THE DIGITAL TRANSFORMATION INSIGHT REPORT Orchestrated by CDW

Volume 04 THE DIGITAL TRANSFORMATION INSIGHT REPORT Orchestrated by CDW

Volume 04 THE DIGITAL TRANSFORMATION INSIGHT REPORT Orchestrated by CDW Volume 04 ©2018 CDW®, CDW•G® and PEOPLE WHO GET IT® are registered trademarks of CDW LLC. No material may be reproduced in any form without the written permission of the Publisher. Table of Contents

04 Welcome to the Age of Digital Transformation by Link Simpson

10 Perspectives

12 Think Big, Act Small, and Move Fast: A Guide to Accelerating Digital Transformation by Matt Tourney

18 Bringing Technology and Culture Together: Navigating Digital Transformation’s Complexities by Mike Verbeck & Victor Marchetto

24 F rom Reactive to Preventive and Predictive: IoT and Video Bolster Safety, Security and Transformation by George Howard

32 Maximum Impact: How Digital Transformation Is Revolutionizing Operations by David Frumkin

40 Key Insights

54 Conclusion THE DIGITAL TRANSFORMATION Orchestrated by CDW INSIGHT REPORT WELCOME TO THE AGE OF DIGITAL TRANSFORMATION

4 Foreword

Digital transformation is here. And it’s easy to see why. While most organizations undertake digital transformation to gain operational efficiencies and cut costs, they’re seeing top-line growth, too, as technology continues to improve the customer experience. But despite these and other benefits, digital transformation can seem daunting for many companies. Knowing where to begin, what to execute on and how to extract value from their investments are all big questions that organizations must grapple with along their journey.

“Digital transformation is more than technology. It’s how that technology is harnessed to improve business models, to gain operational efficiency and revolutionize the customer experience. And that’s just the beginning.”

First, it’s worth noting what digital transformation is. At its core, digital transformation is a business-first approach to helping organizations accelerate the transformation of their business model through the use of technology to achieve the organization’s goals.

Digital transformation often includes gathering new information from the environment and the physical world that wasn’t previously available, and then using those insights to inform better business decisions. That connecting and

5 THE DIGITAL TRANSFORMATION Orchestrated by CDW INSIGHT REPORT instrumenting everything around us — the melding of the digital and physical worlds — is the Internet of Things (IoT).

In some circles, digital transformation and IoT are used almost synonymously because of the significant value that this new connectivity and information bring to the transformation process. But the connectivity IoT brings is not the goal, rather it’s a key enabler and a major subset of digital transformation.

Digital transformation is more than technology. It’s how that technology is harnessed to improve business models, to improve operational efficiency and revolutionize the customer experience. And that’s just the beginning.

Digital transformation comes with myriad benefits that organizations have just started to realize. For example, in retail, real-time location systems can help a business track its customers, assets and inventory. This solution not only helps customers find what they need, it also helps that business become more efficient while increasing its ROI. On the factory floor, adding sensors can make processes more efficient as analytics provide information that can predict failures before they happen, which significantly reduces downtime. With connected devices providing these types of insights, the possibilities are endless.

6 Foreword

“First and foremost, an organization must do the hard work of analyzing the business and developing a vision and goals for what transformation looks like for them.”

But those possibilities aren’t always easy to harness. Effective digital transformation is complex, and a number of challenges must be addressed:

First and foremost, an organization must do the hard work of analyzing the business and developing a vision and goals for what transformation looks like for them. It takes top-down executive commitment to lay out a strategy and stay the course through what will probably be a multiyear journey.

Transformation must also include all aspects of an organization’s IT infrastructure and other operational technologies that are currently disconnected from the traditional IT environment. To be truly effective and maximize results of digital transformation, an organization’s information technology and operational technology must be connected and fully integrated.

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Finally, digital transformation usually involves new partnerships and skill sets that the organization hasn’t needed before. Adding new sensors and analytics capabilities, appropriately addressing security concerns, and finding resources with the skill and experience to tie it all together and deliver the desired outcomes are some of the challenges.

To address these challenges and turn the promise of digital transformation into reality, organizations need to think big, act small, and move fast. This means identifying where they want to go from the get-go, determining how big the gap is between their current technology and big vision, picking a starting point everyone can get behind, and then moving ahead aggressively to prove the value of their first solution and realize their first results in the near term.

“To address these challenges and turn the promise of digital transformation into reality, organizations need to think big, act small, and move fast.”

Successful digital transformation involves bringing key stakeholders together to determine a focus, and then relying on outside expertise with the skills that complement your internal capabilities. It may mean choosing a strategic partner that can help you orchestrate all the moving parts, cut the

8 Foreword complexity, and help identify and implement different solutions. Attempting to go it alone in-house can bog down teams, slow business process and result in leadership constraining further investment.

No matter where organizations start or how far along they are in the process, this guide is designed to take insights from the best minds in the industry and combine them with data garnered from over 400 IT leaders across the world. Its goal is simple: to help organizations accelerate the transformation of their business models in a manner that improves operational efficiency, enhances the customer experience and creates differentiation that helps grow sales. I hope the research, ideas and best practices in this guide will help change the way you think about and approach technology in the age of digital transformation.

Link Simpson Senior Manager, Digital Transformation & IoT, CDW

Perspectives

Digital transformation has become a central force behind changing business models. While it’s true that digital transformation may be replacing humans wherever technology can work more efficiently, it’s also empowering us in brand-new ways. Organizations are becoming more efficient, safer and savvy. Armed with data and insight, they are finding new ways to reinvent themselves. Governments are better serving and protecting their citizens. And customers are finding new reasons to shop.

To help organizations harness the power of digital transformation, we have asked some of the best and brightest minds within the industry to identify some of the biggest trends impacting different industries today. By looking at digital transformation on a case-by-case basis, we can better understand its benefits along with specific challenges. Their expert perspectives, along with ours, are included here.

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THINK BIG, ACT SMALL, AND MOVE FAST: A GUIDE TO ACCELERATING DIGITAL TRANSFORMATION

by Matt Tourney Team Lead, Digital Transformation & IoT, CDW

The research conducted by IDG for However, a simple framework can this guide was eye-opening in many help organizations begin their efforts respects. If anything, it shows that digital or continue them once in motion. transformation is well underway. But interestingly, the data also indicates that Our approach is anchored by this guiding a large percentage of organizations are principle — Think Big, Act Small, and either struggling to get started or stuck Move Fast. It’s a simple concept that is in endless proof-of-concept exercises. not meant to downplay the complexity of digital transformation, but rather to While we all agree that digital trans- help with acceleration of the process formation is a key to driving business and increase the chance of success. outcomes such as opening up new We have applied this principle in our revenue streams and improving work with hundreds of clients, and it operational efficiencies, it can be works beautifully. It helps organizations a massive undertaking. And under achieve their vision by establishing a standably, starting and getting stuck clear objective and roadmap for success. will happen. And it happens often.

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“Digital transformation is all about revolutionizing Think Big Successful digital transformation hinges your business with on thinking big. The reason is simple. If technology to drive organizations truly want to transform, they need a clear vision of what they results otherwise want to transform into. That requires not attainable by thinking big to envision what is possible, and then refining that vision into a business as usual. specific end state and its associated The stakes are high, business outcomes. Identifying the end goal will help determine the steps you but a clear vision and take to get there. solid plan will give Take a smart, connected city, for you the confidence example. It’s built with smart sensors, to place the right devices, infrastructure and software all bets on your organi- working together to deliver enhanced city services such as smart street zation’s future.” lighting, smart parking, and intelligent roadways. The cities who do it right are

14 Perspectives

those who have a clear vision of what tions need to act small, and that means they want their community to look like developing a clear roadmap of initiatives from the get-go. The data shows that with finite scope and measurable results successful smart cities attract and retain that build up to the desired end state. their populace at a higher rate than their peers, show higher tax revenues Acting small usually starts with focusing over time, and experience improve- on low-hanging fruit use cases and ments in public safety. These are clear, proven solutions. Identify what’s measurable outcomes. achievable and measurable in short order and pursue those opportunities The same applies to businesses. as a priority. It’s attractive to go after Instead of focusing on generic goals like the big, lofty goals with an ambitious, becoming “innovative” or “efficient,” custom-developed architecture, but focus on identifying measurable doing so often traps organizations in a business outcomes you want to drive constant cycle of proofs-of-concept — and then target specific use-case a wildly expensive and fruitless effort. scenarios. For example, all manufac- Focus on achieving small wins that turers strive to maximize operational build momentum and support for the efficiency and production outputs. long-term investment that is your Equipment downtime — both planned multiyear transformation strategy. and unplanned — is a key metric that factors into that efficiency. Consider We often recommend solving a single the possibility of deploying IoT sensors challenge first with a proven solution that monitor machinery operating that drives immediate results. Recently, parameters such as vibration, heat a manufacturing company wanted to and electrical consumption. Data implement a series of transformative analytics can help identify variance in processes across all their plants on a those parameters as an early warning global basis. Instead of tackling the entire indicator, before they become big issues project scope at once, we identified a or outages. Using that data to inform single use case to start with — an energy proactive maintenance procedures can management solution. Rather than try result in greatly reducing downtime and to sell the concept across a global con- maintenance costs versus traditional stituency of plant managers, we started preventive or reactive approaches. with a “proof of value” pilot on several production lines in a single factory. Bottom line — envision how your orga- It quickly showed that IoT technologies nization could use a digital transforma- delivered clear and immediate insight tion strategy to gain tangible results into operations, without disrupting far above and beyond the status quo. production. Proving that the solution Accomplish that, and you’re thinking big. worked as advertised gave them the confidence to move forward globally Act Small with this and additional IoT solutions You can’t boil the ocean all at once. on the factory floor. The same goes for digital transformation, which can be daunting, complex, Move Fast and often plays out over a period of Once you have established that big years. To help tackle it all, organiza- vision and the small, measurable steps

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to realize that vision, it’s imperative to fast, efficient as-a-service technolo- move fast. Moving fast comes down to gies — and they are more than happy to executing following your roadmap with sell directly to line-of-business leaders a sense of urgency and demonstrating without your input. the ROI of your initiatives early and often. The reason is simple. If you can Does this sound familiar? A line-of- prove to the organization that digital business executive comes back from transformation is driving real results, an industry trade show raving about momentum and companywide buy-in some obscure and unproven technology will follow. vendor with a savvy sales pitch. IT is then put on the defensive, either forced The Role of IT in Transformation to play catch-up or argue why that All of this requires IT to think more like solution is incompatible with the existing a solution enabler within its own or- infrastructure or security posture. ganization than just an infrastructure This effectively slows down the rate provider or gatekeeper. If IT does not of innovation or transformation of the take on the role of a change agent, the organization to a crawl and it is perceived line of business will go around them. that IT is the problem. In contrast, If you’re too slow or rigid, there are truly effective digital transformation plenty of providers out there building happens when IT develops a business-

16 Perspectives

first mindset, looks into the market customers and delivering increased ecosystem, and proactively brings viable value to employees and stakeholders. new solutions forward. Conversely, you can do nothing and be The Time Is Now or Never caught flat-footed in the face of rapid Truly, the nightmare scenario is market change and eventually get left doing nothing in the face of inevitable behind by competitors that do make disruption of your business or industry these investments. Ultimately, digital by technology or external factors. transformation is all about revolution- Think big, and you can choose to be izing your business with technology to your own disruptor and create positive drive results otherwise not attainable outcomes by driving a digital transfor- by “business as usual.” The stakes are mation on your terms. Acting small high, but a clear vision and solid plan will and moving fast will help you accelerate give you the confidence to place the right the process in a way that produces bets on your organization’s future. clear, tangible value. IT sits in the perfect position to elevate its role to a strategic business partner and be a change agent to help the company reach new heights in profitability and reaching

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BRINGING TECHNOLOGY AND CULTURE TOGETHER: NAVIGATING DIGITAL TRANSFORMATION’S COMPLEXITIES

by Mike Verbeck Victor Marchetto Business Architect, Senior Information Security Field Digital Transformation & IoT, Solution Architect, CDW CDW

Misfires, wrong turns, and dead ends. everyone throughout the business The path to digital transformation frame the endeavor within their own is rife with challenges. Particularly department. A strong business case is troublesome is that many organizations essential for digital transformation — today must evolve or become irrelevant. one that articulates clear objectives, Facing increased pressure to digitally is supported by data and KPIs, and transform, they rush into the endeavor helps the entire organization realize the without fully considering the accompa- need for such an initiative, and more nying challenges. importantly, what it will accomplish.

And the challenges are plentiful. From a But that’s just the start. Along the lack of a clear objective to a disconnect way, the organization will encounter between IT and senior leadership, getting both cultural and technical challenges. everyone on the same page can be a It’s important to remember that digital difficult task. Setting and communicat- transformation is not just about ing clear goals on what exactly digital technology. It’s also about change transformation will accomplish will help management. From top to bottom,

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“If real, actual business value becomes the North Star for any strategy, there is no challenge too big to overcome. With a collective focus on a shared vision, digital transformation will ultimately become a reality.”

digital transformation pushes the entire organization toward a common goal that has a real, tangible business impact. And that means it affects change that goes far beyond IT systems. The following ideas can help IT and business leaders navigate some of the challenges that come with that change.

Overcoming Cultural Challenges Digital transformation isn’t just about connecting technology. It’s about connecting people as well. Digital transformation initiatives cannot be relegated to only the IT department, nor can they include just a few other departments. Delivering on the promise of digital transformation means getting everyone on the same page and working together, outside of their traditional silos. This requires organizationwide buy-in, which is necessary to see any strategy through from beginning to end. However, inter departmental collaboration is not always woven into the cultural fabric of many companies, and a lack of collaboration can stop any well-intentioned project dead in its tracks.

20 Perspectives

At CDW, we’ve found that envisioning be used to measure success, everyone workshops work extremely well to leaves the envisioning workshop foster collaboration when building a with a clear vision. But perhaps strategy for transformation. In these more importantly, they have opened workshops, we gather key IT stake- the lines of communication across holders with line-of-business leaders departments. As this newly chartered to facilitate a discussion. In these project develops, they will explore new discussions we ask them to lay out ideas, troubleshoot issues, and come the business initiatives and outcomes to agreements more quickly because they would like digital transformation they’re closely aligned. to deliver for the organization. The conversation often identifies which But lack of collaboration is not the only business processes and departments cultural barrier that organizations may will be affected, and how that may experience. Many organizations also impact employees, tools and training. struggle with the increasing generation- We discuss the IT infrastructure al gap within the workplace — a critical requirements, the possibilities for cultural component that often gets analytics, concerns about data storage overlooked. The modern workforce is and security, and operational support. anything but uniform. It’s an amalgama- As the workshop unfolds, all parties tion of different people from different have a voice in defining the future state generations. Making sure digital trans- of the business, potential issues and formation is understood not just across dependencies, and the critical path of departments — but across generations — initiatives to steer the transformational can help build momentum around the process forward. organization’s digital strategy.

By aligning departments and helping As an example, many industrial them work together to identify the companies traditionally have been technology and key metrics that will slow to adopt technology in parts of

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their operations due to resistance or lack of adoption by older, skilled workers. Now these industries are at risk of losing decades of experience as the baby-boom generation enters retirement. Ironically, digital transformation may be the answer to bridging the gap to capture the knowledge and experience of a tenured workforce and mobilize it for consumption and use by a new generation of workers who have come of age in the highly mobile, on-demand information age.

The key to success is to identify what is needed to ensure buy-in of at-risk populations within the workforce, and offer the training or incentives needed to facilitate a change in behavior or development of new skills that may be required. Remember, digital transformation is as much about people as it is technology. When organizations exclude people from the process, they run a much higher risk of failure.

22 Perspectives

Overcoming Technical Challenges architects begin the process of Digital transformation can be challenging designing systems and dashboards. from a technical standpoint as well. The And security must underpin the entire concern that arises quickly and most plan to protect both data and infra frequently is that of security, especially structure in its entirety. when IoT technologies are deployed to “sensorize” strategic assets or business It All Comes Back to Value processes. When data is collected and Digital transformation is often at the transferred in new ways, organizations forefront of many business strategies need to take extra precautions to today. IT and line-of-business leaders ensure that security is a central part are being asked to work together to of the planning, from start to finish. change their organizations internally as well as externally. It is easy to get Additionally, digital transformation lost in the minutiae of the conversations often creates a massive influx of data about infrastructure, applications and to be handled, especially when IoT operations. Many organizations will have deployments are involved. This data false starts as they struggle to execute can provide great insight into the along the way. That is why it is important operations of an organization. to align the entire organization on the But moving all this data from the vision, the necessary steps for transfor- network edge back to a data center mation, and the allocation of resources for analysis may not technically be to aid in the transformation. In the end, feasible because it could saturate if real business value is the North Star network connections. Plus, moving for digital transformation, there are no all this data may not be necessary — challenges too big to overcome. some of the data being collected is more relevant to the business than other data. There are certainly ways to address this with edge analytics and fog computing, but to do so, you must have a deep understanding of the data you are collecting and how it will be used. The use case must drive the technology architecture, not the other way around.

That’s why it is important for organizations to look at data holistically while considering the impact on both IT and the business. Together, they will need to decide which key performance indicators (KPIs) are important and what the real value of data is to the organization. It’s important to outline clear expectations for which data will be measured and what it will be measured for before the technical

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FROM REACTIVE TO PREVENTIVE AND PREDICTIVE: IOT AND VIDEO BOLSTER SAFETY, SECURITY AND TRANSFORMATION

by George Howard Business Architect, Video Surveillance & Physical Security, CDW

When it comes to security, the digital us more insight into operations, customer and the physical have always lived in behavior, and the way organizations two separate realms within companies. behave in general. And in the context Both operationally and architecturally, of IoT, the video camera very well physical security and cybersecurity may be the most powerful sensor have existed as separate disciplines available. By combining IP-based owned by different organizations. camera systems with video analytics But things are changing. The digital software, organizations are now armed and physical have started to cross with a new tool that can deliver not boundaries and intermingle in ways only hindsight (as in traditional video that are benefiting businesses across surveillance applications), but also different industries and different sizes. insight and foresight. At CDW, we call this “Enhanced Video Surveillance.” IoT and data analytics are hot topics (and rightfully so). Together, these The great thing is that there are use emerging technologies are helping us cases within nearly every industry that instrument our physical world, giving can help companies get more value out

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of combining IoT with their video surveillance investments. Retailers can use video analytics to understand customer foot traffic in the store and dwell times in front of promotional displays as well as RFID to improve inventory management and loss prevention. A manufacturer can use thermal cameras, vibration sensors, and electricity meters to monitor equipment health to detect and predict costly failures before they occur. No matter the industry, IoT and enhanced video surveillance solutions are creating insights that help organizations improve not only safety, but operational efficiency and better customer experiences too.

Throughout this article, we’ll provide examples of how different industries are using these technologies to create safer environments and improve operations. But first, it’s worth discussing what’s causing the massive adoption rate of video, as well as the factors driving organizations to consider it as part of an IoT solution.

The Two Driving Factors In light of recent events and cultural pressures, organizations are constantly looking for new ways to create safer working environments. The evolution of IP cameras, IoT, and video analytics have opened the door for data to play a crucial role in improving safety and security. This is leading to widespread adoption that’s fueled by two key factors: physical security and the bottom line.

Traditional means of physical security might only involve one or more discrete methods of protection, whether using patrol guards, live camera monitoring, or card-based building access control. But that leaves open vulnerabilities to be exploited, whether due to human error

26 Perspectives

or someone “shoulder-surfing” through a secure door. Increasingly, organizations are looking to combinatorial means of authentication, correlating data from facial recognition, badge-readers and even mobile device IDs to ensure that two or more factors are needed to confirm known individuals — or to alert the organization when an unknown intruder is swiping a lost or stolen ID badge.

The second factor is simply the bottom line. Because video and data analytics can provide predictive capabilities, it greatly enhances an organization’s ability to tell what will happen tomorrow, so that preventive steps can be taken today. It’s the ability to both protect in the present while predicting the future that has turned it into a viable solution that’s not only making the workplace safer — but also saving organizations a lot of money in the process.

Data Security in the Era of IoT The Opportunity for Digital Whenever we discuss the widespread Transformation use of IoT devices, information security Using emerging technologies to increase is a concern. Any device connected to insight into organizations must start the corporate network is vulnerable, with having a clear, predetermined goal. including IP video cameras. To help Video solutions specifically, along with IoT mitigate risks, organizations should in general, can be key elements of a larger follow cybersecurity best practices of digital transformation strategy to deliver hardening each connected device when improved business outcomes. How could they are deployed. And they must be video and sensor data provide a clearer properly maintained as threats evolve. view into operations? What data will be important? How can it be measured and Using cameras in increasingly new acted upon? Answering these questions ways in business operations also means will help harness the power of these putting a greater emphasis on privacy. tools to create more efficiency, less risk, Video data must be secured whether and additional cost savings. in flight or at rest, whether it’s stored in the video management system, in the cloud, or in some cases, on the cameras themselves. These are a few of the biggest reasons why we are seeing a trend of Physical Security teams being moved from facilities to IT departments.

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HIGHER ED AND K-12

A CONNECTED APPROACH TO CREATING SAFER CAMPUSES by George Howard Business Architect, Video Surveillance & Physical Security, CDW

Campus safety is top of mind for well as mundane, daily situations. faculty and campus administrators — For example, facial recognition both for K-12 school districts as systems can flag an unknown well as higher education institutions. individual seen entering the building And enhanced video surveillance and automatically alert campus is providing new insight into an security to greet them and enforce escalating concern. visitor check-in procedures. Foresight means using all the data To maximize impact, schools should and insight it’s creating to make think in terms of hindsight, insight future decisions that mitigate risk and foresight. The hindsight of or improve student and faculty traditional video surveillance gives experiences. By combining schools forensic value that lets them hindsight, insight and foresight, learn lessons from the past while schools can make an impact on planning for the future. Those same their operations. But like any digital devices are also giving schools and initiative, implementing enhanced campuses unprecedented insight video devices isn’t a one-size-fits- into what is happening now, so they all solution. It must meet the specific can react to threats in real time. The needs of each school. learnings and safety benefits that come with these devices can be applied to larger safety concerns as

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CORPORATIONS

PROTECTING WORKERS WITH IOT by Joel Hutton Business Architect, Digital Transformation & IoT, CDW

IoT is helping keep workers safe store. Prove the concept and across a variety of industries, understand how operations will including manufacturing, oil and be impacted first before scaling. gas, energy, retail and hospitality. The reasons are simple. An ounce 2. Be Selective About Your Data of prevention is worth a pound I oT can generate an avalanche of cure. For example, an oil refinery of data about operations, but that leverages sensors and which data is important and analytics can foresee and mitigate which is just noise? Understand- unplanned outages and accidents. ing what’s at stake and building This saves money, can reduce a solution around that first will the environmental impact of spills, make a bigger impact, faster. and can save lives. No matter the industry, consider the following 3. Focus on Operational Workflow to help implement IoT in a way I oT is relatively new across that improves safety, security every industry. As such, it’s and efficiency. important to think about the end-user experience. Simply 1. Always Seek Proof of Concept deploying technology — without It’s easy to want to jump from idea accounting for operational to widespread implementation. workflow, usability, or user Instead, start small with just a part adoption — will not likely garner of your factory floor or a single the results you’re looking for.

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CITIES

CONNECTED STREET LIGHTING AND THE PATH TO A SMARTER CITY by Chris Black TJ Costello Business Architect, Global Director, Digital Transformation & IoT, Smart Cities & Transportation, CDW Cisco

From safety to efficiency, for municipal utilities, or installing IoT-enabled devices are helping environmental sensors to monitor local governments build more air quality — all so that officials can efficient cities that protect citizens use that data to make smarter, more while delivering cost savings at informed decisions. the same time. Another example — blue-light One of the big trends in building emergency kiosks on streets and connected cities is smart lighting. college campuses. These are very Upgrading to LED street light effective as a means to improve fixtures alone is saving cities 50% public safety. But they’re also or more in energy costs to start. incredibly expensive to install and Taking the next step of connecting provide localized benefit. Connected these lights with smart, networked streetlights, on the other hand, controllers is driving an additional could enable ubiquitous coverage 30% in savings due to the efficiency at a fraction of the cost. A great that intelligent controls can create. example is CIMCON’s Blue Light On top of that, cities can then mobile app. If a citizen or student begin using streetlight poles as a needs emergency assistance private network for powering other anywhere, the tap of a virtual button smart city services, such as using automatically alerts authorities of cameras for pedestrian or vehicle their physical location while auto- counting, monitoring smart meters matically increasing the illumination

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of nearby streetlights or flashing 2. Build a Strong Network them to draw attention to the area. Deploying hundreds of thousands This dramatically increases public of IoT sensors takes a multiproto- safety while decreasing costs col IoT network to support them. by leveraging the existing smart Engage a trusted vendor who can lighting infrastructure. help you deliver.

More and more, state and local 3. Focus on Citizens governments are realizing that Before Technology safety and efficiency go hand in Many governments want to jump hand. An unsafe city isn’t good for right into technology. It’s an under the economy or public sentiment. standable desire. But focusing But using IoT to create a truly smart on citizens and what will benefit city takes the right planning and them first can help deliver a more execution. Here are a few ideas: effective solution.

1. Understand the Task at Hand Delivering an impact across cities with thousands of citizens means breaking down multiple siloes to initiate digital change. Identify priorities and charter cross-departmental and multiagency collaboration.

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MAXIMUM IMPACT: HOW DIGITAL TRANSFORMATION IS REVOLUTIONIZING OPERATIONS

by David Frumkin Business Architect, Digital Transformation & IoT, CDW

Digital transformation is having a This change is being fueled by access massive, transformative effect on every to more data and insights that are single industry. It’s boosting operational empowering organizations to make efficiencies, cutting down costs, changing more informed decisions about their business models, and improving the businesses. And when data and customer experience in new ways that insight are replicated across entire organizations couldn’t have imagined companies and industries, operations just a few short years ago. drastically improve.

While it may be true that technology With this big bang of data occurring is and will continue to replace human across all industries, digitization is workers when and where it can becoming so disruptive that it’s changing perform tasks more efficiently, it’s entire business models seemingly also empowering us. When deployed overnight. The introduction of tele- correctly, digital transformation doesn’t medicine and remote monitoring within just transform business, it changes our the healthcare industry, for example, is lives by making them more efficient. improving access to doctors, reducing

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costs for patients, and easing tensions in some areas affected by physician shortages. Similarly, digital transformation in retail is putting customers first — and back into stores — by creating a better experience along with more efficient supply chain and inventory management.

The common denominator behind disruption is the improvement in operational efficiency, which leads to long-term financial benefits. But harnessing those benefits means understanding how to optimize data and utilize it in the right way. It takes a big vision and a long-term goal centered on tangible business results, and a tactical focus to act small and move fast — to test new technology in a small, controlled environment that generates results, proves a hypothesis, and lets you iron out kinks before a larger deployment.

Achieving operational efficiency also centers on an organization’s ability to understand its unique challenges in the marketplace. At CDW, we have found that even though most organizations believe their challenges are unique, commonalities exist across different industries.

Regardless of industry, learning how to leverage digital transformation and implement it correctly is helping organizations do more with less, work faster and more efficiently, and improve the way they work — as well as the experience they provide.

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MANUFACTURING

HOW DIGITIZATION IS BREATHING NEW LIFE INTO THE MANUFACTURING INDUSTRY by Mike Verbeck Todd Gurela Business Architect, CTO, Industry Solutions Group, Digital Transformation & IoT, Digital Transformation & IoT, CDW Cisco

The manufacturing industry is facing and optimizing energy use and massive changes on the horizon. maximizing both worker productivity With a large portion of its workforce and operational efficiency. It’s the set to retire in the next 5-10 years, ability to connect manufacturing to a current shortage in the workforce, infrastructure that’s allowing the and fewer younger people learning industry to get data directly off the necessary vocational skills, manu- shop floor to improve operations. facturing companies are looking for This benefit extends to keeping new ways to do more with less — machinery up and running as well as something that IoT and digitization by using sensor data and analytics can help them accomplish. to inform proactive, and ideally, predictive maintenance procedures. Because traditional education isn’t If a manufacturing facility loses a producing the next generation line, it creates real costs — both in of manufacturers, the industry downtime loss of revenue as well is turning to technology to help. as repairs. When hiring new employees, manufacturers are shifting their focus From helping companies capture on skill sets — transitioning from and analyze data, to enabling hands-on workers to engineers the workforce in new, previously who can help facilitate the newer, unimaginable ways, IoT is helping robotic capabilities. the manufacturing industry digitize, modernize, and become Manufacturers are also using IoT to more efficient in the process. reduce upfront costs by monitoring

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HEALTHCARE

A NEW ERA OF CONNECTED HEALTHCARE by David Frumkin Falguni H. Mehta Tim Vanevenhoven Business Architect, Head of Strategic Senior Solutions Digital Transformation Planning & Business Marketing Manager, & IoT, Development, Aruba, HPE CDW IoT Health, Intel Corporation

Some of the biggest benefits of they enter the hospital helps digital transformation happen in providers see how care is being the behind-the-scenes work that delivered, assets are utilized, and transforms business operations. cost-per-patient time is optimized. And there is, perhaps, no other Within senior care facilities, RLTS industry where the effects are more is even helping track dementia apparent than healthcare. From patients to ensure they don’t improving the patient experience to wander outside a specified area. monitoring the behavior of medical devices, IoT is having a massive Digital transformation is also impact on healthcare. creating mobile experiences that are transforming hospitals. Imagine Central to healthcare’s ongoing walking into a large facility for the digitization is Real-Time Location very first time and knowing exactly Services (RLTS). RLTS is driving where to go. Now healthcare orga- efficiency by enabling medical nizations are making it possible by professionals to locate and track equipping hospitals with IoT sensors assets and people in real time. that give specific instructions. Tracking patients from the moment It’s making the patient experience

36 Perspectives

easier and eliminating some of monitor that sends information over the stress patients feel entering the network to a specific server the hospital. suddenly tries sending information to another country, organizations can Because patient data is so central immediately detect and address it. to healthcare, how do organizations ensure that data remains secure, From the ground up, the digitiza- especially considering that medical tion of the healthcare industry isn’t records are now more valuable to only optimizing efficiencies, it’s also identity thieves than credit card improving the patient experience information? Adding IoT devices onto and helping providers deliver a network adds potential security better care. But to make the most vulnerabilities, so healthcare orga- out of their digital transformation, nizations need to continually review healthcare organizations must also and update devices with security focus on how the changes affect top of mind. Solutions like User both patients and doctors. By Entity Behavior Analytics (UEBA) addressing human outcomes, can monitor the behavior of medical they can leverage new technology devices to detect security abnor- in ways that help as well as heal. malities. For example, if a heart rate

37 THE DIGITAL TRANSFORMATION Orchestrated by CDW INSIGHT REPORT

RETAIL

HOW SMARTER RETAIL IS CREATING HAPPIER CUSTOMERS by Aaron Lagowski Senior Field Business Architect, Digital Transformation & IoT, CDW

IoT is giving retailers new ways processing is up-to-date, stores to improve shopper experiences, are cutting down on lines as well increase sales, and reduce operating as actual transaction times. expenses. Within the industry, tools like wayfinding, portable Convenience Is King point-of-sale terminals, and Customers are used to downloading beacons are providing seamless apps that act like loyalty cards, shopping experiences as well as giving them discounts on the items customization that help brick- they regularly buy. But the big shift and-mortar continue to compete we’re seeing today is the marriage with online shopping experiences. of mobile and in-store technolo- Here are just a few ways retail is gies. Instead of merely distributing becoming smarter: discounts, apps now know what you like to buy and how often you buy it. Speed Counts In-store technologies can now point When you’re dealing with thousands customers toward their favorite of transactions, even seconds items, offer them discounts, or make add up to make a big difference, timely suggestions based on their especially in a world where shoppers preference. It’s making the shopping expect immediacy. By evolving experience much more personalized. legacy point-of-sale systems, introducing mobile technologies, and making sure transaction

38 Perspectives

Bring on the Video successful, that technology can be Today, video analytics and real- rolled out in scale or across other time location systems are adding locations. By taking small steps, another dimension to retail’s retailers can actually make huge digitization by helping stores strides in improving the customer understand where customers are experience by using personalized spending time and what products data and convenient mobile tech they’re looking for. This data is nologies that work in harmony. transforming the way stores adjust their shopping experiences.

For retailers, realizing the benefits of digital transformation is often accomplished in small test-case scenarios. Because few stores are fully equipped to take on a complete transformation, they should consider choosing a single location, technology, or outcome, and implementing the technology necessary to prove your hypothesis. Once it’s

Key Insights

Over the course of this report, IDG interviewed more than 400 IT leaders about how digital transformation is occurring across a wide range of organizations and industries. From IoT and data demands to the challenges that come with security and implemen tation, we sought to understand the total impact of digital transformation.

We distilled the research into six key insights. Along with the accompanying report, they help paint a bigger picture of the current technology landscape and shed additional light on the challenges organizations are currently facing and the successes they’re experiencing. For the complete research report, please reference the conclusion of this guide.

41 THE DIGITALMODERN TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 1 DIGITAL TRANSFORMATION IS HAPPENING — AND IT’S HAPPENING NOW

42 Key Insights

Digital technologies and their accelerating impact on results is driving a world of change that organizations are adopting on a wide scale. From initiating new solutions to piloting and adopting them, the majority of organizations have their digital transformation goals well underway.

of organizations have 86% initiated or piloted technology changes to support digital transformations

43 THE MODERNDIGITAL TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 12 THE BIGGEST CHANGES ARE OCCURRING ACROSS THREE AREAS

44 Key Insights

When it comes to transforming the user experience, organizations are placing an increased focus on security, mobility and data analytics. However, more mature organizations have begun to investigate or adopt AI and machine learning into their operations.

Cybersecurity, mobile solutions and data analytics are the three technologies most widely used in production by organizations.

45 THE MODERNDIGITAL TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 13 EFFICIENT OPERATIONS — BETTER RELATIONSHIPS

46 Key Insights

While improving operational efficiency continues to be the core business driver for digital transformation among most organizations beginning their journey, those organizations who are further along have started using technology to improve customer relationships and information exchange.

Improving operational efficiency continues to drive the adoption of digital transformation technologies.

IoT is giving the businesses better visibility into real-time data, leading to faster decision-making.

47 THE MODERNDIGITAL TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 14 DIGITAL TRANSFORMATION IS COMMANDING A LARGER SLICE OF THE IT BUDGET

48 Key Insights

Instead of recycling savings from other areas, organizations are allocating larger budgets toward purchasing digital transformation investments. More mature organizations are placing even more of their new budgets toward digital technology.

of IT budgets, on average, 17% are dedicated to digital technology purchases.

49 THE MODERNDIGITAL TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 15 SECURITY AND BUDGET ARE THE BIGGEST BARRIERS

50 Key Insights

Concerns about implementing security to support digital transformation efforts, as well as the budget to purchase new technology, continue to be a challenge for many organizations. Additionally, time-consuming data migration, upgrades to existing infrastructure and legacy system integration are cited as factors slowing their digital transformation progress.

of organizations cited security 31% and privacy concerns as one of the main factors slowing their digital transformation progress.

51 THE DIGITALMODERN TRANSFORMATION WORKFORCE INSIGHT REPORT Orchestrated by CDW INSIGHT REPORT

KEY INSIGHT 16 PARTNERSHIPS ARE AN IMPORTANT PART OF THE PROCESS

52 Key Insights

The level of confidence for digital transformation initiatives is high across nearly every vertical. But despite the high confidence levels, nearly all organizations are turning to technology partners to help them build and integrate solutions across one or more areas.

of all organizations will turn 92% to a third party for help in one or more areas of the digital transformation process.

53 THE DIGITAL TRANSFORMATION Orchestrated by CDW INSIGHT REPORT

IN CLOSING

Digital transformation is here. The data and insights that it’s providing organizations are changing business models, industries and the customer experience. And while adoption and implementation vary across organizations, one thing is abundantly clear: digital transformation isn’t going anywhere.

Harnessing digital transformation in a way that drives real, tangible business results takes a unified effort, the correct approach, and a willingness to think big, act small, and move fast. The organizations who outline clear business objectives and build a strategy centered on results will ultimately be able to reap the full benefits that come with an effective digital transformation. It takes more than technology. Whether the outcome is operational efficiency or a greater in-store experience, digital transformation takes vision, commitment, and the right partners to drive the change organizations need and want.

Working with a wide range of organizations and partners across different industries to orchestrate and empower digital transformation has given us a unique insight and perspective into designing solutions that work. Now we’re working hard to bring those insights and perspectives together to help organizations navigate the challenges and reap the benefits that come with digital transformation.

For more information, interviews and perspectives, we invite you to visit CDW.com/digitaltransformation

54 Conclusion

OUR PARTNERS

The valuable time, research and perspectives that went into making this report would not have been possible without the help of our partners. From assessment, to design and deployment, they represent the best and brightest minds in technology.

To download a digital version of this report, or learn more about how you can leverage digital transformation to generate powerful results, visit CDW.com/digitaltransformation

THE DIGITAL TRANSFORMATION INSIGHT REPORT Orchestrated by CDW COMPLETE DATA AND ANALYSIS

Volume 04 THE DIGITAL TRANSFORMATION INSIGHT REPORT Orchestrated by CDW COMPLETE DATA AND ANALYSIS Volume 04

02 The Digital Transformation Insight Report

25 About the IDG Research Study

1 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

THE DIGITAL TRANSFORMATION INSIGHT REPORT The Digital Transformation Journey: From Operational Efficiencies to Happier Customers

Digital transformation is radically reinventing aircraft turboprop engine that consolidates industries. From transportation behemoths 855 components into just a dozen parts, to retail chains, organizations are using and dramatically reduces fuel consumption. disruptive technologies to change the way A robotic barista at startup Café X can they design business processes, manage serve 120 cups of coffee per hour — without operations, oversee employees and misspelling your name. And today’s modern engage customers. farmers are relying on drones to get a bird’s-eye view of their crops and identify Examples of disruptive technology gaining problems such as drought and insects. traction include the Internet of Things (IoT) and data analytics/business intelligence. By Although use cases vary wildly, the benefits of 2020, Gartner estimates more than half of digital transformation are consistent across all new business systems and processes will many industries, including operational process incorporate IoT in some way. And according improvements, cost savings, new sources of to a 2017 Dresner Advisory Services study, revenue and enhanced customer experience. 87% of telecommunications companies and 76% of financial services firms rely on But adopting technologies to achieve digital Big Data analytics. Behind these emerging transformation requires overcoming a variety technologies, organizations continue to of obstacles. Many artificial intelligence (AI) explore solutions and upgrades for network and virtual reality (VR) solutions require infrastructure, cloud, mobility and security. serious compute power. An understanding of machine learning (ML) and data visualiza- Real-world examples of disruptive tech- tion is critical to using data analytics tools. nology at work are everywhere, from And legacy infrastructure or on-premises airport hangars to coffee shops. Using 3D deployments can prevent the easy inte printing technology, GE Aviation created an gration of mobile and cloud applications.

2 Key Findings

To solve these and other issues, organiza- on a solution’s age and popularity. tions must identify where they are in their Twenty-seven percent of respondents journey, how to take incremental steps to are actively researching AI; 25% are embrace innovative technologies and what investigating machine learning; and defines success for their particular company 23% are looking into IoT. However, or industry. data analytics, mobile, cloud and cybersecurity solutions are already In an effort to understand how organiza- in production or far enough along to tions are harnessing technology for digital require some upgrading and revision. transformation, CDW partnered with IDG in July 2018 to survey 400 respondents in • Emerging technologies, such as AI, IT-related roles (see box, Page 26, for more machine learning and IoT are triggering information). greater IT investment: Why? Reasons include: better cost control (42%), Key Research Findings empowered consumers (40%), exploding The IDG study examined the biggest opportu- volumes of data (38%) and new global nities associated with digital transformation, security threats (36%). Incentives for drivers for investment in transformation, investment differ based on industry, digital technologies in production and on the however. Forty-three percent of retail radar, and inhibitors to progress. Among the respondents are most likely to invest more revelatory findings: in IoT in response to the demands of an “always-on” economy, whereas 61% of • Organizations are increasingly adopting transportation companies cite a rapidly a digital-first approach to business: changing competitive landscape for Two-thirds (66%) of organizations investment in IoT. have made process, operational and/ or technology changes on their own to • For all the benefits of disruptive support digital transformation. However, technologies, improving operational maturity levels of digital transformation efficiencies tops the list: More than half — vary across industries. Maturity is based 53% — of respondents believe operational on how long an organization has been using efficiencies present the biggest oppor technologies such as mobile, software- tunity to leverage digital technologies defined storage (SDS), Infrastructure as a for an improved customer experience. Service (IaaS), software-defined networks Increased operational efficiency is also (SDNs), cloud and AI in production, as well considered a core business driver for IoT as if these technologies have been deployed and business intelligence (BI) investment on an enterprisewide scale to support digital among 42% of respondents. In addition, transformation. For example, the transpor- given the heightened concern around tation industry is most likely to experience cyberthreats, 40% cite strengthening enterprisewide technology changes. security as a key opportunity. Mature organizations are most likely to cite • A wide array of technologies, from customer relationship improvement AI to IoT, are helping to advance (55% of retail/wholesale companies) digital transformation: But degrees and information exchange (59% of of implementation differ depending transportation companies) as priorities.

3 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

• Organizations typically agree on where to pointing to gaps in security, and 35% begin their digital transformation journey: of state and local governments citing Nearly half — 42% — of respondents have vendor management. focused or will first focus their digital transformation initiatives on operations; • Many organizations choose to focus on 39% will first focus on IT and customer process and technology transformation service, and 31% will first focus on sales. rather than cultural reinvention: Thirty-one percent of respondents are redesigning • Customer demands are driving organiza- business processes to leverage digital tions’ interest in digital transformation: technologies over the next 12 months, According to survey findings, 45% of 28% are building a data security/protection respondents say customer demand for strategy, 27% are conducting a technology security of personal/sensitive data is needs assessment, and 27% are building top of mind; 45% cite better and more a data management strategy. modern functionality; and 35% point to customer demand for personalized • Digital transformation comes at a cost: experiences and interactions. On average, organizations allot 17% of their annual budget to digital technology • Making progress with digital transfor- purchases. The average spend per mation requires overcoming key budget vertical is fairly consistent, ranging and/or cultural obstacles: According to between 15% and 19% of the IT budget. 31% of survey respondents, the biggest In terms of how digital transforma- inhibitor slowing or stopping progress tion investments are funded, 64% of with digital transformation is lack of respondents allocate additional budget budget and/or resources. Other obstacles and 48% reapply cost savings from other include data privacy and security concerns areas of the business. The more mature (31%), internal resistance to change (24%), the organization, the more likely it is that and legacy infrastructure and infrastruc- new budget will be allocated. ture complexity (30%). Transportation companies (59%) are most likely to view • Organizations rely on key metrics to gauge legacy infrastructure as an impediment the success of digital transformation: to digital transformation. Respondents say they focus on such metrics as improved employee productivity • Many technology or IT infrastructure (52%), improved process efficiency through barriers prevent organizations from automation (42%), and excellent customer successfully deploying digital technology: satisfaction evaluations and scores (41%). Challenges include time-consuming data About one-third of respondents (36%) migration (29%), technology/network look to achievement of top-line growth. upgrades (28%) and change management (25%). Barriers differ across verticals This report delves into these key findings with 41% of transportation companies to determine the steps organizations must citing data collection/management take to transform the digital environment analysis, 32% of finance companies and the benefits they stand to reap from

4 Key Findings

their digital transformation initiatives, and Manufacturers, for instance, are relying on shows that there’s no single digital trans predictive analytics to anticipate equipment formation journey. failures and production delays. Government agencies are embedding sensors in street A Digital-First Approach to Business lights to better manage traffic flow and Organizations are increasingly adopting a improve citizen safety. And telecommuni digital-first approach to business processes, cations companies are using VR tools to operations and customer engagement. train technicians in the field.

Adoption of a “Digital-First” Approach to Business Processes, Operations and Engagement Points

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Source: IDG Research in partnership with CDW

5 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

But maturity levels of digital transformation start their own small businesses, delivering vary across industries. Two-thirds (66%) of Amazon Prime packages in Amazon- organizations have made process, operational branded vans and uniforms. and/or technology changes on their own to support digital transformation. However, As a result, shipping rivals such as UPS, only half of these 66% of respondents have FedEx, the U.S. Post Office and DHL are made changes on an enterprisewide scale. facing mounting pressure to meet rising One possible explanation: Because these are consumer service expectations while still early days for technologies such as AI also increasing efficiencies and cutting and IoT, organizations are more comfortable costs. For many, the answer is to readily deploying them by business unit, or for embrace disruptive technologies in new and particular projects. innovative ways. UPS trucks, for example, have more than 200 sensors to collect From an industry perspective, energy, data points on vehicle operations. This data finance and retail/wholesale verticals are is fed into a UPS analytics system, which the most likely to pilot digital technologies analyzes overnight whether new truck today. It’s easy to understand why. Energy parts are needed. By proactively predicting companies are looking for new ways to equipment failures, the IoT-enabled system address the world’s demands on energy helps prevent delays, improve productivity supplies and/or increased use of renewables. and better serve customers. Financial institutions increasingly depend on data for decision-making in today’s Other applications of digital technology in the fast-paced marketplace. And evolving transportation industry include cloud-based consumer expectations are challenging analytics and embedded sensors that can retailers to bring new and innovative monitor truck location, freight temperature products to market faster than ever. and even the well-being of drivers.

Transportation Will Experience the Although obstacles — and competitors — Largest Change differ across verticals, all organizations But as disruptive changes sweep through face considerable challenges that require each of these industries, the transportation digital reinvention. industry is most likely to experience enterprisewide technology changes. In fact, nearly The Technology Maturity Curve half — 47% — of transportation companies Organizations are relying on a wide array of have made process, operational and/or technologies to advance digital transforma- technology changes on an enterprisewide tion. But degrees of implementation differ scale to support digital transformation vs. depending on the age and understanding 33% of retailers, 36% of manufacturers and of the technology. For instance, only about 23% of government agencies. one-quarter of respondents are actively researching AI, machine learning and IoT. One key driver is the impact of the digital marketplace on traditional forms of The explanation is somewhat obvious: AI, commerce. For example, services such as machine learning and IoT are still relatively Amazon Prime are making two-day delivery new and untested capabilities. As a result, the norm. Amazon is also redefining distri- many IT workers lack the necessary bution models by encouraging people to expertise to deploy and maintain solutions

6 Key Findings

that include these technologies. In fact, is already taking over tasks for human survey findings indicate that the farther resources managers, while bots can easily along an organization is on the digital displace employee help desk support agents. transformation maturity curve, the more Forward-looking organizations, however, comfortable they are with using or deploying realize that broad generalizations like this disruptive technologies. aren’t necessarily accurate: automation can cut costs, improve processes and free up Another barrier to enterprisewide implemen- knowledge workers for higher-priority or tation of disruptive technologies: cultural more innovative thinking. resistance. Some employees fear losing their jobs to AI, machine learning and IoT. After all, At the other end of the spectrum, more automated application-tracking software proven technologies, such as data analytics,

Most Critical Technologies Organization Is Evaluating or Using

On my radar or actively researching Piloting new initiatives In production in a business unit or division In production enterprisewide Upgrading/reﬁning Not interested

Artiﬁcial intelligence

Machine learning

Internet of ings (IoT)

Software-deﬁned networking (SDN) Bots

Software-deﬁned storage (SDS)

Infrastructure as a Service (IaaS)

Microservices/containers

Augmented reality (AR)/ Virtual reality (VR) APIs/embeddable

Platform as a Service (PaaS)

Data analytics

Mobile solutions

Cybersecurity

Source: IDG Research in partnership with CDW

7 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

mobile, cloud and cybersecurity, are already integration requirements with legacy in production and/or in need of upgrading and processes and systems have seen the light. revision. Case in point: More than one quarter — And with Gartner reporting that today’s 26% — of respondents have data analytics in employees use an average of three different production enterprisewide; 16% are looking to devices throughout the day, organizations upgrade. Twenty-four percent of respondents can no longer ignore the productivity gains have a mobile solution in production enter- of mobile applications. prisewide, and 15% need to upgrade. And 26% of respondents have cybersecurity solutions Cloud-based platforms and storage in place, as 21% look to upgrade. solutions, such as SDS, IaaS and SDN, have become go-to technologies as organizations The top technologies already in production look for cost-effective ways to store data, among respondents who have made scale quickly and achieve greater agility. enterprisewide digital changes include: Getting Smart About Business • Mobile (52%) Technologies, such as IoT and BI and/or • Software-defined storage (SDS) (51%) analytics technology, are triggering greater • Infrastructure as a Service (IaaS) (50%) IT investment. Reasons include the need • Software-defined networking (SDN) (49%) for better cost control (42%), empowered • Artificial intelligence (AI) (45%) consumers (40%), data explosion (38%) and new global security threats (36%). That’s because these technologies are now a business imperative. Organizations Incentives for investment differ based on that may have shied away from deploying vertical. For example, 43% of respondents mobile technology because of the complex in the retail sector are most likely to invest

Events or Business Situations Triggering Organization’s Investment in IoT, BI, and/or Analytics

Source: IDG Research in partnership with CDW

8 Key Findings

in IoT and BI in response to the demands Operational Efficiencies Are Only of an “always-on” economy. These days, the Beginning consumers expect instant access to For all the benefits of disruptive technologies, information on everything from product improving operational efficiencies is a top availability to return policies. By equipping priority for many organizations, and a key warehouses with sensors, retailers can driver of IT investment. There’s good reason: determine the exact location of a product More than half — 53% — of respondents and discover how many are on the shelf. believe operational efficiencies present the The result is more accurate inventory, faster biggest opportunity to leverage digital tech- fulfillment of orders — and happier customers. nologies for improving customer experience. Increased operational efficiency is also Sixty-one percent of transportation considered a core business driver for IoT and companies cite a rapidly changing competitive BI investment among 42% of respondents. landscape as reason for investing in IoT and BI. As competitors roll out services such as But opportunities for improving customer next-day delivery, transportation companies relations extend beyond the way companies need to better anticipate customer needs and operate. Forty-one percent of respondents service preferences. Business intelligence say enhancing overall customer experience/ tools can help by providing data to optimize relationship presents the biggest opportunity routes, identify logistical issues and improve to harness transformation technologies to supply chain transparency. improve customer experience. For example,

Biggest Opportunities to Harness Digital Transformation to Improve Customer/Patient/ Constituent Experiences

Improving operating eﬃciency

Enhancing overall customer experience/ relationship Strengthening security

Enhancing existing product/service oﬀerings

Real-time and transparent exchange of information Anticipate/predict customer or end-user behavior and trends Enabling better internal/external collaboration and innovation (with customers, suppliers, etc.) Creating new lines of business and products/services Improving internal team productivity and morale (improving service)

Source: IDG Research in partnership with CDW

9 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Core Business Drivers Behind Investments in IoT, BI and/or Analytics

Improving operational eﬃciency

Improving productivity

Reducing infrastructure costs

Enhancing data security

Better visibility into real-time data to make decisions faster Increasing business agility

Improving scalability of services

Increasing speed to market

Improving collaboration between IT and the business Enabling business innovation and new business models Improving business continuity

Enabling next-generation technology such as AI and machine learning

Source: IDG Research in partnership with CDW

many retailers are equipping their sales In fact, according to the Breach Level Index, associates with tablet devices. When a 1.9 billion data records worldwide were customer asks for an item, the associate compromised during the first half of 2017 can open a mobile CRM app, check in-store due to 918 data breaches, taking a significant inventory in real time and provide an toll on customer loyalty. immediate and accurate response rather than go to the back of the store, leaving the Variances Among Verticals customer alone. The drivers for harnessing digital transformation vary among verticals. A staggering Another 40% cite strengthening security 73% of state/local government respondents drives investment — and for good reason. cite improving operational efficiencies as the Cyberattacks, phishing attempts, network biggest opportunity to improve customer eavesdropping, malware and many other experience. It’s easy to understand why: threats not only jeopardize the confidenti- Many government agencies are bogged ality, integrity and availability of IT resources, down by bureaucracy and/or outdated but the trust and confidence of customers. legacy technology systems. By improving

10 Key Findings

how they roll out new initiatives and working disruptive technologies, such as AI, BI and to eliminate waste, public agencies can IoT. But this is only a first step in the digital respond faster to constituent requests and transformation journey. offer better services. The Rising Role of the Customer On the other hand, 52% of manufacturers The good news is organizations tend to cite enhancing internal team productivity agree on where to begin their digital trans- and morale as key to improving customer formation journey. Nearly half — 42% — experience. One possible reason: Manufac- of respondents have focused or will first turing is becoming increasingly automated focus their digital transformation initiatives as robots take over select mundane and on operations; 39% will first focus on IT repetitive tasks. Harnessing the benefits and customer service, and 31% will first of disruptive technologies such as robotics, focus on sales. automation and IoT requires assuring employees that they’ll benefit from Of these three, customer demands are these changes. likely to have the most impact on organizations’ decisions regarding digital In the case of today’s retail and wholesale transformation. These days, customers are verticals, 55% of respondents cite enhancing using their smartphones to price-check overall customer experience as the biggest products on the spot, scour online reviews opportunity for leveraging disruptive to form their opinions and crowdsource technologies. That’s no surprise given the everything from product design to shipment pressure retailers are under to leverage delivery. Showrooming, webrooming data such as buyer behavior patterns to (online browsing before buying in-store), better engage customers and offer person- personalization — they’re all modern-day alized services. phenomena enabling customers to raise their voices and influence an organization’s And 59% of transportation companies digital transformation. view real-time and transparent exchange of information as critical to improving So what customer demands are driving customer experience using digital tech organizations’ interest in digital transfor- nologies. After all, a holistic view of the mation? According to survey findings, 45% supply chain, along with real-time truck of respondents say customer demand for location and delivery data, can help trans- security of personal/sensitive data is top portation companies better compete in of mind. Equifax, eBay, JP Morgan Chase, today’s on-demand economy. Yahoo, Target Stores — they’re among the biggest data breaches of the 21st century. Despite these variances among verticals, Root causes range from human error to the farther along an organization is in its vulnerable point-of-sale payment card digital transformation, the more likely it is to readers. But the results are the same: cite customer relationship improvement and a higher risk of fraud and identity theft information exchange as prime opportuni- for customers, and legal liabilities, loss ties. Certainly, operational efficiencies can of revenue and compromised consumer help organizations harness the benefits of confidence for organizations.

11 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

First Areas of Focus for Digital Transformation Initiatives

Source: IDG Research in partnership with CDW

Customer/End-User Demands Driving Interest in Digital Transformation

Ensure security of personal or sensitive data

Oﬀer better/more modern functionality

Oﬀer personalized experiences and interactions

Provide reliable service and 24/7 availability

Increase the speed of time to market

Enable use/support of cloud-based solutions

Source: IDG Research in partnership with CDW

12 Key Findings

From Convenience to Customized Fortunately, some industries have already Interactions caught on to the power of the consumer. Another key factor driving interest in For instance, 53% of transportation digital transformation: customer demand companies will first focus digital transfor for better and more modern function- mation initiatives on customer service — ality, according to 45% of respondents. efforts that could include offering customers Regardless of vertical, customer expec- next-day delivery and package-tracking tations are the same — access to modern capabilities. And 65% believe customer tools and technologies that will ensure demands for reliable service and 24/7 a seamless, omnichannel experience, availability are driving greater interest in anywhere, anytime. digital transformation.

Examples are everywhere. Today’s banking Similarly, 53% of retail and wholesale customers want to deposit a check or companies will first focus digital trans- schedule an appointment from a mobile formation initiatives on sales — a prime or desktop application. Coffee drinkers opportunity to take advantage of data- expect to check and reload their loyalty driven sales automation tools and CRM card balances through their smartphone, systems. And 65% of these companies a retailer’s website or within a brick-and- report that consumer demand for personal- mortar location — with changes made in real ized experiences and interactions is driving time. More and more healthcare providers an interest in digital transformation. are creating online portals so patients can instantly access everything from lab Managing Change — and Overcoming results and research reports to treatment Challenges options. And innovations in warehousing For all the competitive advantages of and data-driven supply chains are putting digital transformation, changing the way an increasing pressure on transportation organization designs business processes, companies to improve delivery methods. manages operations, oversees employees and engages customers isn’t easy. Customer demand for personalized experiences and interactions is also driving According to 31% of survey respondents, interest in digital transformation, according the biggest inhibitor of digital transfor- to 35% of respondents. Forget about email mation progress is a lack of budget and/ blasts and mass marketing campaigns. or resources. Part of the problem is that Today’s organizations must go beyond the digital requirements of business broad-based targeting to create tailored departments put pressure on IT to do experiences based on a customer’s buying more with the same resources — or doing history and behavior patterns across all more with less. And it’s not uncommon touchpoints. This requires leveraging large for the C-suite to shift dollars spent on IT volumes of consumer data to precisely activities like help desk to supporting new target individuals with tailored content and initiatives such as IoT, which can help gain services. The result is increased conversion market share. rates and greater customer loyalty.

13 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Biggest Inhibitors Slowing Progress with Digital Transformation

Lack of budget/resources

Data privacy/security concerns

Legacy infrastructure/infrastructure complexity Internal resistance to change

Shortage of crucial skills

Siloed operations

Uncertain how to measure progress/ROI

Diﬃculty identifying digital priorities/ opportunities We are proﬁtable now under the “status quo”

Lack of direction from senior leadership

Lack of ownership/accountability within IT

Organizational issues such as poorly deﬁned roles and responsibilities

Source: IDG Research in partnership with CDW

Data Privacy and Security Worries Consider, for example, the General Data Data privacy and security concerns rank Protection Regulation (GDPR). This equally high among respondents (31%) as a European Union law on data privacy and key obstacle to success with digital trans- protection requires companies that handle formation initiatives. AI, machine learning the data of EU citizens to comply with some and IoT require vast volumes of data to of the strictest data privacy regulations produce actionable insights. IoT, in particular, in the world, or face significant financial creates new endpoints — and new vulner- penalties. For instance, when collecting abilities. And the complexity of machine personal data, companies have to specify learning — which uses algorithms to help what it will be used for, and not use it for computers learn — can make it difficult for anything else — a burdensome requirement. organizations to be transparent about the Data security is also a concern as hackers processing of personal data. become increasingly sophisticated and brazen in their attempts to steal consumer data and compromise IT systems.

14 Key Findings

Moving Past Legacy Systems Getting a Handle on Deployment Another challenge to digital transfor- Deploying new digital technologies also mation: 30% of respondents report that brings a variety of challenges. The majority legacy infrastructure and infrastruc- of respondents — 29% — cite time-con- ture complexity are slowing or stopping suming data migration tasks as the biggest progress with digital transformation. Many barrier to implementation. That’s because of today’s older, transaction-based legacy moving data requires data preparation, systems still serve mission-critical business such as cleaning data to ensure pristine processes and store critical data. To reduce quality and eliminating duplicate records. costs and ease migration, some organiza- And when organizations are talking about tions are building wrappers around these unstructured data, which represents the age-old systems using APIs. Others are large majority of new data being generated eliminating or replacing them entirely — a around the world, that task becomes slow and costly endeavor that can hinder extremely difficult, time-consuming digital transformation. A significantly smaller and expensive. segment (21%) point to siloed operations as a hindrance to digital transformation. Twenty-eight percent of respondents consider technology/network upgrades From a vertical perspective, transportation to be a barrier to the deployment of digital companies (59%) are most likely to view technologies. For example, many IoT legacy infrastructure as an impediment systems require connecting remote sensors to digital transformation. One possible with other IoT components, including edge explanation is that the transportation computing, data centers and the cloud. industry is decades-old and has always The result is an interconnected platform relied on robust and sprawling systems with multiple moving parts — each of which to maintain operations. And many of its requires network readiness and moderni systems are siloed and rely on proprietary zation to support digital transformation. operating systems. The same percentage (28%) of respondents Nearly a quarter — 24% — of survey say integrating legacy systems with new respondents cite internal resistance to applications is a challenge to deployment. change as impeding digital transforma- And 25% consider change management a tion progress. That’s easy to understand: barrier, for good reason: AI, IoT and other Customer service chatbots and self-driving disruptive technologies often necessitate cars threaten to replace hard-working skills upgrades and organizational employees. In fact, a McKinsey Global restructuring. Institute study reveals that by 2030, as many as 800 million jobs could be lost Again, barriers differ among verticals with worldwide to automation. In the U.S. alone, 41% of transportation companies citing between 39 and 73 million jobs could be data collection/management analysis as automated — a third of the total workforce. a challenge. The obvious explanation for At the same time, many of these digital this: the industry’s legacy systems create technologies promise to deliver plenty of hard-to-integrate data silos. Thirty-two business benefits. percent of finance companies view filling

15 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Biggest Barriers Regarding Deployment of Digital Transformation Technologies

Source: IDG Research in partnership with CDW

gaps in security as a challenge. Case in A Culture of Constant Change point: IoT systems can provide hackers Overcoming these obstacles is critical to with a direct path to connected devices and achieving digital transformation. Yet many operational technology systems. Firewalls, organizations choose to focus on process encryption and network segmentation and technology transformation before can help mitigate these risks by isolating taking steps to change company culture. IoT devices. And 35% of state and local governments identify vendor management For instance, 31% of respondents are as a significant barrier as these agencies redesigning business processes to leverage tend to engage in a wide array of public digital technologies over the next 12 months, and private partnerships, resulting in 28% are building a data security/protection multiple requests for proposal and other strategy, 27% are conducting a technology important documents. needs assessment and 27% are building a data management strategy.

16 Key Findings

Steps Taken/Planned Over the Next 12 Months to Transform the Digital Environment

Source: IDG Research in partnership with CDW

These are important first steps as business products and services to market faster. processes must adapt and evolve to accom C-level executives can help fuel this shift modate AI, IoT and BI applications. But by talking openly about their own career organizations must also reinvent corporate missteps and encouraging employees culture to support enterprisewide digital to share lessons learned in corporate transformation. newsletters and via employee portals.

Forget about rigid business processes Changing organizational structure can also and system silos. Rather, a growing faction support a culture of digital transformation. of survey respondents are encouraging a This includes empowering employees to startup/OK-to-fail culture where employees make their own decisions; relaxing rigid can experiment in one-off projects — without reporting lines; driving greater account- negative repercussions. Benefits range ability of project successes — and failures; from building more resilient teams to getting flattening hierarchical structures that

17 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

impede agility; and driving greater collabo- For this reason, on average, 17% of an orga- ration among disparate teams. For example, nization’s annual budget is allocated toward 19% of respondents are deploying core IT digital technology purchases. And the team members into business units for a average spend per vertical is fairly consistent better balance of technology skills and (between 15% and 19% of the IT budget). business acumen. And 35% report that new roles will be created in IT and/or lines of In terms of how digital transformation business to enhance customer experience. investments are funded, 64% of respondents allocate additional budget spend and 48% Funding Digital Transformation reapply cost savings from other areas of From redesigning business processes to the business. The more mature the organi- encouraging a startup culture, more than zation, the more likely it is that new budget half — 55% — of respondents have taken will be allocated — an indication that these or plan to take three or more of these steps companies are willing to place bigger bets to transform their digital environment. on more innovative solutions. But digital transformation comes at a cost.

Percent of Annual IT Budget Allocated to Digital Transformation Technologies

Average: 17% of the IT budget

How Digital Transformation Investments Are Funded

Source: IDG Research in partnership with CDW

18 Key Findings

Measuring Success by Maturity tivity and computer algorithms, the system Given the considerable impact of digital trans- can not only alert maintenance managers via formation on culture, organizational structure an iPhone app of a restroom mess, but it lets and the way employees work, organizations users better prioritize staff resources and must carefully measure the success of their more accurately stock carts for improved digital transformation investments. Values employee productivity. metrics range from productivity and efficiency gains to customer experience. However, Another valued metric for gauging the benefits fluctuate based on an organiza- success of digital transformation: improved tion’s maturity. process efficiency through automation (42%). At Creating Revolutions, a collab- More than half — 52% — of respondents orative robot named “Manuel Noriega” rely on improved employee productivity to assembles the tiny components of a measure the success or impact of their digital customer service paging device. Unlike transformation investments in disruptive other employees of the startup, Manuel technologies. Consider, for example, works for hours, day in and day out, without Kimberly-Clark. The multinational personal bathroom breaks or healthcare benefits. care corporation created an intelligent The result: Creating Revolutions has reduced restroom platform that uses tiny sensors, its product rejection rate to nearly zero, placed on public restroom equipment, such increased production rates and reduced as soap dispensers and toilets, to collect and its overhead by double digits. Better yet, analyze data in real time. By using a powerful manufacturing processes can be tweaked combination of IoT devices, network connec- in real time for greater flexibility.

Valued Metrics to Demonstrate the Success of Digital Transformation Investments

Improved employee productivity

Improved process eﬃciency through automation Excellent customer experience as measured by customer satisfaction evaluations/scores Achievement of top-line growth

Improved employee retention rates and team morale Accelerated time to market

Reduced customer churn rate

Improved risk posture

Source: IDG Research in partnership with CDW

19 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Forty-one percent of survey respondents mature organizations are significantly more cite excellent customer satisfaction likely to experience cost-savings benefits evaluations and scores as a measure of and improved IT/business collaboration digital transformation success. This metric is from their transformation initiatives. especially important to 57% of respondents in the retail sector as these companies tend Interestingly, both mature and less-mature to rely heavily on customer loyalty and companies are experiencing the same positive word of mouth for profitability. degree of operational efficiencies via digital And a smaller percentage of respondents transformation: 32% of both segments. look to achievement of top-line growth as That’s a strong indication that achieving an indicator of success (36%). operational efficiencies is the first step in any digital transformation journey. Overall, Together, these metrics add up to a strong 55% of respondents have experienced business case for digital transformation. three or more business benefits from their Most interesting is that more digitally transformation initiatives.

Digital Transformation by Level of Maturity

Matre caes Lessatre caes

Source: IDG Research in partnership with CDW

20 Key Findings

Third Party As a Partner confident in their preparedness to Clearly, organizations believe they support a digital transformation strategy — have the right people, technology and a figure that is similar across verticals. processes in place to leverage new Confidence is particularly high among technologies, such as IoT, network senior-level executives: 63% vs. 48% infrastructure, data analytics, cloud and of other titles — a strong indication that mobility. To note, 55% of all respondents organizations will continue to invest report they are extremely or very heavily in digital transformation.

Confidence in Preparedness to Support Digital Transformation Strategy

Not at all conﬁdent

Not very conﬁdent Extremely conﬁdent

Very conﬁdent

Somewhat conﬁdent

Confidence by Title

P Ttes Other Ttes Extremely conﬁdent

Very conﬁdent

Somewhat conﬁdent

Not very conﬁdent

Not at all conﬁdent

Source: IDG Research in partnership with CDW

21 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Despite high confidence levels, though, nearly These factors align closely with the all organizations (92%) will turn to a third challenges cited earlier in the survey party for help in one or more areas, including: results. The average respondent’s company will seek third-party help in • Time-consuming data migration three or more of these areas. And while tasks (27%) 43% of energy organizations will turn • Technology/network upgrades (27%) to a third party for change management, • Data collection/management/ 35% of transportation companies will analysis (23%) look to a third party for help optimizing • Integrating legacy systems with new processes to enable quicker cycles, applications (22%) such as agile approaches.

Challenges for Which Companies Will Turn to a Third-Party Partner for Help

Source: IDG Research in partnership with CDW

22 Key Findings

Biggest Deployment Barriers vs. Challenges Requiring a Third Party

arrers Chaees

Source: IDG Research in partnership with CDW

The good news? Third-party partners can Regardless of vertical industry or level of meet organizations wherever they are on maturity, the right third-party provider the maturity curve. Consider a retail chain can help organizations realize operating fully deploying a mobile solution so its sales efficiencies to achieve greater cost benefits, associates can better serve customers, or a improve cross-organization collaboration healthcare company researching the benefits and better engage customers. of AI capabilities that can help simulate molecules for early drug development.

23 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

The Bottom Line: How the Right Technologies — and Partner — Can Lead to Digital Transformation Success Less than 10% of respondents across all industries have yet to establish a digital transformation strategy. Clearly, organiza tions recognize the business benefits of deploying disruptive technologies, regardless of obstacles such as change management and data migration. The key is for organizations to take the time to identify where they are on the digital transformation maturity curve, evaluate what they want to derive from revising business processes and find the right partner to advance them along their journey.

24 ABOUT THE IDG RESEARCH STUDY

To qualify for the July 2018 IDG Research/ CDW survey, The Digital Transformation Insight Report, respondents had to be familiar with and involved in digital transformation at their organizations.

Qualified respondents work in an IT-related function at the Manager level or above or a non-IT role at the Director level or above, at a company with 250 or more employees.

The average company size was 5,590 employees.

25 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Respondent Profile – Job Title and Purchasing Responsibilities

Job Title

IT-Related (Net) 50% Non IT-Related (Net) 50% CIO 5% CEO/COO/Chairman/President 13% CTO 4% CFO/Treasurer/Controller 8% CSO/CISO 1% Executive VP/Senior VP/VP/ 13% General Manager Chief Architect 1% Director 16% Executive VP/Senior VP/VP 9% Executive Director/ 5% Managing Director Director 16% Manager 10%

Involvement in Digital Transformation

0 11 22 33 44 55 About the IDG Research Study

Respondent Profile – Industry

Represented Industries

27 THE DIGITAL TRANSFORMATION COMPLETE INSIGHT REPORT DATA AND ANALYSIS Orchestrated by CDW

Respondent Profile – Company Size

Company Size

15,000 employees or more 21% 10,000 – 14,999 5% 5,000 – 9,999 8% 2,500 – 4,999 18% 1,000 – 2,499 21% 500 – 999 14% 250 – 499 13% Fewer than 250 –

28 To download a digital version of this report, or learn more about how you can leverage digital transformation to generate powerful results, visit CDW.com/digitaltransformation