4 digital transformation trends to watch in 2023
Quick summary: As we enter 2023, we expect businesses will be seeking greater agility and fiscal flexibility, and these four digital transformation trends will help them achieve their goals.
Two years ago, we reported how the pandemic had forced businesses to hit the accelerator on their digital transformation efforts. Since then, the accelerated pace has become a new normal, even though the driving forces behind it have shifted somewhat.
When Covid hit, organizations pursued digital transformation to keep business going amid pandemic-driven lockdowns. Today the same organizations face a different challenge: economic uncertainty and a high probability of recession in 2023. As they address the reality of having to “do more with less” and pivot quickly as conditions change, businesses are exploring new opportunities to realize the overall agility-building and cost-saving benefits that digital transformation offers.
In this article, we’ll explore four of the trends that will drive businesses looking to adapt to economic uncertainties and shifting ecosystems in 2023.
Digital Transformation Trend #1: Shrinking time-to-market windows
There’s no question that Covid forced many businesses to adopt digital-first strategies, and today, we’re seeing more willingness to go completely digital—fast. Organizations are looking for ways to respond more quickly to market changes and achieve flexibility in their time-to-market plans, posing questions such as
• “How rapidly can we launch new customer services, such as new payment arrangements?”
• “How quickly can we set up a digital headquarters to accommodate remote team members?”
• “How fast can we build new features and push them to production?”
The business environment continues to evolve quickly as customer expectations escalate and competitors race to accommodate them. The same can be said of employee expectations: “the Great Resignation” and the recent trend of “quiet quitting” are compelling employers to waste no time elevating their employee experiences if they are to attract and retain top talent.
By leveraging approaches such as DevSecOps and multicloud architectures (see also Trend #3 below), businesses can accelerate timelines for the innovations that give them a competitive edge, improving their ability to adapt to changing economic conditions.
Digital Transformation Trend #2: Leveraging artificial intelligence (AI) to automate processes
In the midst of economic uncertainty, businesses face the precarious question of how to streamline costs while still doing all they can to keep their best customers. Implementing AI-driven automation enables them to deliver on both counts while also creating the kind of employee experiences that help them keep their best team members.
Intelligent automation, when it’s done well, is a win-win-win for businesses, customers, and employees. Leveraging AI and machine learning at scale for automation reduces the number of manual steps processes require, enabling faster results, reduction or elimination of tedious manual tasks, and lower overall costs.
To cite one example, we partnered with a telecommunication industry leader to leverage AI in redefining their customer service experience, which delivered a series of game-changing innovations:
• Automated customer intent analysis enables immediate routing to the proper customer service agent.
• A real-time recommendation engine identifies the next best action for agents conversing with customers and for customers browsing the website.
• Virtual assistants offer customers the convenience of self-service on demand while freeing agents from rote tasks such as resetting passwords.
• Smart agent desktop applications automatically search knowledge bases for relevant information, reducing the need to put customers on hold while agents search for answers.
Digital Transformation Trend #3: Adopting a product mindset
If Trends #1 and #2 reflect the “what” of digital innovations that help businesses address economic uncertainty, this trend reflects the “how.”
In contrast to the old project-focused method (write requirements, build a budget and timeline, deliver, assess), product-focused approaches begin with a desired outcome in mind, as measured by the product’s ability to deliver value to the customer. A cross-functional team, driven by a detailed analysis of customer needs, builds and executes a strategy incorporating frequent progress checks and regular iteration releases. This approach stays in place throughout the product’s lifetime, enabling the team to respond quickly to changing circumstances and ensuring that the product continues to serve customers.
Inherent in the product mindset is the kind of user-focused thinking embodied in concepts such as customer centricity and design thinking. Customer centricity is the philosophy that customers should be the focal point of all business decisions, while design thinking is more of a process that puts this philosophy into action, focused on developing solutions to problems that real-world customers are facing. User experience (UX) also figures heavily in product-driven approaches, as it brings customer centricity and design thinking down to a technical level to deliver optimal experiences on websites, mobile apps, and other channels.
Two important concepts that drive the product mindset are speed and agility as teams drive a continuous loop of “discover, ideate, prove concept, test, implement, repeat.” When a new deliverable is ready for release, rapid time-to-production is vital (see also Trend #1) to ensure a fast return on investment.
By implementing cloud computing and DevOps—or, even better, DevSecOps, which builds in security at every phase of the DevOps lifecycle—organizations can get solutions into production and into customers’ hands faster than with traditional IT approaches and on-prem configurations. DevSecOps enables automation of the deployment process in a way that makes it fast and easy to pull code from a branch, build it, and deploy it. And since cloud technology is built for DevSecOps, it enables products to be built and deployed even faster. For example, teams can use infrastructure as code (IaC) to streamline deployments while also benefiting from out-of-the-box observability, backups, and high availability.
So, what does all this mean for a business looking to optimize operations in the face of economic uncertainty? Plenty. The iterative and user-focused nature of product-driven approaches translates into less time and money wasted on solutions that are doomed to go unused or under-utilized in the real world. The focus on the customer helps build the loyalty that makes customers want to stay around in uncertain times. And the emphasis on speed and agility helps ensure that solutions can start delivering benefits to the bottom line as quickly as possible.
Digital Transformation Trend #4: Optimizing cloud costs
As we’ve touched on in Trends #1 and #3, cloud computing is a critical asset in shortening time-to-market and time-to-production windows. Migrating to the cloud can also be an effective agility-building and cost-management strategy in its own right—if it’s implemented and managed strategically.
When organizations use serverless architectures, for example, they only pay for the time when a code is executed, which can lower overall costs, and increase their cloud utilization (server density). Containers are another key cost-controlling asset since they require fewer system resources than traditional systems or virtual machines.
On-premise and unoptimized ecosystems reduce business agility on several counts, including high cost of ownership; long, complex deployments; low reliability; and poor ability to scale. Transitioning to modern cloud architectures delivers a series of benefits that alleviate these pain points and other challenges:
• Greater flexibility in adjusting to web traffic peaks and valleys
• Increased availability and reliability of applications
• Facilitating remote work with virtual dev environments and online resources
• Greater agility in adapting to market fluctuations and changes in competitive environments
When we work with clients to optimize their cloud costs, we focus on three areas:
1. Evaluating existing infrastructure and usage needs: Analyzing the current state of your infrastructure can uncover design decisions that could be affecting cloud cost and resource efficiency. A thorough evaluation will reveal the answers to three key questions:
• “How do we create and manage resources currently?”
• “What are our current usage needs?”
• “Do our current tools deliver adequate utility for the expense incurred?”
2. Implementing cost-saving strategies: Cloud cost optimization occurs at the intersection of three approaches: adjusting existing tools, changing your approach to spending, and/or investing in something new. Specific strategies may include
• Containerized deployment
• Heuristic cost analysis
• Reservation of virtual machines
• Changing subscription/spending model
• Implementing a cloud management platform
3. Monitoring and managing cloud spending: The fluid nature of cloud computing requires constant monitoring to avoid unforeseen and unnecessary costs. Entrusting oversight to a responsible party, like a cloud center of excellence, helps ensure continuous visibility into resource usage, rapid response to new needs, consistent enforcement of policies, and proper evaluation of new tools or services.
Staying prepared for 2023 and beyond
As we look ahead to 2023, it appears that economic fluctuations, geopolitical disruptions, and global supply chain issues won’t be going away anytime soon. Business agility and cost management are as important now as they ever have been, perhaps even more so. Strategic investments in digital transformation will help businesses set themselves up for success, whatever the future may hold.
Lionel Bodin is the Senior Director of Digital Transformation at Logic20/20. He manages highly complex, multi-faceted digital programs related to CRM systems, cloud and on-prem implementations, big data, and more.