Digital technology changing our lives

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Why companies should invest in innovation to compete in a digital economy

December 1, 2017

Innovation Factory

At the 4th World Internet Conference (WIC) in Wuzhen, which drew to a close yesterday, China announced that its digital economy reached 22.58 trillion yuan ($3.4 trillion) in 2016, accounting for nearly a third of the national GDP. The same report said that 22% of the world’s current GDP is closely related to digital economy.

A report from IDC predicted a 42% increase in digital transformation expenditure in the next two years. In another survey of UK digital leaders, over half of respondents expect to invest more than £10 million in digital technologies by 2020, and 85% of senior executives said they planned to invest in artificial intelligence (AI) and Internet of Things.

Chief Information Officers (CIO) are also pinpointing cybersecurity and AI as the technology trends that will change their jobs most significantly. While they believe that digital business is making their IT organisations better prepared for change, a Gartner report shows how digitalisation is turning CIOs into leaders: to remain relevant, they need to align their activities with the business priorities of their organisations.

Embracing digital transformation
Yet it seems not everyone is so willing to adapt to increasingly digital environments. A global report published last year found that many organisations are reluctant to embrace digital transformation. In addition, 55% of digital decision-makers said they had a year or less to make digital inroads before suffering financially and competitively, with the report warning that businesses must digitally transform to survive, and soon.

But even if companies are willing to accept change, many of them aren’t prepared for digital innovation. According to the majority of IT professionals surveyed by Commvault and Quadrant Strategies, there is a wide gap between management expectations and the actual readiness of their IT divisions, who feel they lack the skills and technology to create the foundation for digital change.

The consensus is that companies must prioritise innovation initiatives to effectively compete in a digital economy. A digital business study by the MIT Sloan Management Review revealed key lessons for companies wanting to improve their digital efforts, which includes spurring workplace innovation and digitally minded culture, scaling small digital experiments and securing leaders with the vision necessary to lead digital strategy.

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