It’s that time of year when the analysts, researchers and pundits “look behind to look ahead,” so let’s assess the impact of digital transformation in 2017 and forecast the trends for 2018 and beyond. One message is clear: There will be no opportunity for companies to take a breather from their transformation initiatives, and no leniency—only punishment—for companies that fail to get started and defend their markets—and their customers.
This blunt, collective assessment is best summarized by Forrester Research, in its Predictions 2018, A Year of Reckoning: “2018 dynamics will favor those taking aggressive action, and create existential risk for those still holding on the old ways of doing business.” Forrester went on to suggest “…executives need to move past incremental approaches and make sweeping changes.”
Indeed, according to the Gartner Group, even the most aggressive disruptors will not be immune from the need for continuous innovation. Gartner predicts that “by 2020, five of the top seven digital giants (such as Amazon, Apple, Facebook and Google) will willfully self-disrupt to create their next leadership opportunity.” The premise here is that “the giants have grown so large, it is difficult to find new external areas to disrupt, so these enterprises will turn to self-disruption…to create new opportunities.”
Technology raises the stakes for talent
Ushering in 2018 are a maturing raft of technologies that are enabling disruptors to succeed in new markets, quicker, and with new refined, operationally efficient business models. Gartner observed “The continued evolution of digital innovation has resulted in seemingly endless options and technologies available for companies…” Leading the charge in technology innovation are artificial intelligence, intelligent bots, agents, more sophisticated algorithms, security, cloud services, blockchain and cryptocurrencies and IoT connected devices.
These innovations have raised the stakes for talent, especially “data scientists, security analysts, high-end software developers and experience designers that are critical to digital transformation,” according to Forrester. Companies with more refined digital strategies will be more effective at recruiting and retaining this talent than the laggards.
Real business implications
The war for customers and market share waged in recent years through digital innovation will only intensify in 2018 and beyond. Forrester predicted that customer expectations will outpace most companies’ ability to evolve customer experiences (CX), and that “deferred transformation” from prior years will require top executives and CEOs to intervene in 2018 and make CX an internal cultural priority—and a significant customer-facing investment—if they want to succeed. As additional incentive for CEOs to act, IDC anticipates investors will determine 75 percent of enterprise value from digital engagement metrics, assets and capabilities by 2020.
Technology will further complicate and challenge the role of the CMO in 2018. Traditional advertising will continue its pause, putting more pressure on the media industry while marketers wrestle with the complex issues of how intelligent bots and algorithms are having a greater influence over brand preference and purchasing decisions. Alarmingly, much of this is currently out of marketer’s control, and that can be troubling. Marketers will revisit their marcom platforms and processes to energize their brands. In many cases CMOs will initially be forced to play defense, concentrating on reducing customer churn and building loyalty as opposed to acquisition.
Winners and losers
Unfortunately, the digital disruption business is a game of hardball. Players will quickly understand that while widely available technologies have the potential to put companies on a level playing field, a lack of will, investment, vision and the inability to define and execute strategies will quickly separate winners from losers. IDC forecasts that DX (digital transformation) spending will reach $1.7 trillion worldwide, a 42-percent increase from 2017, but at the same time cautions that “while we are seeing more companies becoming more digitally capable, there is a widening gap between leaders and laggards, with significant implications for those organizations that cannot make the transition to a digital-native organization.”
All of this adds up to what is expected to be an energizing and pivotal year in terms of digital innovation, disruption and the distance between market leaders and slowpokes. What could be more exciting? We look forward to ringing it in with you in 2018.