Australian business executives complacent about need to adapt to rapid change

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Research sponsored by NetSuite titled: The ‘Disrupt, Collapse, Transform’ study conducted by Frost and Sullivan, has revealed that 26 percent of Australian executives believe their industry is rapidly changing, a significant increase from 13 percent in 2010.

Despite this, executives are more complacent about the need to adapt their organisation than in other countries – only 13 percent believe change needs to happen much faster than in the past, compared with 22 percent globally.

The biggest trends driving industry change are digitalisation, new disruptive competitors, servitisation and new business models.

Australian organisations are responding by adopting cloud computing for its greater adaptability to rapid industry transformation – 63 percent of software-as-a-service (SaaS) users indicated that cloud has helped them react more effectively and 72 percent have gained competitive advantage.

The Frost & Sullivan study of 1,500 senior executives across multiple industry sectors in seven countries, including Australia, Singapore, U.S., U.K., Japan, Hong Kong and the Philippines, was carried out in October 2014 to examine what is driving disruption across all industries and how the modern business is responding – 200 of the surveyed participants were from Australia.

“The pace of transformation in most, if not all, industry sectors in Australia is very high and appears to be accelerating,” said Mark Dougan, managing director of Australia and New Zealand for Frost & Sullivan.

“The introduction of new business models as a result of the digital revolution has helped accelerate cloud adoption. Coupled with shifting economic conditions, accelerated time to value and the need to innovate rapidly, businesses simply need to be more efficient and adapt at a much faster rate than ever before.”

According to the study, digitalisation – the use of digital channels to do business, sell to customers, or transact with suppliers – was identified as the top trend driving change in Australia, particularly in the media, entertainment and retail sectors.

Despite being the leading driver, only 30 percent of organisations on average allow customers to transact with them online. This does differ greatly by sector, however, with ICT (52 percent), manufacturing (48 percent) and retail (38 percent) leading online use, but adoption lags in many sectors, particularly financial services (20 percent).

Many organisations identify that one of their biggest threats is the entry of new, disruptive competitors with new business models, which are forcing change in the way that businesses interact with customers.

This includes the emergence of competitors using low-cost models, for example, or those using online only distribution channels. However, only 22 percent of Australian businesses say that they are likely to change their distribution model in the next five years, by far the lowest of all countries surveyed.

While much less developed in Australia than elsewhere, servitisation is another significant driver of change worth noting. Many businesses are developing the capabilities they need to provide services and solutions that supplement their traditional product offerings.

In Australia, less than 30 percent of manufacturers, for example, are servitised, compared to almost 60 percent in the U.S. and 50 percent in Singapore.

Frost & Sullivan believes that cloud computing is both a contributor to industry transformation, as well as a necessary response for organisations to survive.

The study revealed that the main reasons for adopting software-as-a-service (SaaS) are evolving over time, with cost savings and ease of upgrading becoming less important than they were four years ago.

Greater adaptability to industry change is now a main driver of SaaS adoption in Australia, according to 34 percent of surveyed organisations, which is a significant increase from 10 percent in 2010.

According to the study, 63 percent of SaaS users in Australia indicated that it has helped them respond more effectively to changing market conditions and 72 percent say that it has given them a source of competitive advantage.

As well as lower costs, the main benefits achieved have been improved speed to market with new products or services (20 percent) and the ability to enter new global markets (20 percent).

“Given industries are changing so quickly in such an unpredictable way, companies need to have the ability to adapt extremely quickly to launch new products and services, come up with new revenue or business models and access new geographical markets,” commented Dougan.

“That adaptability is being enabled by cloud computing – it has become a necessary response to the rapid pace of transformation.”

Since its inception in 1998, NetSuite has established itself as the leading provider of enterprise-class cloud ERP suites for divisions of large enterprises and mid-sized organisations seeking to upgrade their antiquated client/server ERP systems.

A recent Gartner study named NetSuite as the fastest growing top 10 financial management systems vendor in the world.