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On the malice of the day
23.03.2021

Digital Transformation Trends Coming Up in 2021

At the beginning of each year, global analytical firms publish forecasts on IT industry trends for the next 12 months. These days, such forecasts seem especially fascinating, since the year 2020 has changed so many things in our lives and introduced an element of surprise. Today, let's look at what IDC analysts envisage for 2021 in terms of digitalization*. (Spoiler alert: budgets on the digital transformation of business practices, products, and organizations will keep growing steadily, defying the challenges that arise from the Covid-19 pandemic.)

The key point here is that companies must and will invest in digital transformation, otherwise, they will merely be unable to survive.

It may sound like an exaggeration, but specific digitalization reforms with specific measurable returns exist in most industries. Yet a close look at digital initiatives around the world shows that most companies are still focused on process automation and efficiency, while just a few of them dare to overhaul their business model. This is fair: not every company is mature enough to embrace dramatic change.

Companies that have already gone digital are more efficient and their investment has already started paying off.  IDC predicts that in 2021, digitalized enterprises will adapt to disruptions and start offering new services 50% faster than those staying at the same business and IT maturity level. *

Companies that have gone digital expect their partners to follow suit. Interaction between digitalized companies will be transparent, clear, and predictable. According to IDC, by 2024, 80% of enterprises will reinvent their relationships with suppliers and partners to better execute digital strategies. *

The cloud services market is growing, promising a higher revenue

The cloud is becoming a new revenue focus for commercial companies. It can be used to host many services such as training, consulting, implementation, migration, support, and managed services. Cloud providers may expect to triple their core revenue this year.

Businesses that have had no time yet to move to the cloud, will rush to catch up. The pandemic has taught them a good lesson. IDC analysts believe that compared to pre-pandemic times, 80% of enterprises will double their efforts to migrate to cloud infrastructure and applications by the end of 2021. *

Brand-new on-premises IT systems will become pretty rare. There must be a very special reason to reject the simple, convenient and inexpensive cloud model.  IDC's research suggests that "by 2023, cloud infrastructure will become the underlying platform for all IT and business automation initiatives anywhere and in most industries."*

The attitude to IT products and reasons to buy them will become very different (there are almost none left).

Using a product make more sense than purchasing it. In the digital economy, companies make money by selling access to products rather than property rights. This means that business customers will be increasingly reluctant to buy anything from you; they would rather pay a fixed charge for occasional access to products. 

The flexible consumption model provides predictable recurrent revenue streams, and benefits end users greatly by offering them pay-as-you-go plans, which helps customers get a better idea of their consumption patterns and reduce operating costs. It also relieves customers from ownership risks so they can focus on relevant needs and capabilities instead of the product lifecycle. 

Flexible consumption is an attractive model that is not very easy to adopt. While many IT companies are already including flexible subscription plans to their "as-a-service" offerings, this calls for a profound revision of business operations and philosophy, which is sometimes a fairly long shot.

Artificial Intelligence: the hottest buzzword now

More and more companies are trying to power their products and services with AI. What prerogatives can be delegated to a robot is still a big question, yet opinion polls around the world show that people tend to have more trust in computers than in fellow humans. AI technology still remains one of the most likely world-changers of the future.

At the same time (albeit with a huge delay), AI solutions are being developed to analyze the enormous amount of medical data on treatment of cancer as well as cardiovascular, brain and other diseases.

IDC analysts claim that by 2023, a quarter of G2000 companies will have acquired at least one AI startup to ensure ownership of relevant skills and knowledge. *

Technical debt is to be settled

During the crisis months of 2020, many companies have frozen their IT development budgets. Now they need to make up for the lost time. An IDC survey shows that the "technical debt" accumulated during the pandemic worries 70% of CIOs. **

How does such debt arise? IT system development is always a controversial issue. The more sophisticated a system is, the more needs its users seem to have. But it costs money and time to meet these needs, especially in lean times when companies have to tighten their belts. What if you lay low, save money, and just keep relying on existing resources? After a year and a half, it becomes clear that unresolved problems have piled up and started impairing your business processes and interaction with partners. 

Such deferral may be sensible when you just need to stay afloat by any means. But in year 2021 short-term solutions will have to be replaced by long-term ones. Whoever incurs technical debt should realize that it will need to be redeemed one day.

Hybrid human resources

Distributed project-specific teams will become the norm. In such teams, local and remote employees, staff, and freelancers work side-by-side.

An IDC survey shows that by 2023, 75+% of G2000 companies expect to have access to a hybrid workforce capable of productive collaboration in real time. *

It is not yet clear what could this exactly look like. In any case, companies could obviously benefit from keeping something like a list of freelancers with data on their qualifications, expertise, fees and so on. These people will probably work as independent contractors providing specific services to businesses, without being tied to any particular organization. 

Previously, companies could boast of hiring “rare" experts and talent as a business advantage. Today, the winner is the first one to assemble the best team for a project.

In addition, freelancers will start building cohesive teams on their own to offer services directly to companies.

Accelerated investments in digital transformation creates a kind of "economic gravity force".

The economy remains on course to its digital destiny, with 65% of global GDP digitalized by 2022 and will drive over $6.8 trillion of direct DX investments from 2020 to 2023, IDC notes. ** 

International business giants will become even bigger, developing new areas of service and production by merging with hundreds of other companies and attracting the best and the brightest from the whole world. The market will extend a warm welcome to startups providing new digital services. Definitely in the spotlight today, they seem deemed to be successful.

The role of the partner ecosystem will grow

The number of offers on the IT market is constantly increasing, especially in trendy areas such as artificial intelligence or big data analytics. In each category, the market offers a great variety of products and services, which makes informed choice a daunting task calling for a great amount of knowledge and experience.

In addition, existing it systems often need to be adapted and enhanced to accommodate new digital solutions, and it is often necessary to make sure that solutions from different vendor work well together.

These challenges can be addressed by the right partners with a sufficiently broad range of competencies and resources. To guarantee project success, a partner needs to learn both from errors and achievements, and have extensive hand-on experience in the implementation of sophisticated solutions in various industries. Also, IT partners constantly receive training from vendors who are increasingly investing in their professional development.

I am confident the growing role of the partner ecosystem is a trend that is here to stay. All factors are in favor of partners: customers (end-users) and vendors of digital products and solutions need them more and more.

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