Almost four out of every five businesses in a recent global study said they were threatened by digital startups. The research, conducted by IT infrastructure company Dell reveals that almost half (45 per cent) of global businesses actually fear they may become obsolete in the next three to five years due to competition from digital-born start-ups.
The fear is presaged by recent experience say the authors. More than half (52 per cent) of business leaders surveyed said they had already experienced significant disruption in their industries over the past three years as a result of digital technologies and the Internet of Everything. And 48 per cent of global businesses don’t know what their industry will look like in three years’ time.
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The findings are based on an independent survey by Vanson Bourne of 4,000 business leaders — from mid-size to large enterprises — across 16 countries and 12 industries.
According to Jeremy Burton, chief marketing officer for Dell Technologies, “So far the fourth industrial revolution has proved as ruthless as its predecessors. If companies can’t keep up, they will fall behind … or worse. The ‘delay until another day’ approach simply won’t work.”
Patchy Progress or Digital Crisis looming?
Despite recognising the problem many business leaders have been slow to act and some companies have barely started their digital transformation according to the study. The authors say many companies have taken a piecemeal approach and only a small minority have almost completed their digital transformation.
“Just one in three businesses surveyed are performing critical digital business attributes* well. While only parts of many businesses are thinking and acting digitally, the vast majority (73 per cent) admits digital transformation could be more widespread throughout their organisation,” according to the study
Around six in 10 companies are unable to meet customers’ top demands, such as better security and 24/7 faster access to services and information. Nearly two-thirds (64 per cent) confess to not acting on intelligence in real-time.
Digital Rescue Plan
Given the acute threat of disruption, businesses are starting to escalate a remedy. To advance their digital transformation:
- 73 per cent agree they need to prioritize a centralized technology strategy for their business
- 66 per cent are planning to invest in IT infrastructure and digital skills leadership
- 72 per cent are expanding their software development capabilities
In order of priority according to respondents, the top planned IT investments over the next three years are:
- Converged infrastructure
- . Ultra-high performance technologies (Example: Flash)
- . Analytics, big data and data processing (Example: Data Lakes)
- Internet of Things technologies
Between a quarter to a third of businesses have created a full digital P&L (36 per cent); are partnering with start-ups to adopt an open innovation model (35 per cent); have spun-off a separate part of the organization or intend to acquire the skills and innovation they need through M&A (28 per cent). Just 17 per cent measure success according to the number of patents they file and nearly half (46 per cent) are integrating digital goals into all department and staff objectives.
“In the near future, almost every business will have software development expertise at its core. Many of these companies will be brand new, others – having not written a line of code in 20 years – will have been on a momentous journey. New digital products and services will drive the transformation of IT infrastructure as businesses struggle to manage 1000x more users and 1000x more data,” says Burton.
“Digital Transformation is the result of blending the power of technology with a rapidly adaptable culture that understands not only what technology can do for its business, but why it is so important in creating the future of the enterprise,” said Daniel Newman, principal analyst, Futurum Research. “Every C-Suite leader looking to up their investment in digital transformation needs to understand the threats to their industry and how technology can take their business to the next level to stay competitive.”
*In 2015, business leaders agreed on a core set of digital attributes businesses must embrace to succeed over the course of the next decade. These are:
- Innovate in agile ways
- . Predictively spot new opportunities
- Demonstrate transparency and trust
- Deliver unique and personalized experiences
- Always on, operate in real time
According to last year’s research, only 4 per cent of businesses executed all key digital business attributes well and company-wide. This year, the figure climbed to 7 per cent.
The proportion of businesses performing any one of these attributes well and company-wide is also higher this year.