Digital transformation: innovation, science, and technology, pillars of economic recovery

If there is something that governments and companies should bet on for economic recovery, it is innovation, science, and technology, says Hiram Monroy, Director of Commercial Sales for AMD in Mexico, Central America, and the Caribbean. The executive assures that in the pandemic it has been possible to observe that public or private projects survive while others have disappeared. The coincidence among the former is that they have used some technological tool.

Before the pandemic, it was considered that organizations that assumed the digital transformation were 26% more profitable than their competitors; taking into account the world we live in, where social isolation and teleworking policies are part of everyday life, this notion is more evident than ever.

It is estimated that at the beginning of the pandemic, global markets lost between 10 and 30% of their value, resuming a steady upward curve until the announcement of the first vaccine, adds the executive. For the Mexican economy, the COVID-19 pandemic brought a contraction in the national Gross Domestic Product (GDP) of 8.2 percentage points at the end of 2020, in addition to putting on hold or definitively closing the operation of millions of businesses in the country.

"With the imperative urgency of vaccination on a global level, we all quickly became aware of the relevance of scientific research in our daily lives; it is more than likely that generations that just entered basic education are more familiar with laboratory names than with their classmates. The point is that, although often invisible, science is very much the basis of our society today. Behind every food we eat, every television program we watch, every device we interact with, there is a whole process of research and development to bring it to our hands".

"In the same way that the pandemic reaction-reinvention process is made up of three stages, the keys to detonate a substantial transformation of people and companies in the new normal also comprise three pillars, which are science, technology, and innovation. We see a clear example of this when we observe that the countries that invest the most in research and development lead the world in the production of vaccines," says the AMD executive.

He adds that the private sector has increased its investment in research and development, particularly in technology, software, and digital services companies, where the budget increase grew up to 35% in some cases.  On a smaller scale, says Monroy, businesses also intensified their technology adoption initiatives, to the extent that 9 out of 10 companies in Mexico accelerated the adoption of one or more technologies.

As an example, he highlights remote work, as he says that companies had to decide to leap cloud technologies, a model that is designed to handle large volumes of data and complex workloads, which was of vital importance to support the infrastructure and service demands created by the COVID-19 crisis.

The long-term impact of technology adoption was a natural step, one that was accelerated by the health emergency, but one that will help organizations stay in line with long-term market needs: the use of collaboration, videoconferencing, storage, and data processing solutions will continue to rise, so investing in technology in this period of change is, at the end of the day, a timely expenditure.

Digital transformation perspectives in Latin America

Digital transformation is not a mere application of technologies in the business environment. It is a continuous process of change that involves changing business models and changing the culture within any company. Mexico is one of the countries in the region that represents one of the most dynamic economies in Latin America. Through the conditions it offers, countless companies find here the possibility to establish themselves and develop their growth.

In this sense, it is no coincidence that the country has become one of the main technological capitals of the region. It is in this scenario that Business Digital Transformation has taken on special relevance. This process -which involves the use of technology, the incorporation of agility practices, and the strategic direction to improve productivity; the speed to adapt; in addition to the experience of the final clients of any business- is becoming a trend that more and more companies are adopting. However, the road is still long.

According to IDC, only 23% of the country's large corporations have initiated this technological change in their processes. The same source reveals that, by 2021, 40% of the region's GDP is expected to be digitized, so companies in the national territory cannot lag in this change. In this evolution, the Latin American region is advancing by leaps and bounds.

Prospects indicate that, for the next few years, in Mexico and the other countries of Central and South America, there will be growth - in each productive sector - driven by digitally improved offers, operations, and relationships. According to data also provided by IDC, worldwide investment in technology and services necessary for companies and organizations to achieve this change will reach US$2.3 billion by 2023. Thus, process manufacturing and discrete manufacturing (automobiles, domestic industrial equipment, or computers), in addition to retail, are expected to be the fastest-growing industries. But that's not all.

Within five years, nearly 70% of all IT spending in the region will go to "third platform" technologies and services (cloud computing, big data, social business, and mobility), as more than 75% of companies will create "digital native" IT environments to thrive in the digital economy. In this context, the business model may adopt different formats. One of them is the "peer to peer", which directly contacts the two parties carrying out the transaction. Services such as Airbnb and Uber are among the most outstanding in this classification.

For its part, the economics of subscription also gives rise to initiatives of another nature - known as "freemium" - that advertise products or services for free and, in parallel, offer another variant "premium" for those who want the content of a higher quality or free of advertising (as is the case of Spotify). Traditional companies do not have to immediately incorporate all these Digital Business Transformation practices. But if they don't open up to this trend, they run the risk of their business being "consumed" by Tech initiatives with greater flexibility and capacity to respond to what customers are looking for.