Deloitte/BPM Study Cites Disruptive Technology, New Competitors As Current Threats

Technology companies, confronted with growing competition from adjacent and overseas markets, a dramatic shift in power toward the consumer and the accelerating pace of various technology and Web-based deployments are being challenged to rethink their strategic planning processes and how they respond to market-altering change. This is a key finding from a study conducted by the Business Performance Management (BPM) Forum and Deloitte Consulting LLP's Technology, Media and Telecommunications (TMT) group. The study surveyed more than 180 technology industry executives, including qualitative interviews with senior executives involved in strategic planning.

The report, entitled Competition at the Crossroads: Strategic Planning in Disruptive Markets, finds that companies are having difficulty anticipating market change and are limited in their capacity to make effective course-correcting action. This limitation is in large part due to insufficient investment in strategic planning, getting the right information and having the required talent that can look beyond today's sales, profitability, current products, customers and technologies.

When it comes to developing winning strategies and taking effective actions to address disruptive market changes, whether it is introduction of a breakthrough technology, developing new business models or entry of a non-traditional competitor, most companies are not meeting the challenge and may not have the tools, talent and processes they require.

Among the key findings:

• While most respondents say their companies are able to identify market-altering change, only 25% believe they can anticipate such changes.
• Executives also give their companies poor marks for their ability to take adequate action in the face of these changes.
• Only 35% of respondents said the executives responsible for managing course-correcting actions were "very effective" in this role.
• 92% believe competition is intensifying in their industry sector.
• 96% say their sources of competition have changed in just the past two years, including 44% who say their sources of competition have changed significantly.
• Respondents indicate that senior management is spending more of its time on the strategic planning process, but also that their companies' investments in strategic planning processes, tools and talent have not increased as fast as revenues.

Agents Of Change

The study points to a number of factors that are driving the level of competitiveness and change in the technology industry. The rapid growth of consumer technology markets, the rise of global competitors, and declining barriers to entry due to outsourcing and on-demand business models are key factors increasing the likelihood of disruptive competition entering both new and established markets, according to the study.

As one senior executive remarked, "All of a sudden our competitive set has widened dramatically. It's not just about 'What are our traditional competitors doing?' Now there are a whole bunch of other folks we've never looked at before."

Still another spoke about the growing threat from "disruptive competitors from overseas... The potential for a disruptive attack from a low-end Taiwanese or Chinese company is now very, very prevalent."

Impediments To Change

The research also identifies a variety of factors that are impeding the ability of companies to cope with market-altering and disruptive change. Executives believe they lack the resources, in terms of talent and information, to effectively plan for change, which is not surprising given the low levels of investment being made in the strategic planning function. They also say their ability to take course-correcting action is stymied by a focus on short-term profitability, current business issues and a lack of a quantifiable business case for taking action. As a result, executives say it is difficult to access funding for new strategic directions and also that alignment and consensus are hard to achieve across the organization.

The Competition at the Crossroads study lays the groundwork for a series of future management dialogues that will be hosted by the BPM Forum and Deloitte Consulting to facilitate discussion among high tech strategy executives trying to anticipate, plan and better address market altering changes.

The full report is available for complimentary download at the BPM Forum and Deloitte websites (www.bpmforum.org or www.deloitte.com/tmt).