Half of all UK business leaders (50 per cent) fear that their industries face significant digital disruption within the next two years, according to new research.
The Microsoft report, the most extensive of its kind to date, finds that whilst disruption is imminent for a wide range of industries, the shelf life of current business models is also extremely limited – nearly half of UK business leaders (44 per cent) say their existing business models will cease to exist within the next five years.
The financial services sector, which employs 2.2 million people and contributes £66 billion in taxes to the UK economy, demonstrates the highest level of anxiety, with two-thirds (65 per cent) of respondents fearing the impact of digital disruption on their markets over the course of the next 24 months.
Almost half (46 per cent) of business decision makers say senior leaders in their organisations are unwilling to disrupt their existing businesses to grow and compete.
Nicola Hodson, general manager of marketing and operations at Microsoft UK thinks that business leaders appear to be unwilling to address this opportunity to innovate.
She says, ‘New challengers, many who are digitally savvy start-ups, are disrupting established markets by deploying new technologies quickly, and luring expectant customers away from established competitors.
‘For many larger organisations, the challenge is how to react to this digital disruption in a considered way and how they maintain competitiveness in a rapidly shifting landscape.’
Financial services – a battleground for digital disruption
The financial services sector, which represents a huge contribution to UK jobs and growth, fears that the biggest disruption will come from entirely new market entrants (33 per cent) – significantly higher than other sectors including retail (10 per cent) and manufacturing (10 per cent). As a result, financial organisations are more focused on the future, with two-thirds (64 per cent) stating that they have a formal digital strategy in place.
Public sector challenges
Meanwhile, the public sector faces an even bigger hurdle and has been the slowest to apply digital technologies to business challenges, with only a third (35 per cent) saying they have a formal strategy in place and one quarter (26 per cent) actively stating that no such strategy exists at all.
Fear of cultural change and leadership are driving this uncertainty – only 35 per cent of public sector respondents believe they have a digitally literate leadership team, despite their belief it is a critical element to implementing a successful digital strategy.
UK business leaders remain cautious of the long term societal impact of rapid digital transformation – 51 per cent say they are anxious it will raise more concerns about privacy and security.
Those in the public sector are most worried (56 per cent), compared to those in financial services (48 per cent) and retail (47 per cent), yet the figures are relatively high across industries.