Digital disruption

“Digital disruption” is the situation when new technology emerges and competes against traditional ways of doing business. For example, personal computer emerged and destroyed mainframe computer business; mobile technology (Smartphone and Tablets) emerged and competes against personal computer business.

Digital disruption is happening now with cloud computing, big data, and Internet of things (IoT). A global company executive said: “If we do not have strategy to deal with these emerging technologies, our company may not last another five years. To take advantage of digital disruptions, we need information system managers who can explain these technologies to business managers and help them build strategy to take advantage of them before our competitors do. But even today it is difficult to find managers with these skills.”

All over the world, there is high demand for technology managers who have knowledge of emerging technologies and can explain them to business managers. The problem is most technical people do not have good understanding of business and business people do not have enough technical knowledge to understand technology. Many technical managers often focus on what they know but do not pay attention to emerging technology. A manager told me: “I am doing well with my technical skills so why bother to learn something else?” This is a common attitude among technical people as they do not have a lifelong learning attitude. In this fast changing world, without continuous training and updating the knowledge, there is a big risk as technology changes and your skills become obsolete. The same also happens at company level, if a company does not pay attention to emerging technology, their business may not last long. For example ten years ago, Blackberry, Nokia and Motorola are leaders in mobile phone business but now, it is Apple and Samsung as they are no longer in business. Why? As technology changes, they did not pay enough attention then not changed fast enough.

Because digital disruption changes the way Information Technology works, information system managers must constantly read more about new technologies so they can alert their company about what is coming. By quickly adjusting the strategy and adapt new technology, they can change the way their company does business and response to customers quickly. A good information system manager must be able to help the company understand digital disruption and how it adds value to the business. Last week, a Wall Street analyst wrote: “The next five years will determine which company will thrive, which will survive, and which will be left behind. Every company must realize that technology is the key strategy to increase profits and growth. They must understand that the Information Technology function will be shifted from a supporting model to fully automation and standardization model. To survive in this rapidly evolving time, companies need to hire more technology managers to integrate their traditional business processes with these new technologies in order to survive.”

Few years ago, there were many online companies but today Amazon dominates the market and destroyed most competitors. Amazon is using big data analytic system collect and analyze each user’s online activities then personalize their product offerings to them. This is a massive threat to other online companies who are not offering this type of services. By leveraging its emerging big data analytical capabilities, Amazon can sell more things to customers and put others out of business. As the company is expanding globally, it creates significant threat to traditional companies that do not use this technology. According to a global industry report, many top companies will fail in the next five years as they cannot compete with companies who have technology advantage because digital disruption could destroy about half of existing company in the next ten years.”

The main challenges for traditional companies are how to adopt new technologies and change. For years, these companies already have certain management structure in place to run their business; most of them are a hierarchy with many levels of management. In order to compete in today’s market; these companies must change their strategy, reduce their levels of management, and adopt technology to automate their process to increase efficiency. To overhaul its structure in a short time is almost impossible, that is why most companies collapsed.

In order to adopt technologies and change, companies need strong leaders with vision and many information system managers who can automate processes, integrating existing and new technologies across company. In addition, companies need to view their business from the customers’ view to know what they want. Through the use of big data and social analytics, companies can collect customers’ activities and provide products and services that meet their needs. Furthermore, by reducing several levels of management, companies can make things move faster and more efficiency. By using cloud computing technology, companies can avoid investments in equipments and using capital to grow faster into the global market.

In this fast changing world, the need for change is obvious. Traditional companies must take steps towards a full automation of their business to remain competitive. In order to grow, companies need to optimize their internal process in order to response to market needs to move quickly to the information age. According to the industry report, 65% of company owners are concerned that the digital disruption is coming faster than they can cope and 82% do not think that they have enough technical talents to make changes happen. The report concluded that today digital disruption is changing every company into a technology company, and every employee to become IT workers. An executive said: “Without information technology you cannot compete in this global economy. No matter what you do and what your business is, you must use information technology to increase efficiency and performance to stay competitive. No matter what your degree is in, you must at least know some basic technology skills; else you will not be able to keep your job. We are in the Information Age, and everything is dictated by technology.”

To stay competitive, every company must review their business strategy and adding technology in as the key factor to increase profits. The need to use technology also means every company will need more information system manager instead of business manager. Today a degree such as Master in Information technology or Information System Manager is considered highly desirable just like the Master in Business Administration (MBA) ten years ago, before the financial crisis. Currently most MBA programs are adding technology courses in their training because in this global economy, if you do not know technology you will not be able to get job. A business professor explains: “A hundred years ago, if you did not know how to read and write, you could not get a job. The same is true today; if you do not know computer skills you will be unemployed for a long time.”

A business manager laments: “Thing changes so fast that few people can cope. Everything is about new products, new experiences, and new way to reach customers. To keep the job, you must have to learn new things all the time and change quickly. You cannot be content with what you have because there are many people who want your job. You cannot depend on the hierarchy structure anymore as everything is being flattened down quickly. You will have no job if there is digital disruption. The fact is already being written clearly in Wall Street stock market: Out of 50 top companies in 2000, only 31 remain on the market today.”

Sources

  • Blogs of Prof. John Vu, Carnegie Mellon University
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