The boom in generation Z and millennials are forcing CEOs and CIOs in the Middle East to transform their organisations digitally and a significant amount of investments are pumped into it to create new business value.
Close to 68% of the population in the Gulf Cooperation Council countries (GCC) in 2020 are generation Z and millennials and that is driving the digital transformation and tech trends, so, only 32% of the population are born before 1980.
Research firm International Data Corporation (IDC) projects that by the end of this year, digital transformation spending will be around $1.5tr globally, driven by spending around emerging technologies and transforming organisations in digital enterprises.
By 2024, more than 30% of all META [Middle East, Turkey and Africa] IT spending will be directly for digital transformation and innovation, up from 18% in 2018, growing at an annual rate of 18%, compared to 1.5% for the rest of IT spending.
What is the key driver for digital transformation?
Jyoti Lalchandani, vice-president and regional managing director for IDC, said that enterprise IT is changing dramatically with digital IT taking the lead.
“They [generation Z and millennials] have a significant impact on the way technology is consumed and it is fundamentally going to change the way we organise the IT infrastructure and the way we organise requirements around what customers really need,” he said at the 13th edition of IDC CIO Summit.
Moreover, he said that this is the generation that is always connected and forcing a significant amount of transition from voice revenues to data revenues in the telecom space.
“This is the generation that wants to access rather than possess the access and services and this is the generation that wants one brand one experience. They see very little differentiation between physical and digital in consumer engagement. They want a seamless interaction between physical and digital,” he said.
So, what an IT organisation is doing, he said is fundamentally transforming the technology infrastructure and investments around emerging technologies to drive the fulfilment and needs of generation Z and millennials.
The emerging technologies are cloud, software-defined infrastructure, AI, IoT, Big Data analytics, advanced security and app explosion.
Role of CIO is going through a dramatic change
“The CEOs today have digital transformation at the forefront of the corporate agenda and they are facing pressures from stakeholders and shareholders across the enterprise in wanting to see how some of these technologies can transform the organisation.
“They [CEOs] are also facing pressures from customers and brands on the seamless interface between the physical and digital. They are also pressured by a lot of new market entrants coming in and disrupting their industries,” he said.
Digital transformation is not only the agenda of CIOs, IT and digital officers but it is increasingly at the forefront of CEO’s agenda, he said and added that stakeholders diversify as digital transformation spreads across functions and line of business to create new revenue streams from new products and services and increase the rate of customer adoption.
So, the expectations from the line of business and from CEO communities are going much beyond the “traditional metrics” used across the organisation.
From a challenge perspective, he said that organisations are undergoing a significant amount of new set of challenges to transform the organisation, thinking about a new set of KPIs and go beyond the short-term tactical roadmaps and develop long term strategic initiatives related to digital transformation programmes.
Furthermore, he said that it is also causing organisations to grapple with the island of innovations that are happening with different projects, organisational structure across the enterprises.
IDC research shows that close to half of the CIOs in the GCC have multiple technologies that are disconnected from the core IT platform.
“The role of CIOs is also going through a dramatic change and they are no more an operational CIO and are essentially are in a larger state to bring together the different IT architectures, working together with the line of businesses and looking at a dedicated digital transformation budget. Also, they are focused on bringing together and orchestrating across the enterprise,” he said.