How CFOs Are Harnessing Digital Disruption to Increase Productivity, Business Value
We are living in digital revolution where new gadgets, technologies and innovations are permeating our everyday lives.
The Consumer Electronics Show in Las Vegas every January introduces a dizzying array of new gadgets, technologies and future-forward innovations that may, in short order, permeate our daily lives. It’s the clearest indication that we are no longer waiting for a digital revolution – we are living it in real-time, with the pace quickening each year. This year, technological advances in artificial intelligence (AI), cloud computing and the Internet of Things (IoT) are cascading across industries, causing wide-scale disruption. This disruption is delivering many new opportunities for organizations and industries, with companies cleverly investing in, and taking advantage of, innovation to increase the success and value of their businesses.
A majority of CFOs surveyed for the Bank of America Merrill Lynch CFO Outlook reported that they plan to increase their technology spending to help their companies achieve stronger fraud protection, expanded market share and increased sales. These technology investments are spread across four key areas among mid-market companies: big data and analytics, cloud computing, e-commerce and digital payment. The report showed that a majority of middle market companies would spend up to 10 percent of their entire budget on technology, investing in product and service innovation as well as in core technologies to increase productivity across departments. These investments are mission-critical to businesses seeking to build a new digital value chain for tech-savvy customers.
Big data and increasing sales.
One of the biggest technology challenges companies face is properly managing, protecting, synthesizing and analyzing data. Massive volumes of data are being created by the technologies that enable our modern lives. This trend will only accelerate, as, for example, entire ecosystems of customers and partners convene around artificially intelligent digital platforms, including Google Home, Amazon’s Echo and Apple’s Siri. Each of these individual interactions generate data that are securely encrypted and stored in the cloud to improve future personalization and purchasing recommendations. While these technologies generate a high volume of data, they’re a retail investment that is already paying off. According to a study by Checkout Tracking, Amazon Echo customers on average increase spending by 10 percent after buying Amazon Echo, and their buying occasions increase six percent.
Artificial intelligence and improving productivity.
AI is transforming the enterprise software industry with acquisitions and new offerings increasing at lightning pace – from Salesforce Einstein to Microsoft Azure Cognitive Services and Google Cloud Platform. Businesses can leverage AI to develop analytics that combine front-end customer insights and back-end business intelligence to better understand customer interactions, and we’ll likely see the productivity-enhancing aspects of AI initially help workers in the areas of IT and customer service.
AI adoption is expanding across industries as well, offering a gateway to more intuitive experiences for workforces in the field. In the auto insurance industry, adjusters use Tractable’s deep learning systems to simplify triage after a car accident. Instead of manually scanning pictures, they use machine-trained estimates for repair costs, enabling agents to accelerate a claim past triage and into repair, salvage or appraisal.
AI adoption is expanding across industries as well, offering a gateway to more intuitive experiences for workforces in the field.
Digital payments and emerging markets.
As comfort levels increase around digital payments and e-commerce portals, businesses are motivated to take advantage of these critical entry points. Identifying tech trends and finding productive solutions (such as e-commerce portals and tools for digital payments) can help companies get ahead in both established and emerging markets and capture new revenue streams, locally and globally.
Moving at the Speed of Disruption: Analytics, AI and Digital Payment
The speed of disruption requires companies to put new efficiencies to work faster, in order to stay ahead of competitors and to increase market share. Many 2017 budgets contain line items for a number of technology investments, including big data/analytics, security, artificial intelligence and cloud computing.
Strategizing for the Future
Deciding which technologies to invest in depends on a company’s goals. For greater efficiency, cloud services can enable huge cost savings and simplicity in just a few months. The CIO Strategic Partner Index run by IDC reports that 29 percent of IT leaders are spending more than half their IT budget on external providers. To reach customers in new markets, an online presence and expanded payment choices can accelerate e-commerce sales. Companies should also consider innovations that can improve their products and services. For example, many manufacturers are switching to 3-D printing for cost-effective prototypes and customized production. Healthcare firms are embracing wearables and genomics. And as blockchain technology develops, there will be new opportunities to increase security and efficiency.
In the next 12 months, we’ll see CFOs working more closely with IT to determine where to invest for greatest productivity now and in the future, which could range from artificial intelligence to virtual reality. The speed of disruption requires companies to put new technology to work quickly, making technology investment a priority on every CFO’s agenda.
General disclaimer for Bank of America Merrill Lynch, visit baml.com/disclaimer.