Predictions 2017: Digital transformation budgets will top the billion-dollar bar

Forrester predicts that digital transformation will tip from experiences to operations in 2017.
Written by Ted Schadler, Contributor and  Nigel Fenwick, Contributing Writer

You've been creating digital customer experiences for years now. You've built a successful app, you've assembled a martech/adtech stack, and you may have even started swinging at omnichannel delivery or harnessed AI or piloted a connected product. It's time to declare victory on digital transformation, right?

Not so fast.

Digital customer experiences are only the shining faces of a digital business. Those pretty faces quickly lose their luster unless you've also transformed your business operations to make them better every single day -- and introduce new digital faces all the time. Forrester calls this capability "digital operational excellence." It's the 80 in the 80/20 rule of digital transformation.

Forrester recently released its 2017 digital business predictions, which focuses on the importance operational excellence plays in digital transformation. Here are three predictions for 2017 to prod the digital business conversation:

  1. Digital transformation will tip from experiences to operations: Bolting digital front ends onto existing products and services is a good start to digital transformation. But it's not enough. Frank Blake, CEO of The Home Depot, shared a plan to spend $300 million on digital technology so customers could order on their phones and pick up in the store. Six months later, he raised that to $1.5 billion to cover the cost of new distribution centers and an overhauled fulfillment process so customers can order from the catalog, not just from store inventory. Businesses must double down on (or start) their investment in operational excellence in 2017.
  2. Transformation budgets will edge up into the billions. The Home Depot is not the only firm investing billions in operational transformation. Wal-Mart will spend $2 billion to overhaul their core capabilities for digital engagement. General Electric is spending $1 billion a year in its quest to be a digital business. Unilever purchased Dollar Shave Club for $1 billion to establish a direct-to-consumer product line. These are technology investments, sure, but also investments in products, processes, and people. In 2017, businesses must re-assess their budgets - they are probably not big enough. As The Home Depot learned, brands may find that they need to spend $4 on digital operational excellence for every $1 spent on digital customer experiences.
  3. Brands will finally build holistic customer experiences that transcend touchpoints. Customers don't deserve to be dropped between touchpoints. In 2017, digital business professionals will accelerate work to break down the silos between web, mobile app, and offline engagement. Omnichannel retail experiences like digital stores or click-and-collect will become increasingly mainstream customer experiences as will App+ strategies that transform smartphones into control panels for cars and homes and wearables that feed health data to insurance firms. If businesses have not yet embraced customer journey mapping, now is the time to do so.

To learn more about what Forrester expects next year, visit http://forr.com/predictions2017 to download our free 2017 predictions guide that covers the top 15 dynamics that will shape the future in the age of the customer.

Ted Schadler is VP and principal analyst at Forrester, serving application development & delivery professionals. Follow Ted on Twitter: @TedSchadler. Nigel Fenwick is VP and principal analyst at Forrester, serving CIOs. Follow Nigel on Twitter: @NigelFenwick.

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