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Enterprise recognizes technology-driven disruption as biggest threat: IBM

As disruptive innovations from outside competition become more commonplace, C-level executives have taken notice and, for the first time, recognize ?uberization? as the biggest competitive threat, according to a new report from IBM.

The report, Redefining Boundaries: Insights from the Global C-suite Study, found that disruptive innovation is often driven by an integration of mobile technology, cloud computing and other technologies. A key takeaway is that one of the biggest threats to enterprise businesses today is an up-and-comer that has not necessarily been identified as a competitor yet and often comes from outside the industry. 

?Uberization is about industry disruption,? said Linda Ban, director of the global C-suite study for the IBM Institute for Business Value. ?The competitive arena is experiencing colossal upheavals, as new rivals from adjacent industries and digital upstarts jointly challenge the incumbent players. 
 
?These assailants are capitalizing on cloud computing, mobile solutions and other such technologies to straddle the boundaries between sectors, develop radically different business models and cut out established providers,? she said. ?They're ?exploding the market.?

?An example in the mobile industry would be WhatsApp.?

IBM surveyed 5,247 business leaders from 21 industries in more than 70 countries for the report. 

Competitive landscape evolves
As Uber has so clearly demonstrated, mobile has the potential to upend traditional business models, helping innovative startups to quickly become a force to reckon with in industries where little has changed until recently and the leaders have not seen the potential threat until too late. 

Until recently, enterprise business could easily identify the competition, which typically came in the form of a new rival with a cheaper or better product or service. 

The report found that the competitive landscape is changing and C-level executives, while aware of the changes, are still struggling with how to address them. 

Between 2013 and 2015, there was a 26 percent in increase in the number of C-level executives worried about competition coming from other industries, coming in at 54 percent compared to 43 percent. 

These executives also pinpoint technology factors as the biggest force transforming the competitive landscape, at 72 percent. The second biggest force, at 71 percent, is market factors. 

CEOs previously put technology at the top of the list of forces transforming the competitive landscape, but for the first time, this year the other C-level executives agree. 

Embracing innovation
The technologies executives think will be most important over the next few years are cloud computing, named by 63 percent, mobile solutions at 61 percent and the Internet of Things at 57 percent. 

At the same time, executives are trying to embrace technology to develop better goods and services, so they see it as both an opportunity and a threat. 

In terms of how they plan to embrace technology, executives expect more digital and individual engagement with customers by 2020. The report found a 19 percent increase from two years ago in the number of executives expecting more digital and virtual interaction, for a total of 81 percent. A 22 percent increase was recorded for a bigger focus on customers as individuals, coming in at 66 percent.
 
There was also a 15 percent increase in the number of executives planning to partner with outside sources for innovation. 

As more things become connected, security is rising to the top of the agenda for executives, with 68 percent naming IT security as the top risk. 

Brain-storming
Despite the recognition of technology?s disruptive potential, IBM also found that the majority of executives are still heavily reliant on traditional practices for identifying new trends, with 80 percent using brain-storming, 63 percent predictive analytics, 51 percent simulations and 46 percent predictive analytics. Just 23 percent are using crowdsourcing and 13 percent cognitive computing. 

Disruptors typically target a key part of the value chain, bypass the incumbents and seize control of the customer relationship, making other suppliers irrelevant. 

Some of the competition is coming from digital giants, such as Alibaba and Tencent, who are making advances into territory traditionally owned by state banks in places such as Hong Kong. Or how Google and Amazon are getting into the grocery business. 

Competition also comes in the form of small, smart and agile startups. Often encumbered by legacy infrastructure and reliant on others? assets, they are quickly gaining steam in some industries. 

For example, in the financial services arena, consumers can now bypass a bank and use Nutmeg for savings, Kabbage for loans, Robinhood for stock trading and Currency Cloud for cross-border payments. 

To be more innovative, businesses need to leverage a confluence of multiple technologies, such as mobile, cloud computing and cognitive computing. 

?CxOs say that mobile solutions are one of the top three technologies most likely to revolutionize their business in three to five years ? the other two being cloud and IoT,? Ms. Ban said. 

?Some examples of how the growth in mobile has impacted the competitive landscape are by opening up new opportunities for new business models and changing the interaction with the customer,? she said. 

Final Take?
Chantal Tode is senior editor on Mobile Marketer, New York