While 2016 is shaping up to be the banner year for digital transformation (DX) to take root in many New Zealand organisations, IDC expects innovation accelerators to speed up the transformation in the years to come.
IDC New Zealand’s Futurescapes (top predictions) report says these accelerators are the Internet of Things, cognitive computing, robotics, 3D printing, augmented/virtual reality and next generation security.
IDC says organisations are now moving from the foundation stage of the third platform (the new era of IT built on mobile devices, cloud services, social networks and big data analytics) to mainstream adoption.
“With most organisations now utilising third platform technologies to drive the digital transformation of their organisation, the industry finds itself at an inflection point – those organisations who can rapidly scale their digital transformation efforts by leveraging 3rd Platform technologies will be the thrivers in the digital economy,” reports IDC.
In 2016, and over the next three to five years, IDC predicts enterprises will "flip the switch”, committing to a massive new scale of DX and 3rd Platform adoption, to stake out leadership positions in the DX economy.
"Adapting to DX and embracing the change will be difficult, defining DX alone is not easy. Most projects involve transforming the experience but little attention is being paid on other dimensions such as information governance, which can lead to disillusionment on the benefits of DX,” says Shane Minogue, senior telecommunications analyst with IDC NZ and one of the report authors.
"However, as challenging as this transition will be, the cost of ignoring this change is far higher. The sweeping changes about to take place have been compared to an avalanche. If you try to react when the change is already surrounding you, it will be too late. In order to be in the best shape possible, preparations and changes must be made now."
IDC's predictions for the fast-evolving ICT sector for the next three to five years are:
One: The importance of digital transformation (DX)
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By the end of 2017, 60 per cent of NZ enterprises will have digital transformation at the centre of their corporate strategy. “Those companies that do not initiate a digital transformation procedure will find themselves struggling to respond to changing market demands and find it difficult to stay profitable,” reports IDC.
IDC says the CEO must understand that being a technology company takes more than bold statements. Any DX strategy must be supported by a willingness to make big bets, publicly fail, and leverage the entire value chain in an incremental way.
Two: Customer intimacy at scale
By 2018, 80 per cent of B2C and 60 per cent of B2B organisations will overhaul their “digital front door” to support 1,000 to 10,000 times as many customers/customer interactions as they do today
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Those companies that do not initiate a digital transformation procedure will find themselves struggling to respond to changing market demands and find it difficult to stay profitable, says IDC.
Three: Security and risk management
By 2016, 50 per cent of IT organisations will shift their focus to advanced "contain and control" security and away from a perimeter mentality
Risk assessment drives security, so this must be a priority for CEOs and their boards, says IDC.
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It advises enterprises to make security a "compliance" requirement for all employees
“Establish security as a holistic and complementary practice across business, information, application, and technology domains,” IDC advises. “A comprehensive security architecture should include and blend activities across all these domains to provide targeted, consistent, and effective solutions.”
Four: IoT becomes a strategic imperative to drive growth
IDC predicts by 2018 there will be 22 million connected things in NZ growing from 15 million today.
This year, expect to see a new focus for IoT in New Zealand – humans, says IDC. "Organisations are starting to recognise the importance of the human aspects of IoT. Line of business will get more involved, the customer experience will be brought in and a focus on leadership to bring cultural change will be integral to success and ROI.”
Five: Adoption of fibre accelerates
By the end of 2016, there will be 300,000 fibre connections in New Zealand. Remote working will increase as employees will have sufficient broadband speeds at home to work, says IDC. Customer interaction will increase as online channels will increasingly be used to connect with the market and customers.
Ensure that IT has a seat at the table when projects to train and curate content needed to train cognitive computing systems are launched.
Six: Enterprise will embrace biometrics
By 2017, a third of enterprises will begin using smartphone biometrics for employee authentication. Many companies have already embraced some forms of biometric technology, says IDC.
It cites the introduction last year by Air New Zealand of the world’s first biometric bag drop. Banks and government agencies have likewise implemented voice recognition for a number of years.
Seven: Unified communications as a Service (UCaaS) will gain significant traction
By 2017, UCaaS will account for 60 per cent of UC&C implementations in New Zealand, says IDC.
The rise of UCaaS will contribute to shifting UC&C adoption drivers as enterprises start investing in UC&C, not to reduce costs, but rather to enable new applications and solve business process and collaboration challenges, says IDC.
Eight: Cognitive systems will be key
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IDC predicts by By 2020, 40 per cent of all business analytics software will incorporate prescriptive analytics built on cognitive computing functionality
The use of cognitive computing systems will uncover new insights but also shed light on data in ways that may expose new data privacy and access issues, it says.
“Ensure that IT has a seat at the table when projects to train and curate content needed to train cognitive computing systems are launched.”
Nine: Augmented reality will disrupt
Purpose built augmented reality devices will grow from 100,000 units worldwide in 2015 to more than 7.5 million units in 2017 and will impact key verticals in New Zealand, says IDC.
“It’s predicted that augmented reality has the potential to change how we utilise financial services in New Zealand,” says IDC. Westpac New Zealand, for example, released one of the first banking applications based on augmented reality, allowing its customers to manage their accounts using 3D imagery.
"CIOs need to stay on top of advances in AR that impact their company's field."
IDC believes categories such as healthcare, design, architecture, military, and logistics are likely to be among the first to be impacted.
Ten: Transform or perish
By 2018, 35 per cent of IT resources will be spent to support the creation of new digital revenue streams.
“IT must change its mindset and strategy from cost reduction to revenue generation. IT must go beyond its ‘firewall’ to source opportunities from partnerships, mergers and acquisitions and open innovation platforms,” says IDC.
“A strategy for digital is now a must have, not a nice to have,” concludes Minogue. “Business leaders must be willing to take gambles and disrupt the future of their own industry by shaping behaviour, being proactive rather than reactive."
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