The Drivers of Enterprise and Industry Digital Transformation

At the 2023 Huawei Global Analyst Summit, HuaweiTech sat down with Dan Bieler, Principal Analyst for Forrester, to explore the trends, drivers, and features of enterprise digital transformation.

By Gary Maidment, Huawei

Enterprises across the globe are embarking on the digital transformation journey, deploying technology solutions and management approaches that are reshaping business processes, ramping up productivity, and —ultimately— better serving consumers, customers, and clients.

In terms of the major trends that are currently shaping this journey, Bieler states that while this of course depends on which stakeholder you are and which industry you are in, there are certain universal trends that can be seen across enterprises and industries.

Building in resilience and agility

A major trend is a global response to a clear vulnerability that fell into sharp relief during the pandemic. “We see the desire to make supply chains more resilient - it’s an obvious one,” says Bieler.

Local and national lockdowns, raw material shortages, and economic instability exposed supply chain vulnerabilities, not just with lead times and bottlenecks due to a lack of supply diversification, but also poor visibility across end-to-end supply chain dynamics. For companies across the globe, the net result was huge disruptions to business. According to an Ernst Young survey of 200 supply-chain executives during 2020-2022, just 2% of respondents’ companies were fully prepared for the pandemic, with 72% of companies reporting a negative effect.

Lessons learned since 2020 have also been accompanied by a more flexible and collaborative approach to the enterprise work environment, one that has brought the supply chain closer.

“We see the drive to involve more of your partners, your suppliers, your customers, and also parts of your organization in the form of open innovation and ecosystem-based innovation,” says Bieler

Not only does a more collaborative mindset involving key stakeholders build in greater resilience along the supply chain, but it also responds to an increasingly customer-centric approach. This, Bieler notes, has emerged as a key facet of organizational decision-making. Complementing the customer-centric drive is the move by forward-thinking enterprises to foster deeper employee engagement by improving the employee experience.

Doing so creates “employees who are more prepared to spend time with the customer, with colleagues, to go the extra mile to really improve business overall,” he says.

Another major trend is the drive towards sustainability and minimizing energy use. Prioritizing the environment does not just result in a lower carbon footprint and reduced costs for enterprises, it also responds to shifting consumer preferences: people are voting with their green feet. As part of a 2023 series of “Green is Good for Business” publications, Huawei’s business research lab in Ireland commissioned GSMA Intelligence to conduct research in 16 countries on consumer attitudes to climate change. As well as finding that a majority of consumers in every country reported that climate change was the most pressing global challenge, the survey also found a sizable preference for sustainable brands and products (as shown in Figure 1).

Figure 1: Consumers are increasingly ‘walking the walk’ to effect climate action

Technology-driven transformation, AI, and productivity drivers

From the technological perspective, Bieler notes a recent and rapid rise in key technologies such as cloud platforms and SaaS, as well an array of connectivity solutions, including 4G, 5G, Wi-Fi 6, and fixed line solutions. Alongside these, AI, analytics, and automation are key technologies for powering digital productivity gains, data-driven insights, and greater efficiency.

“We see a big drive towards automation in general,” says Bieler. “Process automation for sure. But also, the data analytics part of automation, because AI in many respects, is a sub-part of the automation drive.”

Inevitably, the key technologies underpinning digital transformation also support the major trends that Bieler identifies: supply-chain resilience, workforce engagement, improved efficiency, and sustainability. AI, analytics, and process automation, for example, are integral to supply-chain resilience and visibility, an area of investment that has become increasingly central to enterprises’ IT investment strategies.

But the role of AI is both varied and growing, and its application cannot be viewed in a single context.

“What helps maybe is to separate and split out the AI drives into different layers,” says Bieler. In the workforce layer, we see AI applied to areas like knowledge management, content management, and customer support techniques such as remote machine operations and large language models, areas that can really benefit the workforce.

On the operational side, he says, “We see that remote monitoring via drones, for instance, would be an example and where AI comes in, and quality assurance via high definition video would be another one and also monitoring energy consumption levels, optimizing energy consumption levels based on AI insights.”

Another crucial area where AI is increasingly being implemented is cybersecurity, a threat that for enterprises continues to grow. In 2021, for example, ransomware attacks on organizations occurred every 11 seconds, with the average time and cost of recovering from a ransomware attack hitting 16 days and US$1.85 million.

“We see the need for anomaly detection, device, network and application testing, and malware and threat analysis. That's all where AI can play a very, very important role,” says Bieler.

Which sectors are leading industry transformation?

While the pace of digital transformation is increasing in a macro industry context, he states that identifying leaders and laggards is not necessarily clear cut. Survey results may show that sectors like utilities, manufacturing, finance, and retail are advancing rapidly on the digital journey, “But,” he says, “if you look more closely, there are some odd ones out. There are amazing examples in mining, in oil and gas, in ports, and the like.”

Part of the reason is that digital transformation involves a complex interplay of factors that extend beyond technology. It includes a change in organizational structure and cultural mindset that embraces agility and a more collaborative approach, a drive to reduces hierarchies and break down operational silos.

And while the initial drive is top-down, gaining momentum requires buy-in from the ecosystem in which an enterprise operates.

“It depends a lot on the Chief Technology Officer, the Chief Information Officer that are in charge of driving these initiatives,” he says. “And the availability of the right partnerships with tech vendors, the availability of broader ecosystems that support these initiatives. And I think it's the combination of these factors that really can make or break businesses endeavor to drive digital transformation forward.”