The world has changed…(Part 2)

Last week I began my exploration of how the world has changed by taking a look at the change in demographics and technology. You can read that here if you missed it. I am picking up the conversation looking at investment trends focused on digital transformation - while investment is forecast to increase, I believe many companies are still moving too slowly to protect their businesses' future.

Various research groups report that corporations have increased spend on Digital Transformation by 45% between 2019 and 2023 (IDC; Statista). They are forecasting that spending will accelerate to 81% by 2027. Additional research shows that 54% of companies lack the skills required, 53% of companies have legacy systems and technology that is holding them back, and 43% say senior management won’t fund the digital transformation efforts. Only 8% of those surveyed say that nothing is holding them back (Veeam; Statista). This is baffling to me.

Why am I baffled?

There are 335M people in the United States in 2023. 295.5M have mobile phones - that is 88% of the population (Statista). On-line spending (mobile transactions) increased by 123% between 2019 and 2023 (eMarketer; Insider Intelligence). Forecasts indicate that mobile transactions will increase by another 74% by 2027 - to just under $1T annually (eMarketer; Insider Intelligence). That is a lot of technology adoption by most of the population. 56% of smart phone users report using their device to research and buy products and services on-line - that’s a big number (Statista). And yet, only 8% of companies report moving forward on digital transformation. Of course there are the companies that drive most of these transactions - Amazon, Walmart, Apple, Google - their investment levels are up (I’m speculating) based on their business models and the forecast mentioned above. I can’t help but think that many CEOs are just thinking that since they don’t sell books, or housewares, or music, that they don’t need to compete with these digital titans. I disagree.

The World has Changed.

Every time you, your employee, customer, vendor or family member orders something on Amazon - it changes their/our expectations. Every time we use our phones to buy music - it changes our expectations. Every time we order and accept delivery of groceries with our phones, it changes our expectations. And, every time we order something and have it arrive on the same day, it changes our expectations. We have been trained to expect that type of service everywhere we transact - and we are disappointed when we don’t get it.

Expectations changed.

Amazon came on-line in 1995 - selling books. But, it isn’t just books, or digital music that we are transacting for today. Now you can buy almost anything using Amazon - not just the small things - and get it delivered today. In fact, today, you can sit on your couch, shop for a car, find the one you want, buy it, finance it, arrange and accept delivery using only your smartphone. You don’t have to leave your house, test drive it, go to the bank, go to the DMV none of that historical cost is incurred. You just get what you want and you transact with your phone to get it. If your customers and employees are doing that in their personal life, they are expecting that level of service from their employers, customers, and vendors too. No business has time to wait, no one will side step the competitive pressures. Your customers, employees and vendors will move on, because, the world has changed and you haven’t.

Size doesn’t matter.

Today’s small and mid-sized businesses have the same challenges as the Fortune 50 businesses - they just don’t have the budgets to solve them. And, it doesn’t matter. The world’s population (including your customers and employees) is being trained to expect digital interactions from you. If you don’t provide them with what they want, they will move on. A study from a major research firm in 2020 reported that the primary reasons driving digital transformation efforts were: customer demand (26%); competition (25%); new entrants (12%); improved earnings (19%); market disruption (15%); Board of Directors demands (5%) - (IDC; Statista). Being a big player in a local market no longer matters - we are all competing for a share of the same wallets. And the competition is heating up.

Do you have the help you need?

Based on the research I am reading, it looks like you don’t. Do you even know what kind of help you require? If you are a mid-market company with a small or outsourced IT presence, probably not. Next week, we will look at the types of help in the marketplace and how you can exploit that help to get on the path to your digital future.