The transformation of digital
Technology was one of the early heroes of the pandemic, but how are businesses’ long-term digital strategies evolving? Jane Douglas finds out for the BVCA Journal.
In the space of a year, organisations have stopped talking about the Fourth Industrial Revolution and started living it. Where once emerging technologies such as cloud and artificial intelligence (AI) were part of long-term plans, they are now at the centre of investment strategies for competitive businesses.
“We’ve seen a rapid embrace of disruptive technologies, starting at the beginning of the pandemic and continuing throughout,” explains Paul Henninger, Head of Data-Driven Solutions at KPMG UK.
“Technologies like automation, relatively advanced AI, such as natural language analytics, machine vision and equally just the use of data in real-time decision-making.”
Organisations had been investing in these technologies prior to the pandemic, often experimentally, with the objective of keeping up with trends, but the pandemic changed the playing field.
“Disruptive technologies are disruptive because they introduce risk and if your business overall is growing by 6%, then the risk you take on by adopting a natural language solution to process invoices is meaningful. When the pandemic hit, the level of disruption it caused made the relative disruption of emerging technology seem much more palatable,” explains Henninger, adding that KPMG has subsequently seen emerging technologies move to the centre of organisations’ investment strategies.
Necessity has been another driver of this trend. “Projects that two years ago would have been a more conventional process job have become much more technology intensive because businesses need to work quicker, faster, more accurately, with better information,” says Henninger.
New priorities
The rapid transition to all things digital is good news for those working in the right areas of the technology sector, but there is a payoff to this windfall. “There is a lot of demand out there, but there is more pressure on technology companies to be able to demonstrate value. You don’t see digital projects where the metric that’s used for success is you turn it on and the technology works. The measure of success is the operational outcome – the cost saving, the increase in the number of people coming to the website, the improvement in customer experience metrics and things like that,” says Henninger.
The focus on outcomes means offering integrated solutions is even more important for technology companies. “The big ones always have the portfolio approach, but even the smaller ones have started to look at adjacencies – it’s a lot harder to survive as a graph analysis company or just as a company that provides a widget. You need to have an ecosystem that’s going to solve a problem,” says Henninger.
Bernhard Schaffrik, Principal Analyst Serving CIO Professionals at global market research company Forrester, agrees that automation projects now have value at their core. “About a year ago we were seeing that companies in a growth mode were investing in cutting-edge AI-infused robotic process automation (RPA) to play around with because they could afford to, and with the ambition to be ahead of their closest competitors,” he says. “What we see now is that these trends are shifting towards the more basic RPA tooling. What I mean by basic is helping people that were not really in their focus groups pre-pandemic, like assistants, people who do lots of data shuffling from spreadsheets into Salesforce or SAP-related systems.”
Although driven by necessity as they adapt to remote working, organisations are realising the productivity gains that can be found in even basic automation, driving digital further into the core of business strategies.
Real-time
Another long-term technology trend emerging from the pandemic is a focus on real-time analytics. Perhaps the most prominent manifestation of this trend is the way governments have tracked the spread of the virus and its impact daily, drawing together data to inform policy in near real-time. Behind the scenes, businesses are also adopting real-time data and analytics in response to the market volatility and unpredictability created by the pandemic, using technologies that were previously more experimental.
“Whether it’s work we’ve done with government or the telecommunications sector or retailers, there’s a need to have a much more rapid view of what’s going on today and what’s likely to happen tomorrow,” says Henninger. Cloud infrastructure, AI and analytic technologies that use a smaller amount of data to predict outcomes are some of the underlying technologies behind the trend. “That’s given some of our clients and others an ability to understand what’s going on in their business in real-time – and that could mean day to day or week to week – rather than taking the temperature of the business once a month,” says Henninger.
Indeed, even before the pandemic, Gartner was estimating that more than half of major new business systems would incorporate real-time context data to improve decisions by 2022. The pandemic is likely to make this an even bigger priority.
Platforms take off
Behind the array of different technologies being adopted at pace, Henninger thinks there is something structural happening. “You can see it in the areas that have really boomed, the Netflixs, the Amazons, some of the new fintech payment technologies, where the platforms have become critically important.”
There is a vast amount of technology driving services on a platform like Amazon. “Machine vision, cloud, automation, physical robots, software robotics – all of that is happening when I click on a button for hand cream and it shows up 10 hours later,” explains Henninger. The strength of platforms is in making those advanced technologies accessible and useful to a larger group of small businesses or consumers. “Platforms come together combining lots of technologies into a holistic solution that responds to demand quickly, pushing the Fourth Industrial Revolution into companies and pockets of the economy where it just didn’t exist before.
“That’s an interesting holistic change and we’ve seen our more traditional clients start to embrace that as well,” he adds. “So if you’re a big bank or insurance company or a big anything, you’ve started to think, ‘what is our role as a platform provider?’”
So, as elements of the Fourth Industrial Revolution become day to day during the pandemic, such as cloud infrastructure, there are less obvious but still fundamental changes happening around how technology relates to business operations. “There are going to be winners and losers, and that has a lot to do with understanding what it is to build or navigate in the context of platforms,” concludes Henninger.
Workplace technology trends
Social distancing and remote working have opened up new challenges for businesses that technology companies are working to solve. Here are some of the themes starting to emerge.
Employee experience
“We see big employers asking about technologies that keep up employee motivation and employee experience. The trend is towards a personal bot for every work-from-home office worker,” says Bernhard Schaffrik, Principal Analyst Serving CIO Professionals at Forrester, describing the technology as like Alexa for the workplace. “That could involve voice-interaction, a sophisticated chatbot that allows you to retrieve data from systems and helps you in your daily work as you are working remotely. This is a trend we are seeing and companies are asking for that. Unfortunately, these personal assistants are not really enterprise-grade yet.”
Enabling individuals
Wayne Kurtzman, Research Director, Social and Collaboration at international market research company IDC, says 56% of companies globally and 96% in North America will invest in team collaboration applications in 2021. “Security, video conferencing applications, as well as traditional productivity office suites and also e-signature software are the largest areas of projected spend,” he says. “But that will change over the next couple of years – we will still see collaboration, but we will also see enabling tools for individuals.” That will involve a workspace customised for each worker, Kurtzman explains, allowing any worker – employee, contractor or frontline worker – full access to any technology they need from any device. “The 1980s promise of a workspace is coming to fruition now that the tech has caught up with the dream.”
Integration
Echoing the broader trend towards solutions-focused technologies, Kurtzman sees integrated applications as a major trend coming through in the workplace technology market. He gives an example from video conferencing: “Once you can get the transcript of a video conference, AI can @ mention people who were talked about in the meeting and keep records, can perform a lot of intelligence behind the scenes that makes it easier for workers. If you need to catch up on the meeting that was recorded, intelligence will be able to highlight the items you were most interested in and almost make it a best of show of that meeting for you. It’s in beta now so we’ll see that from some vendors in 2021.”
This article is from the BVCA Journal spring edition, published March 2021. BVCA members can access the full publication here.
This Spring issue explores ‘how to do well by doing good’ as we examine the environmental, social and governance opportunities for venture capital; and reflects on the work-life rebalance and what this new employee-employer dynamic means for talent retention. This bumper issue also features an in-depth interview with Alice Hu Wagner on what it takes to address structural inequality; a detailed look into what makes Edinburgh such a thriving hub of financial, tech and life science expertise, and much more.
