The Year 2017 is wrapping up, so it’s time to get ready for the year ahead! Businesses love making predictions about the near future so they can plan their strategies. This is our summary about some of the most leading tech-expert researches looking into 2018!
2017 was an eventful year in digital transformation. We witnessed UX, big data, bots, AI & ML to be the big players in the business landscape this year, but what will be the biggest drivers of digital transformation in 2018?
Here’s what we found out:
The biggest threats for those players, still taking baby-steps in actions towards digital transformation in 2018, are: unmet customer expectations & the loss of market share. Customers’ expectations and their power over the markets can’t be undermined any longer as these expectations are changing faster than companies’ abilities to evolve. According to Forrester’s predictions for 2018, 30% of companies will see further declines in CX performance, and this will translate into net losses of a point of growth.
IoT, analytics, edge computing & 5G
As there is no way of disregarding digital transformation, there’s no way we can overlook IoT this year, but IoT alone is only the start. Gartner's report states that there are more than 8.4 billion “things” connected to the internet, which is 30% more than a year before. So what do we do with these “things” once they are connected and accumulating data? 2018 is going to focus on analytics, edge computing and 5G cell processing - all these systems are driven by the IoT.
The mass amount of data created by the IoT, has the power to disrupt industries from healthcare to manufacturing, or even entire cities. The analytics of this data improves efficiency and profitability, allowing almost every industry to exercise this efficiency to its benefit. In 2018 we’ll see more tech giants investing in analytics, as they realize it’s power in driving business.
Now, when many companies are finally moving towards cloud computing, edge computing is moving to the frontline of the business scene. Many industry leaders, such as Cisco and HPE, have made huge investments in hardware, software and service of edge computing, which can be seen as a strong validation of this becoming a trend. As smart vehicles, drones and other AI-powered devices connect and communicate through the IoT, sending data all the way to the cloud is highly impractical. These devices need the ability to respond and to process in real-time, making edge computing the only sensible option. IDC predicts that up to 40% of computing will happen at the edge in the next few years.
The same reason, as why the amount of IoT data is forcing data to the edge, will push mobile providers to move faster in 2018. Users today expect hyper-connectivity, which is another reason why mobile providers don’t really have a choice but to move towards the 5G path. However, this is a change that won’t happen overnight, but slowly, throughout the upcoming year. Gigabit LTE has already taken steps with Samsung and Sony, but much of the movement is being powered by Qualcomm Snapdragon technology, a stepping stone towards 5G. A lot of competition is expected to enter into this rapid growth market for mobile.
Blockchain, Open banking, ICOs
In 2018, Blockchain is finally predicted to find its place! This year blockchain was oversold, tests delivered underwhelming results against high expectations, and blockchain approaches were applied to problems that could have been solved with existing technologies. This upcoming year however, 30% of proofs of concept are foreseen to accelerate blockchain for the companies that can consider its operational impacts. While the financial sector will most likely be the first to start using this tool, healthcare-, hospitality- and the entertainment sector won’t be far behind! Although the transition to blockchain will most likely begin this year (and after it does there’s no turning back), the change will be slow, as it’s predicted that in 2020 only 20% of trade finance will be using it.
Another trend shaking up the financial sector in 2018, is open banking and ICOs. In Europe, the most established funds have yet to participate in token offerings, but this is predicted to change this upcoming year. Open banking, on the other hand, is seen to turn some banks into unintentional utilities through their traditional power center - data. Banks will no longer have a monopoly over their customer data, which hands a potential competitive advantage to fintech- and other players. Amazon, Google and well positioned fintech providers as well as challenger banks, will exploit this access to data, disintermediating incumbent banks.
AI & AR
AI, old news right? 2018 will take artificial intelligence from a newbie-status to the mainstream. On the business side, so much power remains in AI, that companies continue to use it to connect, communicate, analyze and market in smarter, faster and cheaper ways.
Last year, VR was the big and exiting thing entering the markets, but as we already begun to see towards the end of this year, AR has overthrown VR. At least for now, AR is the cheaper and simpler solution, especially if we look things from the professional setting.
Culture and digital transformation
Another trend getting a lot of attention in 2018, is the “lean management” approach. Today’s quick-moving digital transformation environment is pushing businesses into adapting failure faster. It is predicted that an increasing amount of companies will try to adapt the "fail fast" mindset and culture, which will provide them with more agile visualization, rapid prototyping and other fast failure methods that will help them to strategize. This will be key in determining who are the "winners" and the "losers" of digital transformation.
In addition, cultural issues are becoming more and more pressing. If your company is struggling with business culture issues in digital transformation, you will struggle even harder in 2018. The pace for change continues to increase and the number of new technology continues to grow – it is necessary that companies move fast, while aiming towards growth. Companies should really embrace the agile culture, because transformation is nearly impossible in a resistant culture. Although, the “move fast and fail” –mentality hasn’t always sat well within the more mature businesses, especially in the highly-regulated industries, a fresh outlook is that regulations can work as a boost for innovation. This past year we have seen many startups from regulatory markets using these “handcuffs” as a potential source of competitive advantage.
While “digital transformation” is a buzz-word in some lagging boardrooms, 2018 will force companies to realize it’s a must. Disruption continues to be an increasingly dominant trend in the following years, and those who are unprepared to change, will quickly become the bottom of the pack. Digital transformation is the critical response to rising customer expectations, delivering experiences at scale, and operating at the speed of the markets. All the technologies driving change in the markets at the moment, are pushing one another forward. This can be seen as a tsunami of change that cannot be ignored. According to Forrester’s predictions, 20% of CEOs in 2018, will fail to act on digital transformation, and over 60% of executives feel that they are behind in their digital transformation. We know that digital transformation isn’t free, so there are problems with getting operational savings fast enough in order to fund the transformation operations.
Last year has indeed been a small step forward for many companies lagging in the digital transformation adoption. Many more corporates invested in tech startups in 2017 compared to earlier years. With the growing number of investments from the private sector, the number of acquisitions is also on the rise, and so are the price tags. Acquisitions within Europe have typically been in the hundreds of millions, but this is predicted to change in 2018 as the non-tech European corporates put some of their combined 1.5 trillion cash holdings to work!
Competition over talent
The battle for talent in Europe is intensifying in 2018. As there are more venture-backed growth companies, hungrier for engineering talent than before, and global tech giants are competing with their highly inflated salaries on offer, corporates are fighting back hard. Those struggling to attract talent, will spend about 20% above market on acquiring it. The real need is of the specialized roles of data scientists, information security analysts, high-end software developers and experienced CX designers. This new year will spur up creative ways to best exploit the talent pools in less obvious places, and also widen the divide between the digital front-runners and the laggards, since the ones embracing digital transformation are the most attractive to talent.
GDRP & Cyber Security
Another challenge for this upcoming year will be the compliance with all aspects of the General Data Protection Regulation, GDPR. According to research, 80% of companies will not fully comply with all GDPR aspects by May 2018. GDPR, including the ePrivacy Directive, is an expensive bar to clear and companies are weighing what it means to fully, or partially comply.
Finally, there’s no doubt that security issues are heating back up, as consumer privacy questions are at stake. However, people seem to forgo privacy and security for experiences, which is unlikely to change. On the corporate side, companies increasingly face cyberthreats and in 2018 we will start to see security for profit measures and transforming security mandates into CX enhancements. It is predicted that during this upcoming year, 10% of companies will translate some of their security investments into powerful leverage.