Will Your Business be Obsolete by 2020

Whether they call it digital transformation, revolution, or disruption, businesses feel threatened by the start-ups that are in its vanguard, according to research released Wednesday by Dell. The Digital Transformation Index shows that over three-quarters of businesses (78 percent) believe digital start-ups pose a threat to them now, or will in the future.

Dell put together the index from a survey by Vanson Bourne of 4,000 “business leaders” from mid-size and large companies in 16 countries and a dozen industries. Almost half of those surveyed (45 percent) fear they will be made obsolete in the next three to five years by “digital-born start-ups.”

Slightly more than half of those surveyed say they have experienced significant disruption in their industry in the past three years, and just under half say they do not know how their industry will change in the next three.

“So far the fourth industrial revolution has proved as ruthless as its predecessors. If companies can’t keep up, they will fall behind … or worse. The ‘delay until another day’ approach simply won’t work,” Jeremy Burton, chief marketing officer for Dell Technologies said.

Dell divided the companies surveyed among five rankings, from “digital leaders” to “digital laggards.” Unfortunately, the latter category includes 15 percent of companies surveyed, while the former includes only 5 percent.  The rest are distributed more heavily towards the lower end as well, though companies tend to recognize their digital shortcomings.

Between two-thirds and three-quarters of those surveyed recognize the need to prioritize their technology strategy, plan to invest in IT infrastructure and skills, and are expanding their software development capabilities. Converged infrastructure is the top area for planned investment to keep pace with digital transformation, ahead of ultra high-performance technologies, and big data and analytics.

Dell found that just a third of companies are performing well in five digital business areas perceived as critical by a consensus of business leaders in 2015.  Worse, only 7 percent are performing well in all five, though that number increased from 4 percent a year ago. The good news is that in each individual area or “attribute,” company-wide performance increased by more than double.

The survey also shows that almost six in ten companies are not meeting customers top demands, such as better security or 24/7 access.

“In the near future, almost every business will have software development expertise at its core. Many of these companies will be brand new, others – having not written a line of code in 20 years – will have been on a momentous journey. New digital products and services will drive the transformation of IT infrastructure as businesses struggle to manage 1000x more users and 1000x more data, Burton said.

A study released last month by IBM indicated that hybrid cloud should be included in many businesses digital transformation plans to spur innovation and customer satisfaction.