NetSuite Study Reveals UK Businesses Need to Respond Faster to New Disruptive Competitors, Digitalization, New Business Models and Productization/Servitization to Remain Viable
NETSUITE SUITECONNECT, LONDON—10 November 2014—NetSuite Inc. (NYSE: N), the industry's leading provider of cloud-based financials / ERP and omnichannel commerce software suites, today announced that 98 percent of UK executives questioned in a recent survey believe their industry is changing—with 28 percent stating their industry is changing rapidly. The research study titled 'Disrupt, Collapse, Transform: The Role of the Cloud in Industry Transformation' was sponsored by NetSuite, and conducted by global industry analyst firm Frost & Sullivan. Yet, despite this high level of recognition of industry change, the survey found that UK executives are somewhat more complacent about the need to adapt their organizations—only 20 percent of those surveyed believe change needs to happen much faster than in the past, compared with 22 percent globally.
The study also revealed the four key drivers of industry change in the UK and around the world as new disruptive competitors, digitalization, new business models, and productization/servitization (product companies adding services business/services businesses packaging their services like products). UK organizations are responding to these challenges by adopting cloud computing for its greater adaptability to facilitate rapid industry transformation. Among respondents, 72 percent of UK cloud-based software users told Frost & Sullivan that cloud has provided them with a competitive advantage over their rivals—particularly with regard to entering new markets—and has helped them react more quickly and effectively to change.
The Frost & Sullivan study of 1,500 senior executives across multiple industry sectors in seven countries—the UK, Australia, Singapore, the US, Japan, Hong Kong, and the Philippines—was conducted in October 2014 to examine the drivers for disruption across all industries and how modern businesses are responding to that disruption—200 of the surveyed participants were from the UK.
"The pace of transformation in UK industry is very high and accelerating," said Alexander Michael, Director of Consulting for Frost & Sullivan. "Widespread cloud adoption has helped UK companies make the most of the new business models that emerged as a result of the digital revolution. Coupled with shifting economic conditions, the need to constantly innovate and to accelerate time to value, organizations simply need to be more efficient and adaptable in order to survive."
Drivers for industry transformation
Survey respondents in the UK and around the world identified four significant disruptive drivers that are impacting their businesses and leading them to transform their businesses. The four drivers were:
Companies are keenly aware that the advent of cloud computing has significantly contributed to the advancement of these disruptive drivers by enabling industry transformation. Survey respondents also highlighted other factors for change including changing customer needs, new regulations impacting their specific industry, and the increasing costs of doing business.
Companies need to respond to the emergence of new disruptive competitors
New market competitors have shaken up many UK industries, including media and retail. In many instances, these new entrants are using cloud computing to quickly establish operations, scale up those businesses, and build out their geographic reach. Market incumbents need to be able to respond at a similar lightning speed to compete effectively with fast-moving cloud-powered startups.
Companies need to make effective use of digitalization
Digitalization is the use of digital channels to do business, sell to customers, or transact with suppliers. According to Frost & Sullivan, online retail sales in the UK now account for 12 percent of all retail sales—the highest percentage in the world. Digitalization is occurring in all industries with 18 percent of UK businesses surveyed now taking orders over the Internet representing total online sales of 164 billion pounds. According to Frost & Sullivan, online business in the UK is growing at almost 25 percent per year. Among those surveyed in the UK, 11 percent are selling directly to consumers (B2C), 56 percent are selling directly to other businesses (B2B), and 27 percent are selling to customers via wholesalers, retailers, and distributors (B2B2C).
Companies need to embrace new business models
New business models continue to emerge, often enabled by cloud and other technologies including mobile broadband, 3D printing, and low-cost data sensors. These business models represent a significant competitive threat to established industries driving them to change the way in which they operate their businesses.
Companies need to adopt productization and/or servitization to compete more effectively
Productization occurs when service companies package their services in a similar way to how many products are presented. Servitization is where product manufacturers also provide services and solutions that supplement their traditional product offerings. According to the survey:
In summary: the cloud enables companies to transform their businesses and adapt to change
The majority of UK executives see cloud computing as a response to the rapid pace of industry change. Sixty-eight percent of those surveyed in the UK describe cloud computing as representing an opportunity for their business as compared with their peers in the US (62 percent), Japan (59 percent), and Australia (48 percent). Already, 43 percent of UK respondents said they are accessing elements of their business management software over the cloud, with cloud-based customer relationship management (CRM) and ecommerce the business applications they most commonly use. The adoption of cloud computing in the UK is second only to that in the US.
Frost & Sullivan believes that cloud computing is both a contributor to industry transformation, as well as a necessary response for organizations to survive. According to the research, greater adaptability to industry change is now a main driver of SaaS adoption in the UK.
"Given industries are changing so quickly in such an unpredictable way, companies need to have the ability to adapt extremely quickly to launch new products and services, come up with new revenue or business models and access new geographical markets," commented Frost & Sullivan's Alexander Michael. "That adaptability is being enabled by cloud computing—it has become a necessary response to the rapid pace of transformation."
"The reality of fast-changing market conditions is that businesses need to stay ahead to generate future revenue and remain relevant," said Mark Woodhams, managing director, EMEA for NetSuite. "We have seen a big shift in cloud computing in the UK over the last two years, as businesses of all sizes have moved beyond initial adoption to using cloud solutions to drive real business transformation. Cloud provides greater flexibility, speed and agility for businesses to move quickly with the market as it changes, enabling them to easily achieve their broader growth strategies."
NetSuite cloud provides the valuable tools to enable businesses to adapt
NetSuite's cloud-based business management software solutions play a crucial role in helping businesses expand more easily and cost effectively, by giving them the agility, flexibility, and speed to set up new business operations or change business models. NetSuite's leading solutions remove the hassle and weighty costs of traditional on-premise software that cramp business growth. CRM, enterprise resource planning (ERP), financials, ecommerce, human resources, manufacturing, inventory, distribution, supply chains and more can be managed from one NetSuite cloud-based business management solution. This single unified solution provides deep, and up to the minute visibility of every interaction, transaction, and relationship occurring within a business in every market, anywhere in the world.
Today, more than 20,000 companies and subsidiaries depend on NetSuite to run complex, mission-critical business processes globally in the cloud. Since its inception in 1998, NetSuite has established itself as the leading provider of enterprise-class cloud ERP suites for divisions of large enterprises and mid-sized organizations seeking to upgrade their antiquated client/server ERP systems. NetSuite excels at streamlining business operations, as demonstrated by a recent Gartner study naming NetSuite as the fastest growing top 10 financial management systems vendor in the world. NetSuite continues its success in delivering the best cloud ERP/financial suites to businesses around the world, enabling them to lower IT costs significantly while increasing productivity, as the global adoption of the cloud accelerates.
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