In this article, we’ll dive into some digital transformation statistics, data, and trends that will be relevant in 2019.
We’ll also learn what digital transformation is and why it’s all the rage right now.
And — just as we did last week — we’ll dig a little deeper into the data to separate fact from hype.
Let’s get started with the concept of digital transformation.
Digital Transformation Is Hot Now … But How “Buzzy” Is It?
Digital transformation is a relatively recent term that means slightly different things to different people.
One common definition refers to the adoption of digital technologies, practices, business models, etc., in order to survive and thrive in today’s digital economy.
Others claim that digital transformation also entails a radical rethinking of how a business uses technology, people, and processes.
Yet others claim that it’s a buzz phrase. As one writer put it, “the phrase itself has become ubiquitous to the point of meaninglessness.”
This hasn’t stopped the phrase from dominating headlines, research reports, and marketing.
The Digital Revolution, a.k.a., Industry 4.0
McKinsey says it’s time to move from buzzword to value creation.
They point out what many see as obvious — that we’re in the midst of another industrial revolution. Namely, the digital revolution.
Being the fourth major industrial revolution, it’s also being called Industry 4.0.
In that article, they cite a variety of examples to make their point:
- A B2B ecommerce platform, Amazon Business, generated $1 billion in its first year alone
- 94% of B2B buyers do some type of online research prior to purchase
- Digital technology can reach customers anywhere, cutting the “cost to serve” by up to 70%
Just to name a few.
But most of us shouldn’t need this type of convincing.
Since the advent of the internet, we’ve seen massive technological disruptions … from the internet itself to mobile phones, cloud computing, and wearable tech.
And more is on the way. IoT, edge computing, AR, and VR, just to name a few.
Perhaps these tidal waves of technological disruption have been the driving force behind digital transformation.
Let’s look at state of digital transformation is in 2019.
Digital Transformation Statistics, Data, and Trends: 2019 Edition
A good place to start would be with Altimeter’s 5th annual The State of Digital Transformation.
In this report, we learn that:
- Most digital transformations still center around IT, though other areas are gaining — such as customer service, operations, and innovation
- Some companies reported transforming only specific units within the organization — IT, marketing, customer service, and customer experience led the pack
- CIOs, CTOs, and CEOs tended to be lead and own most digital transformation efforts
- Market pressures drive most digital transformation efforts — 51% by growth opportunities and 41% by increased competitiveness
- Most efforts focus on customer touchpoints (54%) and infrastructure (45%)
Naturally, digital transformation doesn’t come easy. Challenges included:
- Lack of data or ROI to justify the value of digital
- Viewing digital transformation as a cost center
- Resistance to change
Unsurprisingly, when it came to transforming the employee experience, the top three reasons focused on:
- Training programs to modernize employee skill sets
- Recruiting those with the desired skill sets
- Creating a culture of innovation
These last three points highlight a trend that you will see time and time again in 2019 and beyond.
A Big Takeaway: Organizations Need Skilled Employees
The demand for skills is made glaringly obvious in PwC’s 20th CEO Survey, from two years ago:
- 77% of CEOs see availability of key skills as a threat to their business
- 77% of CEOs struggle to find the creativity and innovation skills they need
- 60% are rethinking their HR function
- 52% are already exploring the benefits of humans and machines working together
And it is accentuated in the 22nd CEO survey from January, 2019:
- Of CEOs “extremely concerned” about the availability of key skills, 55% believe that the “availability of key skills” makes them unable to innovate efficiently
- 52% said this increased people costs more than expected
- 47% claimed their customer experience was impacted
- Two solutions were favored to close skills gaps — retraining and establishing a direct pipeline from education
- 63% of CEOs agree or strongly agree that AI will have a stronger impact than the internet
When asked about whether AI would displace more jobs than it created, CEOs were divided down the middle, like much of the world.
Watch Out for Unsubstantiated Hype
Last week, I wrote about robotic process automation (RPA) and AI statistics, focusing on automation and job loss.
Many predictions on this topic are dire (read that article for the pessimistic statistics), but not all:
- In the 20th PwC CEO survey mentioned above, 52% of CEOs said they were planning to increase headcount in the coming 12 months
- An Accenture study predicted that AI and human-machine collaboration would actually increase employment by 14% in the next 3 years
- 67% of executives in that study expected AI to result in a net gain in jobs within their bank in the next 3 years
Some companies, though, deliver predictions that are all over the map.
Gartner, for instance, can’t make up its mind about the job automation issue, claiming that:
- By 2022, AI will create more jobs than it eliminates
- By 2025, smart robots will take away a third of jobs
- By year-end 2018, 45% of the fastest-growing companies will have more smart machines than employees
- 2 million employees will be required to wear health and fitness tracking devices as a condition of employment
- 3 million people will be working under robobosses
These types of sensationalist headlines have come under fire from the tech analyst firm, Horses for Sources.
Founder Phil Fersht hasn’t held back with his criticisms of these overblown predictions, making a very valid point:
Careers are on the line with automation and AI, and the more embedded these technologies become in organizations, the more clients need real data and real evidence to create their roadmap for them. Outlandish claims like this are getting shot down faster than ever, and we need, as an industry, to stop pandering to the marketeers and panic-mongers and start having a realistic conversation.
Bob Hoffman has made claims that some futurists are merely charlatans “hiding in the future.”
His criticism is more blunt:
The great thing about talking about the future is that you don’t have to know anything. You just make shit up and nobody can refute it.
As I mentioned last week, we should always look behind the data for motives as well as patterns … when we have actually have access to the original data. And when we don’t, we should wonder why the data and analytical methodology aren’t being made available.
Otherwise we risk becoming enthralled by reputations and sensationalism.
So let’s look at one future prediction that backs up its claims with transparent data and analyses.
Upskilling Will Continue Well Past 2019
One report, by Brookings, was released in January 2019 and offers a fully dimensionalized analysis around job displacement and automation.
A few highlights:
- “Automation and AI will affect tasks in virtually all occupational groups in the future but the effects will be of varied intensity—and drastic for only some.”
- Almost no occupation will be unaffected
- About 25% of US jobs will face high exposure (70% task substitution) to automation in the coming decades
- About 36% will experience medium exposure
- And 39% will experience low exposure
The first figure in their report is headlined, “Most jobs are not highly susceptible to automation” and presents a graph of the above data.
From the outset, the report makes it clear that low-skilled jobs are the ones at risk — office administration, transportation, production, and food preparation. Naturally, many people are worried by the fact that they predict a quarter of low-skilled jobs will be at high risk.
Similarly, AI Superpowers makes a compelling argument that should be examined carefully. The author explains why white collar jobs are more at risk than jobs that require a physical component.
Though these two sources look far past 2019, we’re still examining part of the same overarching trend.
That is — transformation is driving the demand for digital skills.
Conclusion: Skilled Workers Will Fuel the Digital Revolution in 2019 and Beyond
Digital transformation may be a buzzword, but it’s justified.
This term became popular “to the point of meaninglessness” because we’re living through the digital revolution.
Industry 4.0 is at our doorstep, and everyone should be prepared — workers and organizations alike.
On the one hand, individuals need to proactively re-skill and find their place in the digital economy.
On the other, organizations should support their workforce through training programs and digital adoption initiatives.
In 2019 and beyond, expect digital transformation to further disrupt industries, companies, and jobs, pressuring more people to enhance their digital skill set.