Why Businesses Should Prepare for Increased Digital Innovation
The global economy is becoming digital. Statista forecasts that 65 percent of the world’s GDP will be digitalized by 2022. In a recent IDC analysis and report, it is predicted that by 2025, a quarter of the Fortune 500 will need to become software producers to maintain their Fortune 500 status. Digital innovation is the next normal in the business world.
What are the top digital innovations
Here are the top digital innovations transforming businesses today.
1. Cloud
Thanks to cloud-based services, many companies managed to remain operational in the past year despite the threat of the COVID-19 pandemic. In 2020, according to VentureBeat, cloud spending had grown to one third higher than the year before, jumping from $107 billion to $147 billion.
Cloud makes work scalable and enables remote collaboration, efficient transfer of information, and business continuity. Many organizations have started to transition from onsite solutions and investment in hardware to the more easily-maintained and accessible cloud services. Storage, virtual workspaces, hybrid cloud, infrastructure, and data crunching — these are a few examples of how businesses will be able to leverage cloud solutions and position themselves for greater flexibility and innovation.
2. Blockchain
The solutions that blockchain presents have huge potential to transform the way we do business. First, blockchain gives organizations the capability to digitize complex and sensitive information more efficiently. The second key benefit is transparency–no change can be made without a record of alteration.
Forbes lists the top organizations that are transforming business through innovation with blockchain. The list goes beyond applications in finance. Blockchain-enabled innovations include tracking of product lines for supermarkets, digitizing supply chain information, virtual litigation, an air traffic control system, and fundraising.
3. Automation
Companies have been forced to find new ways to deliver services. The COVID crisis has required the world to reduce human interaction significantly. Time quotes University of Oxford economics fellow Daniel Susskind, describing this development: “This pandemic has created a very strong incentive to automate the work of human beings.”
It is a sad reality for many workers, and it goes to show that businesses worldwide are evolving. Automation is not just an innovation, but a necessity. In the past year, we’ve seen machines and AI take over tasks such as cleaning, manufacturing, dining services, and basic customer service. Within the next few years, companies will be moving towards reducing the complexity and cost of standard processes and replacing them with automation and AI.
4. Cybersecurity
As businesses struggle to stay afloat amid the difficulties brought about by the pandemic, cyber criminals have taken advantage of the situation while companies are vulnerable. Organizations all over the world have had to shift to remote work almost overnight, and entire workplaces have had to transition to virtual environments and interactions. According to PR Newswire, the FBI had reported that they were getting up to 4,000 cyberattack complaints per day. Compared to pre-COVID numbers, that’s a 400 percent increase.
Apart from the potential vulnerabilities in remote work and virtual environments, more and more companies are also investing in more tech services and software. As businesses digitally transform, their cybersecurity needs will increase significantly. Forbes reports that in an IDG Research Services survey, 80 percent of IT leaders believed that their companies lack sufficient protection against attacks. Without clear and solid measures in place, companies could be struggling to stay competitive.
5. Digital ecosystems
Building digital ecosystems position companies to scale and rapidly enable their products and services to evolve. A digital ecosystem is a network of solutions, products, and services, including suppliers, customers, and strategic partners. Think Amazon, Apple, and Google –the wide variety of products and all the integrated services they’re able to make available for their customers.
On the potential of digital ecosystems, McKinsey states” “Most global companies are now actively considering the ecosystem business model given its value-generation potential: growing the core business, expanding the network and portfolio, and generating revenues from new products and services.”
How can you prepare for digital innovation
Develop organizational agility.
Digital innovation starts not with upgrades in your product or in larger investments in software. Your entire organization will need to learn to be agile. Agile is not just methodology, but should be part of the organization’s culture. Start creating a culture of flexibility and adaptability. Enable your teams to develop sensitivity to market needs and encourage innovation.
Revamp your IT. This is the potentially painful part of your organization’s repositioning to a more digitally innovative business. Legacy tools, IT organization, infrastructure, workflows, security, and so much more–the entire system, including the people running it, needs to be rethought. Be strategic with the investments you make and ensure that your solutions in place are not short-lived patches, but real business-driven decisions.
Be data-driven. As companies expand, so do their data requirements. It would be impossible to innovate without data. Data empowers your organization to make better decisions. While this certainly means providing your teams with access to better tools, it’s also about making data a part of your culture and processes.
Invest in upskilling. Digital transformation comes with major changes for the company and for employees themselves. Your organization–its people–will need time to adopt change. And despite all the investments you make in sophisticated technology, without the right mindset, culture, and skills, you’ll be far from where you want to go. This may mean providing training, but it could also mean changing the way you hire or manage talent.
The next normal in business
The next normal could be drastically different from what your organization understood three to five years ago. We’ve seen a lot of changes in the business world in the past 12 months compared to what it had undergone the last couple of years. And although at some point the threat of the pandemic will fade, business is not sliding back to its previous state. Companies are all the more expected to accelerate growth. Many have started to sense the necessity of agility and resourcefulness, but it does take a lot of work and investment. Start thinking about how you might want to position your company better to prepare for sustainable growth and digital innovation.
