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Digital Transformation is a Necessity for the Future Growth of Organisations. Here’s Why

Digital Transformation is a Necessity for the Future Growth of Organisations. Here’s Why

Digital transformation is no longer an option but has emerged as a critical success imperative for business continuity and future growth

Illustration by Anirban Ghosh Illustration by Anirban Ghosh

While giving the keynote presentation at the Microsoft Business Forward event in 2017, Microsoft’s Executive Chairman & CEO Satya Nadella went back in time to the mid-1990s, when the company was about to launch its first server product. Back then, Nadella was coding on screen, showing a scenario that speaks of today’s digital transformation (DX) needs. And all the technology deployed allowed him to pull the data into a spreadsheet for storing inventory, and then use automation to drive a document that could create a purchase order to deal with the back-order situation. While he thought the innovation was going to change the world, it took about two decades to realise how the digital transformation revolution is not just about transforming industries, but powering every part of the economy.

“Digital transformation is not simply about ‘lifting-and-shifting’ old IT infrastructure to the cloud for cost-saving and convenience. Organisations adopt new technologies to redesign and redefine relationships with their customers, employees and partners, which includes modernising applications and creating new business models, products and services,” says Bikram Singh Bedi, Managing Director for India region at Google Cloud.

DX is about leveraging technology to reinvent the way enterprises operate, with better utilisation of data through real-time visibility into the information, workflow automation, and collaboration between teams and strategic partners. But its core is about taking advantage of the applications, services and technologies to increase efficiencies, grow profits, streamline workflows, and improve customer experience. “We went from turning paper into digits to optimising processes with software, networking, software-as-a-service (SaaS), and the new digital economy. Consider that since 2000, 61 per cent of companies on the Fortune 500 have been acquired, merged, gone bankrupt, or fallen off the list. These changes are often due to digital disruptions,” says Satyakam Mohanty, Chief Product Officer of Fosfor by LTI (L&T Infotech).

Indian IT companies are the world leaders in enabling this transformation, yet the adoption within the country is rather unhurried. While banking and telecom were some of the early adopters of greater digitisation, the public sector, healthcare and traditional retailers are among those who are catching up. The pandemic has accelerated the pace of DX with most organisations having to transition from physical to digital-first. Initially, work from home and now, work from anywhere, led to a huge spike in demand for cloud-based applications, collaboration, security, and productivity tools to ensure business continuity.

For instance, Covid-19 has accelerated the migration from retail to e-commerce by allowing customers to do some of their buying online. There has also been a significant surge in online banking and digital payment use, which has reached record highs. Businesses are now taking the opportunity to reinvent their models for a more connected, automated, data-intensive, and distributed future. “According to McKinsey, internal operations and customer interactions have accelerated by three to four years for some companies, and the share of digitally enabled products has increased by seven years,” says Trideeb Roy, Director of Sales for Cloud Infrastructure & Software Group at Cisco India & SAARC. Meanwhile, education ministries have been launching large-scale digital capacity-building initiatives to provide instructors with the tools and resources they need to teach remotely.

India’s successful Covid-19 vaccination drive wouldn’t have been possible without the digitisation of records and processes. Rakuten India’s SixthSense survey confirms the same. Of the 500 technology decision-makers in India covered in the survey, 70 per cent expect their IT budgets to go up while 29 per cent said they will remain constant. Seventy-seven per cent of CIOs said that they are increasingly embracing SaaS solutions to cater to specific functionalities as it helps them bring new capabilities to: go to market more quickly (49 per cent); scale more efficiently (29 per cent); lower costs (17 per cent); and reduce technology risk (6 per cent). And for the technologies they wish to invest in, 38 per cent cited investments in improving software development and quality assurance lifecycle; 24 per cent cited enterprise-wide observability solutions; 21 per cent picked data management and availability; while 10 per cent said it would be cloud and infrastructure; with the remaining citing DevOps and security.

Spending on DX is expected to shoot up. IDC’s Worldwide DX Spending Guide for April 2022 predicts that the global spending on the DX of business practices, products, and organisations overall will reach $2.8 trillion in 2025, more than double the amount allocated in 2020. DX spending will have a compound annual growth rate (CAGR) of 16.6 per cent over the 2021-25 forecast period as organisations pursue a holistic digital strategy for people, processes, technology, data and governance. Indian DX spending is forecasted to reach $69 billion in 2025, from a base of $30 billion in 2020. This represents a CAGR of 18.2 per cent over the forecast period of 2021-25.

Evolving for over two decades, the paradigm shift for digital transformation took place with the introduction of 4G LTE services in 2012 in India, which helped enterprises leverage cloud infrastructure. This resulted in the emergence of social media platforms, e-commerce redefining the way we shop, the way we conduct financial transactions, and opened new possibilities in terms of business efficiencies. “5G with its low latency, higher bandwidth and superior reliability, is going to enable the next wave of digital transformation. It will completely transform every aspect of our lives including the way we think, interact, do routine work, entertain ourselves, and operate businesses,” says Nitin Bansal, Head of Ericsson India and Head of Network Solutions for Southeast Asia, Oceania & India.

This special report takes a deep dive into today’s digital transformation world where data analytics is redefining the success of an organisation, and digital twins are using real-world data to create simulations for predicting a product or process. However, the backbone of all this transformation lies in having a skilled workforce, which is a pressing issue that has to be dealt with immediately. Rajeev Chandrasekhar, Union Minister of State for Skill Development & Entrepreneurship, explains what the government is doing to address this issue.