MANILA, Philippines – IDC Philippines announced its top predictions for the Philippine ICT industry for 2017 and beyond and predicts 25% of its top 1,000 companies will see majority of their business depend on their ability to create digitally enhanced products, services and experiences by 2020.

 

IDC expects digital transformation (DX) will attain macroeconomic scale over the next three to four years, changing the way organizations operate and reshaping the global economy and calls this as the dawn of the “DX Economy”.

 

“The rise of DX definitely has an incredible effect on the market. It opens massive opportunities for businesses as it helps strengthen relationships with end users, flattens organizational structures, and redefines traditional industries,” says Jubert Alberto, Business Operations Head, IDC Philippines.

 

IDC Philippines’ technology and industry analysts also revealed the strategic top predictions and major technology trends that are set to present opportunities and challenges to IT leaders in 2017 and beyond.

 

#1: DX Economy. By 2020, 25% of top 1,000 companies in the Philippines will see the majority of their businesses depend on their ability to create digitally enhanced products, services, and experiences.

 

The market dynamics are quickly changing, and the enterprise must continually improve productivity and effectiveness while lowering costs in order to enable a transformation that will allow it to best compete in the constantly evolving market environment.

 

“Year 2020 will see Filipino companies level up their DX journey to a macroeconomic scale, as their ability to offer digitally transformed offerings and experiences becomes an important measure of competitiveness and success in the market,” says Karen Rondon, Research Manager for Enterprise Computing – Networking, IDC Asia/Pacific.

 

#2: Pinoy DX Teams. By 2018, 25% of Philippine organizations will have dedicated digital transformation/innovation teams.

 

“These specialized ‘PH DX teams’ will be in charge of formulating plans both for internal and external applications of digital technology. These include identifying and using new technologies to improve operations, creating digital marketing strategies, developing their IT capabilities, and other related initiatives,” says Jan Edward Taneca, Market Analyst – Imaging, Printing, Document Solutions (IPDS), IDC Philippines.

 

#3: More Strategic ICT Push. By 2021, the government will have a more strategic ICT push to enable technology adoption among Philippine organizations.

 

Year 2016 has been a good year as far as the country’s ICT agenda is concerned. According to the latest findings of the United Nations E-Government Survey, the Philippines went up 24 notches to rank 71st out of 193 countries in e-government development. With a dedicated, centralized agency at the helm of the country’s ICT development, IDC sees that by 2021, the government will be able to lay the much-needed groundwork that would enable robust technology adoption among Philippine organizations and raise the nation’s standards to be on par with other digital economies.

 

#4: Cybersecurity. By 2018, cybersecurity will become a tier-1 business priority receiving fixed capital spending for 30% of the top 1,000 companies in the Philippines.

 

Increasing security breaches and attacks has significantly raised interest in and awareness of the need to modernize security infrastructure in the Philippines. “In the coming years, enterprises will realize that rather than reacting to global security trends, the best-run businesses try to anticipate them. Thus, they will make cybersecurity a core part of their overall business strategy, taking into account the existing security industry trends and evolving criminal tactics and couple those factors with the organization’s risk tolerance, security program maturity, a holistic security strategy and, most importantly, business targets,” says Jan Edward Taneca, Market Analyst – Imaging, Printing, Document Solutions (IPDS), IDC Philippines.

 

#5: Information-Based Products. By 2020, revenue growth from information-based products will be double that of the rest of the product/service portfolio for a quarter of the top 1,000 Philippine companies.

 

“In the Philippines, companies in the telecommunications, retail, and banking industries, among others, have unlocked new opportunities in creating revenue through analyzing and making sense of the aggregated customer information. Some organizations that have explored these options benefited in the form of penetrating new markets and generating new revenue streams as the information may vary from customer data to consumer buying patterns,” says Nicolo Santos, Market Analyst – Imaging, Printing, and Document Solutions (IPDS), IDC Philippines. “This opportunity requires a constant effort for organizations to address data privacy and security issues, and government regulations that surround the collection, storage, use, and sale of consumer data.”

 

#6: Hyper-disruptive marketplaces. By 2019, 40% of customer-facing top 1,000 companies will experiment with augmented reality/virtual reality (AR/VR) as part of their marketing efforts.

 

The potential impact of AR/VR across industries will become so big that by 2019, IDC sees 40% of the Philippines’ top 1,000 companies experimenting with these technologies to create their own unique experiential marketing strategies. “Consumer brands will be compelled to think out of the box and reinvent their marketing approaches – incorporating more AR/VR elements and placing emphasis on gamification – in a bid to gain the patronage and loyalty of consumers, especially young and tech-savvy millennials,” says Sean Agapito, Market Analyst – Client Devices, IDC Philippines.

 

#7: Customer-/Ecosystem-Facing Digital Services. By 2019, 65% of Philippine IT organizations will create new customer-facing and ecosystem-facing services to meet the business DX needs.

 

Customer-experience initiatives are on the rise across organizations, and as they increase the level of control customers and business-to-business (B2B) organizations have over their own experience, the scale of interactions will concurrently explode. “Failure to scale up the number of direct and indirect customers with whom an organization does business will lead to revenue shortfalls and uncompetitive cost structures. Improve profitability, we expect organizations to increase their use of virtual agents or digital assistants. Intelligent assistants will use artificial intelligence (AI)/cognitive technology to automatically adjust experiences to the users’ preferences and context,” says Alon Anthony Rejano, Market Analyst – IT Services, IDC Philippines.

 

#8: Digitalized Customer Support Interaction. By 2018, 60% of customer support interactions will be digitalized and occur in online communities.
With an increasing proportion of the Filipino population – reaching nearly half of the country’s total population in 2016 – actively using social media, IDC expects more organizations to interact with customers through social and online communities. Online customer support not only help solve customer problems but it also improves brand image. Additionally, a successful community will create brand champions or advocates and will not only recommend the product or the service to customers but will help solve customer problems on behalf of the brand. “This will make the theme of customer reciprocity strong moving forward. Also in the near future, more organizations will use IT to integrate existing customer services and support systems like integrating pre-built connectors, mining the community for insight into customers’ behavior, and proactively solve any emerging issues,” says Jerome Dominguez, Market Analyst – Client Devices, IDC Philippines.

 

#9: Next-Wave Sari-Sari Store. By 2020, 30% of Philippine sari-sari stores will evolve to become another channel for one-stop payments and remittance centers.
Something unique in the Philippine retail scene will be the presence of sari-sari stores in different localities. IDC foresees a future where sari-sari stores, a Pinoy cultural phenomenon, can offer services such as payment of utility bills, e-loading, and buying of travel tickets can also be done through these neighborhood stores. Serving as complimentary touchpoints especially in the rural areas, sari-sari stores play a pivotal role in filling the “unbanked” gap in the countryside. Organizations looking to engage more in the rural areas will have a viable channel, as in alternative to building brick-and-mortar branches, which may be cost-prohibitive to most companies.

 

#10: ICT and BPO Disruption. By 2020, ICT and BPO markets will be disrupted by the pivot and policy changes from the Duterte and Trump administrations, if the industry does not take critical steps safeguarding the country’s inherent growth drivers.

 

The BPO industry is one of the great contributors to the total ICT spending in the country. IDC maintains that the burgeoning and evolving to higher-value services around contact centers, medical transcription, software development, animation and game development, and global captive operations centers will still be very much viable in the short term, given the country’s inherent strengths. “In the longer-term view, however, this may change due to the shift in pivot and policy changes from the Duterte and Trump administrations. This may lead to an impression of the country’s volatility and together with issues on manpower and availability of skillsets, it may result in the industry stagnating in the near future due to lack of new investments and expansionary plans from incumbents. Far-reaching measures to address key issues are of paramount importance this year,” adds Alberto.


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