The company of the future will be a new type of symbiotic organization of autonomous technology and autonomous humans, working effectively together, accelerating the flow of value, as and when needed, to our customers and all other stakeholders in the ecosystem.
Your next company is designed like a Tesla. The power of automation and autonomy will define the purpose of digital transformation for businesses in the next normal. The benefit of automation will be the ability for organizations to implement design thinking principles of flow, powering individuals and teams to create value at the speed of need.
The seven principles of Flow by Design will guide digital business transformation initiatives for a more sustainable paradigm of success. These principles will better design stakeholder experiences, products and services, organizational structures, and new business models. Ultimately, the application of these principles will create the autonomous enterprise, where businesses and their stakeholders can co-create value at the speed of need.
The purpose of automation is to improve execution velocity -- speed and direction. Speed is the new currency of business, but you cannot be fast if you are not designed for movement. Mobility and continuity, the two key components of movement, will enable speed and business relevance in this next normal economy after the . Continuity is highly dependent on process automation. But automation is not easy. Most platforms are missing key elements like , no customer insights, no integration across data and no digital best practices.
To achieve success with automation, line-of-business needs a single source of truth for stakeholder data in order to compose intelligent workflows, integrate across any system and access to a library of industry specific and business function applications in order to accelerate multi-purpose solutions development and delivery. Today, only 25% of IT leaders say their current technology maximizes employee productivity.
Research from Salesforce MuleSoft and third-party findings highlight some of the top 2021 trends facing CIOs, IT leaders, and organizations in their digital transformation journey. Here are the top 8 trends shaping digital transformation in 2021.
- The digital-ready culture. Organizations are under greater pressure to digitize services quickly at scale to meet rising customer demands and create new revenue channels.
- Democratization of innovation. Line of business users is trying to develop digital customer experiences faster. IT needs to drive cultural change by empowering the business to self-serve and deliver solutions quicker.
- Composable enterprise. Hyper-specialization has created a groundswell of applications, leading organizations to shift to a composable enterprise to become more agile -- where digital capabilities can be composed of existing applications using APIs, rather than being built from scratch every time.
- Automation. Organizations are using automation to drive operational efficiency and improve business processes. APIs are key to driving automation and scaling productivity.
- API security. The average enterprise has 900 applications. The proliferation of new endpoints creates new avenues for intrusion, requiring robust API security.
- Microservices. Organizations are turning to microservices to rapidly build new customer experiences. Companies deploying microservices to production will require some form of service mesh capabilities to scale.
- The data divide. To keep pace with evolving customer expectations, organizations are looking for faster ways to unlock data and gain insights. 2021 will be the year that data separates organizations from their competitors and customers -- the ability to unlock, analyze, and act on data will become foundational to growth.
- Data analytics. Organizations are investing in data analytics to transform customer experiences. The value of data analytics will be dependent on the data they are fed.
Automation is a strong digital transformation trend for 2021
Automation is a key digital transformation trend for 2021 and beyond. Here are some key findings regarding the importance of process automation.
According to Salesforce, 81% of IT organizations will automate more tasks to allow team members to focus on innovation over the next 12-18 months. McKinsey notes that 57% of organizations say they are at least piloting automation of processes in one or more business units or functions. And 31% of IT decision makers say that automation is a key business initiative tied to digital transformation, per MuleSoft.
Integration continues to be a challenge for process automation. Sixty percent of line of business users agree that an inability to connect systems, applications, and data hinders automation initiatives. The future of automation is declarative programming. "In 2021, we'll see more and more systems be intent-based, and see a new programming model take hold: a declarative one. In this model, we declare an intent - a desired goal or end state - and the software systems connected via APIs in an application network autonomously figure out how to simply make it so," said Uri Sarid, CTO, MuleSoft.
McKinsey estimates that automation could raise productivity in the global economy by up to 1.4% annually. Salesforce finds that 70% of service agents believe automating routine tasks would allow them to focus on higher value work. The PwC Finance Effectiveness Benchmarking report finds that up to 40% of time in the finance function can be reduced with automation and behavior change.
Forrester's predictions for 2021 includes the recasting of automation roadmaps: "COVID-19 is changing firms' automation agendas rapidly toward back-office processes and business resilience. Intelligent automation will represent the infusion of robotic and digital process automation with pragmatic AI and low-code tools. These technologies will help businesses become more efficient and resilient while expanding their operations."
Gartner top strategic technology trends for 2021 included Hyperautomation. Per Gartner:
Hyperautomation is the idea that anything that can be automated in an organization should be automated. Hyperautomation is driven by organizations having legacy business processes that are not streamlined, creating immensely expensive and extensive issues for organizations. Many organizations are supported by a "patchwork" of technologies that are not lean, optimized, connected, clean or explicit. At the same time, the acceleration of digital business requires efficiency, speed and democratization. Organizations that don't focus on efficiency, efficacy and business agility will be left behind.
The growing demand on IT and the need for automation
According to the 2020 connectivity benchmark report, developed based on insights from 800 IT leaders across the globe, IT pressures are intensifying as project demands increase. The demands on IT have intensified. IT leaders report a 40% increase in project requests this year, compared to a 32% increase last year. Today, over half of IT leaders report it is difficult for their organization to deliver connected experiences. As a result, 92% of organizations are currently undertaking digital transformation initiatives or plan to in the next year. The average organization has 900 applications, and only 28% are currently integrated. Requests for integration projects are increasing across all business functions. Ninety-four percent of IT leaders report the need for integration spans across the organization.
As demand for integration and automation soars, IT teams find it difficult to deliver on project requests -- further exasperating the gap between IT delivery and business needs. More than half (59%) of IT leaders report they were not able to deliver all of the projects they committed to last year.
IT is being asked to innovate faster with fewer resources. Traditional IT operating models are too slow to keep up with business demands. More than half (59%) of organizations were unable to deliver on all of their projects last year. And this year, IT projects are projected to grow by 40% while budgets will only increase by <10%. Instead of working on innovative solutions to accelerate project delivery, IT still spends 69% of their time maintaining the status quo.
In addition to running the business and integrating systems, IT teams are responsible for implementing technology. Automation projects are more difficult with the compound affect of introducing new technologies.
As new technology investments increase, so does the burden on IT to deliver automated processes. The top technology investments for 2020 include security (53%), big data and analytics (48%), multicloud strategy (41%), and AI/machine learning (41%). These technologies will all present new integration needs as organizations connect data to make these investments successful.
Digital transformation is driven by key business initiatives
Digital transformation is top of mind for IT leaders and, as survey results show, this transformation is tied to key business initiatives, including modernizing legacy systems, migrating applications to the cloud, automating business processes, and other critical business goals. Automating business processes is the third most important digital transformation priority for line-of-business leaders. By 2023, IDC predicts, over half (52%) of global GDP will be accounted for by digitally transformed enterprises. According to the new report from IDC, despite a global pandemic, direct digital transformation (DX) investment is still growing at a compound annual growth rate (CAGR) of 15.5% from 2020 to 2023 and is expected to approach $6.8 trillion as companies build on existing strategies and investments, becoming digital-at-scale future enterprises.
The ability to automate and accelerate digital transformation is critical to growth and future success. If organizations cannot integrate data, develop smart workflows via automated processes, and digitally transform, revenue, profitability and growth will suffer. Most importantly is the customers experience will suffer -- the most important success factor for competing in the next normal.
According to the Salesforce State of the Connected Customer Report, the Digital Imperative hits its moment of truth. Digital-first behavior is here to stay as customers develop new habits that will last for the long term. As digital engagement grows, customers expect companies to digitize their operations for multichannel, high-touch interactions. This relies in no small part on the use of personal information, and customers are calling for enhanced transparency and stewardship. Eighty-eight percent of customers expect companies to accelerate digital initiatives due to COVID-19. An important 2020 lesson: every company must become a digital company. Seventy-eight percent of customers say this year's crises should be a catalyst for business improvement. Per IDC, by 2023, 75% of organizations will have comprehensive digital transformation (DX) implementation roadmaps, up from 27% today, resulting in true transformation across all facets of business and society.
IT leaders recognize the need to accelerate digital transformation. A whopping 90% of IT leaders said their company's revenue will be negatively impacted if they fail to complete digital transformation initiatives in the next 1-5 years. Nearly three-quarters (73%) of them predict their organization will lose revenue if they don't digitally transform in the next 12 months.
The citizen developer movement is powered by low-code or no-code applications
According to IDC, automation and autonomous IT is a shift driven by the greater need to speed, agility and innovation. In the next three years, all IT and automation initiatives across the globe will have a cloud ecosystem as the underlying framework that extends resource controls and real-time analytics capabilities. In order to get there, organizations must strive to integrate analytics powered by AI and ML, adopt automation, self-driving infrastructure enabled by serverless process and use of low code. Dion Hinchcliffe, vice president at Constellation Research has been a long-time advocate of citizen developers.
The global low-code development platform market is predicted to generate a revenue of $187.0 billion by 2030, rising from $10.3 billion in 2019, and is expected to advance at a fast pace, 31.1% CAGR, during the forecast period (2020-2030). Small and medium enterprises (SMEs) are expected to witness faster growth in the low-code development platform market, at a CAGR of 33.3%, in the coming years, on the basis of enterprise. According to Forrester's predictions, low-code and cloud will become essential in development projects in 2021.
According to Gartner, three quarters of large enterprises will use at least four low-code development tools by 2024 and that low-code will make up more than 65% of application development activity. Per IDC, while "digital first" prevails in every experience, 60% of enterprises will invest heavily in digitalizing employee experience in 2021, transforming the relationship between employers and employees. To thrive in digital supremacy economy, 50% of enterprises will implement the organizational culture optimized for DX in 2025, based on customer-centric and data-driven. This culture transformation prediction by IDC will include acceptance and investments in citizen developers across the entire enterprise. IT cannot meet the digital transformation goals of the enterprise with enablement programs that give non-IT employees access to low-code, no code tools and platforms.
IDC predicts that by 2022, 70% of all organizations will have accelerated use of digital technologies, transforming existing business processes to drive customer engagement, employee productivity, and business resiliency. And by 2023, 60% of G2000 companies will build their own business innovation platform to support innovation and growth in the new normal. IDC's report indicates that "By the end of 2021, based on lessons learned, 80% of enterprises will put a mechanism in place to shift to cloud-centric infrastructure and applications twice as fast as before the pandemic." Most of the cloud apps will enable non-IT citizen developers to produce application and workflows to further accelerate process automation within lines-of-business.
IDC also forecasts additional stress for CIOs and IT during the pandemic. "The technical debt incurred due to forced cloud migration and IT agility during the time of the pandemic might cause financial stress to the CIOs through the next three years. IDC indicated that 70% of the CIOs will be subject to such stress through 2023. Sharp CIOs will continue to seek opportunities to build sustainable digital capabilities for next generation infrastructure and applications while successfully managing to retain the delivery models of the new products and services as flexible as possible for their workers and customers," per IDC. The opportunity to accelerate automation will bring stronger focus on AI. According to IDC, "By 2023, one-quarter of Global 2000 companies will acquire at least one AI software start-up to ensure ownership of differentiated skills and IP".
According to Gartner, AI engineering will also accelerate automation. Per Gartner:
AI engineering offers a pathway, making AI a part of the mainstream DevOps process rather than a set of specialized and isolated projects. It brings together various disciplines to tame the AI hype while providing a clearer path to value when operationalizing the combination of multiple AI techniques. Due to the governance aspect of AI engineering, responsible AI is emerging to deal with trust, transparency, ethics, fairness, interpretability and compliance issues. It is the operationalization of AI accountability.
The ability for businesses to create value at the speed of stakeholder -- employee, customer, partner, community -- need is highly dependent on their ability to automate what can be automated. The ability to consistently deliver value on time will lead to relevance and trust. Research shows that automation is top of mind to enable innovation and digital transformation. The ability to automate should not be burden on IT only. Companies across industries are experimenting with automation -- 16% of companies on a global average, with the automotive industry leading the way with 25%. The manufacturing and retail industries are at 15% and public and government sector lags at 8% experimenting with automation.
To compete in the next normal, all businesses of all sized, in every sector, must find automaton opportunities in order to increase productivity, innovation, revenue growth, profitability and most importantly, improved stakeholder experience. Businesses must: 1. Automate anything to be productive, 2. Integrate everything with clicks, not code, and 3. Transform quickly using pre-built and proven solution templates.