Preparing for the technological changes ahead will be the biggest hurdle for leaders and businesses in 2017, according to Constellation Research.

Digital transformation became a hot topic in 2016, and companies soon learned that investing in such projects was more than a just one-time initiatives, according to the organization’s new report. With this in mind, Constellation expects digital transformation to remain a priority for business leaders throughout 2017, and budgets to increase as a result.

“We’re going to see greater budgets and more understanding by boards and CxO’s that [digital transformation] is more than a one time project. This is a longer-term commitment,” R. “Ray” Wang, founder, chair, and principal analyst at Constellation Research and the report’s author, told ITBusiness.ca.

The report found that 61 per cent of Global 2000 companies invested in digital transformation in 2016, and that 73 per cent of CxO’s expect to increase their transformation budgets in 2017.

It also discovered that 87 per cent of projects had a data component, something it notes is “fundamentally important” to any business looking to be prosperous in the new year.

“Conversations with digital leaders reveal that teams need higher data proficiency in order to succeed,” the report explained. “From identifying correlation to testing for causation, leaders must democratize skill sets for data proficiency.”

In pursuing digital transformation, businesses have become aware that combining technology and data – for example, with Internet of Things (IoT) devices or artificial intelligence (AI) – can accelerate the process, with Wang’s report suggesting that companies attempt to “achieve a level of automation and ultimately some level of machine learning and AI.”

“Organizations must build a data foundation that enables neural networks to self-learn and provide predictive and preventative capabilities that eventually will lead to automatic situational awareness,” he added.

Wang identified AI as the biggest disruptor in 2017, pointing to a blog post he published in November on the topic.

“Organizations can expect AI-driven smart services to impact future of workflows, IoT services, customer experience journeys, and blockchain-distributed ledgers,” he wrote on Nov. 28. But once companies master the technology, AI can be used to “orchestrate, automate, and deliver mass personalization at scale”, he added.

Upcoming challenges and how to avoid them

However, Wang pointed to internal governance and how organizations prepare themselves for these changes as the biggest challenges leaders face as they begin 2017. To successfully shift towards greater digitization, he and Constellation Research offered five recommendations for businesses:

  • Answering the hard questions – organizations need to identify a mission and goal they want to achieve, and should pinpoint what experiences they want to deliver to consumers.
  • Left vs. right brain – organizations need innovation from multiple disciplines and should find a balance by employing both scientists and engineers along with artists and designers.
  • Starting from the bottom – a brand needs to develop a core business model first before figuring out the people, technology and process to support it.
  • Follow your brain, not your gut – data is the foundation of successful digital businesses and using that information flow to make informed decisions is key.
  • Partner up – companies can’t do everything alone, and finding partners to co-innovate and co-create everything from content and products to services and experiences will be necessary in our ever-evolving digital world.
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