Covid-19 accelerates digital transformation of enterprises worldwide

21% of companies implemented their digital transformation plans ahead of schedule during 2020. Cultural change is positioned as key when carrying out a digital transformation process. 2021 funding priorities are: security (45%), IT and cloud management (39%), and cloud infrastructure (34%). Artificial Intelligence/Machine Learning and IoT are the emerging technologies most expected to be used in 2021. Telecommunications and financial services sectors lead the digital transformation, while public administrations lag behind the average

Since the start of the Covid-19 crisis, organizations around the world have been forced to rethink their business and adapt to unpredictable scenarios. These changes have impacted their digital transformation processes and, in the run-up to 2021, have forced them to rethink their technology priorities.

This was confirmed by the technology company Red Hat in its annual Global Tech Outlook 2021 report, for which it interviewed 1,470 IT professionals from companies, most of them with an annual turnover of more than $100 million. Unlike other years, in addition to Red Hat’s customers, companies from different sectors participated in the study, with 60% more respondents from all regions, including Spain.

çIn recent years most companies have been undergoing a process of “transformation” towards digital, but 2020 has been characterized by “acceleration“. To analyze the impact of the pandemic on organizations and being aware of the reality in which they were immersed, Red Hat has incorporated two new variables to know in what state they were in their journey to digital transformation. On the one hand, it wanted to know if they were “stuck“, that is, if they had interrupted the adoption of new processes and technologies; and on the other hand, if they had “accelerated” the process, in case they had to start many of the digital transformation initiatives earlier than planned or accelerate those that were already underway.

As a result, 21% of respondents said they had started their digital transformation plans ahead of schedule, while only 6% said they had had to interrupt them. If we take into account those organizations that consider that they are leading (15%) the digital transformation within their sectors and those that are still transforming (29%), we can say that 65% are making progress in this process.

Conversely, 35% of organizations are on the opposite side. A significant 19% say they are “emerging”, i.e. they are starting to adopt new technologies and transformation processes, while 5% “have not yet started” because they are getting informed, and 4% have no plans for digital transformation. The latter has doubled compared to the previous year, when it was only 2%.

Cultural change is essential for digital transformation

As last year, respondents continue to believe that the success of digital transformation in enterprises will depend primarily on greater collaboration between business and IT (30%), as well as cultural transformation or evolution within the IT department (27%), with the latter figure rising to 35% when only experts who are Red Hat customers are asked.

There are other reasons almost as important to achieve this success, such as, for example, the implementation of cloud technologies and infrastructure (28%), offering end users a better digital experience (27%), or faster IT services (27%).

Despite the importance given to cultural change to achieve the much-desired success of digital transformation in a company, when respondents have to choose a “single” priority to carry out digital transformation, “culture” comes last (6%) and other priorities such as innovation (23%), security (19%), user experience (13%) and cost savings (11%) emerge. It is worth noting that for Red Hat’s customers, culture continued to be more important (13% as opposed to 5% for companies in different sectors).

Funding priorities for 2021

In the Global Tech Outlook 2021 report, Red Hat wanted to differentiate funding priorities between those that are related to IT products or solutions and those that are not.

Among the top 5 funding priorities related to products or solutions, respondents pointed to security (45%), IT and cloud management (39%), cloud infrastructure (34%), optimization of existing IT (29%) and automation (26%).

Regarding funding priorities without taking into account IT products and solutions, respondents favored digital transformation, training and the organizational structure of the company. 

With these funds, respondents expect to become more efficient (37%), improve safety (32%) and save costs (30%).

And the reasons why respondents have set these funding priorities are mainly customer needs (30%), budget (26%) or company restructuring (18%).

Hybrid cloud is the most widely recognized cloud strategy

Respondents identified multiple cloud strategies, but the most recognized was hybrid cloud (27%), followed by private cloud as a priority (17%), standardizing on a single public cloud (12%), or using multiple clouds, either private or public (11%), or prioritizing public cloud (10%). Nearly a quarter of respondents are either establishing their cloud strategy or have no plans to have one.

AI/ML and IoT among the emerging technologies most expected to be used in 2021

Half of the respondents are considering using Artificial Intelligence/Machine Learning (AI/ML) during 2021, but are aware of the challenges involved. In the Global Tech Outlook study, respondents identified collaboration between teams as a major challenge in bringing machine learning models into production (28%), as well as managing AI/ML tools and frameworks (28%), or having the infrastructure in place (24%), or having access to relevant data (18%). To address these challenges, self-service container platforms serve to integrate and simplify the use of AI/ML tools.

Second, the Internet of Things (IoT) is expected to be used (47%), closely related to AI/ML, as the data used by many AI/ML models comes from IoT sensors. IoT is a type of edge computing.

Different phases by sector: Telcos in leadership and Public Administrations in initiation

In the Global Tech Outlook, Red Hat has interviewed IT professionals from different sectors, but has especially analyzed the responses of those working for telecommunications, financial services, healthcare and public administration companies. 

As a result, we can see that companies in the financial services sector are at a more mature stage in their digital transformation process. Respondents indicated that they are leading (20%) the digital transformation within their sectors, 22% are accelerating this process and 33% are transforming it. In total, 75% are making progress in this process, 10 percentage points above the average.

The telecommunications sector shows almost the same maturity, with 22% in the leadership phase, 19% accelerating change and 29% transforming. In total, 70% of respondents are making progress in their transformation process.

The healthcare sector is at the global average of evolution towards digital transformation. In this case, only 10% consider themselves to be leading the digital transformation of their sector, half as many as in financial services or telecommunications, while 33% are in the process of transformation and another 21% are accelerating it.

On the other hand, public administrations are well below the average, with 51% of organizations in the process of digital transformation. Only a small 8% feel that they are leading the change, while 31% say that their organization is in the process of transformation, and just 12% have implemented their digital transformation plans ahead of schedule, when the global average is almost twice as high.

Fuente: Axicom para Red Hat