Adopting more digitalization in firms separates the thrivers from the survivors
Businesses across the world were propelled into the digital-first era by COVID-19, which has been both beneficial and disruptive. When the pandemic struck, technology had already begun to transform various sectors of the economy, business models, and supply chains in response to consumer demand for more touchless and seamless digital experiences. The result of this shift has been the rapid adoption of digital technologies, such as cloud computing and Artificial Intelligence, which have enabled businesses to power better customer experiences while reducing costs.
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In the Middle East, Turkey, and Africa (META), digital transformation investments are expected to more than double between 2021 and 2026, according to the most recent forecast from International Data Corporation (IDC). Over the next five years, spending on digital transformation in the region is forecast to grow at a compound annual growth rate (CAGR) of 16 percent, reaching $74 billion in 2026 and making up 43.2 percent of all ICT investments that year. This substantial growth in digital transformation spending reflects the increasing importance of technology in enabling regional economic development and improving operational efficiencies.
IDC revealed that it expects telecommunications services spending to increase 3.6 percent year on year (YoY) in 2023 to reach $133.9 billion, with IT spending set to grow 4.3 percent YoY to $99.9 billion. As the region's digital economy increasingly takes shape, IDC forecasts that digital transformation spending in the META region will top $48.8 billion in 2023 and accelerate at a compound annual growth rate (CAGR) of 16 percent over the coming years to cross the $74 billion mark in 2026.
The digital and technological investments that many organisations made during the pandemic to increase resilience may be put to the test in 2023 in areas such as customer experience, operations, and financial management. The key to separating the thrivers from the survivors will be the implementation of further digitalization in crucial areas and a more rapid shift to a "digital business" approach.
At this point, enterprises must switch from traditional infrastructure, which is ineffective, rigid, and hard to scale, to highly responsive, resilient, and adaptable infrastructure that spans edge, core, and cloud to adopt a "digital-first" approach. The digital-first approach allows businesses to be agile and responsive, ready for rapid market changes, and able to gain a competitive edge.
Investments in technology and interoperability by the ICT sector have helped make a huge change in how information and money move around the world economy. Globally, IDC expects spending on digital technology by organizations to grow at eight times the economy in 2023, establishing a foundation for organizations to drive operational excellence, competitive differentiation, and long-term growth.
Organizations must keep their eye on their digital aspirations no matter what the economy throws at us over the next 12 months. The emphasis should be on facilitating precise and quantifiable results, and digital spending must shift from building to scaling. In fact, operating a truly digital business and scaling innovation will account for at least 30 percent of the C-suite's attention by 2027. This process will be driven by automation, which will help to address labour shortages, lower the cost of IT operations, and speed up innovation.
Leaders won't make drastic cuts in technology in a world that is dominated by digital, where an organization's competitiveness is based on its digital business model. Unwinding these investments will be difficult during the first potential "as-a-service" recession, when cloud spending accounts for 40 percent of enterprise IT budgets. But as tech leaders work to get the most business value out of their investments in technology, new strategies will be used. Tech leaders must simplify and reduce costs in their technology stack while updating the underpinning infrastructure to ensure resilience in a digital-first economy.
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