digital trends report 2017

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DIGITAL TRENDS REPORT 2017 THE FORCES DRIVING TRANSFORMATION IN THE YEAR AHEAD

The independent community for disruptive business and technology leaders

Nimbus Ninety

Nimbus Ninety

Nimbus Ninety

Nimbus Ninety

For many of us, the beginning of the year is a time to reflect, take stock and set plans for the months ahead. In a world where technology is developing at hyperspeed, reviewing priorities is a good deal more challenging. So each year, we survey members and take the pulse of digital transformation across a broad range of sectors, combining it with commentary from thought leaders, to help you define your own plans for 2017.

Over the course of 2016, we’ve been privileged to welcome innovators from all types of organisations. We’ve heard from established enterprises who are undertaking ambitious transformation and have the battle scars to prove it. We’ve learnt from Airbnb, Deliveroo and Uber - leading digital disruptors who are changing how entire industries think and how consumers behave. As technology continues to astonish and amaze, I’m excited at what 2017 will bring for our members.

Bringing together an inquisitive and diverse community is at the very heart of what we do. With a shortage of skills cited as a critical challenge in this report, this is a crucial time to learn from each other, and harness

the Nimbus Ninety community to make the connections which will drive projects forward. To facilitate this, we’ve planned a stimulating programme of activities for 2017 to reflect many of the themes outlined in this report. Despite the sense of uncertainty taking root in 2016, digital transformation is more crucial than ever. Although there is much work to do, 52% of members rated their organisation’s progress in achieving its digital ambitions as adequate or poor. Increased connectivity and automation are bringing about another wave of development and disruption, so gathering insights from different sectors will play a key role in ensuring 2017 is one of progress rather than stagnation. We hope that by bringing together those who are driving transformation, we can equip you with the tools you need to navigate the year ahead successfully and smoothly.

I would like to thank all the contributors to this report, especially members, research partners and particular thanks to our thought leaders David Rowan, Debbie Hulme and Dr Will Venters for sharing their insights into where technology will transport us in 2017.

Emma TaylorFounder and Managing Director

Nimbus Ninety

Digital Trends Report 2017 | ContentsForeword | Digital Trends Report 2017

32

FOREWORD

We live in a time where disruption is the new normal, and technology is accelerating the pace of change to an unprecedented degree

SURVEY RESULTS & ANALYSIS

DIGITAL TRANSFORMATION IN A HYPERCONNECTED ERA

THE INVESTMENT LANDSCAPE FOR DIGITAL IN 2017

ACHIEVING SUCCESSFUL DIGITAL TRANSFORMATION

WHAT LIES AHEAD?

SUPPORTING PARTNER INSIGHT

INTRODUCTION & DEMOGRAPHIC

INTERVIEWS

SUPPORTING PARTNER: CASE STUDY

FOREWORD

PAGE 6 - 17

PAGE 6

PAGE 8

PAGE 12

PAGE 16

PAGE 4 - 5

PAGE 18

PAGE 2

PAGE 20- 37

PAGE 38

TABLE OF CONTENTS

WIRED UK, EDITOR-IN-CHIEF

VIRGIN ATLANTIC, VP CUSTOMER EXPERIENCE

LONDON SCHOOL OF ECONOMICS, ASSISTANT PROFESSOR OF INFORMATION SYSTEMS

PAGE 20

PAGE 26

PAGE 32

£0 - £25m16%

£25m - £100m10%

£100m - £500m18%

£500m - £2bn15%

£2bn - £10bn18%

£10bn - £25bn6%

£25bn -£50bn8%

£50bn+9%

At the start of 2017, a year where the Internet of Things, Artificial Intelligence, and Augmented Reality are widely expected to have a significant impact, it’s worthwhile pausing to reflect on how, in this dynamic landscape, organisations can carve out a successful path to growth.

For the Nimbus Ninety community the top business challenge for 2017 is keeping pace with the speed of change. In 2016, connectivity increased, data exploded and the pace of progress accelerated once again. Companies, even those that have previously seemed resilient to disruption, are increasingly adopting the view that thinking like a digital enterprise is simply essential to reap the benefits of another wave of technological progress. Indeed, with increased competition from digitally-driven companies viewed as the second biggest challenge, time is running out to develop robust digital strategies that can weather the disruptive times ahead.

This of course is easily said. ‘Digital transformation’, has become a popular, catch-all term to describe the range of projects and programmes undertaken to digitise aspects of an organisation’s

operations. These projects vary hugely in scope and complexity. When we asked members to define their role in digital strategy, a multi-layered picture emerged. For some, digital is confined to marketing, for others it’s about data strategy or innovation. At the other end of the scale, it’s all-encompassing: including self-disruption, organisational change and constant horizon-scanning to capture the opportunities emerging in the so-called digital economy. What is clear, is that members are often introducing brand new ways of working into their organisations, which in turn, require new approaches to planning, communication and leadership.

Much progress has been made. However, organisations need to aim ever higher in their digital ambitions, just to keep up with consumers’ expectations and drive forward the operational efficiency that is within reach. The results in this report highlight the progress that has been made, and outline the themes shaping another transformational year across the Nimbus Ninety community.

Jessica ThorpeSenior Research Analyst

Nimbus Ninety

Digital

Marketing/PRManagement

RD/Innovation

Operations

Finance

HR

Communications

Standards

BIM

Risk Compliance

Business C

hange

Service Delivery

Executive Board

Education Training

Internal Audit

Tax and HR

Content Strategy

Global Transaction Banking

Global IT

Risk M

anagement

Supporter Engagement

Crossfunctional

IT & Finance

Tax & Technology

Security

Compliance

Strategy PlanningIT Technology

1 -104% 11 -100

5%

101 - 50016%

501 - 1,0007%

1,001 -5,00022%

5,001 - 10,00011%

10,001 - 20,0007%

20,000+28%

Organisationsize

Job function

Automotive1% Banking

7%Charity/Not for profit

7%

Construction/Engineering3%

Consultancy1%

Consumer packaged goods 3%

Education/Arts3%

Energy/Mining2%

Gaming/Gambling1%

Healthcare1%

Hospitality & Leisure3%

Insurance9%IT 3%

Manufacturing1%

Media, Broadcasting & Entertainment

12%

Other4%

Other Financial Services

5%

Pharmaceutical2%

Professional Services3%

Public Sector7%

Retail6%

Technology3%

Telecommunications3%

Transport/Logistics5%

Utilities3%

Industry Sector

Annual turnover

Digital Trends Report 2017 | Survey Demographic

5

Introduction | Digital Trends Report 2017

4

INTRODUCTION TO THE DIGITAL TRENDS SURVEY

The world’s economy is in transition, as technologies progressively underpin growth and reshape operational models throughout industries across the world.

SURVEY DEMOGRAPHIC

251 senior stakeholders responsible for driving digital transformation initiatives across business and technology functions

0% 5% 10% 15% 20% 25% 30% 35% 40%

39%We are developing

a digital strategy

29%We have a clear digital

strategy that is communicatedacross the business

27%Separate departments/teams/

business lines have theirown digital strategies

5%We do not have

a clear digital strategy

Figure 1 - Which statement best describes your digital strategy?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Digitaltransformation

not required

Other

To comply withregulation/legislation

To attract newtalent and develop

existing employees

To enternew markets

To reduce costs

To create newproducts or services

To reinvent business/operating model

To improveoperational

e�ciency

To meetchanging customer

expectations80%

52%

47%

41%

18%

15%

8%

5%

2%

1%

10%

17%

19%

20%

22%

34%

43%

52%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Higher margins

Higher revenueper customer

Improvedproductivity/sta�

engagement

Greater marketpenetration

Improved customerloyalty

Improved levelsof innovation

Greater agility

Better use of datain decision-making

Improved customerengagement

Figure 2 - Why in general does your organisation need to undertake digital transformation?

Figure 3 - What are the main benefits of your digital transformation?

Digital Trends Report 2017 | Survey Results & AnalysisSurvey Results & Analysis | Digital Trends Report 2017

76

DIGITAL TRANSFORMATION IN A HYPERCONNECTED ERA

30% are not well equipped to seize the opportunities presented by digital. With 60% feeling a lukewarm quite well equipped.

Accepting that we live in a disruptive era, the quality and execution of organisations’ digital strategy is crucial if they are to grow, and for some, to survive. 39% of members are developing a digital strategy - and for those, time is surely running out (Figure 1). The remaining two thirds of members divided almost equally into two groups - 29% have a clear digital strategy communicated across the business versus 27% where separate departments/teams/business lines have their own digital strategies.

Without a coherent digital strategy, customers are apt to lose interest and are mopped up by digitally-driven competitors who are providing

seamless and frictionless experiences. Whilst on one hand it makes sense for teams and business lines to have their own digital strategies, does this approach lead to pockets of digital success that are isolated from the rest of the organisation?

Reflecting on the results from previous surveys, digital transformation is driven overwhelmingly by the need to meet changing customer expectations (80%) (Figure 2). This goes beyond simply improving ‘the customer experience’. Many organisations recognise that they need to change fundamentally in order to serve clients and customers who are increasingly connected. Whilst improving operational efficiency is

clearly important (52%) and there is much excitement about the power of automation, Internet of Things and Artificial Intelligence in this regard, it’s exciting that for 47% digital transformation is to reinvent business/operating models. This marks a contrast with the results of our Digital Leaders Insight Report in March 2016, where just 6% members chose ‘reinvent’ to best describe how business models needed to change¹ in light of disruption. The top response, ‘evolve’ selected by 33%, now seems too glacial in its nature to aptly reflect the speed at which technology is really driving change.

Drilling into the benefits of digital

transformation (Figure 3), improved customer engagement topped the table with 63%, consistent with the top ranking objective in the previous question. Throughout 2016 we have regularly returned to the theme of data at IGNITE Summits. Harnessing the growing mass of data is critical, and sits at the core of successful transformation, and better use of data in decision-making takes second place with 52%. Greater agility (43%), often but not always driven by agile development practices, steals third place ahead of improved levels of innovation (34%).

These results underline the significance of digital transformation and the scale of the challenge ahead. Yet 30% are not well equipped to seize the opportunities presented by digital. With 60% feeling a lukewarm quite well equipped, the following sections explore the many and varied obstacles facing organisations in this highly connected and dynamic period of change.

57%

24%

10% 9%

54%

30%

9% 7%

0%

10%

20%

30%

40%

50%

60%

70%

Increase Stay the same Decrease Don't know

2016

2017

Figure 4 - In 2016, how did your spend on technology change? & How do you expect your spend on technology to change in 2017?

1%

2%

3%

3%

4%

6%

9%

10%

11%

12%

14%

18%

18%

23%

25%

34%

0% 10% 20% 30% 40%

No one

Don’t know

Chief Data O�cer

Analytics/Insight

Communications

Dedicated transformationunit/role

Innovation

Chief Operating O�cer

Other (please specify)

Chief Financial O�cer

Chief Digital O�cer

Chief Marketing O�cer

Separate business units

Chief Technology O�cer

Chief Information O�cer

Chief Executive O�cer

Figure 5 - Who is the budget holder for your digital strategy?

35%

25%

55%

26%

33%35%

33%

36%

32%

41%

29% 29%

45%

28%

39%

35%

39%

19%

29%31%

24%

43%

24%26%

0%

10%

20%

30%

40%

50%

60%

We are developing a digital strategy

Separate departments/teams/business lines havetheir own digital strategies

We have a clear digital strategy that is communicated

across the business

Chief Executive O�cer

Chief Information O�cer

Chief Technology O�cer

Chief Marketing O�cer

Chief Digital O�cer

Chief Data O�cer

Chief Financial O�cer

Chief Operating O�cer

Figure 6 - Who is the budget holder for your digital strategy? vs Which statement best describes your digital strategy?

In focus: The employee experience

Digitisation is reshaping the workplace - 49% agree their company culture has in fact changed as a direct result of technology. These changes are fundamental, and yet with the focus primarily on improving the customer experience, investing in the employee experience often ends up far down the list of priorities. Communication between teams/departments is most likely to derail digital projects (Figure 12). And yet, improving employee engagement/knowledge sharing and attracting new talent/developing staff rank as the lowest priorities in terms of drivers of investment (Figure 7). Indeed, with only 8% focusing spend on the worker experience (Figure 9), and with skills in short supply, are organisations missing a major opportunity? Or perhaps this is seen as the preserve of the HR department, given that improved employee satisfaction/effectiveness is a KPI of digital projects for just 32% (Figure 13). Freeing up staff time to focus on more valuable tasks through greater automation may be part of the solution, although this alone cannot tackle the entirely human error of poor communication. What is clear, is that digital is propelling new thinking on how human capital is employed and deployed - and we expect to see more innovation on this front throughout 2017.


98

An emphatic 84% feel more investment is needed if digital objectives are to be achieved. For the majority, technology spend is growing, with 54% expecting an increase in 2017 whilst 30% expect it to remain roughly the same (Figure 4).

Digital is now fundamental to any organisation’s success and with more funds channelled into projects, support is required at the highest level. Although the CEO holds the project purse strings for the majority of members, at 34%, (Figure 5), budgets are still largely the domain of technology and IT, with a combined total of 48% choosing CIO or CTO. With the majority of spend directed at the customer relationship, the CMO is just behind IT and technology with 18%. The diversity of digital projects is reflected by the high percentage of those choosing the category ‘Other’. Here commercial and product roles feature heavily as budget holders, as do combined IT and digital director-level roles.

Those organisations which have a clear digital strategy communicated business-wide are most likely to have the CEO as a budget holder (39%), and those where digital strategies are the domain of individual business units are the least likely to find the CEO holding the purse strings (25%) (Figure 6).

THE INVESTMENT LANDSCAPE FOR DIGITAL IN 2017

84% feel more investment is needed if digital objectives are to be achieved

38% of members say they have the right skills in place to achieve their digital objectives

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cutting costs

Improve operational e�ciency

Improve customer experience

Employee engagement/knowledge sharing

Increase competitive advantage

Launch new products/businesses

Replace legacy systems

Increase productivity

Increase automation

Attract new talent/develop sta�

High Medium Low

22%

28%

28%

40%

42%

45%

46%

68%

72%

85%

50%

52%

47%

47%

45%

40%

47%

28%

27%

13%

28%

20%

25%

13%

13%

15%

7%

4%

1%

2%

Figure 7 - How important are the following drivers for investment in digital?

2%

11%

30%

39%

11%

7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Within3 months

3-6 months

6-12 months

1-2 years

More than2 years

ROI is not an objective

Figure 8 - Thinking about your digital spend in 2016, in what time frame do you typically expect to see a return on investment from digital technologies?

6%

8%

8%

16%

17%

21%

29%

30%

32%

35%

35%

43%

44%

46%

67%

0% 10% 20% 30% 40% 50% 60% 70%

Other

Worker Experience

Storage

Artificial Intelligence

Internet of Things

Social Media

Security

Automation

CRM

APIs

Agile transformation

Infrastructure

Cloud

Mobile

Data & Analytics

Figure 9 - Where will your digital/technology spend be mainly focused in 2017?


1110

79% say that to achieve digital objectives, investment in different areas or technologies is necessary

Improving customer experience, operational efficiency, and increasing competitive advantage are considered the most important drivers of investment in digital (Figure 7). Whilst cutting costs, launching new products, increasing productivity and increasing automation occupy the middle ground, the ‘people’ issues, attracting new talent/developing staff and improving employee engagement/knowledge sharing are the lowest priorities. A shortage of digital skills plagues projects and, later in this report, is identified as a one of the top three business challenges of 2017. Just 35% of members say they have the right skills in place to achieve their digital objectives, so investing in internal capabilities or rethinking current approaches to managing human capital is essential.

Where will spend be directed to support these objectives? On average respondents selected four areas for investment, with the breadth of choice underscoring the diverse nature of today’s technology landscape (Figure 9). For the majority, 67%, data & analytics will enable organisations to deepen customer relationships, discover internal efficiencies, and visualise operations by harnessing a primary yet underexploited and ever-expanding asset - data.

Cloud (44%) and APIs (35%) continue to receive significant attention, as innovative new partnerships between organisations emerge, in line with the growing importance of business models based on a digital ecosystem. Agile transformation also selected by 35%, highlights the challenge for many organisations wishing to embed agile across the business as a whole. Interestingly, spend on Internet of Things and Artificial Intelligence is significantly less than their perceived disruptive potential (Figure 16).

With the majority expecting a return on investment from digital technologies within either 1-2 years (39%) or 6-12 months (30%), the pressure is on (Figure 8). A note of caution though, 79% say that to achieve digital objectives, investment in different areas or technologies is necessary, suggesting the technology landscape will remain highly complex over the next 12-24 months.

Against this backdrop, we explored the common stumbling blocks to success in the following section.

46% say their organisation has significantly transformed its digital operations over the past year, so some excellent progress has been made. Despite this, when drilling deeper into barriers to successful transformation, some usual suspects emerged.

Dealing with legacy is the most common obstacle to digital progress, and this was reflected in both 2015 and 2014 Market Trends Reports. This trend continues with 50% selecting this option (Figure 10) and although this is a reduction of 5% from 2015, it’s clear legacy systems still absorb a significant amount of time and attention despite efforts to overcome them. (See page 13 In focus: Legacy Systems for more).

38% felt organisational structure was a major barrier, highlighting one of the thorniest challenges facing enterprises, which, despite investing heavily in new technology often find they must realign teams, capabilities, people and processes, to truly capture the value of their investment. Digital transformation cuts across traditional company boundaries and structures in ways that can be painful to manage, as established ways of working and hierarchies become harder to justify. Perhaps unsurprisingly then, a lack of agile IT was chosen by a quarter of respondents as a major barrier to success, with agile practices also requiring significant cultural shifts to be successful.

Figure 10 - What are the greatest barriers to the success of your organisation’s digital strategy as a whole?

0% 10% 20% 30% 40% 50% 60%

5%Poor internal training

8%Lack of developer

experience/skills

9%Security

13%Employee buy-in

14%Working with the right

suppliers/partners

17%Time

26%Lack of agile IT

26%Cost

27%Recruiting the right

skills and talent

33%Lack of collaboration

between di�erent teams

38%Organisational structure

50%Legacy systems

Regulation/compliance 11%

Naturally, leadership and culture are easy targets when determining why digital projects fail (Figure 11). Technology is significantly changing the culture within organisations, and leaders are having to adapt rapidly too. A resounding 60% felt that the biggest cultural barrier to digital was that business as usual diverts attention from digital transformation, highlighting the gulf between ‘normal’ operations and the perception of what constitutes a truly digital organisation. ‘Vision’ itself formed the basis of the second and third barriers. It is either too short-term in nature (26%) or not cohesive enough (22%). Both responses underline the complexity of the communication challenge around digital transformation for leaders.

9%

17%

17%

19%

20%

20%

22%

22%

26%

60%

0% 10% 20% 30% 40% 50% 60% 70%

Not applicable

Organisation/leadership does notembrace innovation

Leadership does not understandthe benefits of digital

Fear of change

Lack of clear boundaries betweenIT/Technology and Business

Communication ofdigital strategy/vision is poor

Leadership is risk averse

Lack of shared vision

Vision is too short term

Business as usual divertsattention from digital transformation

Figure 11 - Thinking specifically about leadership and culture, what are the main challenges with respect to successful digital transformation?

In focus: Legacy Systems Legacy systems, occasionally referred to as ‘heritage’ systems, are often characterised as the millstones grinding digital transformation projects to a halt. Replacing legacy systems may not be the biggest driver of investment; only 28% rating it as highly important (Figure 7). Yet 50% of members cite them as the greatest obstacle to successful digital strategy (Figure 10), down from 58% in 2015 and 56% in 2014. Progress is slow, and there is no doubt that many enterprises competing with nimble and digitally-driven new entrants feel the pain of legacy acutely.

Perhaps the tide is turning. Of those 50% for whom legacy impedes implementation of digital strategy, 51% felt that they had made good progress during 2016 to overcome the challenges posed by old systems and processes.


1312

ACHIEVING SUCCESSFUL DIGITAL TRANSFORMATION

Only 28% feel established measures of success are becoming less relevant in today’s digital world

Figure 12 - Thinking about a recent digital project, what were the main pain points?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

2%Nega�ve impact on thecustomer rela�onship

16%Which metrics to track

17%Communica�ng expecta�ons

17%Buy-in fromcompany/staff

18%Unexpected costincreases

21%Buy-in fromleadership

23%Informa�on security risksand challenges

23%Poor data quality ordata privacy concerns

28%Lack of coordinated digital strategy

30%Project direc�on and focus

44%Communica�on betweenteams/departments

Exploring members’ experiences from recent projects (Figure 12), poor communication between teams/departments, is the most common cause of frustration in organisations as evidenced by 44%, regardless of their size or sector. (See Page 9 In focus: The employee experience). The results also underline the importance of having a clear business-wide digital strategy - something only 29% members admitted to (Figure 1) - given that project direction and focus (30%), and lack of coordinated digital strategy (28%) took the second and third places. Poor data quality or data privacy concerns (23%) and information security risks (23%) in the top five, reflect the growing attention on data more generally.

The subject of KPIs has been much discussed throughout 2016, as companies grapple with the right measures of success. Only 28% feel established measures of success are becoming less relevant in today’s digital world, suggesting current KPIs are adequate. The relatively close spread of results (Figure 13) highlights the variety of objectives that projects are seeking to address. As the top drivers for investing in technology are improving the customer experience and greater operational efficiency (Figure 7), it is fitting that the top indicators of success are improved customer satisfaction (72%), increased revenue (51%), and new products/services launched (42%) (Figure 13).

Looking more closely at the market, a variety of organisations are contributing to members’ digital strategies (Figure 14). Competition for skills is as fervent as ever, and 39% mostly use in-house resources to deliver digital transformation. It’s a good time for digital agencies (37%) and small consultancies (36%) which make the top five, implying a need for more specialist skills, whilst it’s exciting to see 26% collaborating with customers/clients who remain, for many, an untapped resource.

16%

20%

24%

32%

33%

39%

39%

42%

51%

72%

0% 10% 20% 30% 40% 50% 60% 70% 80%

New markets entered

Reduction in churn

Reduction in time/downtime

Improved employeesatisfaction/e�ectiveness

Improved time to market

Increased profitability

Reduction in costs

New products/services launched

Increased revenue

Improved customer satisfaction

Figure 13 - How do you measure the success of your digital objectives?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

2%Other

4%Crowdsourcing

11%Academia

16%Research analysts

21%Management consultancy firm

23%Independent consultant

23%Global Systems Integrator

26%Customers/Clients

31%Temp/Contract workers

36%Small consultancies

37%Digital agencies

39%We mostly use in-house resources

41%Solutions vendor

Figure 14 - Which external organisations are contributing to your digital strategy?

Digital Trends Report 2017 | Survey Results & Analysis

15

Survey Results & Analysis | Digital Trends Report 2017

14

Technology is changing society rapidly. Artificial Intelligence, Virtual and Augmented Reality, Internet of Things and Blockchain, are all contributing to the emergence of a world which, at times, resembles that of a science fiction novel. It is, despite the uncertainties, an exciting time for organisations and a truly transformational time to be in IT. For 49% of members, digitally-driven businesses represent the biggest threat to their organisations, underlining how crucial a differentiator technology is.

From our Market Trends Report in 2014, 80% told us they were already experiencing the pain of disruption. Today, the fashion among the most forward-looking organisations is to self-disrupt, often by creating a new digital business which competes with the established operating model, and technology teams are at the very forefront of this experimentation. 57% are rethinking business models as a result of technology, a bold measure necessary in today’s fast-moving world. Whilst customer experience and operational efficiency are common drivers of investment regardless of size or sector, the majority understand that existing revenue and organisational structures are changing fundamentally, with just under half of members agreeing their company culture has in fact changed as a direct result of technology.

Much progress has been made, although there is inevitably, more to do.

41% told us their organisations are not embracing the opportunities that digital transformation offers. Projects may be numerous, but simply keeping pace with the speed of change is, for 43%, the number one business challenge for the year ahead (Figure 15). Despite spend increasing for the majority in 2017, there is a sense that things are still not progressing quickly enough. This represents a challenging environment for leadership, particularly as a shortage of staff skilled in digital is the third highest concern (35%). Information security too has been a growing blot on the horizon, following a year of high profile breaches, with 22% selecting this as a major challenge in 2017. Just 12%, perhaps optimistically, fear the impact of Brexit.

So what will be the disruptive forces shaping the year ahead? Some familiar technologies will, members believe, continue to disrupt in 2017 (Figure 16), with platform technologies ranking top and cloud computing fifth. According to our Digital Leaders Insight Report

June 2016, 56% of members were increasing their investment in platform technologies over the next 18 months³. 32% expect digital ecosystems to be most disruptive. As we explored in September 2016⁴, digital ecosystems, a direct consequence of platform-driven business models are powering many of the world’s high growth companies already. To see more enterprises evaluating this way of working is exciting, and will no doubt further contribute to the reshaping of commercial and organisational structures currently taking place across many sectors.

Augmented Reality (17%) ranked ahead of Virtual Reality (9%) in terms of disruptive potential in the coming year. With VR now into the mainstream, all eyes are on the emerging practical applications of AR to enhance the consumer experience. Despite much excitement in 2016 around blockchain technology, only a fifth of members expected this to be most disruptive in 2017.

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

3%Other

6%Wearable technologies

8%Robotics

9%Virtual Reality

17%Augmented Reality

19%Social Media

19%Blockchain technology

22%Automation

29%Cloud computing

32%Digital ecosystems

32%Internet of Things

35%Artificial Intelligence

38%Platform technologies

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

11%Low profitability

12%Impact of Brexit

12%Higher costs

14%Customer ownership of

data/data consent

15%Regulation

15%Low growth

22%Information security/

cyber attack

27%Meeting customer

expectations

32%Budget cuts/constraints

35%Shortage of sta�skilled in digital

36%Increased competition from

digitally-driven companies

43%Keeping pace with the

speed of change

Figure 16 - Which of the following will be the most disruptive in the next 12 months?

Figure 15 - What do you think the main challenges

facing your organisation as

a whole will be in 2017?

Digital Trends Report 2017 | Survey Results & Analysis

17

Survey Results & Analysis | Digital Trends Report 2017

16

WHAT LIES AHEAD?

57% are rethinking business models as a result of technology

41% told us their organisations are not embracing the opportunities that digital transformation offers

SUPPORTING PARTNER INSIGHT

Digital transformation is only truly effective when an organisation embraces it completely and reshapes the way it thinks and acts

Technology alone does not drive digital transformation. IT alone is not responsible for digital transformation. Digital transformation is only truly effective when an organisation embraces it completely and re-shapes the way it thinks and acts. There is a belief that technology changes culture, but the harsh reality is that technology only enables cultural change. The desire to change, and the support necessary to enable change, must come from within an organisation. IT alone cannot engender this change and must reach out across boundaries and establish a unified strategy with the leadership of HR, operations, and sales.

IT must not only be prepared to fail, but to embrace failure and use it to evolve more rapidly. For IT to reach out successfully, it must understand

Simon RatcliffePrincipal Consultant – Advisory

Ensono

the needs of these other functions and adapt their engagement. For IT to create digital transformation momentum it must break out and communicate clearly and loudly in simple business terms, and define clearly focused projects that can deliver rapid, iterative value.

The era of digital transformation is the opportunity for IT to step up and take control of the strategic agenda for the organisation but for it to work, it must also engage people across the business first. People, process, technology. In that order.

Technology alone does not drive digital transformation. To be truly effective it requires

the integration of people, process and technology. Whether leveraging the power of the

cloud, or optimising legacy technologies, Ensono is your partner for succeeding in the

Digital Transformation era.

ensono.com

Driving Business Change and Innovation

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DAVID ROWANINTERVIEW

EDITOR-IN-CHIEF OF WIRED UK

INTRODUCTIONThe term technology is derived from the Greek techne - meaning “art, skill, craft, or the way, manner, or means by which a thing is gained”. Though our modern perception of what technology is may be separated from the origins of the word by several millennia, for David Rowan, it seems that the central theme remains the same.

As the Editor-in-Chief of WIRED UK, David knows all about the unconventional and avant-garde players in the tech field, spanning from Beijing to Brighton. However, he is also acutely aware of the quiet undercurrents in tech - and it is these that will engross our lives in ways that can only be foreseen by the few.

With David always being at the forefront of the latest digital developments, he shared his thoughts with our members on what the future has to offer for businesses, consumers, and the world as a whole.

WIRED was born in 1993 out of the counter-culture influence that still permeates Silicon Valley to this day, setting its tone from the outset as not just another tech magazine.

“A lot of the ideas that shape today’s business and consumer culture came from that American west coast, anarchic-idealism and utopianism,” David explains. “Influencers from the Whole Earth Catalogue, from the Californian counter-culture, Burning Man Festival, and experimental communities. The idea around the use of technology to solve problems - that is what helped shape WIRED’s editorial ethos.”

I’m not interested in technology - I’m interested in how people use whatever tools that are available to reach people at scale, to understand what people want, and to discover opportunities...Nobody wants technology - they want the fluid problem solving that it offers

Source: ehang 184, Consumer Electronics Show 2016, Las Vegas - Ben Smith, 6 January 2016

What trends, patterns and emerging markets do you see as new sources of value for organisations in 2017?

Once you network the world, you open the door to significant disruption coming from everywhere. A threat to your company could come from a lab in Shanghai, or a teenager’s bedroom in

Dhaka - so you have to be open to what is happening globally.

I travel a lot - I’ve taken 125 flights in the last year alone. I do this because India is just waking up to the internet. China has scale and centralised planning which means they can try some huge experiments. Istanbul is growing ecommerce start-ups for a market of 80 million people. All of this can teach Western Europe new things, and you have to read widely and see things first-hand.

I am also seeing an acceleration of development cycles and new products. These new products may seem odd and laughable at first, but they are becoming mainstream products in ever-shorter cycles. For instance, I thought I knew what drones were all about; then in January, a Chinese company called Ehang revealed a drone at CES, designed to carry a person. You just touch the screen and it navigates you to where you want to go. Flying cars were a science fiction joke until Larry Page invested $100m in two flying car companies; and Aeromobil is also

coming to market pretty soon with its own flying car.

What do you view as the most important elements of globalisation, scalability and innovation for 2017?

Within the next year, all of those businesses that

were desperate to say they were big data businesses will start saying they are machine learning businesses. This is because Artificial Intelligence (AI) is accelerating at such a pace that it is increasingly able to be adopted by all sorts of businesses. Kevin Kelly, the founding editor of WIRED US, has a book called The Inevitable, which says that it’s easy to see what the next 10,000 business plans are going to be; just take industry X, and add AI. As these machines get smarter, they are going to do a lot of things better than humans; things that humans don’t really like to do anyway.

There is an upside and a downside to all of this. The downside is that there are not going to be as many truck drivers, or lawyers and all sorts of other people in the next few years, because a machine can automate a lot of those tasks. For instance, Uber has bought a company called Otto which just had its first demonstration of an autonomous truck on the American highways, a truck which delivered 50,000 cans of beer. This solves one particular problem, but it’s just the start.

The upside is that if you are having a conversation with a customer, you will be able to have a much more real-time and personalised conversation through bots. With bots, the customer won’t go to your website or ring you up; they will instead go to a conversational bot. If you are selling clothes, they can ask the bot if their size is in stock, or have the bot arrange delivery, send a receipt, and deal with other aspects of customer service. Or, if you want to book a flight, or book a hospital appointment, you will be able to do it increasingly via a bot in the near future.

You don’t need to understand all of the complexities of computer vision, machine learning and neural networks; but you do need to understand that these technologies are being made accessible to SMEs as well as the giants. As people are now just starting to get used to talking to the Amazon Alexa at home, that is passively listening to everything, this raises all sorts of other privacy questions. It changes behaviour more quickly than we realise.

What do you think will be the most disruptive business technology of 2017 and beyond and why?

As machines begin to run more and more of the economy, not just robotics, but also AI, what happens to the traditional deal that we make with governments? The deal that we work a certain number of hours and pay our tax, and in return we get the right to educate, feed and raise our family? That’s going to have to change, as a few companies dominate industries, and as more and more people realise there is no such thing as a ‘job’ anymore. In many parts of the world, pretty soon it’s going to be rather hard for people to obtain the income that they are accustomed to.

How can the workforce adapt to this new era of automation?

The way we educate people for the economy is very Victorian. It relies on passively learning to perform particular tasks. The challenge now is that if you have a 16 or 17-year-old, by the

time they have finished their education,

the job they will do has not yet been invented. The university system and work training system are going to have to change their focus to teaching the ability to keep learning and constantly adapting. The skill set it takes for you to produce a magazine article is reproducible by a machine, as is the skill set that the truck driver has.

So, you have to work out where the human can add value. Humans are still pretty good at certain things that a machines have not yet mastered. Humans are great about getting excited about certain things, spotting patterns at an emotional level and telling stories in a compelling way.

So for a lot of businesses, it is about how you reframe those businesses to differentiate them in a commodified economy. For instance, if you have a consumer products company, well, now anyone can get access to a factory. So, how do you turn your product into a story? GoPro did that brilliantly - it’s a commodified HD camera, but their story is, “We are the place you share your extraordinary lifestyle adventures”.

What is gamification’s place in the marketplace of the future? Will it ever evolve into being a solid business tool?

Until the robots decide they don’t need humans anymore, humans are complex, nuanced and interesting - and quite liable to be manipulated. The advertising world of the 20th century

proved that. And today, behavioural psychology is playing an increasingly interesting role in how companies can encourage behavioural change.

Game dynamics and design can lead people to do some really irrational things. For instance, Kim Kardashian gave away a free iOS and Android game two years ago; within five months, that ‘free’ game had earned her $43m in in-game purchases. I don’t think that is an entirely rational set of economic decisions.

Gamification can persuade people to consume less energy in their house by giving them a visual dashboard. You can test people’s work and suitability as an employee by giving them a game to play and monitoring their responses in-game. We are still at the early stages of learning where you can design systems to optimise people’s engagement to optimise customer retention, and to make customers feel satisfied with the experience.


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PREDICTIONS

You don’t need to understand all of the complexities of computer vision, machine learning and neural networks; but you do need to understand that these technologies are being made accessible to SMEs as well as the giants

AUTOMATION, VIRTUAL REALITY, AUGMENTED REALITY AND DISRUPTIVE TECH OF THE FUTURE


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What are the greatest digital obstacles or pain points facing organisations today? What issues are about to blindside them?

The biggest issue facing organisations is being successful and profitable. It’s very hard to tell your shareholders or your internal teams, “OK, in the next quarter, we are going to do something to imperil our revenue stream by reinventing what kind of business we are, in order to save ourselves.”

It’s the classic Clayton Christensen 'Innovator’s Dilemma'. If you are top of the tree, the psychology is, “Well, we’ve made it.” You buy your lavish corporate headquarters, and everyone gets bonuses. However, it’s often at that moment when you are most vulnerable to being killed. The most enlightened CEOs I meet are those that are constantly thinking, “How do we become the business that is going to kill our business?”

There once was a paper company, that became a rubber company, that became an electronics company, that became a mobile phone company - and it became the best, most successful mobile phone company in the world. Its feature phones were used by everybody, and they thought, “We’ve arrived.”

But, then they decided that smartphones weren’t going to be that important - why would people need them? And that company was Nokia.

FEARS & HOPES OF TOMORROW

And that’s the same story you could tell for Kodak, and for a whole bunch of other companies. So, what are you doing as a boss to trample on today’s business model? To see what could be tomorrow’s?

What does the workplace of the future look like? What business traditions are you tired of? What do you want to see replace them?

The physical workspace of tomorrow needs to be designed around collaboration and collisions. It’s no longer enough to think, “We have all the talent within our organisation”, because innovation comes when hybrid minds collide, when people with different expertise, geographies, and skill sets discuss things, and challenge each other, and that is often enabled by physical architecture and space.

There is a growth in demand for shared workspaces, where you will have your own space, but also encounter other people from different industries and get to know one another.

What are you doing as a boss to trample on today’s business model? To see what could be tomorrow's?

The most enlightened CEOs I meet are those that are constantly thinking, “How do we become the business that is going to kill our business?”

Who or what is your favourite digital leader for 2017? What person or company are you keeping an eye on?

As editor of WIRED, you’re inherently armed with a very short concentration span, because there is always something new happening. I tend to get obsessed with organisations and locations where they are doing mind-blowing things.

I’ve been spending a lot of time in China, because the scale of the opportunity there is propelling some entrepreneurs who are doing things in very ambitious ways. We did a cover story a few months ago which featured Lei Ju who runs Xiaomi, a phone company that makes high-quality phones and tablets. However, they don’t call it a phone company, they call it an internet company. This is because they make all of their money from selling accessories and services. They don’t produce the accessories; they have a business model in which they invested £100k in 60 accessories companies. They let them stay as start-ups, and they brand their products, and then make most of the margin

...innovation comes when hybrid minds collide, when people with different expertise, geographies, and skill sets discuss things, and challenge each other

from their products through 160 million phone customers. Xiaomi makes no margin on the phones; they make the margin on the accessories. The start-ups they associate with will sink or swim according to whether they can provide what the market wants today; and Xiaomi gets the benefit of start-up adaptability and agility.

Also, we’re just putting on the cover of our magazine the Swiss adventurer, Bertrand Piccard. He set the record for being the first to fly around the world

non-stop in a balloon around a decade ago. I met him in 2009, and he had an idea of taking an aeroplane around the world and not using any fuel. It sounded a bit silly, yet in July he landed in Abu Dhabi having completed his solar-powered around the world flight on the Solar Impulse. What he did wasn’t just proving an idea; it was starting a debate about what our assumptions are. People like him are game changers, and will have an impact beyond any individual venture in terms of starting conversations.

In which ways do businesses need to evolve the most to meet changing customer expectations, and build engagement and loyalty?

Firstly, don’t assume that in six months you will still be the same business, because somebody out there is trying to eat your business.

Secondly, your customers' behaviour is changing very quickly. Just look at how much time your customer is transfixed

Don’t assume that in six months you will still be the same business - because somebody out there is trying to eat your business

by their notifications on their devices. You have to be aware of that behaviour.

Thirdly, you’re going to have to work out where the purpose and mission are in your business because, increasingly to attract talent, paying salaries is not going to be enough. You’re going to have to show that you have a bigger purpose, that is going to attract people who are really driven to have an impact on the world.

In two words, describe the keys to innovation for 2017.

Openness and experimentation.

What is the ideal technology toolkit for success in 2017 and beyond? What is mobile’s role in it? I’m not interested in technology. I’m interested in how people use whatever tools are available to reach people at scale, to understand what people want, and to discover opportunities. If I am sending you a message, am I using technology, or am I actually communicating with you?

If you have a department that is running your technology, you’re doing it wrong. You need a board-level or CEO-level approach to how you are taking friction away from people’s lives, how you are connecting your customers in a way that they want now. It’s about asking how you are monitoring where the world is going, and serving those needs as they arise. That’s not a problem for your technology team - that’s a human behavioural challenge. That’s a market data in real-time challenge.

Nobody wants technology. They want the fluid problem-solving that it offers.

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DEBBIE HULMEINTERVIEW

VP CUSTOMER EXPERIENCE OF VIRGIN ATLANTIC

INTO THE RED

Think of a colour associated with a brand. Blue may evoke in your mind the logo of Facebook. Orange and yellow - perhaps McDonald’s. And red? For many, the first thing that comes to mind is Virgin. The colour is in itself a symbol of one of the most successful brand stories in the world.

The colour red is not the only thing that veils everything Virgin Atlantic does - more importantly, the company is famously encompassed in levels of customer attentiveness and engagement that are emulated and envied throughout the business world. Their ethos of creative customer-centricity is echoed across all of the Virgin brands, as propelled forward by their famous founder:

“The key is to set realistic customer expectations, and then not to just meet them, but to exceed them — preferably in unexpected and helpful ways” – Sir Richard Branson, Founder of Virgin

Virgin is also famous for how they value their employees’ contributions towards accelerating the brand. One of them is VP Customer Experience, Debbie Hulme. With 26 years in the aviation industry (7 of them at Virgin), Debbie has been at the helm of creating one of the top customer experience methodologies in the world. She explains, “In my role, I am the custodian of the customer on behalf of the business - because everybody here looks after the customer, not just me."

For this report, Debbie shared a unique level of insight on what is needed to deliver the highest levels of customer experience.

The days of customers just buying a brand are gone - customers now seek to engage more deeply with that brand, and that is a wonderful opportunity, having the customer co-creating what your future should be

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Virgin Atlantic has long been famous for their customer experience, as well as for their worker experience. Along these lines, what is the best way to adapt a workforce to deliver the best customer experience possible?

Virgin Atlantic is in kind of a unique

position - since the very beginning, we’ve been known as a challenger brand. We don’t just challenge the competition, but we also continuously challenge ourselves to deliver what’s right for the customer.

For that to be successful, you need the right people. Customer-centricity is in our DNA, and it has been from the very beginning. It’s not about simply adapting; that has been the philosophy of Virgin from day one, and still is today, that the customer is at the heart of everything that we do - we are a customer-centric, customer service organisation.

User expectations are higher than ever today, and are ever-increasing. In what new ways can organisations not only meet these demands, but anticipate the demands of the future? Over the years since I’ve been in the industry, customer expectations have increased, and they will forever more - as they rightly should.

However, I think what has changed is a company’s ability to get the insight and understanding that is required in order to meet those needs. One of the things we do, and have always done, is understand the wants and needs of the customers when they are engaging with us, both in a tangible sense, in terms of the physical journey they are going through and

the emotional journey that they go through.

You need to use the innovation and creativity that you have in the organisation to meet both the known needs of a customer, and tap into some of the unknown needs. You need to take the seams out of the customer journey, so that their experience is as frictionless as possible.

However, you still need to make sure you listen to and understand your customer, in addition to those richer sources of data. Here at Virgin, we are very lucky about the level of engagement we get from our customers to help us along with this process. We do traditional surveying, but we also have a “plane talk” community - which is around 5,500 customers who tell us about their journeys, give their feedback, talk to each other, and share with us what they want to tell us about their travels.

The customers lead the way in telling us about how they feel as they go along their customer journey. We, in turn, can enrich their travels and check

in as things are developing, allowing us to co-create with our customers to generate the journeys of the future.

What advice would you give to any business considering a move towards developing a heightened customer experience? What would be the most essential first step?

Customer, Customer, Customer. Start with the customer.

It’s about walking a mile in your customer’s shoes rather than the organisation’s shoes. It’s really difficult to think outside of your business role, and to start thinking like the customer. It’s about being alongside your customers, and really listening not only to the experience they're having - so not just the journey mapping that everybody now does - but to think emotionally, what their interaction with your company actually feels like them. Get to the heart of that emotional journey for the customer, not just the physical one. We must remember that the customer’s view of organisations from the outside is

ELEVATING CUSTOMER EXPERIENCE TO NEW HEIGHTSYou need to use the innovation and creativity that you have in the organisation to meet both the known needs of a customer, and tap into some of those unknown needs

often getting more complex, due to the multi-channel approach that customers now experience - so we must view our organisation as they view it from their perspective.

When it comes to customer engagement and data curation, what should organisations seek out to gain the most value?

Many organisations, including Virgin, are lucky with the level and richness of data that we can collect now towards getting that single view of the customer. However, I never think you can get to the point that you have gathered so much data that you are sick of gathering data. Data possesses no value unless you can use it in a way that enriches your customers’ lives. It’s not really about the chase of data for me - it’s about what that data does to empower you, and how it enables you.

It’s not really about chasing data for me - it’s about what that data does to empower you, and how it enables you. It’s about providing that data to

the people who can make a difference within your organisation, and who can deliver their services more effectively.

What elements of Virgin Atlantic’s business model do you believe define your approach as radically different?

We’re very lucky

with the founder that we had, who has instilled within us an innovative and customer-centric culture. We have a culture of “try it”, and I think that is really important in terms of technology. We are all about new concepts pushing things, and being innovative - which means not everything is going to work every time. Our founder’s mantra of “screw it, just do it” is very much alive in the business. You have to take the risk, and learn from that, and move on.

A quote I will use here is “The best way to predict the future is to create it”. And it’s about having that bravery and a culture that is about trying, learning, and not fearing risk or failure. In which ways do businesses need to evolve the most to meet changing customer expectations, and build engagement and loyalty?

I don’t think expectations are necessarily changing - customers have long held the belief of “You can do more, you can do it faster, you can make the product or service more relevant to me”. I think it is about

ensuring that you build the sort of engagement with your customers that leads to brand loyalty and advocacy, and having the sort of culture that can work well with an accelerated speed of change.

How has Virgin Atlantic found success in enhancing customer experience with partnerships?

We have worked quite closely in partnership with a supplier to develop a number of things. One particular standout is for the last couple of Christmases, we’ve developed an on-board 4D Christmas experience experiment with them on one of our Boston to London flights.

As customers boarded the flight, they were given a tablet that tracked the position of Santa in relation to the aircraft, and that also gave them live chat access to Santa. We also had some magical cameras mounted on the outside of the plane, which projected the night sky on to the top of the aircraft’s interior.

With the captain’s permission, Santa then used “magic” to enter the aircraft, where he greeted everybody on board, and distributed gifts. We made it festive and focused on the details - for instance, Santa’s hands were, of course, ice-cold as he shook the hands of the children. Customers naturally took pictures and videos and shared the experience that they had on board.

Data possesses no value unless you can use it in a way that enriches your customers’ lives. It’s not really about the chase of data for me - it’s about what that data does to empower you, and how it enables you.

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The development of this experience taught us a lot - it was fascinating for us to observe the role between our people and crew on-board and how they delivered the shared digital experience, along with how and where the customers interacted with us.

It was also interesting to develop and create a community from a shared and enhanced experience. It taught us a lot in terms of thinking, “what should that service of the future look like?".service of the future look like?”How important is getting the technology aspect right as opposed to say the business model, management or cultural aspect?

They’re all so interlinked - one supports the other. I don't think you could do one

There’s no such thing as an “IT project” - they are business projects, delivering for the business and the customer, in a way that technology enables

Innovation is a word that is bandied around and lots of people use it, in the sense of, “We have an

innovation budget” and “We innovate and bring new products to market”. But, you also need to

celebrate small sorts of innovation that people do.

without the others. Technology really is an enabler to the business to me, and to the people within that business, and to the customers that you serve. There’s no such thing as an “IT project” - they are business projects, delivering for the business and the customer, in a way that technology enables.

In which ways can organisations most effectively cultivate an innovation culture?

Get Richard Branson to start them - but we don't all have that luxury!

Innovation is a word that is bandied around and lots of people use it, in the sense of, “We have an innovation budget” and “We innovate and bring new products to market”. But, you also need to celebrate small sorts of innovation that people do.

For instance, a couple of years ago, we were looking at the boarding process, and the frustrations and anxieties our customers have when going through it. We sought to challenge the tradition of

endless waiting and staring at screens that finally tell you, “go to this gate”, and then when you get there, you find a big queue crowding the gate.

So we challenged ourselves towards changing this frustrating experience. We asked, why do’t we instead, as soon as the aircraft is on stand, allow people to board it? We “trickle board” them, taking away their “I’m waiting” anxiety. Or, perhaps if they prefer to get to the gate later, they can choose to do it that way around.

By implementing the innovation of trickle boarding, we found there was no queue or crowding at the gate, and the whole experience just became a lot better, shaking up the traditional way that airlines had done it for many years. Taking on the challenge of that

tradition also enhanced our operations and processes.

It’s important to celebrate and recognise the people who want to think differently - even in their day-to-day jobs. What other trends do you see as new sources of value for organisations in 2017?

The days of customers just buying a brand are gone - customers now seek to engage more deeply with that brand, and that is a wonderful opportunity, having the customer co-creating what your future should be. And there is lots of untapped potential in using the communities that you’ve got out there from people who are more engaged and want to help evolve your brand.

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DR WILLVENTERSINTERVIEW

ASSISTANT PROFESSOR OF INFORMATION SYSTEMS, LONDON SCHOOL OF ECONOMICS

INTRODUCTIONArtificial Intelligence may seem like the latest thing on the horizon, and is without doubt one of the most talked about things in tech right now. However, the aim for robotic intelligence goes all the way back to the 8th Century BC. In Homer’s The Iliad, robotic servants are given the celestial task of delivering wine back and forth to the gods.

Today, nearly 30 centuries later, AI has flowed down from the heavens, landing on Earth - and is no longer viewed with the glowing anticipation that it was in antiquity. Instead, the media is consumed with stories that veer from “fear our future robot overlords” to debate about mankind losing its very humanity in the face of AI. This may at first glance seem sensationalist, but it cannot be ignored that AI has become a real factor in the way our businesses and lives are run. Only 5 days into 2017, news broke of a Japanese Insurance firm replacing nearly all of its workforce

with AI, which is said to “Increase productivity by 30%...and save about 140m yen (£1m) a year”, but will also result in the loss of 34 jobs.

It is clear at this point that AI is going to be a part of our lives, like it or not. But what does this mean for us in the next year, or the next 10, or even 50? Is AI’s role in business far more friendly for both senior leadership, and for employees than we realise?

“AI is at the top of the hype curve - which I always think is interesting, because it’s the hype that is performative. The conversation around it makes it happen. Just as much as it happening makes the conversation happen - the two entwine,” says Dr Will Venters, an Assistant Professor of Information Systems for the Department of Management at The London School of Economics.

I think we’ve become overly concerned about the “Big impact of AI”, to the point we are perhaps missing the small impact


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“What do we do with algorithms? What are the challenges they present?” Dr Venters asks. He continues, “My work is around how we build those distribution systems or ecosystems, those digital infrastructures at the core of it - and that is what led me to AI”.

In interviewing Dr Venters, one could compare his viewpoint to that of The

Iliad. A view that just perhaps, AI will be not so much an encroachment upon our humanity, but rather a tool for creating a world that is easier to live in. I asked Dr Venters to share his thoughts on AI, and what it means for you and me.

Let's talk about the job market in the face of AI. The mainstream media tends to highlight the negatives of the situation - but how much in your opinion do we have to fear? What are the positives and the negatives of AI becoming an element of the workforce?

Technology has always changed jobs as we know it - how many people are working in agriculture in the modern day? Very few.

The big challenge here - which a lot of people are forgetting at this point - is that with technology we are seeing a transition. We are going to see lots of jobs change significantly. I think we’ve become overly concerned about the “Big impact of AI”, to the point we are perhaps missing the small impact.

Basic, simple jobs such as data entry will change significantly in the face of AI, and many will be lost. And maybe that’s not a bad thing. Things like data entry were phenomenally boring and inefficient things for people to do in the first place, and AI is much better at doing these things than humans are.

We need to talk about activities, not jobs. When we talk about job losses, people see a wholesale hollowing out of industries; such as the self-driving car will be the end of all taxi drivers. I think that overplays and underplays at the same time. It overplays the dramaticness of this change. What’s more likely is that in the short term, we will see fewer farmers driving tractors around; or that the tractor driver will be driving two tractors at the same time instead of one.

Also, we must ask - who does one activity today anyway? There is no farmer that just drives tractors all day, every day. So, the majority of his work may remain unchanged with the introduction of AI. He still chooses the seed, he still checks the weather, and makes decisions on what to grow. It’s just a single activity of his job - driving tractors up and down the field, that would be eroded. This isn’t completely new - we can also look at the airline industry. We are at the point now where we slowly went from lots of staff at check-in kiosks, to very few. It was the activity of the employee that changed, and now they do other things in their

roles - and that point is crucial.

The big concern though is that nearly 10% of jobs in the States are predicted to be replaced by AI within the next 10 years. The question is if AI is going to strip away or take some much more intelligent activities and skilled jobs that we didn’t think were vulnerable. The question of “What exactly is an intelligent action?” constantly changes and shifts. But it isn’t a zero-sum game in the economy. A loss of jobs in a certain role doesn’t mean that there will be loads of people sitting around doing nothing, just as the loss of jobs in agriculture didn’t lead to 30% of the population sitting around unemployed. We will create new things.

If you go back to 15 years ago, nobody expected that we would need professional people to make us coffee - yet baristas exist today. We will create a new economy, and new jobs we didn’t imagine we would need. They will be much more service-oriented, much more interactive. That is a shift in the economy that requires a significant change in education and attitude, and not just seeing education in a closed

AUTHENTICITY FROM ARTIFICE

We overly represent the idea that machines can handle knowledge, and then we downplay significantly the humanity in that

way, but in an open way. How do we continually evolve and capitalise on what we are really good at? It is easy sometimes to discount the human element of an interaction - a face, a level of engagement, but there are huge advantages that come with all of that.

All of this isn’t just about education, it’s also going to be about political change. We need to ask, how do you drive communities on in the face of all of this?

With news of AI "writing" screenplays, and even being hired as the Creative Director of McCann Erickson in Japan, it begs the question, "Do you think AI can ever be truly capable of creative thought, or replicate it to a usable degree?"

I think this question asks much more about humanity than it does about machines. Sociologists speak about representational ideas of knowledge. We overly represent the idea that machines can handle knowledge, and

then we downplay significantly the humanity in that. I’ve watched the film that you are referring to⁵, and if you close your eyes, and just listen to the text...well, it’s complete gibberish. However what made it compelling is that we are looking for meaning from the AI written script. In human

communication, the human is looking for some

meaning, so that we can represent different images to ourselves. This AI script isn’t about representation or truth - it’s about us constructing a truth and then examining it.The way that we shoot video has a language to it. The lighting has a language to it. The costume has a language to it. The majority of the film was constructed by humans - it was that which was the human artefact.

It’s not necessarily about AI being highly creative, therefore “being human”. It’s actually an algorithm - an impressive algorithm - that does some very specialised things very well, and can learn in a very bounded way. The idea that it is going to come up with cinematography or creativity that is original, that is something I am more sceptical of.

How can AI benefit organisations in terms of decision-making?

To me, the challenge is how do we put the required data into the algorithms? It’s back to that ecosystem problem - it’s where the data is, and where we

can find the cheap bits that we can turn into expensive bytes. So, where do we find data, and how do we turn that data into some value? AI is within this ecosystem.

We don’t want to put AI in charge of highly strategic decisions, unless we understand the failure. And one of the significant problems with AI is the lack

of transparency. There needs to be an understanding of the decision making. If a person were to make a decision, normally they would need to justify that decision, and the rationale behind it - and that can be as important as what the decision was. AI cannot provide that transparency, and without that, it is difficult to see it making decisions, especially life-changing ones.

The question of “What exactly is an intelligent action?” constantly changes and shifts. But it isn’t a zero-sum game in the economy. A loss of jobs in a certain role doesn’t mean that there will be loads of people sitting around doing nothing, just as the loss of jobs in agriculture didn’t lead to 30% of the population sitting around unemployed. We will create new things.


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What are your expectations for AI in the future beyond 2017?

AI is just a single element of the many tendrils that make up our digital economy. We’re talking about APIs, we’re talking about data feeds, which will allow us to see new and unusual things, and allow us to build ideas of the world from this. This is all around the connection of businesses to data.

When you start plugging those data streams together, and start taking pictures of what the world is, whether it is Facebook looking at Facebook data; or you are walking through a

building and looking at the building management system looking at how you’re working; or the shops observing how you’re moving around by looking at your Wi-Fi data; or your home keeping track of it - it’s the plugging together of those that’s going to lead to the really interesting and possibly frightening examples.

The quality of the data out there in the world is far less than everyone pretends. This means that when you stop thinking hypothetically, and actually hit real-world businesses, they are receiving data with incomplete bias and other issues, along with all of the problems associated with it.

Data bias is inherent. If you were an alien who just found Earth, and analysed Facebook, you would think everyone in the world smiles all the time, and is always happy. Food is always beautifully photogenic. No one takes a photo of the leftovers that they ate on a Wednesday afternoon when there was hardly anything left in the house. With all of this, you are seeing a partial account. Data is always a partial account and it’s always a past account.

The other problem with data, is that we often think things are sub-par when we begin using them. Take Siri for, example. One day in January, you ask Siri, ‘Can you tell me what the weather's

like next week?’. She replies, ‘It’s going to be 50 degrees, sunny, and baking hot’. And you think to yourself - there must be something wrong with Siri! This is London in January!

But what if we can’t tell how Siri has used that problematic data? Or if we don’t look at the figures and analyse them? What if they are inherent in decision-making that is done automatically? Then the only way we can make sure they work is by analysing the quality of the data going in. And we don’t do that very well. There is an inherent problem to be fixed, and where human intelligence has been very good, is to pick out the bad data that has been produced in the

output. But we’re not brilliant when it comes to analysing the quality of the data coming in. We’re not really great in identifying selection biases in that, and we need to be.

What is AI's role in developing the "smart" future - smart cities, cars, etc.?

In terms of IoT, we’re really early days on this. However, where everyone sees IoT growing is in a city-wide management system - in the plugging together of systems, so that the road maintenance system reports to the lighting system, which says ‘this is a really busy road, let’s put the lighting up a little’, or ‘This road is empty, let’s turn the lighting down’.

Or perhaps the lighting could be used to power electric cars? Why can’t we just add a plug socket to the lamp-posts...well, all of this would need

The quality of the data out there in the world is far less than everyone pretends. This means that when you stop thinking hypothetically, and actually hit real-world businesses, they are receiving data with incomplete bias and other issues, along with all of the problems associated with it.

to involve the plugging in of lots of organisations.

Berlin for example, had a prototype for electric car-sharing. It involved a number of parties - which produced a lot of challenges. Car companies required access to data to see the state of the battery life, so that when a car was rented, the battery had sufficient power to get to where it was needed, or to a charging point. This also required integration with parking companies, to avoid constantly having to pick up cars with flat batteries.

Again, to be successful, these are political questions. Things like the

smart thermostat, or the self-driving car - they are all the same - single products. They may sell you a self-driving car, but to be truly successful, it would be great if the self-driving cars talked to all of the other self-driving cars, and to the streets, and the traffic management system. Achieving all of that is the harder challenge - the building of standards, and it all takes time towards negotiating control, and negotiating political, cultural and financial changes, and even insurance. All of these are things that are perhaps not as hard as getting a car to drive itself, but do present their own set of challenges.

We must remember that being 90%

there is not good enough. A self-driving car that can drive well most of the time, in California, on particular streets, in sunny and ideal conditions is slightly different to driving on icy roads in Finland in the middle of a snowstorm. There is the implication out there that we are really close to being there. In truth, we are very close to having the sunny California version of the self-driving car that works on a particular street. But we may very well be a long way away from the genuine kind of driving challenges.

With revenues in excess of £475 million, and with 4.6 million members, the Nati onal Trust is a unique charity. It is one of the largest land owners and chariti es within the UK, with the largest UK membership subscripti on. Since its incorporati on in 1895, the sole purpose of the Nati onal Trust has been to care for places of beauty and signifi cance for ever, for everyone, throughout England, Wales and Northern Ireland.

In 2013, The Nati onal Trust embarked upon its most ambiti ous and transformati ve programme, ever to be undertaken. The System Simplifi cati on Programme (SSP) is a £40 million programme of works, which was conceived by Sarah Flannigan, former CIO.

The SSP is about business processes and cultural transformati on, with IT as an enabler. It has completely changed how the Nati onal Trust interacts with its customers, with predicted benefi ts of £100 million.

A PARTNER FOR THE TRANSFORMATIONAL JOURNEY

To enable the Trust to undertake this transformati onal journey it appointed Ensono as its chosen IT Managed Services Provider, to operate and manage the IT infrastructure and applicati on estate for the SSP; and additi onally, to provide consulti ng services to help to evolve and deliver its IT transformati on strategy.

The Nati onal Trust Case Study

Highlights

A trusted IT Partnership driving £100 million of benefi t through transformati on

CLIENT

One of the largest land owners and chariti es within the UK

CHALLENGE

The most ambiti ous and transformati ve programme ever undertaken

ENSONO SOLUTION

Managed services and consultancy for IT infrastructure and applicati ons estate

RESULT

£100m benefi ts case outperforming initi al esti mates

12653-ENS-CS-A4-NationalTrust-v6.indd 1 23/01/2017 16:50

“We are delivering the single biggest change programme of its type that the Trust has ever taken on, and Ensono is helping us to achieve that.”

Sarah Flannigan, former CIO,Nati onal Trust

“Ensono is always there, able to step up the pace and deliver for us. The Ensono people are the sort of individuals that I like to hire myself, professional, with high integrity and get the job done.”


“Ensono has provided a fi rst class professional engagement with the Trust, building a strong relati onship from the outset. It is exactly how you wish all new supplier relati onships to start and conti nue.


DELIVERING NEW AND ENHANCED CAPABILITIES

The SSP comprised a number of major projects delivering new and enhanced capabiliti es to the Trust. Deliverables included a single customer view and state of the art marketi ng tools, a new fi nance soluti on, new EPOS ti lls and ERP for use across the Trust, to provide much more granular sales informati on and the ability to restock as required; and new Digital soluti ons to support the Trust websites and mobile off erings.

The Trust looked to Ensono as a long-term strategic partner, with the right skill set, people and capabiliti es to accompany the Nati onal Trust on its journey.

ADOPTING A HYBRID IT APPROACH

Ensono is providing the Trust with scalable, secure and cost eff ecti ve basic infrastructure and managed hosti ng services. Ensono’s platf orm and locati on independent Hybrid IT approach meant that it could off er the Trust services for Amazon Web Services (AWS) public cloud platf orm, as well as Ensono’s own private cloud platf orm; ensuring that applicati ons were placed in the most appropriate locati on.

Through Ensono the Trust has the processes, people and knowledge in designing, building and maintaining infrastructures services, so the Trust does not need to signifi cantly change the size of its internal IT department.

The new Nati onal Trust public website was launched on AWS, managed by Ensono, providing an extremely fl exible soluti on to meet the changing peaks in business demand. The fi nance system applicati on and the new EPOS system back offi ce applicati ons reside in Ensono’s private cloud platf orm, with other applicati ons located within on-premises data centres.

ADVICE AND GUIDANCE FOR THE TRANSITION PLAN

Ensono Consulti ng Services were engaged on a number of aspects of the project, in parti cular programme and project management of the transiti on, to plan and manage implementati on and cut-over to the live environment. It also reviewed the existi ng service management processes to ensure that Nati onal Trust customers experienced a seamless service during the transiti on period of SSP.

Additi onally, the Ensono Consulti ng team worked closely with the SSP applicati on providers to ensure that the technology requirements aligned with Nati onal Trust’s business objecti ves; including platf orm design that aligned with the Nati onal Trust’s budget and service requirements, whilst minimising the migrati on risk.

REALISING THE BUSINESS OBJECTIVES

The SSP has transformed the Nati onal Trust, with its two main objecti ves being realised. The £100 million benefi t case is already outperforming initi al esti mates, with customers buying membership online in even greater numbers than predicted, procurement savings performing especially well, and very strong membership renewals at the new EPOS points of sale. It has also signifi cantly improved management informati on, getti ng the best possible informati on to decision makers at all levels of the Trust, using common tools and with one version of the truth.

The Nati onal Trust believes that it is the cultural fi t, capability and open engagement style that makes its relati onship with Ensono so successful. Ensono has earned the positi on of strategic IT partner to the Trust, and will conti nue to work collaborati vely in ongoing initi ati ves to simplify the Trust’s IT architecture and opti mise service delivery.

Ensono, formerly Att enda, collaborates with clients to deliver progressive IT soluti ons to operate their infrastructure for today and opti mise it for tomorrow. To learn more, visit ensono.com

12653-ENS-CS-A4-NationalTrust-v6.indd 2 23/01/2017 16:50

Digital Trends Report 2017 | Supporting Partner Case StudySupporting Partner Case Study | Digital Trends Report 2017

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References1 Nimbus Ninety March 2016, Digital business model reinvention

2 Nimbus Ninety 2014, Market Trends Report

3 Nimbus Ninety June 2016, Examining the impact and implications of the

platform economy

4 Nimbus Ninety September 2016, Exploring the role of innovation ecosystems

5 Sharp, O. et al. 2016. Sunspring | A Sci-Fi Short Film Starring Thomas

Middleditch [Online]. Available at: https://youtu.be/LY7x2Ihqjmc [Accessed: 7

January 2017].

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