Large firms struggle to keep up with digital innovation

23 June 2015 Consultancy.uk

When it comes to capitalising on digital disruption, especially large companies are struggling to keep up, research by KPMG and Harvey Nash shows. While the majority of CIOs feels their business will be disrupted by digital in the coming decade, with almost half expecting to lose market share, only 17% of large companies feel they will do ‘better’ in dealing with the disruption, compared to 35% of small companies.

Professional services firm KPMG and staffing and recruiting company Harvey Nash recently released the results of their CIO Survey 2015 in their report titled ‘Into an age of disruption’. The research, which covers the input of 3,691 technology leaders from more than 30 countries, shows that while digital innovation is high on the agenda of the CIOs (Chief Information Officers), many companies are struggling with the disruption associated with the new technologies.

Digital seen as disruptive

Two thirds of respondents see digital as disruptive and believe it will significantly change their business, with them foreseeing new business models, products and or services that will be better than their old ones. Around a quarter (24%) does not agree and feels digital will not change their business much.

Almost all (89%) CIOs believe that their organisation will be impacted by digital disruption in the coming decade, with almost half (47%) foreseeing a big impact in the form of a significant loss of market share. One in ten (11%) thinks their organisation will be little or not affected at all by the digital disruption. The research also shows that of the companies surveyed, 34% are already disrupted and 28% expect this to happen within the next two years. Only 4% of CIOs thinks their company will never be disrupted.

Impact of digital disruption

The research shows that majority of CIOS working in the ‘profit’ industries expect their companies to be disrupted to a ‘great extent’. CIOs in the in broadcasting/media industry expect their industry to be disrupted the most, with 75% of respondents foreseeing the disruption to their company to be ‘great’, followed by CIOs in advertising/PR (62%) and technology/telecoms (59%). Less than a third (28%) of CIOs in the non-profit industry think their organisation will be impacted by the disruption to a great extent. CIOs working for the Government expect the least disruption, with 31% expected ‘little’ or ‘no’ disruption at all. 

Expected disruption per industry

The majority of CIOs are confident that the effects of the digital disruption will work in their favour, with 22% expecting their company to capitalise on the disruption ‘much better’ and 39% ‘slightly better’. Slightly more than one in ten thinks their company will do worse than other companies, with 1% thinking it will do ‘much worse’.

How companies will handle the disruption

Especially CIOs of large companies feel they are at a disadvantage when it comes to digital, with less than one in five (17%) feeling they are better positioned to capitalise on digital disruption compared to CIOs at other companies. CIOs of smaller companies express much more confidence as 35% thinks they will do ‘much better’ than their competitors in managing digital disruption.

Responding to the digital disruption

Commenting on the results, Lisa Heneghan, Head of EMA CIO Advisory at KPMG in the UK, says: “CIOs are concerned that they could lose significant market share to competitors more adept at using technology, yet despite this threat, three in four still don’t have a company-wide approach to digital.  Unless CIOs cement this vision, the chance of being overtaken appears a foregone conclusion. To get ahead CIOs need to focus on defining their operating model to support a digital business now, and driving through the cultural shift which is fundamental to success.”

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