2020 was undoubtedly a year for change.
The COVID-19 pandemic disrupted our lives and business, forcing significant changes in the way we work, shop, and interact. Many of those changes are likely to continue. So, as we prepare for a new year, what digital transformation trends should companies look forward to in 2021?
Before we get to that, let’s clear up what types of digital transformation trends we’re reviewing. We’re not talking about what technologies will change the future in the coming year.
If you want an idea of what technologies are driving change in the telecom industry in 2021, check out our recent blog post on telecom technology trends. Several of the technologies mentioned there apply to other industries.
For this post, we’re going to focus on four trends that were either set in motion by or intensified by the pandemic. In our view, these are the trends that will shape digital transformation projects for the next year and beyond.
Trend 1: Digital transformation projects will focus on customer and employee experience.
COVID-19 dramatically and quickly changed the way we interact in both our business and personal lives. The mass disruption highlighted the need to focus on both your customer experience (CX) and your employee experience.
From grocery pickup to virtual doctor’s visits, more customer experiences shifted to digital channels. Successfully navigating that shift impacts the success of a company’s digital transformation and overall profitability. Companies that deliver a better customer experience bring in up to 5.7 times more revenue than competitors with bad customer experiences.
As a part of this trend, we expect companies to increase their investments in adopting modern CRM systems as well as customer experience and data platforms.
But COVID-19 changed more than how you interact with customers; it also upended how you engage your workforce.
Before 2020 most companies’ employee training and engagement efforts were focused on in-person and in-office activities. Human resources teams had to quickly adapt to a digital-first approach to creating a positive employee experience.
Common questions include:
- How do we onboard new remote employees?
- How do we train employees remotely?
- How can we provide self-service options to decrease in-person interactions?
Even before COVID forced many companies to ask employees to work from home, only one-third of employees report feeling engaged in their jobs. Low engagement can have significant impacts on output and performance. The same research also found that companies that can manage to increase employee engagement are 22% more profitable.
In 2021, you can expect digital transformations in human resources to include more digital onboarding and training tools, employee self-service options in HCM systems, and more remote collaboration and video conferencing tools.
Trend 2: Transformation projects will focus on improving data quality and analysis.
The second trend shaping digital transformation in 2021 is the need for quality data. Bad data costs U.S. companies an estimated $3 trillion a year. The need for accurate and useable data will only increase as companies switch to selling and delivering more products and services through digital channels.
In our previous trend reports and other blogs, we’ve written extensively about the potential of artificial intelligence. From personalized product recommendations on an eCommerce website to predictive analytics on potential business opportunities, AI will play a large role in your digital transformation. However, AI algorithms are only as good as the data sets that power them.
Ensuring process and data hygiene will likely receive increased attention in 2021 digital initiatives plans.
Trend 3: Business outcomes will drive projects instead of technology.
The third trend we expect for 2021 is a shift to focusing on the outcome of a digital transformation instead of the underlying technology. In the past, transformation projects were usually centered around a critical piece of technology or major software implementation.
For example, a large healthcare organization might roll out a new ERP to consolidate finance, HR, and supply chain functions into one system. These digital transformation projects followed the same formula:
How can we use ________________ (Oracle, Workday, Salesforce or any enterprise application) to achieve ________________ (business outcome such as increased sales or efficiency).
But in 2021, you can assume more transformation projects will drop the first part and form their projects solely around the business outcome:
How can we achieve ________________ (business outcome such as increased sales or efficiency).
Let’s look at this trend a little more closely and try to answer two questions. First, why is this change occurring, and second, what’s the impact?
The driving force behind the shift from a technology-centered to an outcome-centered approach to digital transformation is the proliferation of SaaS solutions. As more software companies implement SaaS-based subscription models, it’s easier for large enterprises to buy and implement software.
Large companies, on average, spend more than $4 million on SaaS subscriptions a year and use more than 280 different applications, according to 2020 statistics.
As companies begin to add more applications, the idea of implementing new software seems less challenging. So, you can expect digital transformation to start with a focus on the business objectives they’re trying to achieve.
Then companies will audit their current process and tech stack to determine if they can use existing or new applications to solve their problems. Gone are the days of picking one software and then deciding how you’ll implement and use it.
So, what does this shift mean for digital transformation in 2021?
This trend requires companies to invest in:
- New Ways of Training - As transformation projects involve more applications, the need for training and onboarding users increases. The ongoing pandemic makes in-person training an unfavorable option so expect companies to include more digital training or in-application guidance from a Digital Adoption Platform as a part of their transformation plans.
See more of the technologies changing training and human resources in our list of top tech trends for HR in 2021.
- Process Compliance and Analysis - A single process may involve three to five different applications. Companies will need ways to track how well the process is working and identify where users are struggling.
- Software Management - Companies need to know if they’re seeing the value from their software investment. The last thing a company wants is another application to become shelfware. Digital transformation plans will likely include more ways to measure the ROI of software and better under usage for licensing allocations.
Trend 4: Companies will opt for agile and flexible solutions
The final trend is not new, but something 2020 demonstrated as necessary, and that’s being agile in your digital transformation. Agile methodologies have long been popular with software developers and IT teams alike, but COVID illustrated how important it is to respond quickly to changing conditions. For 2021, you can expect agile and flexible solutions to be a part of companies’ transformation plans.
In retail, companies with agile eCommerce systems could quickly adapt to curbside pickup and did better than those with more outdated and harder-to-use systems.
For example, Target was an early adopter of curbside pickup and introduced its drive-up pickup before the pandemic. The only change they had to make to their experience was to change the way their mobile app confirmed the right person was picking up the order.
Before the pandemic, a store employee would scan a barcode on the customer’s phone. The company changed it to limit interactions, so customers received a 4-digit code to show the employees without rolling down their windows. It was a small change, but they could make it quickly because they had the existing infrastructure in place that allowed for fast updates.
Their efforts paid off. Target posted a record-breaking $23 billion in revenue in the second quarter, driven primarily by a 273% increase in same-day pickup orders.
The lessons go beyond retail and eCommerce. After an unprecedented year, no one knows what to expect from 2021, but you can bet companies will continue to invest in flexible and agile IT solutions to allow them to better adapt to changing market conditions.
Drive Digital Adoption Forward with Apty
Most companies started their digital transformation journeys before 2020, but this year certainly changed the course of many company projects. Spiceworks Ziff Davis reports that the COVID-19 pandemic is the driving force shaping changes around digital transformation.
Nearly half of all companies said they already have or plan to accelerate their digital transformation projects, and 76% of companies plan to make long-term IT changes as a result of COVID-19.
When you need to optimize and accelerate your digital transformation, Apty’s Digital Adoption Platform can help.
Apty provides on-screen guidance that walks users through complex processes step-by-step. Apty also allows you to track and measure your digital adoption initiatives and provides actionable insights for improving employee proficiency and productivity.