Executives are redefining how humans and technology work together, and creating organizational cultures that put people first
Technology, talent, and trust are top priorities for 2022. Executives are rethinking how they operate all along the value chain. They’re finding ways to increase flexibility, strengthen cybersecurity, and reduce environmental impact each step of the way. They’re also redefining how humans and technology work together–and creating organizational cultures that put people first. As open innovation, ecosystem partnerships, and integrated customer experiences become increasingly important, leaders need to move strategically to stay relevant. The choices–and investments–they make today will define, in part, which doors are open to them tomorrow.
This was the summary of an IBM Institute for Business Value survey interview of tens of thousands of executives, employees, and consumers around the world, to paint a canvas of the business primacies for 2022.
Digital transformation is here to stay
The survey found that 60% of organizations sped up their investments in digital technologies due to COVID-19 and more than half (55%) permanently course-corrected their organizational strategies. Many executives have realized that transformation is here to stay. Rather than working toward a perfect end-state, they’re focused on making their organizations more responsive.
When asked about their priorities for the next 2 to 3 years, more CEOs said they needed to aggressively pursue operational agility and flexibility (56%) than any other action. They see technology playing a key role in building resilience and adaptability, ranking it as the top external force that will impact their businesses in the near term, above regulatory concerns, and market factors.
IoT, Cloud, AI top tech priorities
Internet of Things (IoT, 79%), Cloud computing (74%), and artificial intelligence (52%) are the top technologies they expect to deliver business results. These technologies, especially Cloud, will also enable faster, more effective collaboration, which will be another driving force for growth in the new year. Executives say they plan to participate in business ecosystems 332% more in 2022 than they did in 2018.
$85 trillion revenue lost from talent shortage
Talent has become a major issue for every organization. Often shortage of talent is upsetting transformation plans. More than 85 million jobs could go unfilled globally by 2030 due to a lack of skilled talent–resulting in as much as $8.5 trillion in unrealized revenues. In the US tech sector alone, the talent shortage could lead to $162 billion in lost revenues each year. While the virtualization of work has given companies greater access to global talent, this extended reach can only take them so far. Ultimately, talent management is a zero-sum game. That means companies will need to look within and make changes that will attract potential employees. That starts with showing people their contributions are valued–and prioritizing their wellbeing.
More than half (56%) of those who voluntarily changed companies last year cited the need for more flexibility as a key reason for making the switch, while nearly one-third said they wanted to work for a company that better fits their values. And those not planning to make moves are not necessarily content. Roughly 1 in 4 say they don’t believe their employer looks out for their mental and physical well-being and nearly 1 in 3 don’t believe their employer looks out for their financial well-being.
Consumers seek trust
The traumatic events of the past two years have people rethinking their priorities and redefining responsibility. Regarding sustainability specifically, the research found the pandemic influenced 93% of global consumers’ views. Consumers also see that sustainability and wellness go hand in hand. When choosing a brand, roughly 4 in 5 consumers said that sustainability and health and wellness benefits are important to them–and they’re willing to put a premium on protecting people and the planet.
But don’t trust more than half the companies
Just under half of consumers say they trust the statements companies make about environmental sustainability, and more than three-quarters of this group also do their own research before making a purchasing decision. That means companies need to provide transparent and detailed information about their initiatives if they want to connect with purpose-driven consumers. But many companies have a sizable information gap they need to bridge. While the 2021 research found that 9 out of 10 companies say they will be working on various sustainability initiatives across the enterprise, another study found that only 1 in 3 consumer companies are measuring their progress. This disconnect will need to be addressed in 2022.
Failures shouldn’t be penalized
Taking a piecemeal approach to technology is no longer enough. Businesses need to holistically reinvent their operations to realize the full benefits of digital transformation. Rather than rolling out isolated innovations that streamline individual workflows, executives must focus on building integrated systems that revolutionize business models in 2022. And they can’t be afraid to “fail forward,” as taking risks is what leads to tech-driven rewards. In fact, the survey research showed that companies that don’t penalize failure see a 10% revenue growth bump in the context of tech adoption and digital transformation.
Hybrid Cloud adoption rockets 700%
Almost 2 in 3 (64%) organizations shifted to more Cloud-based business activities, in response to Covid19. Now, 97% are employing Cloud and 78% have at least piloted AI (artificial intelligence). The IBV 2021 CIO Study also found that, since 2019, there have been monumental increases in the number of CIOs whose organizations have advanced hybrid Cloud operations (700%) and intelligent workflows (560%). One study found that high adopters of technology across 13 industries benefit from a revenue premium of 7 percentage points, with the Internet of Things (IoT), AI, and Cloud yielding the greatest benefit. And those that invested in ecosystems and open innovation saw an average revenue premium of 40%.
Security threats increase
While Cloud-based technologies, platforms, and ecosystems expand an organization’s reach and create new opportunities for innovation, they also introduce new threats. The research revealed that 7 in 10 organizations are unable to secure data that moves across multiple Cloud and on-premises environments. It’s no surprise then, that the same report found that more than 90% of cyber-related incidents originated in Cloud environments. This vulnerability is borne from an inability to adapt security practices to a more open environment, as a full 92% of organizations lack the ability to securely enable and extend new Cloud-native capabilities to their internal and external partners.
As companies expand their Cloud footprint to enable remote work, integrate supply chains, and streamline customer experiences, they must also evolve their approach to cybersecurity. “Zero trust” is a preventative approach to security that assumes malicious actors are everywhere. It requires authentication and verification for every exchange of value, which allows companies to open their boundaries more securely.
Cloud & security integration delivers business results
Open, secure Cloud networks can create a virtuous cycle that drives innovation and collaboration. For example, 3 in 5 zero trust leaders say their security approach has enabled digital transformation, compared to 35% of all others. And more than half (54%) say they’ve increased trust and secure connections to external partners, compared to roughly 1 in 3 other companies. Evolving security practices for the Cloud era also positions organizations to deliver better business results. Organizations with the most mature Cloud security practices– those that integrate their Cloud and security strategies more intentionally–outperformed peers by more than 2x, both in terms of revenue growth and profitability.