In January of 2021 I attended Predictions 21, an online event organized by Forrester Research. “Faced with the pandemic, firms did things that once seemed impossible - sometimes overnight,” said Forrester last year, adding that “2021 will be the year that every company - not just the 15% of firms that were already digitally savvy - doubles down on technology-fueled experiences, operations, products, and ecosystems.”
Earlier this year I attended Predictions 22, and was particularly curious to see how things had changed in the intervening year. “Disruptive Forces Necessitate Bold Decisions,” was the overriding message in this year’s event guide. “The old ways of working no longer work. The future is up for grabs. Leading firms will use the crucibles of 2020 and 2021 to forge a path to an agile, creative, and resilient tomorrow.”
Let me summarize some of Forrester’s key predictions in three areas: technology, customer experience, and industry trends.
Technology
Cloud Computing. Last year Forrester predicted that the move to cloud would spike in 2021, yielding greater enterprise adoption, and accelerating the transformation of traditional enterprise IT while increasing cloud provider revenues. This year: “We’ll see a shift to modern application development and industry-specific clouds even as geopolitical tensions reshape the cloud service provider (CSP) marketplace worldwide. … Having watched the hyperscalers upend entire industries - perhaps including their own - enterprises will accelerate their move into cloud-scale applications to meet their competitive challenges.”
Specifically, Forrester predicts that cloud is undergoing a transition from interchangeable, generic infrastructures to industry-focused clouds, especially for highly regulated, industries like financial services, health care, and government where security is paramount. “For cloud buyers, the differentiator will no longer be which hyperscaler has the most services, but which one delivers compliance while enabling application developers to do their jobs faster and better in their specific vertical.”
In addition, we’ll see the emergence of cloud nationalism, with nations intervening on where and how cloud providers can operate. “Regulators and government officials in Washington and Beijing are putting pressure on their respective big tech companies to align with a US-China competition for global, economic, and political influence.”
Artificial Intelligence. “Especially when it came to AI innovation, there were many sets of big waves to ride this year, like the advancements in computer vision, edge AI, and AI-driven software coding. These waves will continue to rock the boards of those trying to adopt AI.” 2022 is expected to bring big waves in embedded, responsible, and creative AI.
- Embedded AI: 20% of organizations will embrace AI inside, that is, AI that’s embedded in everything from architecture to operations. An AI inside approach should help enterprises shrink the latency between insights, decisions and results.
- Responsible AI: “Some regulated industries have started adopting responsible AI solutions that help companies turn AI principles such as fairness and transparency into consistent practices.” These solutions will likely be extended to other industries that use AI for critical business decisions.
- Creative AI: Until recently, only humans could receive patents, but this is starting to change. Innovations and products created by AI systems are expected to start winning dozens of patents. Such legal recognition will encourage further development of creative AI systems.
Automation. “The COVID-19 pandemic, while winding down, has permanently changed the course of business for many firms and industries. Among those changes, it forced enterprises to adopt more sophisticated automation programs that have the ability to reshuffle priorities on a dime by using the latest analytics.”
Forrester predicts that 35% of companies will start introducing physical robots to fill the increasing shortage of service workers in healthcare, food preparation, warehouse jobs, grounds maintenance, surveillance, janitorial support, and other jobs with low wages and difficult working conditions. At the same time, 5% of Fortune 500 companies are expect to rely on advanced automation programs to fuel extreme innovation. To do so, enterprises must develop a hybrid workforce of human and digital workers, and define an automation fabric that links AI-based and traditional automation components.
Customer Experience
Consumer Expectations. “After years of living in the face of uncertainty, consumers are weary, guarded about their spending, and used to constantly resetting their expectations and adapting their patterns of activity. … Lingering fear around physical and financial health, along with tempered optimism for a post-pandemic recovery, will compel consumers to find brands, products, and experiences that provide an immediate - even if temporary - sense of happiness, comfort, and relief.”
Around 80% of consumers will see the world as all digital, with no divide. “Since the start of COVID-19, 49% of UK and over 60% of US online adults started making online transactions for the first time; 35% of UK and 44% of US consumers upgraded their in-home technology. Even consumers who were once considered to be digital holdouts anticipate continuing the online behaviors they picked up during the pandemic.” Overall, consumers have high expectations that digital experiences will work well. 60% of US and UK consumers expect that, by now, companies should have learned how to handle pandemic-related disruptions, and be better prepared to a future public health emergency.
Workforce Expectations. Employees are emerging from the turbulent years of the pandemic in a different state of mind. As the worst of the pandemic is hopefully behinds us, executives need to prepare “for an onslaught of emerging employee experience (EX) challenges. … And, looking around, they see evidence suggesting that they can ask for and receive the reasonable things that they want.”
Companies have a lot of decisions to make, including where and when people can work and what tools they should have available. 48% of large US organizations have dedicated EX programs, a number that’s expected to rise to 65% as monthly quite rates go as high as 2%.
Industry Trends
Retail. “The prolonged pandemic continues to shape how retailers and brands strategize and execute to grow their business. 2022 will be a year of investment and new partnerships as retailers position their business model, strategy, marketing, stores, and operations to flourish in a post-pandemic world.”
Forrester predicts significant growth and investment in the so-called circular economy, that is, an economy where products are intended to be shared, leased, reused, repaired, refurbished and recycled for as along as possible, unlike the classic linear economy where once used, products are destined to become waste. “Consumers like buying secondhand products because they’re unique and less expensive — and for the fun of finding a bargain or special item. For retailers and brands, it makes good sense for both the planet and the business: Sixty percent of online adults in France, 49% in the UK, and 41% in the US prefer to buy environmentally sustainable products.”
In addition, returns will become a major competitive differentiation in the retail industry Online consumers fear of returns influence their choices and often discourages them from online shopping. About 60% of adults in the US, UK and France prefer to do business wit online retailers that offer free return shipping, and 40% also prefer retailers that provide refunds via the original form of payment.
Banking. To compete and survive in an increasingly unpredictable, post-pandemic world, banks will invest heavily in technology, talent, and new business models, while accelerating their end-to-end digital transformation.
Forrester predicts that 2022 will be the year when open and embedded finance starts reshaping financial services, with a growing number of banks experimenting and evolving their business models toward more open, collaborative approaches. “While some banks will (foolishly?) try to join the race to build the world’s next lifestyle super-app, others will leverage their open-banking connectivity and focus their efforts on delivering select capabilities as a service.”
“In a time of crisis, every decision counts,” says Forrester’s in conclusion. “In 2022, the new normal will be more new than it will be normal. Creativity, resilience, and agility fueled by strong customer understanding and smart tech investment will separate leaders and laggards, no matter the industry.”
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