2017 IT Priorities – Challenges Remain in the Push to Digital Transformation

Blog /2017-IT-Priorities-Challenges-Remain-in-Push-to-Digital-Transformation

Every business is unique. Each must prepare an annual tech budget that aligns with specific business requirements and growth goals. Nonetheless, it is helpful to know what other businesses are doing around the globe and, especially, within your industry.

In this spirit, we’ve pulled together a quick roundup of analyst predictions for U.S and global tech spending in 2017:

  • Tech spending in the U.S. is expected to increase by 5.1% to $1.51 trillion in 2017 (as reported by SiliconAngle).
  • Global IT spending is forecasted to rise 2.9% to $3.5 trillion in 2017, up from an estimated $3.4 trillion this year (as reported in WSJ).
  • Worldwide IT spending will grow from $2.46 trillion in 2015 to more than $2.8 trillion in 2019. North America will provide the largest share of global IT spending throughout the 2015–2019 forecast period and is forecast by IDC to pass the $1 trillion mark in 2017 (as reported by ZDNet).

Digital transformation hits inflection point in 2017

Customer centricity is the guiding principle of digital transformation. Cloud, mobile, big-data analytics, social and IoT are the myriad, integrated and rapidly evolving technologies that enable digital transformation. Fear of death-by-disruption is digital transformation’s key driver.

What began on the edges as “shadow IT” projects led by LOB heads now impacts core business processes and has been embraced by the C-suite as a strategic business imperative.

The consensus among leading analyst firms is that digital transformation will reach an inflection point in 2017.

According to analyst predictions for 2017 (as reported by ZDNet):

  • Digital transformation will tip from experiences to operations.
  • Transformation budgets will edge up into the billions.
  • Brands will finally build holistic customer experiences that transcend touchpoints.

Top-ten worldwide IT industry predictions for 2017 and beyond (as reported in Forbes) center on digital initiatives:

  • By 2020, 50% of the Global 2000 will see the majority of their business depend on their ability to create digitally enhanced products, services and experiences. (#1)
  • By 2019, 3rd Platform technologies and services will drive nearly 75% of IT spending – growing at twice the rate of the total IT market. (#2)
  • By 2020, 67% of all enterprise IT infrastructure and software spending will be for cloud-based offerings. (#3)
  • By the end of 2017, over 70% of the Global 500 will have dedicated digital transformation/innovation teams. (#7)
  • By 2020, all enterprises' performance will be measured by a demanding new set of DX-driven benchmarks, requiring 20-100% or better business performance. (#9)

Digital dominates Gartner’s Top 10 Strategic Technology Trends for 2017 (as reported in InformationWeek):

  • AI and Machine Learning (#1)
  • Intelligent Apps (#2)
  • Intelligent Things (#3)
  • Virtual and Augmented Reality (#4)
  • Digital Twin (#5)
  • Digital Technology Platforms (#9)

Businesses are struggling to realize the digital dream

A recent report from The Economist Intelligence Unit (EIU), sponsored by SAP, showed survey results designed to gauge satisfaction with digital initiatives among SMEs ($250M – $1B ) versus larger enterprises ($1B+). Even though the majority of all companies surveyed ranked their digital initiatives as a relatively high or the highest strategic priority (SMEs 67%/LEs 80%), only a relatively small percentage ranked their digital initiative as being highly effective (SMEs 21%/LEs 29%).

Two-thirds of Global 2000 CEOs will center their business strategies on digital transformation by the end of 2017, according to IDC. But few business executives today have the leadership mindset or skills necessary for these strategies to succeed, according to the Leaders 2020 study conducted recently by SAP, Oxford Economics and McChrystal Group. The study found that only 16% of executives are ready to lead their companies through this transformation.

Help in reaping SAP digital fruit

Only 37% of companies represented have begun implementing a digital transformation strategy, according to a survey of SAP customers conducted by ASUG over a two-month period, from April through June 2016, that drew 788 respondents from a wide variety of industries, company sizes and organizational roles. 50% are actively planning or have completed planning a digital transformation strategy and 13% have yet to start formulating a digital transformation strategy.

When asked about the SAP technologies that would best help their digital transformation, 52% of the 458 respondents chose SAP S/4HANA. SAP's line-of-business cloud applications — including Ariba, Concur, Fieldglass, Hybris and SuccessFactors — were a distant second, at 13%, followed by HANA Analytics at 9%, HANA Database/BW on HANA and HANA Cloud Platform both at 8%, and HANA Vora at 1%. 

As we enter 2017, businesses across industries understand that the piecemeal edge innovations of past years won't pass muster and that the core business processes that drive operations must be completely re-imagined — from the consumer to the core — if they are to remain relevant and viable in today's digital economy.

As a growing number of companies transition from planning to implementation and/or from one-off projects to an enterprise-wide strategy, the need grows for a consulting partner with the experience, resources and approach to ensure success.

At NTT DATA, we anticipate a strong demand in 2017 (and beyond) for consulting partners with the experience, skills and guidance capabilities needed to close the gaps between tactics and strategy and expectations and results when it comes to digital initiatives.

Contact NTT DATA today to learn more about how our focus on Enterprise-Grade Digital Business can help your organization survive and thrive in the digital age.

Post Date: 12/14/2016

Tim Clark - NTT DATA Tim Clark

About the author

Tim is a Vice-President with NTT DATA with responsibility for SAP Consulting and the global HANA COE. He has 20+ years of experience in the SAP space with a focus on leading large scale global transformation programs and outsourcing engagements. He has worked across 30+ countries and a variety of industries, including Wholesale Distribution, Semiconductors, Building Materials, Consumer Products and Oil Field Services. Previously, Tim was a Vice-President at Neoris/CEMEX and a Partner at Accenture.