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Adapt Or Die: The Digital Disruption Imperative

Oracle

By Harish Venkat

I look at the business world today and here’s what I see: Everyone’s in adapt-or-die mode, everyone's embracing frenetic change, and technology is either your best friend or your worst enemy—either you digitally disrupt your fastest-moving competitors or you’ll be completely disrupted by them.

A quote from former GE CEO Jack Welch applies: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

Evidence of radical change is all around us:

  • The average life span of an S&P 500 company was about 65 years in the 1960s; now it’s closer to 15 years…and projected to get even shorter in the coming years.
  • The accelerating power of technology described by Moore’s Law is taking us into some weird areas: driverless cars, the Internet of Things, machines talking to other machines. We’re building new business models based on systems and processes that didn’t exist a couple of years ago. New terms such as “attention economy” and “collaborative economy” have emerged to describe these radical, tech-driven developments.
  • Emerging economies are another challenge. A list of the world’s largest companies now includes representatives from China, Russia, India, and Brazil, revealing a shift in the balance of economic power.
  • Technology has shifted the balance of power in the traditional value chain from producers to intermediaries—and now to buyers. Investors have rewarded companies that have best capitalized on this value chain shift. Consider Google, whose market cap stands at about $384 billion, or Facebook, at $228 billion. Or more recently ride-sharing company Uber, valued at close to $40 billion, or customer-empowering travel site TripAdvisor, approaching $12 billion.

Beyond the collaborative or sharing economy, the so-called third platform technologies—mobile, social, data analytics, and cloud—are enabling this large-scale disruption.

Mobile

Today, our planet has more mobile computing/communications devices than human beings. They command our attention. The last thing I do before I go to bed at night and the first thing I do when I wake up is check my email on my phone. (Admit it—you do, too.) During the day, if I get even five seconds, I’m going to look at my phone for something—to buy something, approve something, or check my calendar or email.

Savvy business people are asking: How can I capitalize on this “attention economy” to push my products? So if you don’t have a mobility strategy, and your competitors do, you’re automatically at risk of being disrupted.

Social Networking

Gone are the days that we can neglect 5% of our disgruntled customers. Depending on their Klout score, depending on their social reach, that 5% can make a big stink, initiating a viral effect that can cause millions of dollars of brand degradation for your company.

For example, I was traveling to Switzerland recently on a US-based carrier and realized the flight had no Wi-Fi, no personal entertainment. I was looking at 9 or 10 hours with absolutely nothing to do. Right before I took off I tweeted that it probably would be one of my worst travel experiences. By the time I landed in Switzerland I had emails and phone calls from the carrier apologizing for the inconvenience and offering a travel voucher to try to reverse my sentiments. So I tweeted about that experience too, giving the carrier kudos for using technology to understand a customer’s sentiment and attempt to address it. (Unfortunately, on my way back I had to take the same flight, so it was something of a wash….)

Data Analytics

In just the last two years we’ve generated something like 90% of the world’s data. This includes voice and video, as well as real-time social media feeds such as Twitter.

Connecting the dots among this volume and these types of data is where enterprises are looking for a competitive edge. A new breed of non-relational database technology is helping reveal structure and patterns within these data sets.

For example, look at how big data analytics has changed the world of sports. Analyzing data generated by sensors in basketballs and golf clubs helps improve performance. By tracking social media engagements we’re able to generate and analyze statistics related to players’ emotional and nutritional well-being, their strengths and weaknesses.

Bottom line: Data analytics will transform all industries moving forward.

Cloud Computing

Some hotels have consolidated their meeting rooms into single flexible spaces they can apportion to accommodate specific numbers of participants, and price them accordingly. This flexible structure lets these hotels use their space resources more efficiently and effectively, and create additional revenue streams.

Apply that same concept to IT and you have cloud computing. As Oracle Senior Vice President and Chief Communications Officer Bob Evans wrote in his Top 10 Strategic CIO Issues for 2015, today's leaders need to be "business transformers" who  leverage the cloud "to accelerate and enhance core business processes through powerful mobile-first software as a service applications."

By creating so-called private clouds—on-site cloud computing infrastructures—enterprises can consolidate their IT resources and distribute them on a project-by-project, requirements-oriented basis. In this way they can improve operational efficiency, deploy IT resources faster, improve management efficiency, and charge their various lines of business based on specific usage.

At the same time, public cloud companies are making a variety of IT services available online, thereby obviating organizations’ need to rely exclusively on internal IT resources. That dynamic will allow businesses to balance their use of private and public cloud resources. Those that get the balance right will gain an incredible competitive advantage.

The IT Equation

So, what’s preventing companies from capitalizing on these technology trends? The answer is simple: CIOs are spending too much of their IT budgets on “run the business” technology and not enough on true innovation. The typical IT budget looks something like this: 60% to 70% of spending to keep the lights on; 20% to 25% for brand new opportunities; and 8% to 10% for knock-your-socks off, differentiating innovation.

If your company is holding to that IT equation, it’s begging to be disrupted.

It’s critical that you repurpose some of those IT resources for innovative ventures—ones that will grow your business, take out your competition, and better position you to do the disrupting. Options like cloud computing and integrated systems can reduce overhead and maintenance costs, freeing IT budgets to focus on innovation.

A Holistic Strategy

All of these technologies are interwoven. If you just implement a mobile strategy but you don’t have any analytics about your customers, your mobile platform is almost useless. If you can’t integrate your social and mobile strategies—don’t let customers tweet from your mobile applications, for instance—you’re not going to generate much attention.

So you have to adopt a holistic strategy. Start by eliminating, project by project, the redundancies and complexities in your IT portfolio. Stop buying storage, compute, and networking systems from five different vendors and cobbling them together.

This targeted approach to IT deployment will enable companies to focus on innovation and their core IP—which should be their prime directive, rather than trying to become experts in building complex IT systems.

All organizations are in a hard-fought race to attract and maintain customers and constituents in an increasingly disruptive and disruptable marketplace. Companies that are able to reallocate their IT resources toward innovative technologies and processes, and radically improve customer service, will not only find themselves still standing, not only find themselves leapfrogging their competition, but will find that they have become the new disruptors themselves.