The International Data Corporation (IDC) released its Semester World Guide to Digital Transformation. The study predicted that companies worldwide would, during 2019, invest $ 1.18 billion in digital transformation. This represented an increase of 17.9% compared to 2018.
This meant that globally, companies were making significant investments into technologies to digitally transform their business models during these years. Investments in hardware and software accounted for over 75% of all digital transformation spending in 2019.
All of this happened before the pandemic, right? When the business landscape was operating in a state of ‘normalcy.’ The office was filled with employees, and everyone worked from a central location instead – not scattered to their homes. Undoubtedly, information is never safe when stored on a server; but now that everyone is operating from their home computers, security is especially pertinent.
If we break software spending In 2019 related to digital transformation, the total was $253 billion. The fastest-growing technology categories were IaaS (35.9% CAGR), application development, and deployment software. (26.7% CAGR) and commercial services (26.5% CAGR).
Craig Simpson, a researcher at IDC’s Customer Insights & Analysis group, stated, “Digital transformation is fast becoming the biggest driver of new technology and project investments among companies.” Our study has made it clear that companies that have invested heavily in digital transformation over the past 2-3 years are already reaping the rewards in terms of faster revenue growth and greater profits compared to companies lagging in initiatives and investments in digital transformation.”
One significant highlight of digital transformation was its ability to accelerate the Finance function.
Digital transformation, in the long-term, always costs businesses less and steers them towards growth. The most digitally advanced Finance departments in medium to large companies cost a business around 30% less as a proportion of revenue than companies that don’t automate their day-to-day activities and Finance functions.
This means despite a lower cost, analysts in top-performing functions spend 75% of their time on providing insight into the rest of the business, resulting in more efficient, digitally-driven Finance teams.
Currently, the financial sector sees a 15-20 percent investment jump into new technology, which is the most significant increase than in any other industry. Additionally, the financial sector investment into digital transformation is set to see a compound annual growth rate of 20.4 percent between 2017 and 2022, finds the IDC report.
“It is already clear from our research that the businesses which have invested heavily in digital transformation over the last 2-3 years are already reaping the rewards in terms of faster revenue growth and stronger net profits compared to businesses lagging in [new tech] initiatives and investments,” Craig Simpson, said in the report.
Regardless of the industry, you are in, new technology investments will redefine the future’s enterprise landscape. Before adopting new technologies, you need to ensure that you have your eyes set on all areas within your organization to ensure that the digital transformation improves your operation. Keeping the Finance function top-of-mind here, you need to account for a digital transformation to accelerate its processes and deliver more efficiency.
Again – the numbers stated above are about 2019 before the global pandemic shifted the business landscape. Since then, over half of the workforce has been moved to a home-working environment (emphasis here on the IT department).
It is critical for Finance to invest in cloud-based applications to ensure that all data is stored safely as workers aren’t operating from a central location such as an office. CapEx software needs to be implemented to ensure that companies don’t lose information.
Today’s businesses can only grow with intelligence. Technology is the answer to thriving in a global pandemic. The Finance function, which houses so much of that intelligence, needs to be driven by better decision-making, which can only be achieved with data. And that happens with investment in process automation to enhance Financial activities.
Analyst Bottom-Line
Evolution for businesses that want to survive is inevitable in a COVID-19 world. Can we afford to put off a digital transformation for another day, week, month, and year? Maybe. But, know that you will lag if you don’t implement the necessary technology to carry you through into a new business landscape. This is not the time to put off investment in digital transformation. You need to ensure that the Finance department and all its data are secure. Becoming more efficient and profitable happens with a migration to the cloud. It’s time to evolve. It’s time to enhance your organization’s Finance function to ensure you are making the best investment decisions regarding your capital spending.
