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According to Chinese horoscope 2015 was the year of the sheep. As we say baa-bye to 2015 we look back at a year where technology and digital disruption became synonymous with the upheaval of traditional business heavyweights.
Consider the following:
The world's largest taxi company owns no taxis: www.uber.com
The world's largest accommodation provider owns no real estate: www.airbnb.com
The world's largest phone company own no telecommunications infrastructure: www.skype.com
The word's most valuable retailer has no inventory: www.alibaba.com
The world's most popular media owner creates no content: www.facebook.com
The world's fastest growing banks have no actual money: www.societyone.com
The world's largest movie house owns no cinemas: www.netflix.com
The world's largest software vendors don't write the apps: www.apple.com and www.google.com
In 2015 some industries experienced unprecedented transformational disruption. The most severe cases demonstrated how technologically savvy and innovative start-ups can quickly eclipse their traditional brick and mortar counterparts.
Although fascinating to watch from the sidelines, to some, the losses were both costly and devastating. And so the headline grabbing, high profile disruption cases of 2015 have taught us a very brutal but important lesson: the most disruptive types of technology are able to dissolve traditional barriers to market entry that have stood for decades.
And so as we look forward to 2016 we expect to see more cases of high-profile technology driven disruption. In parallel, the more common and frequent impact to the average business will stem from an increase in technology driven competition where instead of turning an entire industry upside down, double digit percentage points of market share will be gained or lost. The reality, is that although your industry may not be facing a disruptive newcomer in 2016, your existing competitors will be leveraging technology to improve operational efficiency, effectiveness and ultimately competitive advantage.
Technology can be defined as: "the application of scientific knowledge for practical purposes, especially in industry [i]." Over the years we have observed countless businesses that acquire technology but do not fully leverage scientific knowledge (data) provided by the technology to improve competitive advantage. We call this Data & Analytics or D&A. Simply put, available data is either not exploited or ignored. It's like buying a Ferrari and using it as a commuter vehicle.
A few weeks ago, I was discussing change management capacity with a federal level government client. He described his seemingly dire situation. "Some areas of the Ministry has been decimated over the last decade, we barely have enough staff to do the existing work, never-mind taking on more."
We discussed some of the issues and eventually the conversation shifted to technology. Specifically, the tragicomic monthly routine that occurred when a key report was requested from Financial Operations.
"Generating the report takes 3 people 5 work days each because they need to manually request for data to be extracted from multiple sources, then they massage it in Excel, consolidate it, format and template, send it back to Fin Ops to be validated, and finally submit it to the requestor. I don't know what's worse...the fact that the process is so slow, or that the data is always a week old."
The solution? He obtained an ERP username and password for the requestor who now extracts two reports from the system in a matter of minutes. The result? "It may not be exactly three full-time weeks...but that's a lot of time that Fin Ops can reinvest to do other things."
It's this type of "reinvestment" that will help top performing organizations face the economic challenges of 2016. Although the global economy could be doing much worse, we are seeing the U.S. Federal Reserve begin monetary tightening, Europe is struggling to manage migrant and debt crises, China's financial stability is in doubt, and emerging economies are increasingly fragile.
We believe 2016 will be the year where user proficiency levels of existing technology will deepen as companies are forced to do more with less. Business processes will more closely align with technological capabilities. Let's be clear: it's not about automation or replacing labor with technology. It's about leveraging existing technology to optimize ways of working that free up resources to do higher value work, and ultimately allow companies to do more and perform better.
Further, we'll see an increase in new technology usage that requires minimal up front investment and directly impacts the bottom line. We are already hearing of "uber only" policies and cloud computing will continue to save costs on many fronts including server maintenance, power and cooling, software licensing and upgrade expenses. According to a Microsoft survey, 49% of SMBs use cloud computing to lower costs (2015 Microsoft U.S. SMB Cloud Computing Research Summary).
Lastly, enterprise change management will become increasingly important for companies to compete and remain relevant to their customers. Technology is cheap and the best development and deployment teams mobilize great ideas from concept to completion in weeks. Mobile is already overtaking desktop, social is beating search, on-demand is undercutting traditional TV, messaging apps are challenging email and text, and everything around us is becoming connected in real time. The well-informed and well-prepared don't view disruption or innovation as a threat. They see it as an opportunity.
We hope your 2016 is filled with opportunity and prosperity - happy new year!
[i] https://en.oxforddictionaries.com/definition/technology
