Digital transformation (DX) is key to driving business growth for both enterprises and small and medium-sized enterprises (SMEs) on the 3rd Platform, according to IDC Philippines which recently announced its top predictions for the Philippine ICT industry.
Businesses in the Philippines need to transform into a digitally led organization through the use of 3rd Platform and innovation accelerators in order to capture value-producing opportunities, pursue new revenue streams, and change an existing business model.
IDC explains that 3rd Platform technologies include the 4 pillars of cloud, mobility, Big Data analytics, and social, as well as the 6 innovation accelerators of IoT, cognitive computing, robotics, 3D printing, virtual/augmented reality, and next-gen security.
Jubert Alberto, country head, IDC Philippines, says, “Companies in the Philippines that do not start a DX initiative will find themselves struggling to respond to changing market demands and competitive pressures. Digitalization has been heightening industry competition as it paves the way for business process excellence and new monetization and business models. Given increasing industry disruptions brought about by digitalization, it is high time for Philippine enterprises and SMEs to make the move into DX to help them scale up in leadership, omni-experience, information, operating models, and worksource transformation.”
Moreover, Alberto adds, “IT leaders in every Filipino organization must transform the IT organization into a true business transformation engine through IDC’s new DX leadership framework, Leading in 3D or 3-Dimensional Leadership. Its goal is to ‘Innovate’, ‘Integrate,’ and ‘Incorporate’ IT within the organization to achieve business-driven objectives.”
This year, IDC’s top predictions are rebranded as IDC FutureScapes for both technology buyers/CxOs and ICT suppliers.
#1: DX-guided enterprise strategy. By the end of 2019, 80% of enterprise strategies will include a significant DX component.
“Globalization, availability of analytics, and the Internet as an economic engine require nearly every enterprise strategy and significant business change initiative to involve some aspect of ‘digital,’ whether it is improving customer experience or internal operations or creating digital products and services. DX is leveraging IDC’s 3rd Platform — cloud, mobility, Big Data and analytics (BDA), and social business — to improve business agility, effectiveness, and customer satisfaction,” says Alon Anthony Rejano, analyst, IDC Philippines.
#2: Authentic experiences. By 2020, 80% of Filipino B2C companies will have created an immersive and authentic omni-experience for customers, partners, and employees.
Jerome Dominguez, analyst, IDC Philippines, states, “In the past, effective marketing for Filipino enterprises meant investing huge sums of money on traditional media such as print and TV. Today, the continuous digital transformation is changing the way Filipino consumers respond to marketing. Filipino consumers are making more use of social media than they used to in the past, hence there is a greater need for companies to assess how they market their products and services in the digital space.”
#3: Security and risk management. By 2017, 30% of IT organizations will shift their focus to advanced “contain and control” security and away from a perimeter mentality.
“By 2017, IDC expects traditional Philippine enterprises to be forced to make significant operational changes to adjust to the accelerating disruption in the ICT industry. As Filipino enterprises evolve to an information-led, information-centric business model, the strategic importance of a strong security governance model will be critical as the uptake of 3rd Platform technologies among businesses will widen the attack surface,” says Dominguez.
#4: Government focus on ICT. Digitalization at a national level will continue to be a challenge but significant push will be felt in 2016.
“Although there are administrative hurdles stalling progress, IDC expects the Filipino government to pursue eGovernment initiatives geared toward digitalizing processes and improving transparency more actively this 2016. This also includes initiatives around Smart City and public WiFi systems in major centers in the country,” says Dominguez.
#5: Enterprise “tingi pack.” By the end of 2016, enterprise “tingi pack” for cloud and IT services will thrive among SMEs.
“The enterprise tingi pack is going to be common in the consumption of IT products and services. As the demand for cloud and other IT services increases among local SMEs, the pay-as-you-go model will not only help grow the providers’ business but also support SMEs in starting a business using IT tools that are budget-friendly, flexible, and competitive,” says Rejano.
#6: Realign suppliers and partners. By 2020, more than 30% of the IT vendors will not exist as we know them today, requiring a realignment of preferred vendor relationships.
The new technologies, offerings, business models, competitors, partners, and buyers in the emerging DX economy are putting tremendous pressure on traditional IT suppliers and accelerating some new players to market leadership roles.
Over the next several years, we will see nonstop shifts in vendor fortunes, with almost one-third of today’s leading suppliers acquired, merged, downsized, or significantly repositioned. “While the traditional IT suppliers are all migrating their offerings and organizations to the 3rd Platform and DX worlds, providing the customers migration paths, the impact is that they may or may not emerge from that transition as market leaders,” says Rejano.
#7: Skills-based marketplaces. By 2016, skills-based virtual coworkers in the Philippines will continue to grow, spurring 3rd Platform usage and further outsourcing opportunities.
Nicolo Santos, analyst, IDC Philippines, says, “Online freelance jobs are taking off, offering job opportunities to many Filipinos at the comfort of their homes. As of 2015, there are approximately 1.3 million online freelancers in the Philippines, a number considered to be one of the highest in the world. By 2016, there will be an additional 500,000 web-based workers to be employed in different online job platforms, specifically coming from the countryside, according to the Department of Science and Technology (DOST).”
#8: Digitalized brick and mortar stores. By 2020, “brick and mortar” stores will provide retailers with new sources of data to create bigger traction and increase patronization and customer base through digital experiences.
An effective way by which an eTailer venturing into offline channel can effectively differentiate itself from its competition is through coming up with a digital store strategy of its “brick and mortar” estate to provide a personalized customer experience akin to online.
Digitalizing “brick and mortar” stores does not only entail deployment of cutting-edge technology solutions to improve in-store experience; it also makes way for competitive data gathering.
“There is a lot of potential to be realized from analyzing the multiple data sources generated from digitalizing physical stores — information that will allow retailers to both identify and target casual shoppers and, in the process, allow them to better position their products and services to stimulate loyalty to their brand,” adds Dominguez.
#9: AiO cards. By 2019, Filipinos will use all-in-one (AiO) cards more predominantly as DX allows bridges of retail payment methods to become more interconnected.
“With a flourishing retail industry, IDC believes that payment processes will be evolving significantly quicker than before as digital disruptions continue to come about. Just recently, Manila’s Railway Systems (MRT, LRT 1, and LRT 2) started offering reloadable cards that can be topped up online. This is an auspicious start in the government’s drive to digitalizing payment methods,” says Linus Go, analyst, IDC Philippines.
#10: DX adoption in various sectors. DX will start to take off in “non-IT-intensive” industries like agribusiness and resource industries in 2016.
IDC expects businesses in non-IT-intensive industries such as agriculture, agribusiness, and resource industries to adopt 3rd Platform technologies to bring innovations in their business
models and consumption patterns.
“The introduction of new information and communication technologies (ICT) in these industries could make these industries more sustainable as it transforms the businesses and drive more organizations to pursue innovation-centric projects with ICT at their core,” says Rejano.
