|  19.01.2015

KPMG survey: Majority of companies unprepared for digital disruption

Today’s disruptive technologies (e.g. social media, mobile, analytics and cloud computing) are redefining products, services and markets and are transforming how businesses are run.

Just as Amazon changed the game in the retail sector and Netflix transformed how we consume videos, companies like AirBnB and Uber are shaking up the hotel and transportation industries.


A recent global survey of KPMG International member firms’ advisors who work closely with end-user organizations found the majority of companies represented are concerned about digital disruption but few are adequately prepared to address it.


“While digital disruption may threaten current businesses, it also creates opportunities,” says Mihai Rada, Director of KPMG Romania Technology, Media and Telecommunications (TMT) services. “Organizations that don’t dive in and embrace disruptive technologies stand to lose competitive ground and they will find it ever more difficult to catch up as technology advances.”


Creating an enterprise-wide digital strategy


Many organizations say one of the biggest challenges with digital transformation is determining where to start. Without a strategic plan, it can be easy for the company to go off in too many directions at once, diluting the investment and stretching already constrained skills.


However, only 36 percent of companies represented in KPMG’s survey have a digital business strategy in place in one or more business units. Only 8 percent have digital business strategy that is enterprise-wide.


Designing the strategy involves defining what ‘digital disruption’ means to the organization at all levels, enumerating threats and opportunities and creating a roadmap for meeting implementation challenges.


“Creating the strategy is a great way for CIOs and their internal clients to start working through all the benefits that new technologies could hold for the business,” says Rada.


Using agile development processes


When it comes to digital transformation, speed is crucial. CIOs need to enable their organizations to move ideas quickly from the design stage to market and to scale up new products and systems.


As a result, agile development processes appear to be gaining traction. Just under half of the companies represented in the survey use agile development processes on 25 percent or more of their Information Technology (IT) projects.


“In agile development processes, IT and the business work together on digital initiatives in an incubator or lab-type environment where ideas can be quickly developed and tested,” says Gheorghe Vlad, Senior Manager Advisory, at KPMG in Romania. “Since learning often occurs through mistakes, agile development processes allow you to ‘fail fast’ and move ideas from design to reality much more quickly.”


Acquiring required skills a critical challenge


Responding to digital disruption involves implementing innovative technologies that require new skill sets that are in high demand. A large majority of companies cite a lack of critical skills as their biggest challenge in this area.


“With fierce competition in the labor market, organizations need to be smart about how they acquire the skills they need,” says Vlad. “Some improvements can come internally through developing existing IT staff, recruiting from other departments and leveraging centers of excellence. Companies can also use direct hiring, outsourcing/contractor relationships or strategic acquisitions. Usually, a mix of these options is needed to extract full value from digital transformation efforts.”


Thriving amid disruption


What can organizations do to thrive in an era of digital disruption? One of the most important things CIOs can do is to take leadership roles in transforming their enterprises into agile digital businesses.


“A CIO’s unique vantage point gives them a window into the technological and information needs of each part of the organization,” says Mihai Rada. “By combining this perspective with knowledge of emerging technologies in the form of a comprehensive digital business strategy, CIOs can drive value for the company. At the same time, they can elevate their own role from that of IT service provider to digital business strategist.”


Load new captcha.