Welcome to quarter three, 2021. The first half of the year whizzed past us all. While the pandemic still dominates the headlines, the post-Covid world has started to take shape.
Towards the end of 2020, we made five predictions on digital transformation trends for 2021. These predictions spanned various areas of business: from marketing, engineering, and recruitment to company culture. Since we are right in the middle of the year, it’s the perfect time to revisit them.
Let’s reflect on our predictions and see if they have turned out to be accurate:
1. Transformational CMOs Will Own Product Innovation
We had stated that in 2021, transformational CMOs would own product innovation and leverage omnichannel product strategies to not only understand how they fit in the marketplace but transform customer interactions for the better. CMOs would use their budget and expertise to take the lead in understanding their target customers.
The idea of CMOs owning product innovation by understanding customers has gained currency in recent months. In February, Forbes mentioned that CMOs must fully dedicate their leadership, strategy, and operations to the total customer experience to succeed in the future. This sentiment was also echoed in a piece on MartechSeries titled CMO’s Need to Own the End-to-End Customer Experience and WPromote’s blog post: Reinventing the CMO Role to Become a Digital Transformation Leader.
Furthermore, senior executives from PwC stated on strategy-business.com that marketing had already been on the verge of a significant transformation, but the pandemic accelerated the need for change. They highlighted that the stage is set for both CMOs and their companies to reinvent themselves by fueling customer demand and business growth.
The stage is indeed set for CMOs to own product innovation, and there are no signs of them getting back to a conventional marketing role.
2. Rise of the Super Boutiques
Emerging technologies, prioritization of workforce culture, and the need for shorter, more cost-effective engagements are making legacy consulting models obsolete.
Our second prediction was that in 2021, we would see an increase in “super boutiques” – consulting firms that can deliver a collection of highly skilled subject matter experts across full-stack app development while still having the ability to scale.
The rise of digital transformation has coincided with the decline in management consulting.
The above graph from Google Trends sums up the disruption in traditional consulting. For the longest time, consulting was synonymous with management consulting. Traditional consultants would rely on information asymmetry and legacy to help executives in big corporations make strategic decisions. However, in the last 12 months, digital transformation has become the need of the hour across all industries. And no consulting firm can ignore it anymore.
According to Source Global Research, digital transformation is the fastest growing sector in consulting and accounts for 20% of the entire market in mature markets.
This means that to be successful in the digital age, consulting firms need not just analysts but engineers, designers, and other technologists. It’s not enough for a consulting firm to tell you that you need a mobile app to reach new customers. It needs to possess the expertise to deliver the application and share knowledge with the client.
This is a challenge for many traditional firms as they don’t have an IT background or culture. As a result, boutique consulting firms that specialize in technology are experiencing rapid growth. To compete, many traditional consultants have created semi-autonomous entities to focus solely on digital transformation, such as McKinsey Digital and Deloitte Digital.
The disruption of traditional consulting has been a hot topic in 2021, especially on Forbes, which has covered it a few times in recent months. In their Editors’ pick: How Boutique Consulting Firms Can Outflank McKinsey, BCG, And Bain, Christian Stadler mentions how traditional consulting models rely on an army of MBA graduates with little experience. Information asymmetry that often gave them an edge is also harder to sustain in the age of Google. We shared this sentiment in our prediction: Organizations no longer need consultants for just advice. They need them for something a lot more valuable – execution.
The rise of boutique consulting will continue well into the future because consulting is getting productized. Unless traditional consulting firms adapt to more flexible engagements, boutique consulting firms will continue to grab market share, at least in digital consulting.
3. Enterprises Will Embrace Open Source Projects
We predicted that in 2021, open source projects would become more strategic as they move from unaffiliated communities to the boardroom. Organizations would continue to seek and value people who imbibe the open source values – transparency, self-motivation, and creativity.
Earlier in the year, Microsoft mentioned that it had learned a lot from its increased engagement with the open source world, adding that open source is now the “accepted model” for collaboration between companies. It further added that the world can learn a lot from the remote-first and digital-first mindset of the open source realm.
According to The State of Enterprise Open Source 2021 report by Red Hat, 87% of IT leaders see enterprise open source as more secure or as secure as proprietary software. 90% of them are using enterprise open source. Additionally, in their recent article titled Why You Need an Open Source Strategy, BCG stated that 95% of IT specialists agree that open source has become strategically important.
The future of open source is bright. It has sparked a cultural shift that will continue to find admirers in the IT community and broader enterprise culture.
4. The Workplace Evolution Will Continue
We had expected the workplace evolution to continue, in more ways than just wider adoption of remote work:
- Redirection of budget from passion projects to revenue-focused outcomes
- Rise of asynchronous collaboration due to zoom fatigue
- Greater transparency across all levels of the organization
- Finding the remote work sweet spot – onsite, remote, hybrid workspaces
This one of our predictions has been a mixed bag. So far, there is no visible data that confirms that pandemic has reduced passion projects. While this might be true in certain industries, tech companies still seem open to sponsoring passion projects at work.
On the other hand, asynchronous collaboration has certainly been the flavor of the season. Many organizations that went remote struggled with defining the boundaries between the time at and away from work. As a result, asynchronous collaboration tools like Miro, Trello, and Aha are witnessing widespread adoption.
Meanwhile, organizations have also been searching for the remote work sweet spot, which is evident in the rise of the hybrid work phenomenon.
Interest in hybrid work is at an all-time high.
Microsoft referred to hybrid work as the next big disruption. Forbes shared that as remote work evolves into hybrid work, productivity rises. There is no easy answer to what kind of hybrid model will work for a business. Each company needs to find its balance between on-site and remote work.
Finally, although transparency at work is a macrotrend that will continue to rise, there is little evidence to suggest that 2021 accelerated this trend. There are still various enterprises, especially in traditional industries, that lack open knowledge management systems.
5. Innovation Will Be a Speed Game
Our fifth and final prediction discussed innovation in business. We had mentioned that as organizations shift from the initial turbulence of COVID-19 to revamping their innovation efforts, the companies that succeed in 2021 would be the ones with the ability to move fast. This prediction mentioned a few specific examples:
- Acceleration of product development process with DevOps and CI/CD
- Wider adoption of AI (Artificial Intelligence) and ML (Machine Learning) technologies
- Continued adoption of true Agile practices
Similar to the previous prediction, this too has been a mixed bag. So, let’s look at Google Trends one more time to understand further:
The above graph analyzes the interest in technologies and practices that our prediction involved. While AI has seen increased interest, ML, DevOps, CI/CD, and Agile practices have not seen the same spike.
Even though the pace of adoption hasn’t shown a significant acceleration based on this metric, this doesn’t indicate a decline in their popularity.
In recent months, we have noticed several enterprises across different industries adopt Agile and DevOps practices. For example, EDR recently executed an Agile transformation and created a more efficient DevOps infrastructure. Similarly, NCR — the world’s largest provider of multi-vendor ATM software, also embraced an Agile workflow using Atlassian solutions.
Preparing for Q3 and Q4
2021 hasn’t thrown any surprises so far. Instead, most enterprises are following the familiar patterns to accomplish their goals in an increasingly digital world. We expect the trend to continue in the second half of the year as proactive organizations fine-tune their digital transformation strategies.
