Disruptive competitors, digitalisation – among key drivers for industry change: report

Tuesday 11 November 2014 14:20 CET | News

Business executives in the UK and around the world believe that new disruptive competitors (cited by 48% respondents), digitalisation (36%), new business models (28%) and productisation/servitisation (26%) are the main disruptive drivers which are impacting their business and leading them to transform it, new research unveils.

UK organisations are responding to such challenges by adopting cloud computing for its greater adaptability to enable industry transformation at a greater speed. Among respondents, 72% of UK cloud-based software users mentioned that cloud has provided them with a competitive advantage over competition – particularly with regard to entering new markets -- and has enabled them to react faster and more efficiently to change.

Research also reveals that 98% of UK executives believe their industry is changing – with 28% stating their industry is changing rapidly. However, in spite of this high level of recognition of industry change, the survey also found that UK executives are somewhat more complacent about the need to adapt their organisations – only 20% of those involved in the survey believe change needs to happen much faster than in the past, compared with 22% globally.

Companies need to react to the emergence of new disruptive competitors
58% of UK survey respondents have witnessed the entry of a new disruptive competitor into their industry in the past 5 years. New market competitors have shaken up many UK industries, including media and retail. These new entrants usually use cloud computing to establish operations, scale up those businesses and build out geographic reach. Market incumbents need to be able to respond at a similar pace to compete with fast-moving cloud-powered startups.

Companies need to make effective use of digitalisation
Digitalisation is the use of digital channels to do business, sell to customers, or transact with suppliers. According to research, online retail sales in the UK now represent 12% of all retail sales – the highest percentage in the world. Digitalisation is occurring in all industries with 18% of UK businesses surveyed now taking orders online, representing total online sales of GBP 164 billion.

The study also indicates that 11% of UK survey respondents are currently selling online to customers, while 22% do not currently sell online, but do plan to do so in the future. Also, 36% of UK survey respondents expect to change their distribution channels within the next 12 months.

Companies need to embrace new business models
New business models continue to emerge, often enabled by cloud and other technologies including mobile broadband, 3D printing, and low-cost data sensors. These business models represent a significant competitive threat to established industries driving them to change the way in which they operate their businesses. Frost & Sullivan identifies mass customisation within the manufacturing sector as a good example of a new business model set to impact the entire industry.

Companies need to adopt productisation and/or servitisation to compete more efficiently
Productisation occurs when service companies package their services in a similar way to how many products are presented. Servitisation is where product manufacturers also provide services and solutions that supplement their traditional product offerings.

Servitisation is a rapidly growing trend in the UK with 40% of UK manufacturing respondents now providing services and solutions that supplement their traditional product offerings. This puts the UK manufacturers a little behind their US peers (58%), but well ahead of Japan (31%) and China (20%).

The research study titled Disrupt, Collapse, Transform: The Role of the Cloud in Industry Transformation, was conducted by global industry analyst firm Frost & Sullivan. The study of 1,500 senior executives across multiple industry sectors in 7 countries – the UK, Australia, Singapore, the US, Japan, Hong Kong, and the Philippines -- was conducted in October 2014 and 200 of the surveyed participants were from the UK.

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Keywords: disruptive competitor, digitalisation, cloud-computing, productisation/servitisation, disruptive drivers
Categories: Payments & Commerce
Countries: World
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