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Businesses threatened by digital start-ups

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A whopping 78% of global businesses believe digital start-ups will pose a threat to their organisations either now or in the future, according to new research from Dell Technologies, and almost half (45%) fear they may become obsolete in the next three-to-five years due to competition from these entities.
Some companies are feeling badly bruised by the pace of change. More than half (52%) 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% 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 and 12 industries.
“So far, the fourth industrial revolution has proved as ruthless as its predecessors. If companies can’t keep up, they will fall behind … or worse. The ‘delay until another day’ approach simply won’t work,” explains Jeremy Burton, chief marketing officer for Dell Technologies.
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. 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%) admit 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%) confess to not acting on intelligence in realtime.
“These are imperatives for success in a digital age,” says Burton. “Failing to deliver in such a highly contested marketplace could trigger the beginning of a digital crisis.”
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 5% of businesses have catapulted themselves into the Digital Leaders group; almost half are lagging behind.

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

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

In order of priority according to respondents, the top planned IT investments over the next three years are:
1. Converged infrastructure
2. Ultra-high performance technologies (Example: Flash)
3. Analytics, big data and data processing (Example: Data Lakes)
4. Internet of Things technologies

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