimize operations. Together with this, enterprises recognized the importance of social media in driving perception of service quality or customer experience.
The following year, 2013, saw an increase in use of smartphones and mobile apps. In addition, there was growth in platform-oriented businesses that integrated the digital and physical realms to provide services to consumers. Also, the year witnessed an increase in adoption of cloud and data analytics and the onset of Internet of Things (IoT) adoption in enterprises. The adoption of these technologies only increased in 2014 and paved the way for smart machines and omni-channel services. Wearables saw the light of the day with end users adopting Google Glass. Concurrently, enterprises began leveraging advanced analytics technologies such as cognitive analytics to make smart business decisions. With the availability of data and digital technologies, gamification became a mainstay for industries such as healthcare and education.
In 2015, there was an increase in adoption of analytics to provide personalized services to customers. At the same time, enterprises began using robotics and 3D printing. The integration of business units with IT became imperative. Several companies prioritized the “platform economy” approach, which increased the scope of services offered to customers. This approach was widely adopted in 2016, where enterprises began to use it for establishing additional revenue streams. Concurrently, automation was on the rise, where artificial intelligence (AI) and machine learning (ML) found increased adoption among enterprises. The adoption of virtual reality (VR) and augmented reality (AR) opened the door to conceiving experiences that could not be earlier imagined. IoT and cloud were leveraged across multiple industries, leading to a rise in use of smart machines across organizations.
Conversational AI was a big hit in 2017; many enterprises launched chatbots to manage customer expectations and as a first-level resolution channel. The emergence of chatbots, or intelligent assistants, enabled enterprises to focus on the establishment of a digital workforce to aid employee experience and implement technology that allowed flexible workplace structures. At the same time, the adoption of VR and AR increased with enterprises leveraging VR/AR for providing better customer experiences. In the meanwhile, the manufacturing industry leveraged the new concept of digital twin to improve the performance of systems. Blockchain was the buzz word of the year and many use cases were developed and deployed across industries.
The adoption of robotic process automation (RPA) increased in 2018, and AI/deep learning was adopted across enterprises to reduce the time required for end-to-end processes and realize cost benefits. Similarly, 3D printing and blockchain were used extensively by multiple industries. The use of intelligent devices was on the rise and many enterprises adopted the Application Program Interface (API) approach to integrate legacy systems with intelligent, digital applications. As data aggregation increased over a period of time, digital ethics and digital trust became important factors to address. The role of chief data officer (CDO) became necessary, in an enterprise, to manage data and use it to build additional service streams.
In 2019, with the increase in adoption of RPA, IoT and cloud, the use of autonomous devices increased. Autonomous drones, robots were implemented across enterprises to optimize operations. The year also witnessed an increase in use of blockchain across geographies, with maximum adoption across supply chains and in smart contracts. Concurrently, the use of advanced data analytics, alongside AI, across industries enabled enterprises to provide personalized services to end users. At the same time, low code and no-code applications have been on the rise and the use of agile, DevOps approaches is increasing to implement digital applications. AR, VR or mixed reality (MR) are being leveraged to create smart spaces. Digital ethics is beginning to get its due importance, particularly in the AI domain.
In the last 10 years, the use of different advanced technologies has resulted in many developments in the digital space. Some of these are considered mainstream and are providing quantifiable benefits to enterprises. In 2020, enterprises are expected to focus on “digital experiences,” either within an organization (for employees) or outside the organization (for customers). With big bets on AI, customer control over their data and appropriate platform strategy, enterprises will focus on hyper-personalized services by leveraging on a partnership-based approach to deliver digital services to customers.
As enterprises focus on determining the impact of digital transformation initiatives in terms of quantifiable revenue, enhance customer experiences or obtain operational benefits, they are seeking the best possible approach. There is much focus on experience platforms and personalized services to widen customer base. Most of the enterprises are focused on automation to optimize internal processes and improve operational dynamics. Leveraging AI to analyze customer data and providing customized services for a microsegment of customers is a major focus area for enterprises. In this context, providing these services within the ambit of regulations, by region, and in an ethical manner will be important for businesses. The adoption of IoT, cloud, analytics, AI and blockchain is likely to increase in the market. Service providers help enterprises in their platform strategy and the enterprises seek value from an implemented digital project. To realize the benefits of digital transformation, enterprises and service providers work in a partnership model to develop customized solutions. In such partnerships, they establish a joint center of excellence to develop cutting-edge digital solutions. In addition to such partnerships, enterprises are seeking partnership for hardware such as drones, AR/VR headsets and edge computing devices.
Service providers are helping enterprises undergo digital transformation by helping them through their proprietary platforms and by chalking out their digital transformation roadmap. In this process, the service providers are also upskilling and reskilling their workforce to focus on neo-skills. With the prevalence of the gig economy and an increase in millennials and Gen Z in the workforce, service providers are employing new techniques to hire and train workforce. Business agility and digital governance are increasingly becoming important to deliver digital projects. The API economy has opened numerous possibilities and service providers are integrating digital applications with the legacy systems of enterprises. New pricing models such as outcome-based pricing and risk-sharing/gain sharing are being used in digital deals to deliver holistic services and realize the benefits of digital transformation. The service providers are entering into partnerships with local providers, including hardware, software, infrastructure and network providers. The local expertise is of prime importance as aligning with cultural affinities is critical for the successful delivery of digital transformation projects. In addition, innovation centers are being set up by the service providers focused on developing applications that can be readily deployed by customers with minimal changes.
With turbulent macro-economic conditions across major economies worldwide, digital technologies will create opportunities for businesses across the globe. Therefore, 2020 will be the year of the customer, with hyper-personalization or hyper-automation being leveraged across most industries.