Digital Investments Seen Climbing in 2019
Despite growing economic uncertainties, growth in investments and adoption of digital technologies such as AI, machine learning and cloid computing are expected to reach double digits in the coming year, according to an Economist Intelligence Unit survey commissioned by an IT services vendor.
Fully 83 percent of companies surveyed by the Economist unit said they expect to increase digital investments in 2019, according to survey results released Tuesday (Jan. 15) by DXC Technology (NYSE: DXC). Of those, 40 percent said expect to increase investments by at least 11 percent.
While cost or lack of funding has been the primary barrier to digital transformation, the survey found that early adopters are beginning to see a return on their investments in technologies ranging from cloud computing and data analytics. More than two-thirds of those polled said annual profits have increased over the past three years while 74 percent expect profits to rise on the next three.
Thirty-six percent of respondents said AI and machine learning technologies have been central to their digital transformations while a higher percentage said those technologies would play a key role over the next three years. Respondents were less enthusiastic about Internet of Things (IoT), social media and collaborative tools, some of which have already been incorporated into their operations.
Other key technologies included cloud computing, application modernization and predictive analytics. Technology adoption also depends heavily on industry segment, size and location, the survey found. For example, financial services companies most often cited AI, machine learning and blockchain technologies while manufacturers highlighted cloud computing and IoT.
An executive at Royal Dutch Shell told researchers the energy giant outsourced data storage and hosting a decade ago and relies on hyper-scalers like Amazon Web Services (NASDAQ: AMZN) and Microsoft Azure (NASDAQ: MSFT) for cloud services like automation, instrumentation and billing.
Along with cash, digital and IT transformation (the survey found that many respondents do not make a distinction between the two phrases) also will require investments in new skills. “Recruiting digital-savvy employees and deploying them in roles where they are likely to have the greatest impact on their co-workers are essential to cultural transformation,” the survey found.
“The survey findings point to perhaps the most rapid, dramatic and sophisticated effort at reinvention that major businesses have attempted in many decades, and those surveyed are committed to investing to make digital happen,” said Dan Hushon, senior vice president and CTO of DXC, Tysons Corner, Va.
“Our research indicates that digital strategy will continue to be a major area of investment—amounting to a dramatic effort at corporate reinvention,” added Gilda Stahl, a managing editor at The Economist Intelligence Unit. “But getting it right will be a continuing challenge.”
The research unit said it surveyed 621 senior executives between during September and October of 2018.