European Companies More Affected by IT-Based Market Disruptions: Report

According to a new research paper published recently by McKinsey & Co, European business leaders believe that enterprises feel the reverberations of IT-driven market disruptions the most.

The paper, called “Time to Raise the CIO’s Game: A Call To Action For European Companies,” reportedly revealed that 74 percent of European business leaders felt that their company was either ‘very’ or ‘extremely’ exposed to IT-driven market disruptions. However, only 18 percent of the companies’ IT executives asserted that their companies were capable of bringing in new technologies in a timely manner and faster than their peers.

The report said that European businesses need to understand the opportunity and take strong and revolutionary steps to make sure that their enterprise is able to sustain itself during changing times. Many enterprises have realized the importance of adapting to new environments. Thirty-one percent of European executives said that they prioritized the evolution of new products and services to suit changing consumer behavior.

The McKinsey report also revealed that there was a need for a change in the attitude of European business executives towards the IT function. Until now, European IT departments have only managed to achieve ‘satisfactory’ results when it came to enhancing IT productivity, operational productivity and innovation. In the changing economic environment, this is insufficient and IT needs to improve its performance standards in order to build a sustainable business.

Cisco’s experience while engineering new business models for improving the overall consumer experience and offering better value propositions to them affirms the McKinsey report findings. It discovered that changing the face of consumer experience by offering new business models in a transparent enterprise is important to achieve success in the ‘new normal’ economic environment.

McKinsey recommended that European businesses set themselves along IT objectives and enhance governance models in a manner that enables optimal decision making. Success in the ‘new normal’ economic environment is possible only by improving the skill sets of IT personnel, removing performance gaps and to bring about a fundamental change in the manner by which the IT department functions. IT-driven business processes will thoroughly change the company’s operating model and also facilitate other revolutionary initiatives.

The ‘new normal’ economic environment is a result of a ‘restructuring of the economic order’ and not just another phase of a business cycle. As a result businesses need to focus on improving productivity rather than minimizing cost to maintain long term sustainability.