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Top Digital Transformation Trends in 2021

December 8, 2020

This post is one part of G2's 2021 digital trends series

In 2021, social productivity will power the next economic evolution, one toward a hybrid future

Most years are remembered and defined by just a few moments. The year 2020 though, has seen a plethora of “moments”, from an ongoing global pandemic which is ploughing through our social and economic needs, wants and expectations, deep-seated social unrest, and climate change-related natural disasters. 

The COVID-19 pandemic has resulted in immeasurable personal and business disruptions; carving itself into economic history as the defining event that forced digital transformation on companies as a means of survival. Companies that could move to remote work executed the change in days, putting new systems and tools in place nearly overnight. As all of us moved online, businesses were compelled to find new approaches to create effective customer experiences across digital channels and transact that business wherever that customer might be.

This acceleration of digital transformation, and the technologies that are its underpinning, continue to impact the five business areas we’ve identified in previous years’ trends projects at G2 Research:
  1. Business Strategy
  2. Customer Interaction
  3. Workforce
  4. Business Operations 
  5. Business Models 

Changes in all five of these business areas have played and will continue to do so, a critical role in a company’s ability to survive the pandemic and rethink its path forward.

Technology to enable remote working will hand productivity back to the workforce rather than their employers

We also added a sixth area of business which we believe is a long-lasting trend: remote work. While many organizations—especially those in the software world—have enjoyed the ability to work remotely for some time, the current situation has catapulted many to this way of working as a necessity.

I have argued in the past that technology powered productivity is the primary driver to economic development, and technologies such as artificial intelligence (AI) and automation are simply the current incarnation—equivalent to, say, the farm or factory machinery that propelled many economies into the age of services. For those of us who have been fortunate enough to work from home, time once spent riding the train, or sitting in traffic has been given back to us: to spend how we choose. For some, this has been at the keyboard leading to widespread employee burnout. It has also presented an alternative possibility, that of spending this additional time and energy differently—with our families, on our hobbies, or on our side projects. We call this social productivity.

G2 proposes that the technology that frees this additional time and energy is the genesis of this social productivity. Traditionally, and in productivity terms, it is businesses that benefit from the technology they employ, deriving greater return from its use by the workforce. The current situation is different. Organizations are either using the technology they had already, or acquiring new capabilities in order to survive an unpredictable and unprecedented situation. While staying in business is obviously a benefit, the additional time and energy it creates is shifted into the hands of the individual, not their employer. The age of the office is not over, but the clock is definitely ticking. Bear in mind, no economic revolution completely removes the previous ways of working; we still have farms and factories, and will continue to need them, and (some) of our offices in the future.

Every major change in the socio-economic balance comes with a spectrum of effects, the one underway is no different. The explosive increase in the use of companies that enable digital transformation, such as the cloud computing arm of Amazon, AWS, Google, and Microsoft is one such effect. Given the pressure to connect physically disparate workforces with equally disparate partners, suppliers, and customers the acceleration toward as-a-service offerings, from compute to storage and fully-fledged applications is a major component of that transformation. The concentration of economic activity into the hands of a small group of companies with hundreds of billions or trillion-dollar-plus market capitalizations also raises questions about the future diversity of the B2B software market.

Related: 10 Software Categories in High Demand to Support Remote Work

2020 will leave a lasting mark on our relationship with work and technology

The emergence of promising news from COVID-19 vaccine trials in recent weeks has granted us a brief glimpse of the light at the end of the tunnel, but the disruption, adaptation, and pain will leave a lasting mark on our socio-economic landscape. Ultimately, some of these marks will be positive, from contributions to our work-life balance to potentially reducing our impact on Earth’s climate; others will be lasting wounds that will take decades to heal, missed education, reduced opportunity, and financial hardship.

From agricultural to manufacturing to services economies, technology has cultivated enormous change in the way that we live and work: this change continues to accelerate. As an all-encompassing trend, this is undeniable—it has made predicting what will happen next even harder. 

Cloud computing’s development offers us a useful lesson. Our technology will never be entirely in the cloud, nor on-premises—past choices have shaped a hybrid approach to IT which leverages the best of what the cloud can offer without ignoring the investments or requirements to date. Stand back and take in the big picture, we argue you will see a hybrid future if you do—neither bound to the office or the retail store; connecting the customer, business, and employee wherever they might be.

Our analysts reveal what's big right now in their 2021 Digital Trends reports.     See our predictions here →

Hybridity raises technology complexity which will be answered by automation

As businesses, and society at large, readapts to the early post-COVID-19 age, a hybrid model will emerge, blending online, physical presence, and decentralization. We won’t be remote from something, we will be close to the network, allowing us to connect to cloud computing resources that intelligently join labor, business, and markets.  

A hybrid business model will create new demands on the culture, processes, and tools we use, but many of the remote working and digital engagement solutions employed right now were designed for the office age. We also need to add the long-standing challenge of siloed team and departmental communication, recently greatly amplified by the necessity of rapid adaptation.

Related: Evolving the Way We Work During a Crisis

As we race to adapt in 2021, connecting workplace technologies to open communication and enable collaboration between individuals, teams, and customers will lead to more mergers, acquisitions, and reorganizations of major vendors’ portfolios. This will make the biggest vendors even more dominant. The competition between these vendors will also intensify as they arm their platforms with integrated communications layers: tightening their grip on the market. 

The already multiplying points of connection will be added to this hybrid model, making the network ever more complex. We have already seen the rise of AI and automation to manage the scale and complexity of data—in 2021, our most convoluted business processes, disparate but co-dependent applications, and connecting networks will demand it too. From this perspective, businesses will be forced by the dual pressures of complexity and financial expediency to adopt an “if you can, you will” approach to automation in the workplace.

The volume and pace of change, hardly unfamiliar to the technology world, will continue to accelerate in 2021. Pair this with the sheer number of options for meeting business requirements with software and services, and it will lead to many businesses being abstracted from the technology that enables them. The use of cloud and software-as-a-service started this trend, empowering small and mid-sized businesses with solutions that had been reserved for their larger, enterprise competitors. Rather than relying on a large IT department, businesses will come to rely on intelligent platforms that employ software services and the hardware to run them based on its understanding of the workload—trading-off requirements, urgency, and the costs of different services to run it.

Note: Tom Pringle, VP, market research, is the co-author of this blog.

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