Digital Transformation

New IDC Study – 66% Would use B2B Outsourcing to Support Digital Transformation

Over the past few months I have posted several blogs relating to digital transformation across the supply chain. My last blog discussed how OpenText’s Enterprise Information Management (EIM) solutions could potentially support an Internet of Things (IoT) platform and an article on Spend Matters looked at how B2B integration and B2B Managed Services are a core part of today’s digital transformation projects.

So what’s driving this interest in digital transformation?  After all ‘digital’ emerged in the 1980s but this time around companies around the world and in different industries seem to be taking it more seriously. Why? Customers are driving the need.

At OpenText I have met supply chain executives around the world and the subject of digital transformation is a hot topic, especially as it allows companies to leverage new and exciting technologies such as IoT and wearable devices.

In customer meetings two key trends started to emerge, firstly companies were keen on establishing a ‘digital backbone’ across their business (to integrate external trading partners to internal business systems) and secondly companies wanted to consider outsourcing the management of their B2B integration platform so that they could focus internal IT resources on new digital transformation projects.

Last year this got me thinking, does digital transformation drive supply chain transformation? Certainly an interesting theory and one that I was keen to explore in more detail.Digital Transformation

Over the years we have completed research projects with the analyst firm IDC so I was only too pleased to engage with IDC on a new study relating to digital transformation in the supply chain. The timing for this study was perfect, not only from a market interest perspective, but digital transformation is a key focus for OpenText and through this study I wanted to prove that B2B Managed Services could support digital transformation initiatives.

I want to use this blog to highlight some of the key findings from the study. Due to the large amount of survey data obtained from this particular study I will post further blogs by different industry sectors, regional aspects and also the technologies being adopted today. So where shall I start?

Last December we worked with IDC to send out a survey to 254 companies across five different industries and seven countries around the world. I wanted to test the hypothesis of whether digital transformation was driving supply chain restructuring initiatives. Over the years we have found that when companies restructure their supply chains they will consider outsourcing their B2B integration so they can focus on the restructuring process at hand.OpenText Digital Transformation

Overall, digital transformation was widely known, as a definition, across nearly all the companies surveyed, only 7% were not sure what digital transformation actually entailed. 57% of respondents said that their business had appointed a Chief Digital Officer (CDO), however some believe this is more of a transitional type of role as it is expected that the traditional CIO role will absorb this activity moving forwards.

However when you look at the role of the CIO in recent years it was about ensuring for example that an ERP system goes live on time or a new warehouse management system could connect into various supply chain solutions. Today, and maybe this is why the CDO role has emerged, the CIO has to embrace new types of networks, new types of devices connected to these networks, and new types of information coming off these devices that needs to be processed, analyzed and then archived.Overall, digital transformation was widely known, as a definition, across nearly all the companies surveyed, only 7% were not sure what digital transformation actually entailed! 57% of respondents said that their business had appointed a Chief Digital Officer however some believe this is more of a transitional type of role as it is expected that the traditional CIO role will absorb this activity moving forwards. However when you look at the role of the CIO in recent years it was about ensuring that an ERP system goes live on time or a new warehouse management system could connect into various supply chain solutions. Today, and may be this is why the CDO role has emerged, the CIO has to embrace new types of networks, new types of devices connected to these networks and new types of information coming off these devices that needs to be processed, acted upon and then archived.

In terms of the maturity of digital transformation projects, the survey had a range of results from 36% of respondents saying they considered themselves as a ‘Digital Transformer’ (business is a leader in its markets, providing world-class digital products, services, and experiences) to only 8% who said they considered themselves as a ‘Digital Resister’ (business is a laggard, providing weak customer experiences and using digital technology only to counter threats). So clearly there is more work to be done to help companies move along the digital transformation maturity curve and of course OpenText is here to help.

The interesting observation in the enterprise world is that there are five pieces of disruptive technology that have been embraced more than other technologies and these same technologies are driving consumer driven markets as well.The interesting observation in the enterprise world is that there are five pieces of disruptive technology that has been embraced more than other technologies and these same technologies are driving consumer driven markets as well.

For the purposes of this study we wanted to understand which technologies were being adopted across supply chains and how these adoption rates would grow over the next three years. The table below provides an idea of the technologies that we surveyed against as part of the study, this chart shows technology adoption at the time the study was conducted in December 2016.OpenText Digital Transformation

From a technology adoption point of view there were some interesting observations. 70% of respondents said they were using B2B cloud networks today, interesting given that cloud really started to go mainstream in 2010. After cloud, IoT projects were the next most important investment area but interestingly machine learning and artificial intelligence is going to have the fastest growth rate over the next three years. Some other observations:From purely a technology adoption point of view there were some interesting observations. 70% of respondents said they were using B2B cloud networks today, interesting given that cloud really started to go mainstream in 2010. After cloud, IoT projects were the next most important investment area but interestingly machine learning and artificial intelligence is going to have the fastest growth rate over the next three years. Some other observations:

The great thing about this study was that it was cross industry and covered the main industrial centers around the world. Given IoT is one of the main focus areas I thought it would be interesting to highlight the benefits that companies in different countries have realized from this disruptive technology. The table below ranks the benefits of IoT across some of the countries surveyed as part of this project.OpenText Digital Transformation

In addition to regional cuts of the survey data, there are detailed findings at an industry level. The chart below shows three of the five main industries that were surveyed and the expected benefits these industries have realized with the deployment of IoT based solutions across their supply chains. Needless to say many hours could be spent analyzing all the technology adoption levels by different countries and different industry sectors!OpenText Business Network

So then moving on to how digital transformation is driving supply chain related restructuring initiatives, once again some really interesting findings as can be seen by the following statistics.OpenText Digital Transformation

In order for companies to implement new digital transformation strategies, the survey demonstrated that there is a certain amount of preparation or IT restructuring that has to take place before new technologies can be deployed across a supply chain. However to ensure that companies can focus on this restructuring and then implement these technologies with ease, there are certain business activities, such as B2B integration, that could be outsourced to a trusted partner.OpenText Digital Transformation

In analyst related studies there is usually a ‘golden nugget’ of information that helps to justify the whole research project. So when we asked the question about whether outsourcing the management of B2B integration would help free up internal resources to focus on new digital transformation initiatives, we found a surprising result.

66% of respondents said they would consider outsourcing their B2B integration to a trusted partner. This was an interesting study for another reason, it demonstrated that companies were thinking about their EDI or B2B integration strategy when considering the adoption of new leading edge technologies such as IoT and machine learning. This also helped to demonstrate that EDI was in the next stage of its evolution, a journey that has lasted more than 45 years so far.OpenText Digital Transformation

I have only scraped the surface in this blog with some of the results from this new study and I have more blogs planned that will provide further technology and industry specific insights from our new study, as well as webinars in the near future with IDC to discuss the findings.

In the meantime if you would like to download a copy of this new IDC study then you can do so here.

About Mark Morley

Mark Morley
As Director, Strategic Product Marketing for Business Network, Mark leads the product marketing efforts for B2B Managed Services, drives industry and regional alignment with overall Business Network product strategy and looks at how new disruptive technologies will impact future supply chains. Mark also has over 23 years industry experience across the discrete manufacturing sector.

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