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Digital transformation trends in 2019 and beyond

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FINEX Folio -- Reynaldo C. Lugtu, Jr.

FINEX Folio

THE year 2018 has been marked by disruptions in the global market, evidenced by the growth of e-commerce platforms, fintechs, and start-ups that shake up traditional industries and businesses, especially the retail sector. Toys “R” Us closed its US stores in March, Nine West filed for bankruptcy in April, Sears, once the largest retailer in the world, filed for Chapter 11 bankruptcy protection on October, and a host of others. An all-time high of 16 US retailers have filed for bankruptcy or announced liquidations so far in 2018.

Asia and the Philippines are not spared from the scourge of disruptions. Many local retail brands are experiencing slowdown in business due to the growth of e-commerce. Ikea will be opening its largest store in the world by end of 2020 in the Mall of Asia Complex in Manila, with online sales capabilities and potentially its augmented reality-backed catalogue. This can potentially wipe out most of the local furniture manufacturers which are not keeping abreast with consumer preferences and technological advancements.

That’s why digital transformation as a strategic move is more urgent now than before. Since its entry into mainstream consciousness three years ago, we observed during our consulting work that many chief executives of organizations are still struggling with its meaning and execution. In fact, in our digital maturity study of several large and medium-sized companies indicate low to medium maturity levels, spanning several factors such as leadership and strategy, execution and delivery, customer experience, organization and culture, and digital platforms.

Large organizations in the country are in the middle of digital transformation, while medium-sized companies are starting in 2019 to 2020. Here are 5 trends that we see happening in 2019 and beyond.

1. MAINSTREAM ADOPTION OF CLOUD, AND CLOSING OF DATA CENTERS
Data centers may actually be a thing of the past come 2019, according to a recent DXC Technology report. With workloads shifting to the cloud, may it be public or private, more and more organizations will be move their IT infrastructure to the larger data center operators or to the public cloud like Amazon Web Services, Azure of Microsoft, and Google cloud.

2. ENLIGHTENMENT ON WHAT DATA SCIENCE AND ANALYTICS CAN REALLY DO
This year marked the fashionable mainstream adoption of analytics and data science. In fact in our study, there is close to a thousand professionals, mostly millennial and GenZ, have a job title of data scientist or data analyst. Organizations started to build their analytics capabilities without truly understanding the business potential it can bring. But in 2019 we will witness the enlightenment of many organization on the use of analytics, beyond providing descriptive insights and moving to predictive modelling, which can help them in understanding better its customers and operations.

3. CHATBOTS — FROM GOOD TO GREAT
Chatbots, the simplest form of artificial intelligence, will see its growth starting 2019 across organizations, may it be large or SMEs, primarily for customer service use. In fact a global Oracle research revealed that 80% of businesses want chatbots by 2020. As they become more inexpensive to create and deploy, companies will grow its use in internal employee support activities such as policy inquiries and HR-related concerns.

4. REDESIGN OF CUSTOMER EXPERIENCES AMID DATA PRIVACY RULES
With the National Privacy Commission (NPC) intensifying its monitoring efforts to ensure strict compliance to Republic Act No. 10173 or the Data Privacy Act of 2012, especially in those sectors where personal data gathering and processing are critical, organizations in education, banking, health care, and insurance sectors will start to redesign their customer experience strategies. Such strategies are for managing customer data, and exploring new ways to communicate with customers. If companies redesign the customer experience to include stronger privacy protections, they could then do business globally, attract customers and revenue, and help create customer loyalty, the report found.

5. CULTURE CHANGE AND NEW SKILLS-BUILDING WILL BE TOP PRIORITY
Organizations especially large ones which are in the early to middle stages of their digital transformation journey are discovering how tough it is to change the culture and mindset of the employees to adapt to new ways of working. With cloud technologies getting more cost-effective and easier to procure and deploy, younger generations in the work force easily try and discard them, while older generations take a longer time to adjust due to multiple technology deployments. In addition, organizations need to be nimbler and more innovative in the face of growing pressures from consumers and new entrants. Hence, culture change and transformation as well as new skills building in the areas of digital and soft skills will be top priority among chief executives.

As we usher in the New Year, organizations should be cognizant of these trends already sweeping the developed countries to remain relevant and competitive.

 

Reynaldo C. Lugtu, Jr. is President & CEO of Hungry Workhorse Consulting, a digital and culture transformation firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at

rey.lugtu@hungryworkhorse.com