Digital disrupters twice more profitable: CA Tech survey
By Benjamin Cher October 29, 2015
- Banking and telcos top two most disruptive and disrupted verticals
- Singapore organisations gung-ho on digital, but lagging on many fronts
THE phrase ‘digital transformation’ is being bandied about as the framework for a future of improved productivity and lower cost, and a recent study puts the business effects into perspective: Digital disrupters have seen up to two times more revenue and profit than mainstream companies.
The just-released study, Exploiting the Software Advantage: Lessons from Digital Disrupters, by CA Technologies, defines digital disrupters as companies which have adopted digital initiatives
The study was done to explore what benefits companies that explored digital transformation early on have gained, according to CA Technologies Asia Pacific and Japan chief technology officer Stephen Miles (pic above).
“Digital transformation is no longer an option but an imperative – it is now simply ‘change or be changed,’ and how quickly you can get on board,” he told Digital News Asia (DNA) in Singapore.
The findings underscore CA Technologies’ belief in the ‘application economy,’ according to Miles, in which every business is a digital business, and mobile apps are the face of the business.
“The reality is that customers are more likely to experience a company’s brand through a software app rather than a visit to the store,” he said.
The CA Technologies study included a ‘Digital Effectiveness Index’ (DEI), a measurement tool developed by CA Technologies and Freeform Dynamics, that translated market competiveness and business metrics into numeric scores to rank companies.
The top 12% of respondents in Asia Pacific were classified as digital disruptors – companies well on their way in their digital transformation journeys.
Digital disruptors in Asia Pacific are 4.3 times more likely to recognise the importance of being a software-driven business, and 2.4 times more likely to use agile development and have DevOps in place, according to the study.
The study covered 615 respondents across Australia, China, Hong Kong, India, Japan, Singapore and South Korea.
Banking and telecommunications were identified as the verticals leading the digital transformation charge, which Miles described as the most interesting statistic coming out of the report.
“They are the most disrupting and the most disrupted,” he said. “They feel the most sense of urgency to adapt to change.”
Many banks are leading with a ‘digital-first’ initiative, which means more than just building a mobile app for customers, Miles argued.
“It is thinking about how you deliver that digital experience across the middle and the backend systems,” he said.
“It means the complete digital transformation of the business, using it not only to be efficient in doing business with customers, but in retaining and acquiring new business, and finding new revenue streams and areas of profit growth,” he added.
Telcos are also as aggressive as banks. “They are building more efficient next-generation network infrastructure to support tomorrow’s content,” Miles said.
“Telcos are also participating in brokering and building new collaborative services,” he added.
Using APIs (applications programming interfaces), telcos can also find ways of extending the reach and relevance of other organisations through new micro services, according to Miles.
“They are building and structuring a new age of services that was previously impossible – telcos will play a massive role in making that change,” he said.
Digital or analogue Singapore
The survey also revealed that 48% of Singapore organisations are currently undergoing digital transformations as part of coordinated strategic programmes.
These strategic programmes are sanctioned by their boards, and not just kneejerk responses, according to Miles.
“Productivity (51%), customer satisfaction (49%) and competitive differentiation (46%) were singled out as factors in driving digital transformation in Singapore,” he said.
“To see digital transformation linked to profit alludes to the fact that companies can build more efficient business models using a mobile-first approach, reduce costs in terms of infrastructure and assets, and offset previous business costs into strategy and programmes to change the business while remaining profitable,” he added.
While Singapore organisations represented up to 8% of respondents classified as digital disrupters, they have yet to fully embrace the necessary innovations, according to the study.
Only 32% see social networks as essential to customer engagement, and only 22% believe in the importance of mobility solutions in customer engagement and market development.
On the Internet of Things (IoT) front, only 21% believe in its importance and only 19% think wearable technology is important.
Singapore also lags in other regards, such as implementing agile development, with only 52% having it in place compared with 77% globally, and 41% of Singapore organisations adopting APIs compared with 52% globally.
Only 77% of Singapore organisations believe in being app-centric, compared with 95% globally.
A new digital world order
While it is still in the early days of the application economy, the CA study highlights the benefits early adopters are enjoying in a digital future.
Miles believes that there is still a long way to go in seeing how all this plays out regionally and globally.
“We are going to get to a point where the past advantages of macroeconomics, legislation and demographics will go out the window, and ideation and innovation will give each organisation a chance to be great,” he said.
“This is the bigger leveller we ever had in our time – the opportunity for innovation and ideation will be the true drivers for business, regardless of where [your business is located], financial resources, or previous constraints,” he added.
Staying ahead of the application economy then is important in competing, and Miles believes that companies need to be disruptive to survive and thrive.
“Companies need to be disruptive, think through and change current organisational structures, processes and systems,” he argued.
“They need to be able to embrace new cultures, failing fast and often, promote ideation and innovation and make it the forefront of the business to make an effective digital transformation,” he added.
Taglines like ‘change or be changed’ and ‘adapt or die’ may be bandied about, but Miles believes that they are certainly more apt and relevant in today’s context.
“When banks can think about being telcos and telcos can think about being banks, you have to think about that playing out in the macro perspective across all industries,” he said.
“We will see that everything is up for grabs,” he added.
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