Reseller News

Digital dominates as businesses ‘harness the turbulence’ of the market

How local businesses are leveraging their investment in digital resilience to transform into digital first organisations.
  • Leon Spencer (New Zealand Reseller News)
  • 27 January, 2022 09:09

A digital first approach is set to further dominate the business landscape in the region, with organisations that can “harness the turbulence” of the current pandemic-ridden market set to gain a long-term advantage.

This is according to analyst firm IDC, which reckons that, by 2024, digital-first enterprises across Australia and New Zealand will enable empathetic customer experiences and resilient operating models by shifting 75 per cent of all tech and services spending to as-a-service and outcomes-centric models.

Along with digital first drivers targeting customer experience and operating models, IDC expects new cloud fundamentals to be increasingly driven by business outcomes in the coming years, according to data drawn from its IDC FutureScape: Worldwide IT Industry 2022 Predictions – Australia and New Zealand (ANZ) Implications report.

The report focuses on how A/NZ organisations will deploy and consume technology over the next five years, contributing to the growth of the digital economy.

The overarching theme of the research, according to IDC, is how businesses are leveraging their investment in digital resilience to transform into digital first organisations.

IDC’s analysis comes off the back of a market heavily disrupted by COVID-19, with 87 per cent of A/NZ organisations surveyed by IDC suggesting that the pandemic has been the catalyst for shifting to a digital-first strategy.

And such a shift in perspective may be essential for the success of local organisations in the near- to medium-term.

"Organisations that can harness the turbulence will gain the advantage,” said Louise Francis, country manager of IDC New Zealand. “They will leap ahead of the competition to capture those rare opportunities associated with systemic industry change.

“Digital first is an aspiration and a representation of the culture of the organisation. It is not about technology or business models deployed. It is an approach to apply to every business activity or investment decision to meet the head- and crosswinds in 2022 and beyond,” she added.

Louise Francis (IDC)Credit: IDC
Louise Francis (IDC)

This is likely to be good news for channel partners, many of which have already seen work surge in certain areas, particularly cloud migrations and unified communications.

But the areas of growth and the best ways to tap into them are likely to be nuanced, as businesses are faced with crosswinds of changing societal norms, sustainability imperatives, systemic industry change and new digital-first ready players in the market, according to IDC.

For example, it is thought that this year will see up to 40 per cent of publicly listed A/NZ organisations reset cloud selection processes to focus on business outcomes rather than IT requirements, valuing access to providers' portfolios from device to edge and from data to ecosystem.

At the same time, IDC expects governance readiness to become a critical capability. Specifically, by 2023, according to IDC, 75 per cent of A/NZ enterprises are expected to use artificial intelligence (AI)-assisted, cloud-linked governance services to manage, optimise and secure dispersed resources and data.  

Meanwhile, the ‘everything-as-a-service' trend is anticipated to continue growing, with IDC expecting that by the end of this year 45 per cent of large A/NZ enterprises' IT budgets will be redistributed due to adoption of integrated as-a-service bundles in areas of security, cloud platforms, virtual workspace and connectivity.

Within the next two years, 65 per cent of publicly listed A/NZ organisations are expected to gain twice as much, in terms of meaningful returns, on tech investments that augment employee and customer activities compared to those that only automate individual processes.

Moreover, by 2026, digital sovereignty requirements are anticipated to further compel data governance restructures, with regional divergences in data privacy, security and placement mandates set to force 80 per cent of A/NZ enterprises to restructure their data governance processes built on an autonomic foundation.

It is also thought that, by 2025, 65 per cent of publicly listed A/NZ organisations will have digital sustainability teams, tasked with assessing, certifying and coordinating use of business and IT sustainability data and analytic platforms offered by IT providers.

Also by 2025, according to IDC, public enterprises' valuations in A/NZ will be based as much on confidence in data controls for proper and effective use of data as it will in financial controls, focusing increased spend on data-centric solutions.

Despite the rush to cloud services and innovative unified communication and collaboration solutions the pandemic-prompted work from home trend has delivered, a return to the physical is anticipated to creep back into business to counter ‘virtual fatigue’.

IDC reckons that, by 2023, 40 per cent of publicly listed A/NZ businesses will shift half of their new technology hardware and connectivity spending to modernise and reconceptualise in-person experiences for customers and employees in their own locations – a stark contrast to the decentralisation that has occurred over the past two years.

As reported in November last year, fellow analyst firm Technology Business Research (TBR) expects to see a refinement of talent management approaches, decarbonisation and the widespread adoption of blockchain technology and 5G solutions across the global IT industry this year.

The firm’s senior analyst, Elitsa Bakalova, claimed at the time that 2022 would see broad trends focusing on the theme of sustainability — in hiring practices, climate change and emerging technologies.

“Even with a rush of emerging technologies and responses to the pandemic at the forefront of IT services [providers’] strategies and client success stories, the fundamentals of IT services remain rooted in people — in recruiting, training and deploying the right talent to solve IT-related business problems and staff enterprise IT needs,” she said.

“The changes TBR expects in 2022, including new competitors in the war for talent, new opportunities around decarbonisation and accelerated adoption of emerging technologies, will not substantially alter IT services [providers'] business models.

“Differentiation among the [providers], in offerings, capabilities and financial performances, will come more through execution than strategy, at least in the near term. [Providers] more adept at pivoting to new revenue streams and more patient with pressured margins will see greater success beyond 2022, provided they are able to adequately navigate talent challenges in the near term,” she added.