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Digital transformation: Biggest IT budget priorities for 2019


Digital transformation is one of the key buzz phrases of the decade. TechRepublic talked to experts to find out how they predict companies will spent their IT dollars on digital transformation.

Participants in the roundtable included:

  • Amy Chang, senior vice president of collaboration, Cisco
  • Jeff Wargin, vice president of product management, Duck Creek Technologies
  • Pete Blackshaw CEO, Cintrifuse
  • Alvina Antar, CIO, Zuora
  • Bill Schmarzo, CTO of IoT and analytics, Hitachi Vantara
  • Mike Cowden, general manager, Slalom Build
  • R.V. Raghu, CISA, CRISC, ISACA board director and director of Versatilist Consulting India Pvt. Ltd
  • Dave Williams, vice president of global product marketing for enterprise software, SAP
  • Ronell Hugh, group product marketing manager, Adobe Experience Platform

SEE: Digital transformation: A guide for CXOs (Tech Pro Research)

TechRepublic: How will digital transformation plans affect tech budgets in 2019?

Alvina Antar: Those plans will prioritize smarter, lighter Software-as-a-Service (SaaS)solutions over big unwieldy on-premise projects. Systems that will let companies rediscover their customers. As more companies turn from static product sales to ongoing service relationships, we’re seeing an acute need for back-end solutions that give executives much more transparency into their customer base. Large companies are realizing that they have to unlearn some of their old ways. It’s imperative that they stay relevant in the face of growing competition from newer technologies and nimbler competitors. This requires a broad systemic change in mindset, systems and practices. It certainly doesn’t mean just asking for a bigger tech budget.

Dave Williams: In the past few years, finance’s mission has changed. It’s not all about being a scorekeeper anymore; it’s about wanting to be a strategic partner to the business, helping the other business functions make better, more intelligent decisions. This means that finance has to be more collaborative with other business functions, such as, the HR, Sales, and Marketing teams. In 2019, businesses who are going through a digital transformation will need the tech and processes in place to gain actionable insights and align strategic, financial, and functional plans on the same platform, allowing everyone involved to collaborate together and act with agility towards common goals. Secondly, the technologies available now, offer solutions that should be taken advantage of. There is all of this data available, that allows businesses to forecast better using predictive analytics and discover things they may not have known, leveraging embedded machine learning. In addition, natural language can be used to search for insights that can help anticipate a downfall or an issue beforehand and course correct before it becomes a larger issue. We’re in a time where organizations that invest in intelligent technologies, like analytics and ML, will only drive their business forward. In 2019, the businesses that understand that it’s worth investing in technology, that can enable them to predict potential issues, will have the biggest pay off in the long run.

R.V. Raghu: Emphasis will be placed on using digital transformation as a platform to fuel innovation and operational efficiency, which will mean that digital transformation spending will move from being considered an outlier, to something that is considered necessary for enterprises to remain relevant in 2019 and deliver value to customers and other stakeholders.

Jeff Wargin: They will be near, or at the top of, many insurance carriers’ priority lists, and will likely be a primary focus of IT budgets at carriers that are still running on-premises core systems. And, for insurers that are already employing the latest technologies, there will remain a need to invest in continued innovation. We expect that there will be a significant focus on taking advantage of the rapidly evolving market for new solutions, regardless of digital maturity.

Pete Blackshaw: In today’s digital economy, consumers are proactively reaching out to brands, companies, nonprofits, and even government, more than ever before. They want answers. They want advice. They want guidance. They are ringing our bell, and they are increasingly empowered by mobile devices of all kinds. And the only way for companies to respond is to build a digital concierge.

Mike Cowden: I’ve seen a bit of a “shiny object” mentality over the last five years; there’s so much advancement in technology with AI and IoT and ML. There have been a lot of companies that have been dabbling. And so I think the focus will shift next year to ensuring these technologies really drive value. We’re going to hear a lot words like: “value,” “efficiency,” and “putting technology to work for the company.” It’s been fun to play around and try out all these new technologies, but I think that CTOs are going to be under a lot of pressure to focus on what’s going to drive value to both the top-line and bottom-line, and push forward that business strategy.

TechRepublic: Will more money be budgeted for digital transformations in 2019?

Wargin: Early on, it looks likely. Insurance carriers are realizing that legacy systems are one of—if not the biggest—roadblocks to innovation, customer engagement and satisfaction, and data-driven decision making. There is increasing pressure to modernize through core systems transformation initiatives, with most of what we are seeing being driven by widespread adoption of SaaS.

Blackshaw: Can we deliver great, emotionally literate service in the context, and do it at scale? My contention is that we can, but it must be addressed thoughtfully. So yes, more money has to be budgeted for this digital economy that continues to rise.

Bill Schmarzo: As traditional organizations of all forms look to take on their digital-friendly counterparts, spending on digital transformation initiatives will surely be on the rise. The move from monolithic, legacy systems to more nimble cloud-based, microservices approaches will continue to sweep through businesses looking to gain competitive advantages by making better use of development resources, tapping into new sources of data, and offering more compelling user experience to their customers. Organizations will slowly start to realize the difference between digitalization, which replaces human-centric processes with sensors to gather usage or performance data, and digital transformation, which uses digital technologies such as machine learning, deep learning, and blockchain to create new sources of customer and market value that drives the reengineering of the organization’s business models.

Cowden: I don’t really think more money is going to be budgeted for digital transformation; but, I believe the allocation of the money people get is going to be used differently. Budgets are going to be used less in large-scale projects and much more focused on the application of many of their already-existing investments in cloud technology, really trying to push for efficiency and some cost savings. CTOs are telling me they’ve made a lot of investments in the last five years in the cloud and that they really need to get those investments working for them to drive some real value into their organizations. 2019 will be about preparing companies to become technology-first companies, for efficiency, for speed-to-market, and the ability to harden against potential slow-downs in the market.

TechRepublic: What will the key trends be in 2019 where tech budgets are concerned?

Amy Chang: Bottom line: Great technology for the huddle spaces where teams meet must be a top budget priority for 2019. With commute times getting longer and longer, and the war for talent getting fiercer, companies need to take a hard look in the mirror and seriously consider the employee experience in their office spaces. When employees come to the office, they expect the experience to be exponentially better than the one they get in their home office. Video conferencing, whiteboarding, co-creation…at the touch of a button. Not only does the video need to be amazing and the sound quality great, it needs to be super simple to use and consistent from one space to the next. And it needs to let them seamlessly carry on with the work wherever they go next—whether that’s Belarus or back home. Employee experience is not an item to skimp on—it is one of those “invest or die” areas for 2019.

Schmarzo: For leading organizations, big data and data science initiatives will be driven by the business, not IT. Consequently, organizations are going to need to increase their efforts to educate and arm the business stakeholders, with respect to how to leverage data and analytics to power their business models. The business leaders will own identifying, validating, vetting, valuing, and prioritizing the areas of the business where big data, IoT, and data science (e.g.: machine learning, deep learning, artificial intelligence) can drive business outcomes. There will be a dramatic increase in awareness by business stakeholders of the business model-changing potential of machine learning and deep learning. Not only do continued proliferation of success stories help, but tools like auto-ML will place simple machine learning capabilities into the hands of the business stakeholders, which comes with its own risks. Data lakes will continue to be a cash sinkhole until organizations change the data lake mindset from a “data lake saves me money,” by off-loading overly-expensive data warehouse ETL/ETL and data archiving tasks, to a mindset that a “data lake makes me money,” by uncovering customer, product, service, operational, and market insights that lead to new revenue or monetization opportunities.

Ronell Hugh: Brands can no longer afford to not pay attention to their data. It’s the lifeblood of the experiences they deliver to customers. However, many are still struggling to get their data in a state where it’s actually usable. In fact, according to a study by MIT Technology Review, 78 percent of companies struggle to digest, analyze, and interpret their current volume of data. A single view of the customer is the mecca for all companies and is critical to providing the best customer experiences, but it’s complex to achieve. It requires resolving identity across many different data sources from different interactions across online and offline channels, synthesizing and controlling the data so it’s value can be realized instantly, and applying the appropriate governance and privacy to adhere to regulation policies like GDPR. Piecing together legacy software to create this unified customer view is painful and ineffective. In 2019, we’ll see many companies thinking differently about data management and investing heavily to get their data in order to fully drive digital transformation forward.

TechRepublic: Where do you predict 2019 tech budgets will be focused for companies undergoing digital transformations?

Wargin: The ability to make proper use of data, the ability to be truly customer-centric, the ability to connect with the rapidly-expanding insurtech ecosystem, and the advantages of SaaS core systems will be key drivers of IT spending in 2019 for a large percentage of carriers-both in the US and around the world.

Raghu: I believe that a key area of focus will be security, considering that much of the technology that is being adopted is new. A renewed focus on security is essential to not only keep things safe within the purview of the new technology, but also to interface with existing technology. A second area of focus would be training, simply because without appropriate and ongoing training, employees in the organization might become the weakest link. ISACA’s 2018 Digital Transformation Barometer research shows that organizations will also be allocating budgets for testing and assessing technologies that may be perceived as being risky, since this information could help with informed decision making and adoption.

Blackshaw: One area that I believe is of increasing importance is what I think of as “multi-sensory experiences.” That’s the world of voice, augmented reality, and even aspects of gamification. This is a massive opportunity for brands, but we need to go crazy deep into consumer behavior and motivations to take full advantage of this burgeoning market.

Schmarzo: It will be focused on the hiring and firing of second generations Chief Data Officers. I predict that 2019 is the year when organizations’ Chief Data Officers, under immense pressure from the CXO level, laser-focus their efforts around data monetization. The successful Chief Data Officers will look less like a mini-CIO and more like a business stakeholder, with a strong background in economics. Part of the data monetization problem resides in the fact that many organizations perceive the term “monetization” as representing a “value in exchange” (what someone is willing to pay me for my data) versus “value in use” (leveraging the insights buried in the data to create new sources of value). Another part of the tech budget will be focused on IoT/Edge computing. Too many IT companies think of IoT as just another data source to be housed in their storage devices. But IoT is more than just another data source;IoT represents ability to take actions at point of data capture and to apply machine learning at data capture to optimize operational decisions. Organizations will have to invest significantly to understand the sources of customer, product, and operational value created at the edge, and that’ll go beyond just buying a bunch of IoT gateways.

Cowden: When you look at predicting 2019 tech budgets and you look more at a macro level at what’s happening in the markets with the massive swings up and down, I’m hearing a lot of conversations among CTOs about the need for industry companies to become technology companies. You take those two together and I think the technology budgets in 2019 are going to be around efficiency and applying the technologies to really drive as much value from those investments. If you think about the cloud for example, lot of companies have moved applications to the cloud. But just moving applications to the cloud in 2019 isn’t going to be enough. Companies are going to be focused on maximizing the value of that investment in the cloud and move more towards a cloud-native mindset for an organization. We’re going to see a three-legged stool approach. First, we’re going to see a focus on engineering application development; applications are going to need to be really nimble, change rapidly and respond to market demand. Then then there’s the operational component-both in infrastructure ,as well as in DevOps, DevSecOps and cyber-liability. You’re going to really want to automate everything you possibly can, driving that mindset of value and efficiency. This is going to help teams move more rapidly and move things to market more quickly. And the third leg is data and analytics; we’re going to see a focus on how you understand what data to look at and where you go next. This is going to drive efficiency and speed to market. And so these three legs of the stool are going to have to come together in 2019 because you can’t have one without the other.

TechRepublic: Will digital transformation be more important in 2019 than in the past?

Wargin: Will digital transformation be more important in 2019 than in the past? For carriers that have yet to modernize their core systems and business intelligence capabilities, absolutely. As more and more carriers move to the cloud and adopt advanced analytics tools-not to mention integrating with insurtechs and microservices providers-the survival of those who have yet to make these moves will depend on how rapidly they can change course and take on true digital transformation. In many cases, insurers that do not employ modern platforms, and solutions are already behind the curve. We expect to see a large number of carriers racing to catch up simply to stay relevant and solvent. Beyond that, carriers that are already well-modernized will continue to invest in innovations that keep them ahead of their competitors.

Cowden: I would say a loud yes. Over the last five years, it’s been great for everyone in technology. The pace of change has been rapid. There are a lot of firms out there that are creating some amazing technology advances. But, as the market starts to indicate caution, digital transformation is going to become more and more important. It’s going to be what I call “focused digital transformation,” meaning focused on the core of your business. What is that core of your business? How do you make it more efficient? How do you beat your competitors to the marketplace? How do you get the most out of every single man-hour you’re using to implement this digital transformation? How do you cobble together a solution that is holistic around the three legs of the stool that are data/analytics, the operational and infrastructure components, and the applications themselves? So I believe that the companies that are really focused in 2019 are going to be the ones that excel. We’re not talking about large $25 or $30 million projects that are going to take several years. These companies will need to work with partners that understand the different technology levers they need to pull, and can implement them in weeks—not months or years—to make digital transformation real, not just an idea.

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Image: iStock/Waldemarus



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