Digital disruption: In 3yrs, nothing will be the same
By Goh Thean Eu January 28, 2016
- 44% in HBR survey expect their industries to experience significant digital disruption
- Companies still spending bulk of IT budget on keeping the lights on, not innovation
MORE than half (58%) of senior IT and business executives in a Harvard Business Review Analytic Services study expect significant changes to their business model over the next three years.
Furthermore, 44% expect their industries to experience significant digital disruption over the next three years, and 66% believe that the future of their companies depends on the quality of their software and applications.
The study, sponsored by US-based software firm CA Technologies, surveyed 250 senior executives across the world, about 27% of them from Asia Pacific. All respondents were from organisations with more than 500 employees, and about 46% had 10,000 or more employees.
The two major factors that drive digital disruption include changes in customer behaviour and expectations (cited by 46% of respondents), as well as disruptive new competitors (25%).
“These underscore the importance of constantly recognising and adapting to new trends in order to stay relevant,” said CA Technologies Asia Pacific and Japan chief technology officer Stephen Miles.
More than half of respondents (53%) indicated that their companies are already investing or are planning to invest in modern technology that would enable them to develop digital products and services more quickly.
“Without question, the key to building something great is being able to iterate quickly, to be constantly taking customer feedback and improving continuously,” said Miles.
“Without sustained development velocity, it doesn’t matter how good your version one is – that is the whole idea behind continuous delivery and the agile management philosophy that we support for our customers,” he told a media briefing in Kuala Lumpur on Jan 26.
Many businesses are looking to ride the disruption with their own apps, but Miles (pic) warned that merely launching an app was not going to solve their problems.
“If it was merely about apps, then we wouldn’t be in business today. Companies need to look at the entire customer value chain, and their processes and business operations,” he said.
And while business executives today bandy phrases such as ‘digital transformation,’ few realise that such a journey comes with its own set of challenges.
According to Miles, many companies are still spending most of their IT budget to maintain their systems, and not as much on innovation.
“Companies are still spending disproportionately on ‘keeping the lights on.’ If you spend too much money on this, you will have less money for the innovation, disruption and change that are clearly linked to new services, new revenue streams, and profitability.
“People want to realise the innovation dividend. It makes perfect sense, and feedback suggests that companies that do that quickly and properly can get a good return on profit quite quickly.
“I think companies are challenged to do that because some parts of their operational environment are so broken, and so in need of an update, a refresh of new systems and capabilities,” he said.
The digital journey
According to Miles, making the transition, while not easy, would be possible with the right approach.
First is to ensure that the IT system has a strong foundation.
“The key is table stakes that have a rock-solid operational environment. If we release apps that now become the new front-end of the business, and the performance is poor, people won’t stay and the investment will be wasted,” he said.
“I see a lot of companies investing in operational management tools to make sure they have a rock-solid operational environment, and they are doing that because the year after that, they can spend on innovation, ideation, and disruption,” he declared.
Of course, getting the technology right is only one part of the equation.
The Harvard Business Review Analytic Services survey also revealed that one of the biggest obstacles (46% of respondents) in making that digital transformation journey is that too much organisational bureaucracy is slowing things down.
Other factors include a company culture that is adverse to change (31%), and outdated technology infrastructure (27%).
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