Where is your company headed in 2018? A large percentage of businesses -nearly 40%- are opting for a small tech budget raise while consolidating their digital strategy.
Much smaller is the number predicting a bigger increase in tech spending; only 8% see themselves raising the IT budget by more than 20%.
Despite the conservative budgets, companies are still striving to keep pace with the digital revolution.
They’re spending smarter, not more, by refocusing their investments in areas that have the most potential for ROI.
Here’s what the major players will be focusing on in 2018.
1. Filling the Talent Gap
There’s a serious shortage of skilled technical employees available for hire in the US.
Last year there were 3 million more STEM positions open than there were skilled workers to fill them.
America is creating tech vacancies faster than nearly any other job type, with industry analysts predicting that 4.5 million people will work in STEM in 2018.
That 3.4% increase in available jobs is great for prospective employees, but it hurts businesses.
65% of tech leaders say that hiring shortages are holding their digital development back.
Fewer skilled employees means longer development cycles, less quality control, and more difficulty reaching ROI on technology spending.
CIOs looking for extra talent for a single specific project have a harder time.
Finding qualified workers who are interested in taking on a short-term contract is difficult; those workers tend to choose long-term positions with companies who can offer benefits and regular salaries.
This makes it hard for smaller companies to get projects done within a competitive timeframe.
There are a few strategies for solving the talent gap.
Some companies are choosing to hire employees with related skills and train them in-house.
This can be a good option when there are senior employees available to mentor incoming staff.
In high demand areas like data science or digital security, however, it carries the risk of losing employees to headhunters after training is complete.
Other companies cope with the talent shortage by outsourcing their routine IT tasks (database management, enterprise app development, digital security).
This frees up internal technical staff for sensitive or high-priority projects. While there are challenges to outsourcing, it’s a useful way to get products finished quickly and on budget.
The last several years have seen the rise of a third method for finding technical talent: hiring entire teams of developers through agencies created specifically for that purpose.
Teams can be retained for as long or short a period as necessary.
The developers regularly work together, so they’re comfortable communicating and sharing data.
Some more comprehensive agencies even offer project managers to oversee the team. It’s like having a temporary second IT department without the hassle of employee maintenance.
Look for more technology team contracting agencies to rise in 2018.
2. Integrating Artificial Intelligence
This isn’t the first time Artificial Intelligence has caused a stir.
AI has seen periodic hype since the 50s, and this current surge in interest has lasted nearly a decade. Before, excitement died down when AI failed to deliver on its promises.
Now, with more computing power and data storage available in the cloud, AI finally has the resources to grow into something useful on a practical level.
AI is showing measurable ROI for enterprise applications. Among IT leaders whose companies have invested in AI, 86% report that AI has lived up to their expectations. 64% say they expect ROI within two years.
Lingerie brand Adore Me is a good case study of successful enterprise AI.
Adore Me implemented an intelligent modelling technology to segment and profile their customers.
The system identified 60 detailed personas which could be targeted using tailored approaches.
Customers responded to the more personal shopping approach.
After launching the modelling and targeting system, Adore Me saw a 15% increase in overall revenue with a 22% rise in the average order amount.
As it proves ROI, more companies are turning to AI for solutions to pressing business problems.
60% of businesses have AI in place somewhere within their company, and 79% say that increasing AI usage is a priority.
By the end of 2018 40% of all digital transformation initiatives will be supported by AI-based technologies.
An important factor driving the rise of AI is that it’s now possible to use it without a computer science degree.
AI is increasingly packaged and sold in enterprise-friendly formats (CRM enhancement software, intelligent customer profiling systems, embedded analytics).
Take a look at these real world use cases:
- Bank of Montreal uses AI to study and improve the customer journey. Their conversion rates rose from 10% to 50% using client experience tools run by IBM’s AI platform, Watson.
- Treasure Island Casino in Las Vegas, NV has an AI-powered guest app that takes care of routine tasks around the clock. Guests can request items, order room service, make appointments, and more without having to call the concierge. This is a major asset considering that 90% of Millennial and Gen X consumers would rather use an app than call a help desk.
- Boch Automotive implemented the Conversica sales assistant to identify and contact internet sales leads. The software has an average engagement rate of 35%, which is astoundingly high considering that an open rate of 15-20% is considered “good” for email marketing. Boch Automotive saw 60 more cars sold per month on average at one of the dealerships targeted with the sales assistant.
3. Adopting Conversational Interfaces
Conversational interfaces are systems that employ sophisticated Natural Language Processing (NLP) technology to interpret requests framed in casual language, not targeted commands.
It’s most often used in chatbots and virtual assistants. Currently, the burden of using voice assistants lies on the user who must use specific phrases that the assistant can recognize:
- “Call Mom”
- “Play Running Playlist”
Conversational interfaces allow for a more natural manner of speaking and a wider range of functions. They can interact with third party services to perform a series of tasks rather than one specific command:
- “Reschedule my meeting with Jane for tomorrow”
- “Book a reservation tonight at the Atlanta Marriott”
For a long time companies hesitated to use AI and chatbots for customer service, concerned that doing so would drive customers away.
Customers are overwhelmingly positive about AI, however.
All but 14% report they’d be willing to use AI for customer service if it worked well enough to avoid frustration.
Chances are good those customers would be satisfied with today’s technology, which has advanced far enough that it’s becoming undetectable by customers.
63% of respondents on a HubSpot survey didn’t realize they were using an AI-powered conversational interface until they were informed.
The overwhelming satisfaction with conversational interfaces is leading to a surge in popularity.
Current digital assistants like Cortana, Siri, Google Home and Alexa have seen an increase in regular usage.
Daily use of voice search across programs is up 27% over last year, and 52% of companies are or are investigating using conversational interfaces on a corporate level in 2018.
4. Developing Enterprise Apps
Many people think of AI and analytics when they hear “digital transformation” but there’s more to it.
Enterprise apps bring digital transformation into daily practice by optimizing workflows, making data readily accessible throughout an organization, and ensuring best-practice protocols are being followed.
Businesses and employees prefer apps over the traditional “work phone” arrangement where companies provide devices pre-loaded with necessary programs.
The overall cost in time and money is much lower.
Enterprise apps also enable a BYOD (Bring Your Own Device) workplace where employees can use the devices they’re comfortable with while still linked in to the company’s system.
75% of businesses with more than a thousand employees use at least one custom app per day.
Enterprise apps are more dominant in some fields than others- 93% of healthcare professionals use an app for work on a daily basis, for example- but the practice is spreading quickly.
On average companies are working on 2.6 custom enterprise apps with 6.2 planned for development next year.
5. Encouraging Digital Adoption
Something that often holds companies back from realizing ROI on tech investments is a lack of internal adoption of new technology.
Systems work best when everyone is using the same one.
Inconsistent adoption leads to unnecessary complexity, misplaced data, awkward workflows, and security risks.
In a MIT Sloan Management Review survey, 63% of managers felt a lack of urgency made technological change too slow for benefit.
Employees tend to stick to established routines, especially in high-tempo operational environments.
They push back against new enterprise apps, customer profiling systems, and other technological advances.
Managers have a hard time motivating employees to embrace change long enough to recognize the value offered by the new technology.
In 2018, companies will be working on innovative strategies to improve the adoption of digital transformation efforts.
Creating a stressful workplace with negative training is risky in industries with talent shortages, so positive reinforcement is key.
Some popular practices:
- Including staff in development planning
- Pushing worker-friendly design
- Putting on engaging training
- Offering incentives for adoption
6. Exploring Adaptive Cybersecurity
As global connectedness rises, so do security threats. Threats keep changing in shape faster than people can learn old threats.
Only adaptive, automated systems can fully protect networks against threats.These systems continually scan for risks and will act on their own to neutralize the threat.
Once the immediate problem is resolved, adaptive systems make the necessary screening process changes necessary to ensure threat won’t recur.
With cybersecurity among the fields hit hardest by the talent shortage, IT leaders say that AI is the tool needed to keep their systems secure.
74% say they won’t be able to cope with the cybersecurity skills gap if they don’t adopt AI.
77% report they were able to prevent more breaches using AI-powered tools than other types, and 81% say that AI found threats before their security teams could.
One note: security starts with developers. Adaptive security must be built into the infrastructure of a system, so quality developers will also be a priority in 2018.
Starting the New Year Right
Clarifying technology priorities is a practice that separates industry leaders from those who fall behind.
Whatever your plans are, make time now to assess your technology needs for the new year.
Are you looking to push digital transformation in 2018? Contact Concepta for a free review of your digital strategy and a look at the tools that will make 2018 your best year yet!