Britain’s banker’s are worried, and they are not alone. In the UK half of all UK business leaders fear that their industries will face significant digital disruption within just the next two years, with Finance executives the most concerned. But still, bosses are failing to act. (Before you get too cocky other research we’v see suggests local leaders are just as bad.)
The findings about UK businesses are drawn from new research published by Microsoft today.
- Download the CMO of Tomorrow report produced by the Which-50 Intelligence Unit
“The dawn of the fourth industrial revolution is a massive opportunity for British businesses but many are still living in an age of innocence or inertia when they need to be innovating,” says Nicola Hodson, General Manager, Marketing & Operations, Microsoft UK. “Whilst this research indicates that business models are breaking, many business leaders appear unwilling to address them.”
The financial services sector, which employs 2.2 million people and contributes £66bn in taxes to the UK economy, is demonstrating the highest level of anxiety. Two-thirds (65 per cent) of respondents fear the impact of disruption on their markets over the course of the next 24 months.
The report, which Microsoft claims is the most extensive of its kind to date, finds that whilst disruption is imminent for a wide range of industries,.
The authors also reveal that the shelf life of current business models is also extremely limited – nearly half of UK business leaders (44 per cent) say their existing business models will cease to exist within the next five years.
BUt despite the findings many leaders remain resolute in their inaction. many organisations seem unwilling to face the coming changes. Leaders are failing, says the respondents to the study.
“Almost half (46 per cent) of business decision makers say senior leaders in their organisations are unwilling to disrupt their existing businesses to grow and compete,” say the authors.
The study called Digital Transformation: The Age of Innocence, Inertia or Innovation?, examines how organisations across vertical sectors plan to compete and ‘survive’ in response to this unprecedented pace of change.
The research consolidates the views of more than 1,000 UK business and IT leaders from large UK organisations and represents the most extensive research into the state of digital transformation in the UK.
According to Hodson added, “New challengers, many who are digitally savvy start-ups, are disrupting established markets by deploying new technologies quickly, and luring expectant customers away from established competitors. For many larger organisations, the challenge is how to react to this market disruption in a considered way and how they maintain competitiveness in a rapidly shifting landscape.”
Financial Services – a battleground for digital disruption
The financial services sector, which represents a huge contribution to UK jobs and growth, fears that the biggest disruption will come from entirely new market entrants (33 per cent) – significantly higher than other sectors including retail (10 per cent) and manufacturing (10 per cent). As a result, financial organisations are more focused on the future, with two-thirds (64 per cent) stating that they have a formal digital strategy in place.
Public Sector Challenges
Meanwhile, the public sector faces an even bigger hurdle and has been the slowest to apply digital technologies to business challenges, with only a third (35 per cent) saying they have a formal strategy in place and one quarter (26 per cent) actively stating that no such strategy exists at all. Fear of cultural change and leadership are driving this uncertainty – only a little more than a third of public sector respondents believe they have a digitally literate leadership team, despite their belief it is a critical element to implementing a successful digital strategy.
A brave new world
The authors says that UK business leaders remain cautious of the long term societal impact of rapid digital transformation – 51% say they are anxious it will raise more concerns about privacy and security.
Among the key findings;
Those in the public sector are most worried (56% per cent),
compared to those in financial services (48 per cent) and retail (47 per cent), yet the figures are relatively high across industries.
In addition, a third (33 per cent) think that older generations of workers will get left behind in some ways, rising to over 40 per cent from those in retail, pointing to cultural change as a potential barrier.
Microsoft claims this points to a need for government and business to work together to address privacy and security concerns for the benefit of all, putting people first. Education on how data is used and empowering citizens to take ownership of their data is also fundamental if society is to truly benefit from the promise of digital transformation.
A full copy of the findings can be found on Microsoft’s website here.