Tony Olvet is a senior researcher with IDC Canada, which recently interviewed 31 Canadian enterprises to examine the leading ways Canadian businesses have embraced digital transformation.
Conducted on behalf of enterprise software firm SAP (you can read it here; registration with SAP is required) Olvet’s study highlights five key ways enterprises can adopt digital transformation, and the benefits to be gleaned from each:
- Cloud;
- Big Data;
- Internet of Things (IoT);
- Artificial Intelligence (AI) and Machine Learning; and
- Blockchain.
You can also read an infographic summarizing the study here.
All of the companies surveyed were what Olvet calls “digital leaders,” adopting at least one of the technologies. Cloud was the most popular, adopted by 79 per cent of the companies surveyed, followed by big data (54 per cent), IoT (32 per cent), AI (26 per cent) and, trailing at only a nine per cent adoption rate, blockchain.
To ensure business leaders could benefit in tangible ways from the study, IDC also limited its digital transformation research to five sectors: financial services, oil and gas, retail, consumer packaged goods, and utilities. Among its sector-specific conclusions:
- IDC predicts that by 2019 $6 trillion USD in peer-to-peer transactions will be conducted worldwide using mobile devices;
- By the end of 2018, IDC expects 75 per cent of all oil and gas companies worldwide to have at least one digital transformation operation in place, utilizing cloud, big data and analytics, process automation, or IoT;
- That by 2019, 40 per cent of retailers worldwide will have developed an artificial intelligence-supported customer service experience;
- By the end of 2020, IDC expects one third manufacturing supply chains to adopt analytics; and
- With the number of electric vehicles on the road expected to increase by 150 per cent worldwide over the next three years, IDC predicts the number of electricity utilities with business units for electric vehicles and e-mobility to double by 2021.
We recently chatted with Olvet about the study, the five leading approaches to digital transformation, and what Canadian businesses can learn from the most digitally-savvy among their peers.
ITBusiness.ca: Can you tell us about the study?
Tony Olvet: It’s a study that we’ve done for the past three years, sponsored by SAP Canada, looking at digital transformation in large Canadian enterprises.
This year, our focus was on companies that were worth $500 million or more, and had adopted at least one of the big five technologies that we talk about in the report: cloud platform, big data, IoT, artificial intelligence, and blockchain, and were able to discuss the benefits of their implementations and future plans.
And so we have grouped together these 31 organizations, which we called digital front-runners, and did interviews with them. So we’re not talking about the average Canadian business. But behind that IDC has ongoing surveys and analyses of the broader market, which does provide some context about where Canadian enterprises are.
ITB: What were some of the conclusions you reached?
TO: The common theme we found from the study was that digital front-runners are really harnessing data for business value. And that comes in many different forms depending on the line of business that we focused on. So we dug deep on five different functional areas: procurement, HR, marketing, finance, and operations.
Our second big take-away was that you could group the notions we studied into accelerating and stabilizing factors in business. So a bit like the offense and the defense of an organization. Some of the offenses included revenue, growth, and designing business models, while defenses included being able to deal with compliance and governance issues, security, and managing the oceans of data you’re dealing with when getting things in order.
And I think it’s important to recognize both sides because often the hype around digital transformation is all about becoming the next Amazon or the next big thing in terms of disrupting a specific industry. And often what’s overlooked is applying things like AI and machine-learning to cybersecurity. Or using data analytics for workforce management. And those were simply the interesting things that we uncovered on the defensive side, if you will.
ITB: Any insight into the people side?
TO: On the people side, we discovered change agents – individuals and teams that push forward a transformational agenda.
We covered digital change agents at three companies that we highlighted in the study: TransLink, Coast Capital Savings, and Cirque du Soleil. And the common thing between them is these people have good vision and an agenda to help transform and support from senior executives.
ITB: For executives still on the fence, why do you think it’s important that companies have digital transformation strategies in place?
TO: It’s important for a number of reasons. One is survival, but another is improved customer experience, which leads to greater retention rates. A big aspect of transforming is not only keeping up with the competition, but also making sure that you’re meeting ever-changing customer needs. Whether you’re B2C or B2B, there’s rapid change in how people are influenced into purchasing what they do, and customer service channels are always changing – there’s more social media influence, and self-service, than ever. The deployment of chatbots, for example.
ITB: What do you hope companies learn from the study?
TO: Compared to the last two that we did, we wanted this study to focus on actual benefits in specific functional areas. So moving from the generic, “Hey, everyone should adopt AI,” to, “here are the five functional roles you should be pursuing, and why. Here are your challenges. Here’s how technology was applied to those challenges in order to overcome them. And here were the benefits realized.”
We wanted to give people who might be struggling with transforming some tangible examples, like deploying cloud applications to lower the cost of ownership, or adopting machine-learning to detect fraud issues, or reducing customer dissatisfaction with automated returns. Very tangible use cases that people can bring to functional roles like procurement, operations, or marketing.
ITB: The National Post’s recent writeup of your report seized on a finding that 77 per cent of retailers don’t have an innovation strategy in place, but that doesn’t appear to be a figure uncovered by this particular study.
TO: No. The 77 per cent figure comes from another study that we just quoted in this one. We needed to round out what we were learning from these 31 interviews with our broader research, and part of the benefit of IDC’s ongoing body of research is we can quote ourselves in something like this. That particular fact seemed to stand out in a couple of news pieces I noticed too.
The majority of Canadian organizations have used cloud in some respects and we’ve reported on that extensively in other studies. The statistic that was referenced does provide some context. It underscores the need to look at those with successful innovation and transformation strategies, beyond just using cloud in an isolated instance.
ITB: So anecdotally you don’t think businesses are falling behind in digital transformation?
TO: Anecdotally, I think enterprises at least have gotten the message and are trying to make sure they have digital transformation strategies in place.
What can be rarer is actually speaking to a business that went through the experience and is willing to discuss the benefits, which significantly transformed its organization and is actually able to discuss its hands-on experience.
ITB: Any other advice for Canadian companies pursuing digital transformation?
TO: You need to look outside of Canada for examples of potential leadership and potential competitive threats. In this digitized global economy, you’re going to have invisible competitors that could be in your backyard within a few months after launching businesses from other parts of the world. So don’t just limit yourself to comparing yourself to companies down the street.