Stephen Miles, chief technology officer, Asia Pacific & Japan of CA Technologies, said, “In today’s application economy, digital transformation has become pervasive in every aspect of business. Across Asia Pacific and Japan, organizations are increasingly leveraging modern technology and communications to transform one or more key aspects of the business to achieve a state of digital readiness. Applications are becoming the primary modes for consumers to connect with businesses. With a high device penetration rate and rising smartphone subscriptions, the region is well-poised to leverage the application economy. Moreover, the large demographic of millennials which has grown accustomed to the transformative digital technologies that exist currently, will play an important role moving forward fueling the application economy further.”
Disruption and the importance of software
Nearly half (44%) of respondents expect their industries to experience significant digital disruption over the next three years; more than a fifth (22%) say that significant disruption has already taken place. Of note, greater than half (58%) expect that their business model in three years will be “radically” different from what it was three years ago. Recognizing the pervasiveness and pace of change, about two-thirds (66%) of respondents expressed the view that their companies’ future depends on the quality of their software.
While there are a number of causes of disruption, changes in customer behavior and expectations was the driver most frequently cited by survey participants (46%). The next most cited driver is disruptive new competitors (25%), which underscores the importance of constantly recognizing and adapting to new trends in order to stay relevant.
Speed as an imperative
More than half of all respondents (53%) indicated that their companies are already investing or plan to invest in modern technology that will enable them to develop digital product and/or services more quickly, an idea advocated by CA Technologies.
“Without question, the key to building something great is being able to iterate quickly – to be constantly taking customer feedback and improving continuously,” said Miles. “Without sustained development velocity, it doesn’t matter how good your version one is. That is the whole idea behind continuous delivery and the agile management philosophy that we support for our customers.”
Industry front-runners, those that describe themselves as advanced practitioners of agile management, have a significant advantage with respect to speed. More than two-thirds (68%) of front-runners say they are adept at developing new technology capabilities quickly. This same group believes its digital offerings are ahead of their competitors, and a full third of the group (33%) says it currently earns more than 50% of its revenue from digital.
Digital business investment priorities
The next most important action being taken or considered by survey respondents (42%) is improving customer-facing business processes, with a particular focus on digital-first. Drilling down into those priorities, respondents are most interested in creating an excellent digital customer experience (42%), transforming core operations and processes (34%) and transforming employee processes (31%). Interestingly, investing in new digital products and services was cited by only 24% of respondents as an investment priority.
Nearly half of respondents (45%) say that as their businesses become more digital, they are very concerned about security risks, including the potential for data breaches, compliance issues, and litigation. Nearly half (49%) believe that better technology tools should be developed industry-wide to enhance cyber-security, while just over a third of respondents (35%) believe that their company should invest to develop a more secure technology infrastructure for their organization. Such investment has become a somewhat easier sell as chief executives and boards of directors have taken it upon themselves to better understand the cyber threats their organizations face.
The global survey of 250 senior IT and business executives was sponsored by CA Technologies and conducted by Harvard Business Review Analytics Services in October 2015. For full survey methodology details, see the report “Surviving Disruption, Leading Change; Winning in the Application Economy”.
About Harvard Business Review Analytic Services
Harvard Business Review Analytic Services is an independent commercial research unit within Harvard Business Review Group, conducting research and comparative analysis on important management challenges and emerging business opportunities. Seeking to provide business intelligence and peer-group insight, each report is published based on the findings of original quantitative and/or qualitative research and analysis. Quantitative surveys are conducted with the HBR Advisory Council, HBR’s global research panel, and qualitative research is conducted with senior business executives and subject matter experts from within and beyond the Harvard Business Review author community.