Half of UK business leaders think their industries will face significant digital disruption within the next two years, according to new research published by Microsoft today.
According to Microsoft’s ‘Digital Transformation: The Age of Innocence, Inertia or Innovation?’ study, which surveyed 1,000 business leaders in the UK, the threat is most keenly felt in the financial services.
Some 33% of incumbents in the financial services, the study adds, are anxious about the entry of new disruptors in the sector. Despite this, the study notes, that the percentage is still considerably low bearing in mind the extent of the threat coming from the FinTech community and emerging technologies such as blockchain.
In the past, financial services organisations may have been able to acquire disruptors in order to counter the threat they posed, but the study claims this is no longer possible.
“FinTech players know the value of what they are sitting on, so major financial services are having to treat single figure headcount startups as peers,” it adds.
As a result of the perceived threat from disruptors, the report argues that 64% of organisations within the financial services sector have a formal digital strategy in place.
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Nicola Hodson, general manager, marketing and operations at Microsoft UK, commented: “New challengers, many who are digitally savvy startups, are disrupting established markets by deploying new technologies quickly, and luring expectant customers away from established competitors. For many larger organisations, the challenge is how to react to this market disruption in a considered way and how they maintain competitiveness in a rapidly shifting landscape.”
Privacy and security
Additionally, the study found that those at the helm of UK businesses remain cautious about the long-term societal impact of rapid digital transformation.
Some 51% of respondents are anxious about the implications on both privacy and security.
The survey states that those working in the public sector (56%) are more concerned, compared to 48% of workers in the financial services and 47% working in retail.
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This, the report adds, should serve to encourage government and businesses to work collaboratively in order to address privacy and security concerns. “Education on how data is used and empowering citizens to take ownership of their data is also fundamental if society is to truly benefit from the promise of digital transformation,” it notes.
Data is key
The study highlights the importance of data, noting that the majority of successful organisations within the digital economy are data-obsessive.
These, it says, will release products and services into the market and scrutinise the associated data very carefully in order to measure the success of their offering.
“If one thinks of the organisation as a body, developing its senses is critical. Our senses help us as individuals to build a model of the environment in which we operate. These senses help us identify opportunities and threats,” says the report, adding:
“Corporates need to develop similar senses. IoT has a role to play here, as does big data, analytics and machine learning. The ability to spot weak signals and act on them might enable organisations to grab a large share of a nascent market, whilst its competitors are oblivious to its very existence.”