Crisis looms as business leaders fear digital startups

• 58% of APJ businesses don’t know what their industry will look like in three years
• 83% of businesses consider digital startups a threat, either now or in the future

EIGHTY-three percent of Asia Pacific Japan businesses believe digital startups will pose a threat to their organisation, either now or in the future, according to new research from Dell Technologies.

This phenomenon is propelling innovative companies forward and accelerating the demise of others. More than half (52%) of businesses surveyed fear they may become obsolete in the next three to five years due to competition from digital-born startups (Global: 45%).

Some companies are feeling badly bruised by the pace of change. Six in ten (61%) of APJ business leaders have experienced significant disruption in their industries over the past three years as a result of digital technologies and the Internet of Everything, and 58% of businesses in the region don’t know what their industry will look like in three years’ time.

The findings result from an independent survey by Vanson Bourne of 4,000 business leaders -- from mid-size to large enterprises -- across 16 countries and 12 industries.

“The influence of the digital revolution has led to a significant decline in the barriers to entry across industries. Aided by the strong entrepreneurial spirit and government support in the APJ region, we have witnessed the rise of numerous digital startups,” said Dell EMC APJ Commercial president Amit Midha. “Failing to innovate will impact the competitiveness of established APJ businesses in the digital era.”

Patchy progress or looming digital crisis?
Progress has been patchy to say the least. Some companies have barely started their digital transformation. Many have taken a piecemeal approach.

Only a small minority have almost completed their digital transformation journey. Just one in three businesses surveyed are performing critical digital business attributes well.

While in many businesses, only some functions of the organisation are thinking and acting digitally, the vast majority (77%) admits digital transformation could be more widespread throughout their organisation.

Around six in ten companies are unable to meet customers’ top demands, such as better security and 24/7 faster access to services and information. Nearly two-thirds (65%) confess to not acting on intelligence in real-time.

“APJ is at the epicentre of a fourth industrial revolution and with customers expecting intuitive and personalised experiences, it is imperative for businesses to transform digitally in order to remain competitive. Although businesses across the region are making progress, now is the time to accelerate their digital transformation journey beginning with IT transformation” said Dell EMC APJ Enterprise Business president David Webster.

“With demand for new digital products and services meaning an exponential increase in users and data, a focus on IT infrastructure modernisation and investment in software development skills is key for businesses to continue delivering value to their customers.”

Dell Technologies’ Digital Transformation Index supplements the research and rates companies globally based on respondents’ perceived performance about their firms’ digital transformation. According to the benchmark, only 5% of businesses across 16 countries have catapulted themselves into the Digital Leaders group; almost half are lagging behind.

• Digital Leaders: 5% - digital transformation, in its various forms, is ingrained in the DNA of the business
• Digital Adopters: 14% - have a mature digital plan, investments and innovations in place
• Digital Evaluators: 34% - cautiously and gradually embracing digital transformation, planning and investing for the future 
• Digital Followers: 32% - very few digital investments; tentatively starting to plan for the future
• Digital Laggards: 15% - do not have a digital plan, limited initiatives and investments in place

Digital rescue plan
Given the acute threat of disruption, businesses in the APJ region are starting to escalate a remedy. To advance their digital transformation:

• 78% agree they need to prioritise a centralised technology strategy for their business
• 70% are planning to invest in IT infrastructure and digital skills leadership
• 73% are expanding their software development capabilities

According to respondents in APJ, the top planned IT investments over the next three years are:

• Analytics, big data and data processing (Example: Data Lakes)
• Converged infrastructure
• Ultra-high performance technologies (Example: Flash)
• Internet of Things technologies

Additionally, between a quarter to a third of businesses have created a full digital P&L (34%); are partnering with startups to adopt an open innovation model (34%); have spun-off a separate part of the organisation (31%) or intend to acquire the skills and innovation they need through M&A (27%).

Just 15% measure success according to the number of patents they file and nearly half (46%) are integrating digital goals into all department and staff objectives.

“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 Futurum Research principal analyst Daniel Newman.

“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.

 
Related Stories:
 
Report warns G20 leaders that digital disruption could hinder young entrepreneurs
 
MaGIC’s concern over flatlining in startup ideas
 
Malaysia: Where ‘disruption’ is an empty buzzword
 
 
For more technology news and the latest updates, follow us on Twitter, LinkedIn or Like us on Facebook.