Disruptive Technology Berometer Technology Sector Report
Transcript Of Disruptive Technology Berometer Technology Sector Report
The disruptors are the disrupted
Disruptive technologies barometer: Technology sector
KPMG in Canada kpmg.ca/tmt
Foreword
Canadian technology firms are no strangers to disruption. But there are growing signs that Canada’s technology leaders may not be fully prepared to take advantage of the new wave of disruptive technologies now emerging at home and around the world. In fact, this report suggests some may be falling behind their global and US peers.
For this global report, KPMG International surveyed 580 technology company senior executives across 16 countries. Thirty Canadian technology executives were among those who contributed, representing some of Canada’s top technology firms. All of the Canadian respondents boast at least 1,000 employees (more than a quarter have more than 5,000 employees). Almost half of our Canadian respondents hold Vice-president or C-suite positions within their organizations.
The data from Canada may not be surprising to many in the industry. In many cases, Canadian technology firms seem well aligned with the views of their global peers. Most believe that disruptive technologies will have a positive impact on their business. Many also see disruptive technologies as an opportunity to grow their business and enter new markets.
At the same time, Canadian firms diverge from their global peers in telling ways. For example, Canadian firms are much more focused on the cost advantages of disruptive technologies than their global peers. They are also focusing greater portions of investment into wearables and placing a higher priority on mobile and cloud.
Unfortunately, our data also suggests that Canadian technology firms are losing ground to their global peers. Canadian respondents report being less prepared to take advantage of new opportunities than their foreign competitors. And they are significantly less likely to have a clear strategy and mission for disruptive technologies.
While Canadian firms may not always be the first to apply disruptive technologies, our technology companies have often been leaders in their commercialization. We believe that Canada’s technology firms once again have a unique opportunity, not only to leverage disruptive technologies within their own organizations, but also to create new applications, products and services on the back of these new technologies.
At KPMG in Canada, we understand the changing and challenging disruptive environment and the impact it can have on your business models and operations. We encourage you to contact your local KPMG office to discuss any of the ideas raised here or to explore your organization’s own unique challenges and opportunities.
On behalf of KPMG’s technology practice, I would like to thank those Canadian technology leaders who participated in this survey.Your time, insights and perspectives are deeply valuable in this time of continuous disruption.
Yvon Audette
Partner & National Leader IT Advisory & ITA Technology
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Executive summary
As agents of change, technology companies have always been at the forefront of disruption. Today, as an ever-increasing range of new technologies disrupt the sector with exponential speed, tech business leaders are focused on how to create new value propositions for their customers, and how to run their own organizations more effectively. The disruptors are being disrupted, and any company that fails to acknowledge and embrace this new reality runs the risk of being left behind.
For this global study, KPMG International commissioned Forrester Consulting to conduct a survey of 580 senior technology decision makers. It reveals that, while many technology leaders express optimism about disruptive technologies, they are also aware that they lack the organizational capability, culture, strategic vision and a solid understanding of the impact disruptive technologies will have on their sector, in order to successfully navigate this revolution.
At its best, disruptive technology:
–– Changes your relationship with your customers. Disruptive technology can, and should, be harnessed in service of customers. Today, a growing number of tech sector leaders link investments in disruptive technology to customer outcomes: 54 percent say they track their success with these investments by tracking customer satisfaction or experience metrics.
–– Improves your company’s business model. In our survey, 56 percent of tech leaders who claim that disruptive technology has a positive impact on their company leverage it to reshape their organization’s business model, and develop new ways to deliver and capture value.
–– Solves difficult operational problems. Sometimes a lack of operational excellence inhibits successful monetization strategies. But savvy investments in disruptive technologies can bridge the gap and drive quantum improvements in efficiency.
So how can business leaders make the best bets when approaching disruptive technologies? One key indicator is how technology leaders are prioritizing their investments and assessing the impacts of disruptive technologies. Companies want to use disruptive tech to improve their products and services, reduce costs, and outpace the competition.
Based on our insights, we have put together a framework to help technology sector leaders navigate the disrupted landscape and provide a guide as to which technologies to adopt and when.
We would like to thank all the technology leaders that gave their valuable time to participate in the survey. If you would like more information on our findings and how disruptive technologies will impact your organization, please contact us.
Gary Matuszak
Global Chair Technology, Media and Telecommunications KPMG International
Richard Hanley
US Advisory Industry Leader Technology, Media and Telecommunications KPMG in the US
Philip Wong
Principal Technology, Media and Telecommunications Global Strategy Group KPMG in the US
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Highlights
About the Survey
KPMG International surveyed 580 senior executives within technology companies from 16 countries. Respondents represented a cross section of the industry, and the questions covered the key disruptive technology adoption trends, the impact of these technologies on their businesses and their investment strategies.
1. Technology leaders admit their companies are not fully prepared for the impact.
A majority of respondents feel disruption has had a positive effect on their organizations, helping them enter new markets, reach new customer segments, and create more agile, efficient business and operating models. A combination of cloud, data and analytics (D&A) and digital payments, for example, lets enterprise software providers target small businesses with subscription-based or ‘pay-as-you-go’ solutions, replacing complex and outdated sales and marketing methods. But executives also fear that this very flexibility is opening up their traditional markets to competition from outside and within the industry, whether it’s automotive companies developing their own software — as well as software businesses — or computing and data storage firms being superseded by cloud offerings from Amazon, Google and Microsoft.
2. The technology sector is investing in a wide range of disruptive technologies — in a bid to increase operational and customer effectiveness.
Links are emerging between the use of certain key technologies and improvements to the business. The Internet of Things (IoT), enabled by ubiquitous connectivity and intelligent D&A, is bringing a step-change in productivity and customer experience, thanks to remote monitoring and maintenance. In addition, tech firms are increasingly using artificial intelligence (AI) and software robotics to autonomously manage customer transactions, predict customer needs, and prevent service problems.
Investment strategies appear to be quite broad, suggesting a challenge for tech executives in prioritizing the appropriate technologies that could deliver competitive advantage. IoT tops the list of investments, followed by cloud and D&A. Respondents are especially keen to enhance their products and services, to improve productivity, cut costs and improve competitive advantage.
3. In a fast-moving marketplace, tech companies are uncertain as to which disruptive technologies will be the real game-changers.
With so many emerging technologies like virtual/augmented reality, robotics and 3D printing, picking the winners is a tough call. The global tech leaders taking part in our survey say their companies are investing heavily in more strategic technologies such as IoT and marketing platforms. But while these technologies are helping their product development marketing and operations, they are not necessarily performing better than investments in some earlier stage technologies.
That’s why tracking investments against key indicators like productivity, operating costs and customer experience is so important. Although this practice is on the rise, only around half of the survey respondents are routinely measuring these and other key performance metrics, leaving considerable room for improvement.
4. Disruptive technologies are not a high enough priority on tech industry leaders’ agendas.
Given its potential for transforming the business model and driving a competitive edge, disruptive technology is, surprisingly, often considered the domain of the IT department. This may explain why just 18 percent of the executives taking part in the survey feel strongly that they have a clear strategy and mission – and just 21 percent strongly agree that their C-level executives keep a close eye on disruptive technology. Without firm guidance from the top, the chance of making the right investment decisions — and gaining the most from the technologies they adopt — is likely to be compromised.
Strategic agility is another essential ingredient in a world where markets can transform in a very short timescale. Many tech businesses admit that a failure to adapt quickly to trends has cost them dearly. Neither are they leveraging the potential of partners like vendors and/or consultants who could help them move faster and more decisively. They also lack the people and skills to get the most out of disruption, which again, could slow the pace of change and leave them trailing more flexible competitors.
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Contents
06
The disruptors are the disrupted
Reassessing competitive positions and the rules of engagement
10
Seismic shifts: The organizational impacts of disruptive technologies
– Improving the operating model.
– Transforming business models and the customer experience.
– Investing in disruptive technologies.
20
The disruptive technology value map: The intersection of investment and impact
Disruptive technologies: Table stakes or future stars?
24
Reshaping your organization for disruptive technologies
Disruptive technologies require a clear strategy
28
Conclusion:
Successfully navigate disruption
30 About the global survey
31 How KPMG can help
31 Acknowledgements
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The disruptors are the disrupted
Disruptive technologies are forcing the industry’s leaders to reassess their competitive positions and their rules of engagement.
Whether it’s designing new software, building futuristic devices or pushing the boundaries of the internet, technology companies are accustomed to shaking up other sectors. So, what happens when these disruptors discover that new technologies are changing the face of their own industry? Are they ready — or are they getting caught in the headlights of disruption?
The impact of disruptive technology on an organization can be multi-faceted and hard to pin down. Disruption acts as a driver of change across many business disciplines. Its effects are pervasive, requiring firms to invest differently, act bravely and adapt their corporate cultures.
Given that technology companies tend to be innovators and are primarily responsible for much of the disruptive technology out there, it’s little surprise that most seem to be upbeat about its potential. More than two-thirds of respondents (67 percent) say they’ve seen a positive impact on either their organizations or their industry. Fifty-one percent are excited about the ability to enter new markets on the back of disruptive technologies, and 46 percent see opportunities to develop new monetization models.
67%
of tech leaders surveyed believe that disruptive technologies are having a positive impact on their company’s performance.
6 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
In spite of this apparent optimism, many leaders of technology firms admit that their organizations may not be ready for disruptive technologies and the changes they bring. Less than
one-third of respondents believe their companies are “very prepared” in their strategic vision and only 31 percent feel they have a strong knowledge of available technology solutions.
Less than one-third of technology companies are very prepared for disruptive technology
“How prepared is your company to address each of the following opportunities/issues as they relate to new, disruptive technologies?” (Responses indicate percentage that are “very prepared.”)
26%
31%
Collaboration between business and technology organizations
Knowledge of available technology solutions
29%
Talent and skills of our personnel
32%
Strategic vision for technology
30%
29%
22%
Emerging technologies are part of the board agenda
Executive support
Data management
Base: 580 business and IT decision makers at technology companies. Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016.
28%
Budgeting
Technology firms are both creating disruption and being disrupted as companies in all industries from healthcare to retail to automotive look to incorporate leading software, mobile, D&A and platforms into their product and service offerings. In many ways, all companies are becoming technology companies.
Gary Matuszak Global Chair Technology, Media and Telecommunications KPMG International
The disruptors are the disrupted 7
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The disruptors have become the disrupted — and the sheer speed at which disruptive technologies are changing the landscape is replacing optimism with concerns for technology executives.
Disruptive technology is breaking down traditional boundaries between industries. Almost four out of five technology leaders
taking part in the survey are worried about non-technology firms becoming technology firms, and of those respondents citing a negative impact from disruption, 61 percent say it’s because of new competitors entering from other industries.
The biggest fear for technology leaders is competition from both within and outside of the industry.
Competitive pressures drive disruptive technology fears
“To what do you attribute the negative impact of disruptive technologies on your organization’s performance?” (Select all that apply.)
Competitive pressures
Disruptive technologies brought new competitors into our industry from other industries
New competitors have emerged from within our industry as a result of using disruptive technologies
Our competitors are leveraging disruptive technologies to their advantage
61% 49% 46%
Disruptive technologies are undermining our company’s business model
We only invest in proven technologies, which leaves us behind the curve
We saw the new technology trend coming too late
We can’t invest quickly enough to keep up
38% 29% 38% 32%
Base: 99 business and IT decision makers at technology companies where disruptive technologies are having a somewhat or significant negative impact on their organization. Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016.
Disruption presents openings for traditional rivals. Half of the respondents (49 percent) that have had a negative experience of disruption say it’s due, in part, to pressure from other companies within the sector. Hardly a day goes by without news of how a large platform company is moving into a new area, whether it’s cloud computing or AI, home security or connected vehicles, payments or drones.
On top of this, venture capital or crowdfunded startups are a growing challenge, capable of quickly becoming major players within a few short years. For example, the
democratization of technologies — through the web, inexpensive cloud computing, open source and ubiquitous connectivity — means that technology companies can emerge from anywhere in the world. Alibaba, the Chinese e-commerce giant, began as a humble startup and is now one of the world’s biggest online retailers.
All of these factors combine to obscure the way forward for tech firms, and technology leaders are struggling to determine which disruptive technologies to adopt in a way that adds the most value to their businesses.
8 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG insight
Who’s eating your lunch?
Today, everyone is a tech company. Automotive companies are pushing ahead in customer interface technology, using AI and image processing to enhance their autonomous vehicles. Rather than going to a technology player, they’re doing it themselves, and in the process creating powerful technology and business platforms. Other companies such as Tesla and Uber consider themselves as being tech companies as much as being in the mobility or automobile business.
But disruptive technology doesn’t just let in new competitors from other sectors; it also breaks down boundaries within the tech industry. Often this is a
result of innovation by firms looking for new solutions not currently available on the market. Google, Facebook and Amazon have all come up with their own ways of managing computing power and networks, in the process developing solutions that they themselves can monetize, threatening the established order of computing and network equipment firms like HP, Cisco and Ericsson.
Richard Hanley US Advisory Industry Leader Technology, Media and Telecommunications KPMG in the US
The disruptors are the disrupted 9
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Seismic shifts: The organizational impacts of disruptive technologies
Across a broad spectrum of technology areas, from D&A to digital payments, IoT to robotics, senior technology business leaders say they’re using disruption to change how they run their operations and serve their customers. In order to effectively navigate through the array of disruptive technologies, tech executives need to understand their impact on an organization’s operating and business models.
10 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Disruptive technologies barometer: Technology sector
KPMG in Canada kpmg.ca/tmt
Foreword
Canadian technology firms are no strangers to disruption. But there are growing signs that Canada’s technology leaders may not be fully prepared to take advantage of the new wave of disruptive technologies now emerging at home and around the world. In fact, this report suggests some may be falling behind their global and US peers.
For this global report, KPMG International surveyed 580 technology company senior executives across 16 countries. Thirty Canadian technology executives were among those who contributed, representing some of Canada’s top technology firms. All of the Canadian respondents boast at least 1,000 employees (more than a quarter have more than 5,000 employees). Almost half of our Canadian respondents hold Vice-president or C-suite positions within their organizations.
The data from Canada may not be surprising to many in the industry. In many cases, Canadian technology firms seem well aligned with the views of their global peers. Most believe that disruptive technologies will have a positive impact on their business. Many also see disruptive technologies as an opportunity to grow their business and enter new markets.
At the same time, Canadian firms diverge from their global peers in telling ways. For example, Canadian firms are much more focused on the cost advantages of disruptive technologies than their global peers. They are also focusing greater portions of investment into wearables and placing a higher priority on mobile and cloud.
Unfortunately, our data also suggests that Canadian technology firms are losing ground to their global peers. Canadian respondents report being less prepared to take advantage of new opportunities than their foreign competitors. And they are significantly less likely to have a clear strategy and mission for disruptive technologies.
While Canadian firms may not always be the first to apply disruptive technologies, our technology companies have often been leaders in their commercialization. We believe that Canada’s technology firms once again have a unique opportunity, not only to leverage disruptive technologies within their own organizations, but also to create new applications, products and services on the back of these new technologies.
At KPMG in Canada, we understand the changing and challenging disruptive environment and the impact it can have on your business models and operations. We encourage you to contact your local KPMG office to discuss any of the ideas raised here or to explore your organization’s own unique challenges and opportunities.
On behalf of KPMG’s technology practice, I would like to thank those Canadian technology leaders who participated in this survey.Your time, insights and perspectives are deeply valuable in this time of continuous disruption.
Yvon Audette
Partner & National Leader IT Advisory & ITA Technology
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Executive summary
As agents of change, technology companies have always been at the forefront of disruption. Today, as an ever-increasing range of new technologies disrupt the sector with exponential speed, tech business leaders are focused on how to create new value propositions for their customers, and how to run their own organizations more effectively. The disruptors are being disrupted, and any company that fails to acknowledge and embrace this new reality runs the risk of being left behind.
For this global study, KPMG International commissioned Forrester Consulting to conduct a survey of 580 senior technology decision makers. It reveals that, while many technology leaders express optimism about disruptive technologies, they are also aware that they lack the organizational capability, culture, strategic vision and a solid understanding of the impact disruptive technologies will have on their sector, in order to successfully navigate this revolution.
At its best, disruptive technology:
–– Changes your relationship with your customers. Disruptive technology can, and should, be harnessed in service of customers. Today, a growing number of tech sector leaders link investments in disruptive technology to customer outcomes: 54 percent say they track their success with these investments by tracking customer satisfaction or experience metrics.
–– Improves your company’s business model. In our survey, 56 percent of tech leaders who claim that disruptive technology has a positive impact on their company leverage it to reshape their organization’s business model, and develop new ways to deliver and capture value.
–– Solves difficult operational problems. Sometimes a lack of operational excellence inhibits successful monetization strategies. But savvy investments in disruptive technologies can bridge the gap and drive quantum improvements in efficiency.
So how can business leaders make the best bets when approaching disruptive technologies? One key indicator is how technology leaders are prioritizing their investments and assessing the impacts of disruptive technologies. Companies want to use disruptive tech to improve their products and services, reduce costs, and outpace the competition.
Based on our insights, we have put together a framework to help technology sector leaders navigate the disrupted landscape and provide a guide as to which technologies to adopt and when.
We would like to thank all the technology leaders that gave their valuable time to participate in the survey. If you would like more information on our findings and how disruptive technologies will impact your organization, please contact us.
Gary Matuszak
Global Chair Technology, Media and Telecommunications KPMG International
Richard Hanley
US Advisory Industry Leader Technology, Media and Telecommunications KPMG in the US
Philip Wong
Principal Technology, Media and Telecommunications Global Strategy Group KPMG in the US
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Highlights
About the Survey
KPMG International surveyed 580 senior executives within technology companies from 16 countries. Respondents represented a cross section of the industry, and the questions covered the key disruptive technology adoption trends, the impact of these technologies on their businesses and their investment strategies.
1. Technology leaders admit their companies are not fully prepared for the impact.
A majority of respondents feel disruption has had a positive effect on their organizations, helping them enter new markets, reach new customer segments, and create more agile, efficient business and operating models. A combination of cloud, data and analytics (D&A) and digital payments, for example, lets enterprise software providers target small businesses with subscription-based or ‘pay-as-you-go’ solutions, replacing complex and outdated sales and marketing methods. But executives also fear that this very flexibility is opening up their traditional markets to competition from outside and within the industry, whether it’s automotive companies developing their own software — as well as software businesses — or computing and data storage firms being superseded by cloud offerings from Amazon, Google and Microsoft.
2. The technology sector is investing in a wide range of disruptive technologies — in a bid to increase operational and customer effectiveness.
Links are emerging between the use of certain key technologies and improvements to the business. The Internet of Things (IoT), enabled by ubiquitous connectivity and intelligent D&A, is bringing a step-change in productivity and customer experience, thanks to remote monitoring and maintenance. In addition, tech firms are increasingly using artificial intelligence (AI) and software robotics to autonomously manage customer transactions, predict customer needs, and prevent service problems.
Investment strategies appear to be quite broad, suggesting a challenge for tech executives in prioritizing the appropriate technologies that could deliver competitive advantage. IoT tops the list of investments, followed by cloud and D&A. Respondents are especially keen to enhance their products and services, to improve productivity, cut costs and improve competitive advantage.
3. In a fast-moving marketplace, tech companies are uncertain as to which disruptive technologies will be the real game-changers.
With so many emerging technologies like virtual/augmented reality, robotics and 3D printing, picking the winners is a tough call. The global tech leaders taking part in our survey say their companies are investing heavily in more strategic technologies such as IoT and marketing platforms. But while these technologies are helping their product development marketing and operations, they are not necessarily performing better than investments in some earlier stage technologies.
That’s why tracking investments against key indicators like productivity, operating costs and customer experience is so important. Although this practice is on the rise, only around half of the survey respondents are routinely measuring these and other key performance metrics, leaving considerable room for improvement.
4. Disruptive technologies are not a high enough priority on tech industry leaders’ agendas.
Given its potential for transforming the business model and driving a competitive edge, disruptive technology is, surprisingly, often considered the domain of the IT department. This may explain why just 18 percent of the executives taking part in the survey feel strongly that they have a clear strategy and mission – and just 21 percent strongly agree that their C-level executives keep a close eye on disruptive technology. Without firm guidance from the top, the chance of making the right investment decisions — and gaining the most from the technologies they adopt — is likely to be compromised.
Strategic agility is another essential ingredient in a world where markets can transform in a very short timescale. Many tech businesses admit that a failure to adapt quickly to trends has cost them dearly. Neither are they leveraging the potential of partners like vendors and/or consultants who could help them move faster and more decisively. They also lack the people and skills to get the most out of disruption, which again, could slow the pace of change and leave them trailing more flexible competitors.
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Contents
06
The disruptors are the disrupted
Reassessing competitive positions and the rules of engagement
10
Seismic shifts: The organizational impacts of disruptive technologies
– Improving the operating model.
– Transforming business models and the customer experience.
– Investing in disruptive technologies.
20
The disruptive technology value map: The intersection of investment and impact
Disruptive technologies: Table stakes or future stars?
24
Reshaping your organization for disruptive technologies
Disruptive technologies require a clear strategy
28
Conclusion:
Successfully navigate disruption
30 About the global survey
31 How KPMG can help
31 Acknowledgements
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The disruptors are the disrupted
Disruptive technologies are forcing the industry’s leaders to reassess their competitive positions and their rules of engagement.
Whether it’s designing new software, building futuristic devices or pushing the boundaries of the internet, technology companies are accustomed to shaking up other sectors. So, what happens when these disruptors discover that new technologies are changing the face of their own industry? Are they ready — or are they getting caught in the headlights of disruption?
The impact of disruptive technology on an organization can be multi-faceted and hard to pin down. Disruption acts as a driver of change across many business disciplines. Its effects are pervasive, requiring firms to invest differently, act bravely and adapt their corporate cultures.
Given that technology companies tend to be innovators and are primarily responsible for much of the disruptive technology out there, it’s little surprise that most seem to be upbeat about its potential. More than two-thirds of respondents (67 percent) say they’ve seen a positive impact on either their organizations or their industry. Fifty-one percent are excited about the ability to enter new markets on the back of disruptive technologies, and 46 percent see opportunities to develop new monetization models.
67%
of tech leaders surveyed believe that disruptive technologies are having a positive impact on their company’s performance.
6 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
In spite of this apparent optimism, many leaders of technology firms admit that their organizations may not be ready for disruptive technologies and the changes they bring. Less than
one-third of respondents believe their companies are “very prepared” in their strategic vision and only 31 percent feel they have a strong knowledge of available technology solutions.
Less than one-third of technology companies are very prepared for disruptive technology
“How prepared is your company to address each of the following opportunities/issues as they relate to new, disruptive technologies?” (Responses indicate percentage that are “very prepared.”)
26%
31%
Collaboration between business and technology organizations
Knowledge of available technology solutions
29%
Talent and skills of our personnel
32%
Strategic vision for technology
30%
29%
22%
Emerging technologies are part of the board agenda
Executive support
Data management
Base: 580 business and IT decision makers at technology companies. Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016.
28%
Budgeting
Technology firms are both creating disruption and being disrupted as companies in all industries from healthcare to retail to automotive look to incorporate leading software, mobile, D&A and platforms into their product and service offerings. In many ways, all companies are becoming technology companies.
Gary Matuszak Global Chair Technology, Media and Telecommunications KPMG International
The disruptors are the disrupted 7
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The disruptors have become the disrupted — and the sheer speed at which disruptive technologies are changing the landscape is replacing optimism with concerns for technology executives.
Disruptive technology is breaking down traditional boundaries between industries. Almost four out of five technology leaders
taking part in the survey are worried about non-technology firms becoming technology firms, and of those respondents citing a negative impact from disruption, 61 percent say it’s because of new competitors entering from other industries.
The biggest fear for technology leaders is competition from both within and outside of the industry.
Competitive pressures drive disruptive technology fears
“To what do you attribute the negative impact of disruptive technologies on your organization’s performance?” (Select all that apply.)
Competitive pressures
Disruptive technologies brought new competitors into our industry from other industries
New competitors have emerged from within our industry as a result of using disruptive technologies
Our competitors are leveraging disruptive technologies to their advantage
61% 49% 46%
Disruptive technologies are undermining our company’s business model
We only invest in proven technologies, which leaves us behind the curve
We saw the new technology trend coming too late
We can’t invest quickly enough to keep up
38% 29% 38% 32%
Base: 99 business and IT decision makers at technology companies where disruptive technologies are having a somewhat or significant negative impact on their organization. Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016.
Disruption presents openings for traditional rivals. Half of the respondents (49 percent) that have had a negative experience of disruption say it’s due, in part, to pressure from other companies within the sector. Hardly a day goes by without news of how a large platform company is moving into a new area, whether it’s cloud computing or AI, home security or connected vehicles, payments or drones.
On top of this, venture capital or crowdfunded startups are a growing challenge, capable of quickly becoming major players within a few short years. For example, the
democratization of technologies — through the web, inexpensive cloud computing, open source and ubiquitous connectivity — means that technology companies can emerge from anywhere in the world. Alibaba, the Chinese e-commerce giant, began as a humble startup and is now one of the world’s biggest online retailers.
All of these factors combine to obscure the way forward for tech firms, and technology leaders are struggling to determine which disruptive technologies to adopt in a way that adds the most value to their businesses.
8 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG insight
Who’s eating your lunch?
Today, everyone is a tech company. Automotive companies are pushing ahead in customer interface technology, using AI and image processing to enhance their autonomous vehicles. Rather than going to a technology player, they’re doing it themselves, and in the process creating powerful technology and business platforms. Other companies such as Tesla and Uber consider themselves as being tech companies as much as being in the mobility or automobile business.
But disruptive technology doesn’t just let in new competitors from other sectors; it also breaks down boundaries within the tech industry. Often this is a
result of innovation by firms looking for new solutions not currently available on the market. Google, Facebook and Amazon have all come up with their own ways of managing computing power and networks, in the process developing solutions that they themselves can monetize, threatening the established order of computing and network equipment firms like HP, Cisco and Ericsson.
Richard Hanley US Advisory Industry Leader Technology, Media and Telecommunications KPMG in the US
The disruptors are the disrupted 9
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Seismic shifts: The organizational impacts of disruptive technologies
Across a broad spectrum of technology areas, from D&A to digital payments, IoT to robotics, senior technology business leaders say they’re using disruption to change how they run their operations and serve their customers. In order to effectively navigate through the array of disruptive technologies, tech executives need to understand their impact on an organization’s operating and business models.
10 The disruptors are the disrupted
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.