Digital Transformation: Future of Enterprises | Predictions | Challenges

Digital Transformation will Lead the Future of Enterprises. Why does digital transformation lead the future of enterprises? Take a manufacturing enterprise as an example. Its business scope presents a pyramid structure.

  • The top level is intelligent decision-making, emphasizing the realization of decision-making model innovation;
  • the second level is intelligent R&D, intelligent management, and intelligent logistics, emphasizing the realization of operating model innovation;
  • the third level is intelligence Production lines, smart workshops, and smart factories emphasize the realization of production model innovation;
  • the fourth layer is smart equipment, smart products, and smart services, and the realization of product service innovation is emphasized;
  • the fifth layer is data mining and analysis services, investment and financing services, and emphasizes Profit model innovation.

5 Major Aspects of Digital Transformation.

These five innovations correspond to the five major aspects of digital transformation.

  1. The first is leadership transformation. Digital transformation must be business transformation, and business transformation requires the participation and decision-making of the “top leader”.
  2. The second is the transformation of the operating model.
  3. The third is the transformation of work resources, which requires the integration of external resources.
  4. The fourth is all-round experience transformation. Need to meet the individual needs of users and improve user experience.
  5. The fifth is information and data transformation. Information and data will directly generate revenue in the future.

Digital Transformation is a Ten-year Journey.

Digital transformation is a ten-year journey. It has four major stages. 2017 is the stage of digital stalemate, 59% of global organizations are in the second to third stages of digital transformation; in 2020, digitalization is basically achieved, and 50% of technology expenditures are related to information and data; 2022 is the stage of innovation realization, with 80% of Sales growth comes from digitalized products and services; 2027 is the stage of comprehensive digital transformation, and 75% of organizations have realized all-round digital transformation.

The Top 10 Predictions of Global Digital Transformation 2018 to 2021.

The top ten predictions of digital transformation in 2018 are DX investment.

  1. By the end of 2019, global digital transformation (DX) expenditures are expected to reach US$1.7 trillion, an increase of 42% compared to 2017.
  2. The second is the future of business. By 2019, all institutions that realize digital transformation will use the “Future of Business” business model to achieve at least 45% of their revenue. The third is the DX success criterion.
  3. Also, by 2020, investors will treat digital businesses differently. The specific evaluation criteria are based on platform participation, data value and customer contact, occupying more than 75% of the corporate evaluation weight. The fourth is DX leadership.
  4. By the end of 2018, at least 40% of institutions will have a complete digital leadership team (rather than a single DX executive leader) to accelerate the digital transformation process across the enterprise.
  5. The fifth is digital assistants. By 2019, although personal digital assistants (PDAs) and robots will only perform 1% of the transaction business, they will affect 10% of the transaction business, and institutions that master their use skills will achieve accelerated growth.
  6. Sixth is data focus. By 2020, in more than half of the global top 2000s, the growth rate of revenue from information products and services will be twice that of the product/service portfolio.
  7. Seventh is DX talents. By 2021, 85% of new operational technical positions will be recruited for analysis and artificial intelligence skills screening, so that there is no need to hire additional data talents when developing data-centric DX projects.
  8. Eighth is DX skills. By 2021, 25% of the global top 2000 companies will complete the development of digital training and collaboration projects, so as to maintain higher competitive efficiency in the battle for talent.
  9. The ninth is cognitive/artificial intelligence. By 2019, 40% of DX projects will be supported by cognitive/artificial intelligence technology, so as to provide in-depth insights into the latest operation and monetization models in a timely manner.
  10. Ten is the DX platform. By 2021, the proportion of institutions that deploy and implement digital platform strategies will reach 60%.

Investment in Digital Transformation

Regarding investment in digital transformation, the digital economy will account for half of the country in the future, and transformation expenditures will grow rapidly. In 2021, the global digital economy will reach US$45 trillion, accounting for 50% of the global economy, while China’s digital economy will reach US$8.5 trillion, accounting for 55% of the global economy. Currently, according to official figures, China’s digital economy accounts for at least 30%, and this digital economy is mainly composed of two major parts.

  • First, the added value generated by companies such as IT, communications, and the Internet forms part of the digital economy, and this proportion does not exceed 10%.
  • The second is the added value of traditional industries and enterprises that combine information technology with business and products.

For example, if traditional home appliance companies apply technologies such as the Internet of Things and cloud computing to their products, this product is a digital product, and the sales revenue and added value generated fall within the scope of the digital economy.

Therefore, the digital economy generated by traditional industries and enterprises will account for 30% to 40%. Future products and services will definitely be closely related to digitalization and information technology, and IT will also transform from a support and tool role to a leading role.

Future of Business Model led by DNE

Regarding the future of business, the new business model led by DNE has become the mainstream. The business model during this period from 1990 to 2012 was mainly e-commerce, that is, online sales of products and services. The business model at this stage from 2012 to 2018 is digital commerce, that is, the value exchange supported by the 3rd platform and IA technology, and new technologies such as cloud computing, big data, and mobile social networking support the digitization of the entire enterprise business.

The third stage is future business, which is a future business model that meets needs, including personalized customized products and services; usage-based sharing models, such as shared bicycles, cars, etc.; information and data-based products and services, such as data monetization; users Community-participated business models, such as group buying, crowdfunding, advertising, etc.; output-based pricing models, such as advertising effect sharing; risk-return-based shared business models, such as contract energy management.

Regarding Data Focus, Information-based Products and Services will Prevail

According to IDC forecasts, by 2020, in more than half of the Global 2000, revenue from information-based products and services will increase twice as much as other products and services.

Regarding the DX platform, the importance of the digital platform has become increasingly prominent. Tomorrow’s enterprises must build a platform for digital transformation. This platform will center on intelligence and be a modern core IT in a hybrid cloud approach.

Enterprises have their own private cloud, and user-related data will be stored in the hybrid cloud. Around this core, with the data center as the main line, this main line can generate insights internally, smooth the business process of the entire enterprise, improve efficiency, and reduce costs; external actions can be generated to integrate with the ecosystem and users.

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To establish a digital transformation platform, two major functions need to be fully considered. One is to have integrated service functions. IT construction will definitely involve the integration of new and old systems. How to integrate different systems requires consideration of the functions of platform integration services. The second is the development service function.

Large enterprises often need to micro-service their services. Only with developers can the ecosystem be built more comprehensively, the system becomes more dependent, and the innovation of the entire enterprise can be better supported. According to IDC forecasts, by 2020, the proportion of institutions that deploy and implement digital platform strategies will reach 60%.

The Five Major Challenges Facing Digital Transformation

If digital transformation is divided into five stages, most organizations in the world are in the second and third stalemate stage, while organizations in the fourth and fifth stages do not exceed 25% of the world.

5 Challenges of Future Digital Transformation

In general, the future digital transformation will face five major challenges.

  1. The first is the outdated assessment system. Digital enterprises need new metrics (KPIs) to understand progress and guide investment. If the assessment system remains unchanged, it is difficult for companies to achieve digital transformation.
  2. The second is the isolated organizational structure, lack of coordination capabilities across business departments, the company’s potential cannot be maximized, and the speed of change is also limited.
  3. The third is short-sighted tactical planning. The company lacks a clear strategic transformation and investment roadmap.
  4. The fourth is limited experience and skills. Digitization determines a new set of capabilities that companies are difficult to cultivate.
  5. The fifth is insufficient innovation collaboration.

There are too many initiatives and too many technology providers. Organizations must focus on digital platforms to optimize resources and innovate faster.

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