Digital transformation has completely changed the media industry with key areas of transformation such as hyperconnectivity, artificial intelligence, cloud, and cybersecurity. Contactless payments, digital entertainment, automation combined with the near death of paper, digital interactions through augmented reality/virtual reality (AR/VR), and sophisticated collaboration tools are critical areas of growth.
COVID-19 caused massive disruption across industries and changed the traditional ways of operations. One of the key norms to handle the pandemic included social distancing, thus creating an opportunity for industries to go digital, especially those that were reluctant prior to the pandemic. Digital innovations and continued disruptions have become commonplace, and are likely to outlast the pandemic.
Digital transformation has progressed rapidly in the last year due to COVID-19. These unprecedented opportunities for IT services through digital transformation have made companies invest in complex technologies at a large scale to improve performance. According to reports by Morgan Stanley, the global investment in digital transformation is estimated to grow at 21% CAGR from 2020 to 2025. The key technologies that play a critical role in this digital transformation adoption include hyperconnectivity, cloud, artificial intelligence, and cybersecurity.
Five key technology themes in digital transformation
Based on these technology adoptions, the five technology themes that have seen rapid acceleration of digital adoption are – contactless payments, digital entertainment, automation combined with the near death of paper, digital interactions through augmented reality/virtual reality (AR/VR), and sophisticated collaboration tools.
- Contactless payments – While contactless or digital payments have seen a multi-year growth, the pandemic has acted as an accelerator. However, a major part of transactions are cash or equivalent, with approximately $4 trillion related to cash and cheque out of $11 trillion of aggregate US consumer spending.
- Rise of digital entertainment – The over-the-top media service providers have seen a sharp rise over the years, and accelerated even more due to the pandemic. It created opportunities for digital streaming platforms to provide content by acquiring and additionally creating their own production houses for generating content to retain customers.
- Rise of automation and near death of paper – Packaged applications made with low code help non-technical customers to build custom applications using drag and drop, and visualizations that help to gain insights. This is a great value creation opportunity wherein vendors can make customized applications for their workers for automation of business processes. These automation tools can help businesses optimize their resources and run their operations.
- Digital interactions through AR/VR – Though there is a lot of buzz around virtual reality, there are some limitations such as high cost of the VR headset, lack of potential use cases, under developing applications and so on. There is a clear opportunity for VR/AR to now act as a support medium for markets like real estate, health care, retail, education, and manufacturing by improving virtual interactions.
- Sophisticated collaboration tools – According to a Morgan Stanley report, CIOs are expecting sustained growth on spending on external collaboration IT tools. In addition, 52% of the survey respondents indicated increase in cloud communication spending as well.
Challenges in digital transformation
While digital transformation holds promise to organizations in elevating their operational efficiency and enhancing productivity, there are some challenges as well.
- Budget constraints – Several organizations lack sufficient budgets to move their existing operations towards digital - given that they have lost existing business and are already burdened with large debts with few investment options.
- Lack of a digitization strategy – As the companies are new to the digital shift, they may not be equipped with the required knowledge and skills to adopt and leverage the digital solutions for implementing their business strategy.
- Lack of digitization initiatives due to low digital expertise – Only hiring experts will incur costs and not serve immediate strategy execution, thus deferring transformation.
For companies to shift and handle remote delivery of services it is important to check and standardize the existing processes in place to formulate the components of its digital solutions and platforms.
Though there are relevant solutions that can be implemented for digital transformation, it is very important to understand how a company can address the most relevant and pressing needs of its customers by this shift -
The digital shift in the customer journey