The era of mass digital disruption has brought unprecedented anxiety to C-suites across the corporate world – but Canadian companies lag their global peers in responding to the looming threats from algorithm-wielding competitors.
Those are among the findings in a survey of 4,000 executives across 12 industries in 16 developed countries by British research firm Vanson Bourne commissioned by Dell Technologies Inc. According to the American computing giant, 52 per cent of those surveyed earlier in 2016 experienced significant disruption in their industries over the past three years brought on by new digital technologies. Just under half say they don’t know what their industries will look like in three years, and 45 per cent admit they may become obsolete within five.
More than three in four see digital startups as a threat, and 72 per cent are expanding their software development capabilities in response. On average, respondents said they were far less capable of digitally delivering the security, access to information or services that customers demanded.
“If companies can’t keep up, they will fall behind … or worse,” Dell chief marketing officer Jeremy Burton said in a statement. At a time when “software is eating the world,” according to a Silicon Valley saying, many established companies, Mr. Burton said, “haven’t written a line of code in 20 years.”
The Dell survey reveals Canada to be a “digital laggard,” ranking 13th out of 16 countries in its “digital transformation index,” a composite of factors measuring what companies are doing to catch up digitally. India and Brazil led the pack, while, oddly, economic powerhouses China and Japan ranked last.
The survey found 35 per cent of Canadian companies have experienced significant industry disruption in the past three years, compared to 52 per cent overall. While 62 per cent of all respondents said they had seen new competitors emerge, in Canada it was 48 per cent among the 200 people interviewed. “We don’t measurably feel the same global competitive pressure” in Canada, said Carolyn Rollins, director of U.S. & Canada commercial regional marketing with Dell Canada.
At a time of widespread Internet and smartphone usage, whole industries have been disrupted. Traditional retailers were among the first to feel the squeeze from e-commerce giants such as Amazon and Alibaba – while commercial landlords are expected to face challenges as merchants shrink their physical store networks in the coming years.
Media firms have sustained significant losses in conventional advertising revenue and have been retreating from print – including Rogers Communications Inc., which said last week it is substantially scaling down its magazine publishing business. Growth in digital ad revenue has largely shifted to search and social media giants Google and Facebook.
Financial services firms are under threat by so-called “fintech” firms, and some industry watchers say this could dramatically impact their profitability in the future. “Silicon Valley is coming,” JPMorgan Chase CEO Jamie Dimon warned shareholders last year. Bank of Nova Scotia CEO Brian Porter recently told The Globe and Mail: “We’re in the technology business.”
“Sharing economy” upstarts such as AirBnB and Uber have also disrupted the hospitality and transportation industries. On the horizon are impacts yet to be felt by the arrival of driverless cars and smarter machines poised to displace millions of white-collar workers.
“There are a large number of organizations where [how to manage digital transformation] is an unknown or something they’re afraid to address – or where they don’t have the talent or capability to move the business forward,” said Ms. Rollins.
Meanwhile, there is a global shortage of employees with skills to program the technology of the future; only British Columbia and Nova Scotia among Canadian provinces have begun to offer coding on a widespread basis as part of school curriculums, while Ontario Premier Kathleen Wynne instructed her education minister Mitzie Hunter just last month to “develop a strategy … that considers opportunities for computer coding.”
“Technical literacy [will be] absolutely fundamental to doing everything in the future,” said Tobi Lutke, CEO of Ottawa-based retail software firm Shopify Inc.
Dell said many companies are now pursuing digital strategies including partnering with startups – as several Canadian financial institutions are doing – assigning executives to leading digital transformation efforts or integrating digital goals into their objectives. The company has a vested interest in publishing the survey: Dell markets itself as an “end-to-end” vendor that helps large organizations digitize their businesses. The company did not release information on the margin for error in the survey.Report Typo/Error