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Digital transformation projects pick up pace under pressure

IT service providers see accelerating demand for cloud, data analytics, AI and automation as organizations face the challenge of retooling their operations as the economy reopens.

The COVID-19 pandemic is expected to reduce IT spending in 2020 and potentially beyond, but some industry executives believe there's still room for innovative projects amid the general economic downturn.

Innovation, however, is being redefined. Projects launched during the early stage of pandemic response have focused on immediate needs to keep businesses functioning in a lockdown. But as the economy begins to reopen, a subsequent wave of projects will address new ways of conducting business that take into account social distancing policies and a jittery public. Other projects will aim to address pandemic-influenced business resiliency requirements.

And while some enterprises had previously embarked on multiyear digital transformation projects, the new initiatives will likely be smaller in scope and have quicker turnaround times (see "Speeding innovation"). The technologies undergirding these emerging projects will include a heavy dose of cloud computing, data analytics, AI and automation.

The first wave: Stabilizing the core

The early wave of projects in March and April focused on the essentials of employee safety and providing the tools for remote working -- cloud-based communications and collaboration systems, for example. Those keep-the-lights-on projects aimed to ensure businesses could continue to perform the basic functions necessary to support employees, run the business and deliver products and services to customers.

Manish SharmaManish Sharma

Manish Sharma, group chief executive of operations at Accenture, called the task of maintaining the business processes surrounding essential services "stabilizing the core." Accenture, using technologies such as Microsoft Teams, was able to quickly transition the vast majority of its 509,000 employees to working from home and remotely working with clients.

Sharma cited establishing a command center to manage priority processes across a virtual workforce as an example of attending to the core. He also noted the "ability to access operational data wherever and whenever it is needed." Those measures were part of Accenture's COVID-19 response and the company is advising customers to do the same, he added.

Making the newly conceived processes hardy enough to endure has become the next step for organizations.

Raj PatilRaj Patil

"In the short term, Q2 is about building resilience," said Raj Patil, CEO at Orion Innovation, a business and technology services provider based in New York. "Can we continue to deliver and continue to run the engine and continue to keep the parts of the business going when everyone is working remotely?"

Cloud as infrastructure

Cloud computing has become a mainstay of early coronavirus-driven IT efforts. In addition to cloud-based collaboration tools, customers are turning to the cloud for essential infrastructure at a time when managing on-premises resources has become untenable. The cloud's long-time selling point of elasticity also offers an attraction during uncertain times.

Patil said infrastructure, in general, and cloud, in particular, have sparked customer spending. "The ability to scale up and down becomes important," he said.

Jeff DeVerterJeff DeVerter

Indeed, businesses have had to abruptly downsize amid the lockdown and resulting economic decline. Jeff DeVerter, CTO at Rackspace, a managed cloud services provider based in San Antonio, said one customer, a century-old retailer, was compelled to dramatically downsize in the space of two months. Migrating to the cloud will help the company adjust to the new economic reality.

Such companies face a quandary: They might need to spend now, although they aren't flush with cash, to gain cloud efficiencies later. DeVerter framed the question for companies eyeing a cloud migration: "How much are you willing to spend to save?"

Other early stage pandemic projects have focused on meeting the IT needs of entities directly involved in COVID-19 response. IT services companies are lending their expertise to a range of initiatives among healthcare, life sciences and research organizations.

Accenture has embarked on supply chain projects. Accenture, Avanade and Microsoft, for example, created Critical Supply Connect to help healthcare organizations dealing with personal protective equipment shortages, Sharma said. He said the platform accelerates the procurement of medical supplies, mapping demand and supply between buyers and sellers. In addition, Accenture is operating a supply chain, which includes manufacturers such as Rolls-Royce, to boost the supply of ventilators in the United Kingdom.

The next wave: Digital transformation projects for the new normal

The next wave of projects will kick in during the next six to 18 months. The groundwork for those initiatives has already started in some cases, particularly among businesses that are beginning to reopen. The emphasis among such organizations will be finding "new ways to interact with customers, buyers and partners," Patil said. "Central to that is digital."

The professional sports sector is one of Orion's vertical markets. When leagues can resume play, Patil said, the question becomes how do you bring fans back? He said his company is working with leagues to think through challenges such as determining the "right way to use temperature checks as fans come in" to stadiums.

Orion also works with tax and audit companies. In that market, a key issue is how to conduct audits efficiently when auditors can't go to the client site.

"Those kinds of businesses … will need a lot of innovation," Patil said.

After this rapid burst of reactive measures, some organizations are resurfacing to think about how they can pivot to new opportunities.
Manish SharmaGroup chief executive of operations, Accenture

Accenture has also encountered the beginnings of the transition from early response projects to those looking further ahead.

"After this rapid burst of reactive measures, some organizations are resurfacing to think about how they can pivot to new opportunities -- innovating their services, infrastructure and route to the market to outmaneuver uncertainty and emerge stronger," Sharma said.

To thrive in this environment, companies must be able to create, adapt and anticipate as the focus shifts from reaction, to recovery, to rebounding, he said. The task calls for businesses to bring together people and technology "to strengthen human experiences and social needs as their overarching objective," he added.

Cloud projects, spurred by the initial reaction to the coronavirus, are expected to accelerate in the coming months. Rackspace, for example, anticipates a second wave of cloud-based transformation to occur in the next six to nine months.

That wave of COVID-catalyzed transformation will involve "optimizing what got moved in Q1" and identifying new workloads to migrate to the cloud, DeVerter said. Organizations will pursue those additional workloads, having learned that the cloud offers greater security and, when deployed properly, can help organizations become more cost-effective and generate more revenue, he said.

John-David LovelockJohn-David Lovelock

John-David Lovelock, research vice president at Gartner, said he also expects to see an acceleration of cloud investment as organizations reinvent their business approaches to recover from the pandemic. Cloud spending levels Gartner once anticipated to surface in 2023 and 2024 could begin to arrive in 2022.

Organizations under pressure to adopt new technology to support new business directions -- and having limited cash to do so -- will continue the cloud push, Lovelock said.

The cloud will also get a boost from the "proof point" the earlier wave of coronavirus-driven adoption has provided, he noted. Lovelock said cloud vendors have been promising the ability to scale up and scale down IT resources as needed. The initial COVID-19 response proves that aspect of cloud computing actually works.

"Through phase one of the pandemic, [cloud resources] have been able to scale down for those who needed to and scale up for those who have more demand," Lovelock said.

Analytics, AI and automation

Data analytics, AI and automation are also expected to play a prominent role as IT projects take on a more innovative flavor.

Maven Wave Partners, an Atos company and Google cloud partner, earlier this month entered a partnership with cloud data analytics vendor Snowflake. Part of the motivation behind the agreement is tapping the cloud-based technology to address accelerated digital transformation projects.

Todd TruesdellTodd Truesdell

Healthcare organizations, in particular, are embracing the "fail fast, learn quickly" philosophy as they develop analytics systems to understand COVID-19 data or predictions, said Todd Truesdell, managing director of data analytics at Maven Wave. Cloud-based analytics platforms, coupled with the minimum viable product (MVP) approach, lets organizations quickly address their needs. The alternative is taking months to build business intelligence tools and data warehouses using the traditional waterfall development methodology.

Healthcare customers "just don't have that time right now," he said.

Truesdell added he also expects to see more data analytics projects in the retail market. Data analytics can help retailers determine the appropriate staffing levels for a store, or a department within a store, based on financial metrics and customer-buying behavior.

AI, meanwhile, is already finding a home in COVID-19-driven projects. Critical Supply Connect, for instance, uses Accenture's AI-based procurement market intelligence advisor, which augments sourcing experts to speed up the discovery of suppliers, Sharma noted.

In addition, Accenture worked with the state of Texas Workforce Commission to deploy an AI-based virtual assistant to handle the sharp increase in unemployment benefits queries, he said.

"The surge of requests placed a significant strain on the commission's online channels and the capacity of its call center," Sharma said, noting other states face the same challenge.

In the area of automation, Patil said he's seen some acceleration of activity compared to early 2020, before the coronavirus lockdown. Some market watchers have pointed to technologies such as robotic process automation and intelligent automation as ripe for significant growth.

"In essence, automation is the social distancing of business resiliency," Sharma said. "The adoption of hyper-automation will accelerate."

He said automation boosts the efficiency of systems, eliminating application and infrastructure bottlenecks and freeing human resources to focus on higher priority issues.

And, during a pandemic, automation can also "help track the location, safety and productivity of all resources as part of an overall business continuity plan," Sharma said.

The precise timelines the next wave of digital transformation projects will follow is difficult to nail down, given the staggered reopening of the economy and the potential for new spikes in coronavirus infections.

DeVerter said the recovery from COVID-19 will differ from the rapid post-9/11 recovery and the slower rebound following the 2007-2009 recession.

"The thing that makes this so different is we don't really see a finish line anywhere," he said.

But in the meantime, organizations will look to improve their resiliency and position themselves for the recovery -- whenever it occurs.

"Transformation has to continue," Patil said.

Speeding innovation

In the COVID-19 environment, one of the biggest questions service providers and their customers face is how to accelerate IT initiatives to rapidly yield results in contrast to years-long digital transformation projects.

Service provider firms are finding the answer in a combination of fast-turnaround methodologies and technologies, such as cloud, which let organizations quickly set up IT resources.

Orion, for example, has developed an agility-at-scale concept to help speed the course of innovation. Patil said the company talks with customers about their desired end state and then takes a step back to identify what key technologies must be solidified to make that happen. Once stabilized, the core technologies can be extended, and innovation can follow.

Patil cited the example of moving a paper-based process to some sort of automated system. Once the core automated system is in place, the focus can shift from the foundational technologies to a succession of "bite-sized" innovations through AI and machine learning.

"You've got to have the basics in order to innovate the quick wins," he said.

Maven Wave, for its part, has rolled out a COVID-19 Rapid Response offering. In this service, Maven Wave helps clients with tasks such as getting remote employees on G Suite Essentials and tracking healthcare trends via data visualization. Projects of the latter type can be deployed in about two days to two weeks, assuming little-to-no customization.

"We are helping healthcare clients build those initial MVPs with a very iterative type of approach," Truesdell said.

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