A new report from the Harvard Business Review (HBR) suggests that the majority of businesses today are about to be on the receiving end of the disruption being created by the rise of digital business.
Sponsored by IBM, “The Ecosystem Equation: Collaboration in a Connected Economy” finds that even though more than half (52 percent) of the business executives surveyed acknowledged that substantial portions of their revenue streams are being threatened by digital disruption, only 18 percent said they are participating in a connected economy to a significant extend. Just over half (56 percent) said they were participating to some extent, while 22 percent said they were not participating at all.
Haunted by digital disruption
For IT service providers, these results illustrate the digital disruption fear factor that is keeping many business executives up at night. Not only are they stressed out about everyday competition, their biggest fear is the startup they don’t see coming that turns their industry upside down using a new business model empowered by the latest advances in IT.
While it’s difficult for an IT service provider to identify and partner with a startup aiming to disrupt an industry, there is no shortage of business and IT executives looking for ways to defend their business from that disruption. The challenge is that most of these executives don’t have a firm notion of how to respond to an existential threat to their business. Geoffrey Moore, author of “Crossing the Chasm,” a book that has become a bible within the IT industry, recently told attendees at a Mendix World 2016 conference that within the next five years every business is going to have to confront this threat.
The true cost of being unprepared
Despite that business climate, most business and IT leaders today still aren't all that interested in IT products and services that improve their operational efficiency no matter how nice they might be to have. The issue the most of them are struggling with is crafting a digital business strategy. Every board of directors in the world is now aware of the “Uber Effect,” and every one of them is asking management what their response will be to that potential threat to the business.
Those that figure it out first wind up with a clear advantage. The HBR study finds that organizations that are aggressively participating in a connected economy are seeing their businesses grow by more than 10 percent. In contrast, laggards are either experiencing flat or declining revenues.
How to stay relevant
The truth of the matter is that most executives these days are not looking for a “trusted technology advisor.” They want a strategic business partner that can explain to them how technologies can be used to create new streams of revenue that enable them to increase market share at the expense of their rivals. For IT service providers to become that strategic business partner, they need to have a much deeper understanding of the business climate that an organization is operating in.
The rise of digital business models creates a historic opportunity for IT services providers to become more relevant to their customers than ever. The other side of that coin, however, is that it also creates a seminal moment where they just might start losing business because their customer base is slowly disappearing into the digital ether. For that reason alone, helping customers craft their digital business strategy is not just an opportunity; it’s also a matter of survival.