‘Digital start-ups threaten 78 per cent businesses’

Seventy Eight per cent of businesses believe digital start-ups 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.

About 45 per cent of global businesses surveyed fear they may become obsolete in the next three to five years due to competition from digital-born start-ups.

Some companies are feeling badly bruised by the pace of change. More than half (52 per cent) of 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 48 per cent of global businesses 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 and12 industries.

Chief Marketing Officer for Dell Technologies, Jeremy Burton, said so far the fourth industrial revolution has proved as ruthless as its predecessors, adding that If companies cannot keep up, “they will fall behind or worse. The ‘delay until another day’ approach simply won’t work.”

According to the study, progress has been patchy to say the least. It observed that some companies have barely started their digital transformation; many have taken a piecemeal approach.

“Only a small minority have almost completed their digital transformation, stressing that just one in three businesses surveyed are performing critical digital business attributes well. While only parts of many businesses are thinking and acting digitally, the vast majority (73 per cent) admits digital transformation could be more widespread throughout their organisation.

“Around six in 10 companies are unable to meet customers’ top demands, such as better security and 24/7 faster access to services and information. Nearly two-thirds (64 per cent) confess to not acting on intelligence in real-time.

“These are imperatives for success in a digital age. Failing to deliver in such a highly contested marketplace could trigger the beginning of a digital crisis,” added Burton.

Dell Technologies’ Digital Transformation Index supplements the research and rates companies based on respondents’ perceived performance about their firms’ digital transformation.

According to the benchmark, only five per cent of businesses have catapulted themselves into the Digital Leaders group; almost half are lagging behind.

The report showed that only five per cent are digital leaders, that have imbibe transformation, in its various forms and ingrained in the DNA of the business.

Given the acute threat of disruption, businesses are starting to escalate a remedy. To advance their digital transformation, 73 per cent agree they need to prioritise a centralised technology strategy for their business; 66 per cent are planning to invest in IT infrastructure and digital skills leadership; 72 per cent are expanding their software development capabilities.

In order of priority according to respondents, the top planned IT investments over the next three years are: converged infrastructure; ultra-high performance technologies (Flash); analytics, big data and data processing (Data Lakes) and Internet of Things technologies.

Additionally, between a quarter to a third of businesses have created a full digital P&L (36 per cent); are partnering with start-ups to adopt an open innovation model (35 per cent); have spun-off a separate part of the organisation or intend to acquire the skills and innovation they need through M&A (28 per cent). Just 17 per cent measure success according to the number of patents they file and nearly half (46 per cent) are integrating digital goals into all department and staff objectives.

“In the near future, almost every business will have software development expertise at its core. Many of these companies will be brand new, others – having not written a line of code in 20 years – will have been on a momentous journey. New digital products and services will drive the transformation of IT infrastructure as businesses struggle to manage 1000x more users and 1000x more data,” Burton said.

To Principal Analyst, Futurum Research, Daniel Newman, 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.

“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,” Newman said.