Recent surveys and evidence are confirming what many business leaders have been anticipating for a while now. Digital disruption has been the defining feature of the past decade and will continue to wreak havoc for those who are unprepared for it. According to a report in 2016 by the World Economic Forum, the digital revolution is already transforming companies and even entire industries. In this new world, large and successful companies that predate the digital revolution, can feel like they are being closed down from all sides, with hundreds of startups attacking traditional markets. CIOs, CTOs and IT managers in many companies are struggling to make this change.
Digital disruption and business models:
There are many companies leading the charge when it comes to digital disruption, the Ubers, Netflixes and the GEs, are winning new markets because they understand the potential of reinventing business models through the strategic and pervasive use of technology. These companies have implemented digital technologies across their business and have been successful in enhancing their revenue sources.
To deal with digital disruption head-on, companies need to move beyond viewing technology merely as a cost and seeing it as a critical enabler for revenue generation. This culture has to be sponsored by the leadership, and they have to encourage risk taking and innovation. This will lead to continuous improvement to enable new and leaner operating models, underpinned by agile business processes, connected platforms, analytics and collaboration capabilities to enhance the productivity of the firm.
Companies in traditional industries such as transportation, manufacturing, agriculture and hospitality are harnessing technology to bring forth new services to customers who want it. The biggest driver for this disruption is the advent of cloud technologies. The merging of cloud computing, mobile devices, agile development, social collaboration and sensor data are the main forces driving digital disruption across industries and businesses.
The Cloud gets bigger:
Cloud computing, for one, continues to grow every year. Forrester Research predicts the global cloud computing market will mushroom from $40.7 billion this year to a staggering $241 billion by 2020. This is a clear indicator of the fact that massive internal IT systems are waning and businesses are recognizing this paradigm shift.
To overcome digital disruption, organizations need to adjust their approach rapidly. By embracing cloud, and taking strategic decisions on moving key infrastructure and/or applications there, businesses are able to leverage some notable advantages, such as:
- Better flexibility: Ability to respond faster to changing demand, advances in technology, new market opportunities and supply chain disruptions.
- Consistent profits: Firms who rely on revenues to cover high-fixed costs, tend to experience swings in profits. This happens as the net income depends on utilization, so moving to cloud can eliminate such volatility in profits.
- Increased cost savings: Cloud computing can transform the business model to being asset-light, which enables scaling without having to invest in additional capital.
Digital transformation may seem like an unstoppable force, but it does present some valuable opportunities. IT organizations are being asked to change in multiple ways, at an incredibly fast pace. Traditional IT workers, system administrators and network engineers have not been trained to disrupt business, but to maintain systems and uptime. This shift in culture needs to be inculcated at every organizational level, for it to be imbibed by the entire system and to show some effective results. Nowadays, IT departments can’t afford to spend their precious budgets on monitoring, updating and configuring systems. The focus is entirely on supporting the core business.
“Even technology companies like Apple are not managing IT, because they are not selling IT, but consumer devices,” says Raju Chekuri, president and CEO of NetEnrich. “If you’re going to internally manage IT, how much money do you have to spend? Every Fortune 500 company is looking at how to spend less on running IT.”
Your local or regional service provider can help you take the next steps towards overcoming digital disruption, and spending less on running IT. Contact us to find out about local or regional service providers in your area.