Digital Dynamics Disrupt Market Winners And Losers

The effects digital transformation reminds me of the beginning words in Charles Dickens’ “A Tale of Two Cities” – it was the best of times, it was the worst of times, … it was the spring of hope, it was the winter of despair …. One of the interesting aspects of digital transformation is that it affects companies (and their stakeholders) and industries differently. I’ll illustrate this dynamic market situation with several examples as well as what happened at Microsoft and at a major US insurance company and the resulting consequences for their industries. Let’s look at how digital disruption upends market winners and losers.

Digital Disruption In An Industry

Digital transformation creates a negative secular trend for the longstanding successful IT services industry. As companies seek to modernize their IT, the digital transformation efforts replace their legacy infrastructure and legacy application estates. The replacements are modern hybrid cloud and agile / DevOps approaches. IT modernization increases efficiencies for companies, but it compresses the revenue of the IT service providers that provided the legacy infrastructure and apps operations. A winner and a loser.

Interestingly, there is another winner in this dynamic market. Companies are now applying digital technologies and techniques to business processes, not just IT. However, instead of a resulting revenue compression that the IT providers experience, we see the opposite result for the business process services industry. Opportunities to apply automation and analytics technologies to business processes opens new estates of business for the BPO service providers.

Read more in my Forbes blog: