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Digital transformation is vital for COVID crisis recovery in Latin America and Caribbean

“The crisis has created the momentum for long-overdue reforms that can help spread the benefits of digital transformation to achieve inclusive and resilient growth,” says OECD Secretary General.

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A new report from the Organisation for Economic Co-operation and Development (OECD) shows digital transformation is the key to quicker recovery from the COVID-19 crisis for Latin America and the Caribbean.

Produced jointly with the United Nations Economic Commission for Latin America and the Caribbean (UN ECLAC), the Development Bank of Latin America (CAF), and the European Union (EU), the report details the harsh impact of the pandemic on marginalized populations. 

Titled Latin American Economic Outlook (LEO) 2020: Digital Transformation for Building Back Better, the report found that microenterprises were hit especially hard — 2.7 million are likely to close, at a loss of 8.5 million jobs.

“The socioeconomic crisis makes a new development model more urgent than ever,” said Alicia Bárcena, Executive Secretary of ECLAC. “Digitalisation could be a powerful tool to overcome the structural challenges of the region, only if it is considered as a comprehensive way to foster progressive structural change, through policies for the generation of new sectors, quality jobs, the development of capacities and innovation.”

According to Ángel Gurría, Secretary General of the OECD, “the crisis has created the momentum for long-overdue reforms that can help spread the benefits of digital transformation to achieve inclusive and resilient growth.”

“It also highlights the urgent need to bridge the digital divides between territories, families, students, workers, and firms.”

The role of DX

How can digital transformation help Latin American and Caribbean communities? 

“By stimulating business innovation and new consumption models, transforming production systems and value chains, re-organising economic sectors, and introducing new conditions of competitiveness,” the report found.

One way digital tools can help is providing support for better access to services, such as healthcare and education, in addition to putting the people at the center of policymaking.

As Luis Carranza, Executive President of CAF added, “digital transformation offers a unique opportunity to boost productivity and to provide better public services in Latin America and the Caribbean. With Covid-19, the region has accelerated its digital processes, but there is still a long way to close the gap with advanced economies.”

“A rough road ahead”

There are certainly challenges in the way of advanced digital transformation acceleration. 

Take internet access. In 2018, 68% of the population in LAC used it regularly, behind the OECD average of 84%. Inequality is also evident here. 75% of the richest population in Latin America use the internet compared to only 37% of the poorest population.

In terms of digital transformation, over 20% of jobs in some countries are likely to be automated in some fashion. As a result, investment in education and training in digital skills is crucial.  

In order for the digital transformation agenda of the region to be successful, the report details recommendations for better coordination of efforts, and how these need to align with National Development Plans. There’s also an emphasis on the importance of international partnerships to the success of DX efforts. 

DX Journal Staff
Author: DX Journal Staff

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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Where is the financial value in AI? Employing multiple human-machine learning approaches, say experts

According to a new study, only 10% of organizations are achieving significant financial benefits with AI.

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AI is everywhere these days — especially as we work to fight the spread of COVID-19

Even in the “before times,” AI was a hot topic that always found itself in the center of most digital transformation conversations. A new study from MIT Sloan Management Review, BCG GAMMA, and BCG Henderson Institute, however, prompts a crucial question:

Are You Making the Most of Your Relationship with AI?

Finding value

Despite the proliferation of the technology and increased investment, according to the report, just 10% of organizations are achieving significant financial benefits with AI. The secret ingredient in these success stories? “Multiple types of interaction and feedback between humans and AI,” which translated into a six-times better chance of amplifying the organization’s success with AI.

“The single most critical driver of value from AI is not algorithms, nor technology — it is the human in the equation,” affirms report co-author Shervin Khodabandeh.

 

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From a survey of over 3,000 managers from 29 industries based in 112 countries — plus in-depth interviews with experts — the report outlined three investments organizations can make to maximize value:

  • The likelihood of achieving benefits increases by 19% with investment in AI infrastructure, talent, and strategy.
  • Scalability. When organizations think beyond automation as a use case, the likelihood of financial benefit increases by 18%.
  • “Achieving organizational learning with AI (drawing on multiple interaction modes between humans and machines) and building feedback loops between human and AI increases that likelihood by another 34%.”

According to report co-author Sam Ransbotham, at the core of successfully creating value from AI is continuous learning between human and machine:

“Isolated AI applications can be powerful. But we find that organizations leading with AI haven’t changed processes to use AI. Instead, they’ve learned with AI how to change processes. The key isn’t teaching the machines. Or even learning from the machines. The key is learning with the machines — systematically and continuously.” 

Continued growth

While just 1 in 10 organizations finds financial benefits with AI, 70% of respondents understand how it can generate value — up from 57% in 2017.

Additionally, 59% of respondents have an AI strategy, compared to 39% in 2017, the survey found. Finally, 57% of respondents say their organizations are “piloting or deploying” AI — not a huge increase from 2017 (46%). 

One of the biggest takeaways? According to co-author David Kiron, “companies need to calibrate their investments in technology, people, and learning processes.”

“Financial investments in technology and people are important, but investing social capital in learning is critical to creating significant value with AI.”

DX Journal Staff
Author: DX Journal Staff

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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Bringing DX to the food supply chain in a pandemic

In a new paper, supply chain stakeholders share how COVID-19 has affected the transformation of the sector.

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There’s little doubt that COVID-19 had a profound effect on the food supply chain.

As one example, just think back to roughly March of this year, when virus transmission was rapidly picking up speed. Remember the reports of food and beverage companies only producing their most popular or essential products? Or how it would take slightly longer than usual to restock certain products? What about the rush to integrate — or quickly improve the efficiency of — digital and e-commerce. 

Panning out a bit, think about food safety and quality professionals. The need to stay safe — and in many cases, stay at home — meant performing the very hands-on job of monitoring, auditing, inspecting at a distance, i.e. digitally. 

When the food supply chain was hit by storages, delays, breakdowns, and lockdowns, the end result was — like in so many sectors — a rapid digital transformation.

As The Food Safety Market — an SME-powered industrial data platform dedicated to boosting the competitiveness of European food certification — elaborates in a new discussion paper, “technology has played an important role in enabling business continuity in the new reality.”

The paper — Digital Transformation of Food Quality & Safety: How COVID-19 accelerates the adoption of digital technologies across the food supply chain — features industry experts from companies like Nestlé, Ferrero, PepsiCo, McCormick & Company, and more discussing the effects of the pandemic on the supply chain.

A few highlights from the paper:

  • John Carter, Area Europe Quality Director for Ferrero put the issue of food access into perspective at the start of his interview:

“The production of food defines our world. The effects of agriculture on our daily lives are so omnipresent that they can be easy to overlook; landscapes and societies are profoundly influenced by the need to feed our growing population. But much has been taken for granted. Only occasionally are we forced to consider: ‘where does our food come from?'”

  • Ellen de Brabander, Senior Vice President of R&D for PepsiCo provided insight on the cost benefits of digital transformation:

“The need for customization is a big driver for accelerating digital transformation and moving away from a ‘one size fits all’ approach. This means that the cost to develop and produce a product must be lower and digital technologies provide a clear opportunity here.” 

  • Clare Menezes, Director of Global Food Integrity for McCormick & Company brought up one area where digital tools need to go:

“There aren’t any areas where digital tools “fail”, but there is a need for tools that ‘prove out’ predictions around where the next integrity event will play out and how it could lead to quality or food safety failure. These tools are an obvious candidate for AI given the number of PESTLE factors that might come into play.” 

Want to read all of the interviews? Check out the paper here.

DX Journal Staff
Author: DX Journal Staff

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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Looking ahead at Digital Transformation in 2021

What’s coming next year? More massive growth in DX investment and IT, and a pivotal role for CIOs in economic recovery.

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What’s to come next year? According to IDC’s 2021 predictions, more massive growth in digital transformation investment and IT, and a pivotal role for CIOs in economic recovery.

Every year, the leading DX market research firm releases its series of FutureScape reports, which, according to IDC, “are used to shape IT strategy and planning for the enterprise by providing a basic framework for evaluating IT initiatives in terms of their value to business strategy now and in the foreseeable future.”

Let’s look at the highlights for three of the IDC FutureScape reports for 2021:

Digital Transformation Predictions

As we’ve firmly established, the global COVID-19 pandemic has largely accelerated DX efforts. 

According to IDC’s report, “direct digital transformation (DX) investment is still growing at a compound annual growth rate (CAGR) of 15.5% from 2020 to 2023.” It’s expected that investment will approach $6.8 trillion, as a result of companies quickly modifying their existing strategies in an effort to prioritize digital-first.

“Organizations with new digital business models at their core that are successfully executing their enterprise-wide strategies on digital platforms are well-positioned for continued success in the digital platform economy,” explains Shawn Fitzgerald, research director, Worldwide Digital Transformation Strategies. 

“Our 2021 digital transformation predictions represent areas of notable opportunity to differentiate your own digital transformation strategic efforts.”

IDC has also revealed their top 10 DX predictions. The top three are:

  • Accelerated DX Investments Create Economic Gravity: “The economy remains on course to its digital destiny with 65% of global GDP digitized by 2022.”

  • Digital Organization Structures and Roadmaps Mature: “By 2023, 75% of organizations will have comprehensive digital transformation (DX) implementation roadmaps, up from 27% today, resulting in true transformation across all facets of business and society.”

  • Digital Management Systems Mature: “By 2023, 60% of leaders in G2000 organizations will have shifted their management orientation from processes to outcomes, establishing more agile, innovative, and empathetic operating models.”

Read the full list here.

IT Predictions

When looking at IDC’s IT predictions for 2021, the firm explains that “to succeed in this period of change, CIOs and digitally driven C-suites need to focus on three areas over the next five years.”

First, they need to address gaps within IT that emerged in the immediate response to the pandemic. Up next, is making sure that accelerated IT and DX efforts are “locked in.” 

Finally, and as IDC says, most importantly, “they must seek opportunities to leverage new technologies to take advantage of competitive/industry disruptions and extend capabilities for business acceleration in the Next Normal.”

While COVID has shown that organizations can — and for the most part, did — respond and adapt quickly, to do so is a marker of future success in the digital economy, explained IDC Group Vice President for Worldwide Research, Rick Villars. 

“A large percentage of a future enterprise’s revenue depends upon the responsiveness, scalability, and resiliency of its infrastructure, applications, and data resources.”

IDC again released a top 10 list of predictions for this category. The top three are:

  • The acceleration of the shift to cloud-centric infrastructure
  • The increasing importance of the edge
  • “The Intelligent Digital Workspace”

Read the full list here.

CIO Agenda predictions

The pandemic has caused many business leaders to rethink their entire organizational structure and workflow. 

CIOs have faced many challenges this year — given the speed of digitization for most businesses — and they’ll need to be in the front seat of the upcoming recovery efforts as well, IDC reports.

“In a time of turbulence and uncertainty, CIOs and senior IT leaders must discern how IT will enable the future growth and success of their enterprise while ensuring its resilience,” said Serge Findling, vice president of Research for IDC’s IT Executive Programs.

IDC’s list of predictions starts with these three at the top:

  • “By 2022, 65% of CIOs will digitally empower and enable front-line workers with data, AI, and security to extend their productivity, adaptability, and decision-making in the face of rapid changes.”
  • Cyber attacks, trade wars, and a shaky economy will mean CIO struggle to adapt. IDC predicts that 30% of CIOs will not be able to protect trust.
  • The accumulation of technical debt accumulated during the pandemic will cause “financial stress, inertial drag on IT agility, and “forced march” migrations to the cloud.”

Read the full list here

DX Journal Staff
Author: DX Journal Staff

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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