IDC expects the economy to deal in a big way with the digital transformation (DX) the coming year, even believes that it will lead to the formation of a "DX Economy", since it is becoming a competitive requirement to support changes to business operations and customer experiences. While 2016 is shaping up to be the banner year for ‘Digital Transformation’ (DX) to take root in many Asia Pacific organizations, IDC expects innovation accelerators like IoT, cognitive computing, robotics and 3D printing to accelerate this transformation in years to come. At least that is what the research firm highlighted in its IT Services Predictions for 2016 recently.

Over the next two years, two-thirds of the 2,000 globally leading CEOs are expected to make digital transformation the focus of their growth strategy. IDC believes the proportion of companies with advanced transformation strategy and corresponding implementations to double by the end of this decade. The upheavals of the digital transformation will then be felt across industries.

The drivers of the digital transformation will be the following:

• Progressive adoption of 3rd Platform technologies in the region not only drives demand for related services, but is fundamentally changing the way they interact with their broader ecosystem as well, the experts pointed out: “This year’s services predictions deep-dive into the impact of 3rd Platform technologies and innovation accelerators such as IoT and Next-Gen Security. As a result, more focus on governance between the IT organization and the lines of business (LOB) is demanded to ensure risk, supplier choices, fail-over, innovation, and agile development is understood between both parties, and the value of integration, management and security is brought to the forefront.

• The DX-Economy will be primarily code driven by developers. The ability of organizations to grow and compete in the marketplace increasingly depends on its ability to innovate. This in turn is determined by the size of the software development team and their abilities - looking at it this way - increasingly transforming businesses to software companies. IDC believes that companies implementing digitization projects will more than double their capacities in the development until 2018. The developer will deal almost exclusively with the digital transformation.

• Data will be equally important in the DX-Economy. Without large amounts of data, which fuel the innovations, the transformation process won’t succeed. IDC believes that the success of the DX-Economy depends on whether it is possible to establish steady data pipelines for data streams to and from the company. By 2018, the inflow of external data to organizations with advanced digitization initiatives is expected to grow by a factor of five. Companies whose digital transformation is extremely highly advanced will increase the amount of outgoing data even by a factor of 500 or more.

• The Internet of Things (IoT) plays a prominent role within the digital transformation, too. IDC expects the number of devices on the IoT double to more than 22 billion that in turn will result in the development of 200,000 new apps and solutions that benefit from it. These devices and solutions have the potential to redefine competitive advantage in almost every industry. IDC predicts that the most interesting IoT developments will be in manufacturing, transportation, trade and healthcare.

• Cognitive systems have already established themselves as an indispensable tool in companies that operate with a flood of data. Businesses will spend this year over a billion dollars for cognitive software platforms, according to forecasts, and this amount will even grow dramatically in the next three years. IDC expects more than half of the development team to integrate cognitive services into their apps by 2018 to use their data pipelines and to improve customer-specific personalization. Currently, just one percent of developers is making use of this opportunity.

• Establish proximity to customers at many different touchpoints: In the DX-Economy, prices will fall in many areas. Therefore, IDC expects that 60% of companies in the B2B segment and 80% in the B2C sector will revise their "digital shop-doors" - and the customer engagement systems behind it - fundamentally. In doing so, the goal is to support a larger number of customer touchpoints compared to today by a factor of 1000-10000. Simultaneously, companies will have to offer dramatically more personalized services than it is the case today.

• "Cloud first" is becoming the mantra of corporate IT, IDC predicts, expecting enterprise to exceed the cost limit of 500 billion dollars on cloud services, hardware and software for the cloud support, as well as implementation and management of cloud services by 2020. That is more than three times the sum spent today. Fact is that industry-wide cloud platforms and active communities are increasingly becoming the focus of the expanding DX Economy.

IDC expects that by 2018 more than 50% of the large enterprises and around 80% of companies with an advanced digitization strategy will enter or expand partnerships with industry-specific cloud platforms to strengthen their digital supplier and distribution networks. IDC anticipates that the number of today’s 100 industry clouds will rise by 2018 to more than 500.

“The switch to cloud-first/cloud-only points to two opportunities in the APEJ services market”, Cathy Huang, Research manager, Services and Cloud Research Group, states. “Enterprises are looking for differentiated capabilities or cost competitiveness based on cloud-based offerings. In addition, it also means sourcing strategies in the past may be incompatible as organizations leverage a cloud-first strategy.” Hence, “this year's services predictions suggests 33% of enterprises in the region will pursue a “Cloud first” strategy” and the share of overall IT budgets dedicated to cloud services will increase to 26% by 2016.”

By Daniela La Marca