Posted by Lee Thompson, Senior Vice President and General Manager, Asia Pacific and Japan, NetSuite
The forces of change seem to be moving at an ever-increasing rate, spurred on by drivers ranging from globalisation to new digital technology to transformative business trends. Of course, which drivers of change have the biggest impact vary greatly by region and by industry.
Recent research by analyst group Frost & Sullivan and sponsored by NetSuite identifies some of the biggest drivers of change across the globe and by region. For example, Australians consider digitalisation the biggest driver, while the majority of Japanese respondents to the survey cited disruptive competitors. In the study titled ‘Disrupt, Collapse, Transform (opens in new tab),’ Frost & Sullivan surveyed 1,500 senior executives across industry sectors in seven countries - Australia, Hong Kong, Japan, the Philippines, Singapore, the U.K. and the U.S.
The research highlighted four key drivers of disruptive change:
Digitalisation
Using digital channels to sell to customers and transact
with suppliers is becoming increasingly popular across all industries, but companies will
struggle if they attempt to kick start online operations with rigid, aging on-premise
software.
New disruptive competitors
Many companies are building out a more global
footprint introducing competitors from a neighbouring company or halfway across the other
side of the world. These new entrants to the market are often using cloud computing to
quickly establish and scale up nascent international operations.
New business models
Packaging up products or services in fresh
innovative ways such as making them available by subscription is already transforming
industries. Think of the shakeup to existing business models in sectors such as hospitality,
transportation and media and entertainment caused by market entrants like Airbnb, Lyft,
Netflix, Pandora, Shazam, Uber and Zipcar.
Productisation/servitisation
Companies are expanding the scope of their
core business to broaden their relationships with customers and to boost revenue. Product
companies are adding services to their business offering while professional services
businesses may extend operations into supporting one or more homegrown products.
These four disruptive forces are making their marks in very different ways across APAC, according to the Frost & Sullivan findings.
Australia singles out digitalisation
Australians identified
digitalisation as the top trend driving change locally, particularly in the media,
entertainment and retail sectors. However, on average, only 30 percent of those businesses
surveyed are supporting online customer transactions. There’s a great difference across
industries, with the information and communications technology (ICT) sector leading the
online customer engagement at 52 percent compared to financial services at only 20 percent.
Japan most concerned about new disruptive competitors
The number-one
threat businesses in Japan call out is the entrance of new international or domestic
competitors into their market space. One example is low-cost air carrier Peach Aviation,
which uses cloud ERP (enterprise resource planning) to rapidly scale its business. A second
significant disruptive threat is new business models such as mass customisation – where
manufacturers, such as Japanese manufacturer the National Bicycle Industrial Company (NBIC),
customise goods and services to meet the needs of individual customers in highly efficient
ways that ensure the manufacturer can still make a profit.
Singapore, already a strong adopter of ecommerce, sees digitalisation as a
threat
Although Singapore, like Australia, ranks digitalisation as a key
disruptor driving change, it’s more a factor of how to differentiate businesses online with
69 percent of those companies using ecommerce. Like Japan, Singapore also points to new
disruptive competitors as a sizeable threat to existing industries. Many of those recent
market entrants also bring new business models with them around the use of low-cost models
or online-only distribution channels which are forcing older companies to change the way
they engage with customers.
Countries united in the benefits of the cloud to drive responsiveness, competitive
advantage
Increasingly, businesses are relying on cloud computing to help
cope with the constant rate of change. Across the board, those companies using cloud
applications report they feel empowered to react more effectively to change by quickly
launching new offerings and entering new markets. Businesses also describe cloud
applications as providing them with a significant source of competitive advantage (72
percent in Australia, 79 percent in Japan and 83 percent in Singapore). In fact, Singapore
leads Asia Pacific in adopting cloud applications with 62 percent of organisations surveyed
using cloud software for at least one main business application - typically CRM, ecommerce
or finance and accounting. Then comes
Australia with 40 percent, while Japan counts 38 percent.
According to Frost & Sullivan, cloud computing across Asia Pacific has already made significant contributions in enabling industry transformation – whether it’s by helping startups scale rapidly or by enabling existing businesses to quickly adapt and respond to those new competitors and their new business models as well as the disruptions caused by digitalisation, productisation and servitisation.
As Mark Dougan, Managing Director of Australia and New Zealand at Frost & Sullivan, so eloquently put it when commenting on the research: “Cloud computing has become a necessary response to the rapid pace of transformation.” I wholeheartedly agree with him.