Andrew Birmingham, Which-50, 3rd November, 2014 – Australian executives remain disconnected from the existential threat of disruption to their businesses and business models, with three quarters indicating they do not believe rapid change is under way in their industry. Indeed their views are some of the most complacent in the world.
Sadly, given the ubiquity of this view it may well be correct — simply because it is self-fulfilling. Of course, taking your lead from your local peers is a risky strategy now that the game has commerce has gone global.
Almost nine out of ten believe there is no need to accelerate and that the current climate of change is little different to their experiences of the past. The view was held more widely in Australia than anywhere else in the world.
That’s the conclusion we draw from a piece of research released this week by Netsuite — conducted by Frost and Sullivan on their behalf — called “Disrupt, Collapse, Transform”.
About the only upside is that the number of local executives who believe their industry is rapidly changing has doubled to 26 per cent since 2010. However, according to the authors, executives are more complacent about the need to adapt their organisation than in other countries — only 13 per cent believe change needs to happen much faster than in the past, compared with 22 per cent globally.
The study found that the biggest trends driving industry change are digitalisation, new disruptive competitors, servitisation and new business models.
The Frost & Sullivan study examined the views of of 1500 senior executives across multiple industry sectors in seven countries, including Australia, Singapore, US, UK, Japan, Hong Kong and the Philippines. Conducted this month, the study sought to examine what is driving disruption across all industries, and how the modern business is responding.
“The pace of transformation in most, if not all, industry sectors in Australia is very high and appears to be accelerating,” said Mark Dougan, Managing Director for Australia and New Zealand of Frost & Sullivan (Pictured above). “The introduction of new business models as a result of the digital revolution has helped accelerate cloud adoption. Coupled with shifting economic conditions, accelerated time to value and the need to innovate rapidly, businesses simply need to be more efficient and adapt at a much faster rate than ever before.”
Digitalisation — the leading factor driving industry transformation.
The use of digital channels to do business, sell to customers, or transact with suppliers was identified as the top trend driving change in Australia — particularly in the media, entertainment and retail sectors. “Despite being the leading driver, only 30 per cent of organisations on average allow customers to transact with them online. This does differ greatly by sector, however, with ICT (52 per cent), manufacturing (48 per cent) and retail (38 per cent) leading online use. But adoption lags in many sectors, particularly financial services (20 per cent).”
While many organisations identified one of their biggest threats as the entry of new, disruptive competitors with new business models, only 22 per cent of Australian businesses say that they are likely to change their distribution model in the next five years — by far the lowest of all countries surveyed. “While much less developed in Australia than elsewhere, servitisation is another significant driver of change worth noting. Many businesses are developing the capabilities they need to provide services and solutions that supplement their traditional product offerings. In Australia, less than 30 per cent of manufacturers, for example, are servitised, compared to almost 60 per cent in the US and 50 per cent in Singapore.”
Need for greater adaptability driving cloud adoption
The researchers say that cloud computing is both a contributor to industry transformation and a necessary response for organisations to survive. For insatnce, the study revealed that the main reasons for adopting software-as-a-service (SaaS) are evolving over time, with cost savings and ease of upgrading becoming less important than they were four years ago. “Greater adaptability to industry change is now a main driver of SaaS adoption in Australia, according to 34 per cent of surveyed organisations, which is a significant increase from ten per cent in 2010.”
According to the study, 63 per cent of SaaS users in Australia indicated that it has helped them respond more effectively to changing market conditions and 72 per cent say that it has given them a source of competitive advantage. As well as lower costs, the main benefits achieved have been improved speed to market with new products or services (20 per cent) and the ability to enter new global markets (20 per cent).
“Given industries are changing so quickly in such an unpredictable way, companies need to have the ability to adapt extremely quickly to launch new products and services, come up with new revenue or business models and access new geographical markets,” said Dougan. “That adaptability is being enabled by cloud computing — it has become a necessary response to the rapid pace of transformation.”
The study indicated that the highest adopters of SaaS are the Australian financial services, ICT and government sectors, with mining, healthcare and construction being the lowest. Forty per cent of organisations overall are using SaaS for at least one of their main business applications, with CRM being the most widely accessed (50 per cent), followed by e-commerce (48 per cent) and finance and accounting (47 per cent).
– See more at: http://which-50.com/blog/2014/october/30/shell-be-rightcom-study-reveals-a-dangerous-complacency-as-local-execs-ignore-digital-disruption/?page=2#.VFcxlf0cSUl