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Global economy approaching a digital-economy tipping point

17th January 2020

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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The global economy is fast approaching a critical juncture where more than half of all gross domestic product worldwide will be driven by products and services from digitally transformed enterprises, says International Data Corporation (IDC) senior VP and chief analyst Frank Gens.

With the rise of the digital economy, digital supremacy will be reached by 2023, requiring organisations to undergo digital transformations to compete and survive in this burgeoning economy.

“As the [last] decade came to an end, the digital economy [started] approaching a critical tipping point,” he said during a webcast presentation as part of the IDC FutureScape webinar series.

Outlining the worldwide information technology (IT) industry predictions for 2020 and beyond, he warns that the impact on enterprises will be enormous: those not able to compete in the digitally powered section of the economy will be increasingly unable to compete in their core markets.

As more than half the global economy turns digital by 2023, IDC’s 2020 predictions show that enterprises will prepare for the digitalised economy by accelerating investments in key technologies and new operating models to become hyperspeed, hyperscaled and hyperconnected organisations, says Gens.

This digital-first economy will demand an entirely new model.

His comments followed the release of IDC’s top ten worldwide IT industry predictions, the first of which revealed that companies are “hastening” to innovation.

“By 2024, over 50% of all IT spending will go toward digital transformation and innovation, up from 31% in 2018 and growing at a compound annual rate of 17%,” he explains.

Enterprises will also seek out greater efficiency within their budgets by shifting to less labour- and capital-intensive operating models, as spending on innovation rises.

By 2022, 70% of enterprises will integrate their public and private clouds by deploying unified hybrid or multicloud management technology tools and processes.

Further, the report indicates an increase in building infrastructure “at the edge” over traditional centralised data centres, as data starts being managed, analysed and processed closer to the source of the data creation.

“By 2023, over 50% of new enterprise infrastructure deployed will be at the edge, rather than at corporate data centres, up from less than 10% today, while, by 2024, the number of apps at the edge will increase 800%,” says Gens.

Another emerging trend predicted by IDC is that operating as a software-driven “digital innovation factory” will be at the core of an enterprise’s ability to sustainably differentiate and compete in its own industry.

“By 2025, nearly two-thirds of enterprises will be prolific software producers, with code deployed daily, over 90% of apps cloud native, 80% of code externally sourced, and 1.6 times more developers than today.”

Meanwhile, by 2023, there will be in excess of 500-million digital apps and services developed and deployed using cloud-native approaches, while, by 2024, more than 50% of user interface interactions will use artificial intelligence- (AI-) enabled computer vision, speech, natural language processing and augmented reality and virtual reality.

“It’s hard to overstate the importance and the impact that AI will have on enterprises’ ability to create new products and services, new customer experiences, and new ways of operating in the coming decades,” Gens adds.

“By 2025, we expect to see enterprises using AI-enabled and AI-led apps to gain competitive advantage from shorter reaction times, greater success with product innovation, and improved customer satisfaction.”

In addition, getting trust right will be fundamental to competing in the digital economy, with half of the top 2 000 companies globally set to name a “chief trust officer” by 2023 to orchestrate trust across security, risk, compliance, privacy and ethical business operations.

Along with this, 60% of the top powerhouses will have a digital developer ecosystem with thousands of developers.

Enterprises must also be prepared to form new digital ecosystem partnerships across industries that can enhance their customers’ experience, he continues.

“By 2025, 20% of revenue growth will come from “white space” offerings that combine digital services from previously unlinked industries, and one-fifth of partners will be from previously unlinked industries,” he notes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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