‘Tech architecture is becoming business architecture, enterprises recognize that’

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‘Tech architecture is becoming business architecture, enterprises recognize that’
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The future of digital enterprise in the post-pandemic era
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Sharath Srinivasamurthy, Research Director, Enterprise Solutions and ICT Practices Team, IDC, brings nearly two decades of experience in mapping Indian enterprises’ technology and digital transformation journeys. In this extensive conversation with Business Insider India, he talks about how Indian organizations will accelerate their digital agendas, what their key priorities are and how the industry’s growing skills shortage can be addressed.

Edited excerpts:

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Over two years into the massive shift to being ‘digital-first’, how are Indian enterprises reassessing the long-term impacts of their digital initiatives?

Indian enterprises have shown tremendous resilience in the last two years, adapting well to the changing market dynamics. They have invested in large-scale reskilling of existing employees on digital technologies, hired new talent from the market, established strategic partnerships with various digital ecosystem players, developed solutions/IPs, set up innovation labs, and executed multiple acquisitions to develop new capabilities.

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The IDC Future Enterprise Resiliency Survey (FERS), October 2021 shows that 92% of Indian enterprises realize the positive impact of digital transformation (DX) on the top and/or bottom line by 10% to 20%. Enterprises recognize that technology architecture is becoming business architecture and want to use technology to drive more revenue-generating activities.

Indian enterprises will look to better position themselves against short-term volatility while staying on course toward long-term outcomes such as digital revenue growth. With the adoption of the ‘digital-first’ mentality, along with the ongoing pandemic, Indian enterprises are focusing on investments in technologies that drive automation of IT resources and business processes.

In the post-pandemic era, if we may call it that, do you see this digital momentum continuing or will organizations take a pause to strategize further?

The coming years will witness an acceleration in the adoption of digital technologies. In fact, IDC estimates emphasize that digital transformation (DX) spending in India is growing at a healthy compound annual growth rate (CAGR) of 11.90% from 2020 to 2025 and is expected to approach $99 billion as companies build on existing strategies and investments, becoming digital-at-scale future enterprises.

By 2023, a whopping 75% of Indian enterprises will have comprehensive digital transformation (DX) implementation roadmaps, up from 27% today, resulting in true transformation across all facets of business and society.

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What will be the key areas of focus for enterprises’ digital investments in this context?

While the momentum will continue, Indian enterprises will focus on a few key areas to derive benefits out of their digital investments.

  • Having the right KPIs to measure and convert them to business outcomes: Indian enterprises will relook at how they measure the effectiveness of their IT teams and investments. They need to tie IT initiatives to business outcomes.
  • Keeping pace with changing technology and being innovative: It is always difficult to keep pace with ever-changing technology. However, it is critical to experiment with new technologies. The mindset of innovation will be the focus of Indian enterprises. Innovation need not be something big, something pathbreaking. It can be incremental small changes, but they will add in the long run.
  • Developing a culture of agility: Indian enterprises will focus on agility in trying new products and services to keep improvising. Since there is an accelerated demand for digital technologies, the war for digital talent will continue in 2022 as well. Indian enterprises will continue to focus on reskilling existing employees with digital technologies
  • Harnessing data: It is critical to breaking the functional and data silos. Indian enterprises will focus on analyzing the data on an ongoing basis. They will leverage AI to manage their IT operations efficiency and reduce the cost of operations.
Skill shortage is coming across as a major roadblock for organizations in achieving their innovation goals, especially around digital/cloud technologies, and AI. How is this affecting their digital transformation roadmaps?

Transformation projects that would otherwise take ages to get approvals were given the green light due to the pandemic, as it became a necessity for Indian enterprises for continued operations and product delivery. With this acceleration came a realization that a lack of skills was creating a bottleneck in the transformation.

DX-related IT skill shortages will affect 90% of global enterprises by 2025, costing over $6.5 trillion globally through 2025 due to delayed product releases, reduced customer satisfaction, and loss of business according to IDC FutureScape: Worldwide Future of Work 2022 Predictions.

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When Indian enterprises are ‘underskilled, as opposed to understaffed, the consequences are similar, but the remediation is more complicated. The lack of skills has an adverse influence on the key business metrics including the profit line.

Though a majority of the demand for skilled personnel is among IT professionals to implement and manage the technology underpinning the business transformation, there is also an increasing demand for digital skills in the business. These include leadership, analytics, coding, and managing projects in agile environments. Employees who have those skills can help take their businesses to the next level.

How can Indian enterprises continue their DX journey against the growing skill shortage?

Indian enterprises have several choices to address the challenge of underskilled employees —focus on addressing skills shortages through training, engage third-party support, and automation of processes, while gig workers are also being utilized.

According to IDCs Digital Transformation survey, India 2022, Indian enterprises report that poor resource skills or the availability of the right skill set for digital transformation or infrastructure modernization is among the top three challenges that Indian enterprises encounter. Indian enterprises invested in online training to reskill employees on digital skills and be prepared for expansion plans once the crisis ends.

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Some are collaborating with third parties such as IT service providers to invest in reskilling existing employees to bridge the skill gap. Indian enterprises are also looking to automate processes to reduce the impact of skill shortages. The demand for gig workers has also risen as they are reliable in accomplishing a business plan within a limited time frame. There is an increased urgency to adopt AI in business processes to allow employees to focus on strategic and core functions instead of performing repetitive tasks in a traditional setup.

So, Indian enterprises should take a hybrid approach of having skills in-house and partners who can bring the right skills to the table. Indian enterprises have built capabilities through reskilling and partnerships in the areas of digital technologies, customer experience, automation, cloud (migration and modernization) , next-gen security, AI, IoT, etc. Solving the skills equation has become a C-suite issue, and Indian enterprises are moving to create a culture of continuous learning and collaboration that will support their digital resiliency efforts in the future.

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