Digital Disruption: A Global Trend With Regional Differences

Today, every business is a digital business. Or it will be soon, anyway. That’s one of the conclusions of a new study commissioned by VMware that shows that businesses worldwide are reinventing themselves by leveraging technology. This digital disruption, while occurring worldwide, is affecting businesses differently across regions.

Digital Disruption Is a Worldwide Phenomenon

The research, based on surveys conducted by the Economist Intelligence Unit (EIU) and Vanson Bourne, shows that digital transformation is affecting businesses across all regions and industries.

Sixty-nine percent of respondents—a group of senior IT and business leaders—agree that management of IT has become more decentralized in the past three years. The change is driven by business units purchasing and building their own technology solutions, in order to remain competitive. As lines of business purchase their own devices, apps, and cloud services, technology—once centralized in the IT department—is becoming decentralized across the enterprise.

Traditionally, the IT department was the central resource for technology purchases, protocols, and purchasing decisions. That dynamic has shifted to lines of business, which has overwhelmed IT functions, increased costs, and created security vulnerabilities. Fifty-seven percent of those surveyed agree that decentralization has resulted in the purchase of non-secure solutions. According to the research, businesses are seeing an average increase of 5.7 percent on IT spending as a result of decentralization.

IT Stressed in Europe, the Middle East, and Africa (EMEA)
Although the research found digital transformation affected businesses regardless of location and industry, the speed and nature of disruption varied by region. In mature regions and industries like those in EMEA, the stress of digital disruption was felt most acutely by IT departments. Companies with fully-staffed IT teams must cope with the changes decentralization brings about for IT roles and responsibilities.

In EMEA, IT teams feel overwhelmed by decentralization. Fifty-nine percent of IT decision makers (ITDM) want to centralize IT and reduce the amount of IT purchasing by business users. The majority of all respondents agree that the impact of decentralization is making the IT department’s work more challenging, and more than half agree that it increases stress on IT personnel and resources. However, as long as business benefits outweigh the difficulties of disruption, innovation continues to drive digital transformation across the region.

Business Value Leads in Asia-Pacific
In Asia-Pacific, digital disruption is more gain than pain. Although respondents acknowledged the complexity caused by decentralization, a significant majority of respondents (69 percent) believe it increases responsiveness to market changes, gives the business more freedom to drive innovation, enables them to launch new products and services more quickly, and helps to attract better talent.

These leaders aren’t blind to the potential security vulnerabilities that decentralization brings. Nearly 75 percent of ITDMs in Asia-Pacific agree that decentralization makes IT’s job more challenging, and 60 percent say decentralization creates a lack of clear ownership and responsibility for IT. In general, however, leaders place more emphasis on the value new technology brings than on its potential for security challenges.

Asia-Pacific is keen on cloud computing, too. Seventy-eight percent of respondents agree that cloud computing has made it easier for lines of business to purchase their own IT. This has led to an average of six additional cloud services being purchased outside of the IT department per organization, according to respondents.

The Americas Moving to the Cloud

According to the research, the Americas are moving to the cloud more quickly than other regions. Non-IT functions are setting up their own clouds and data networks at a higher rate than the global average, and businesses in the Americas purchase an average of 6.5 cloud services outside of IT, compared with 6.2 in Asia-Pacific and 5.6 in EMEA. A significant majority believe this is putting additional stress on IT (65 percent) and driving the purchase of non-secure solutions (64 percent)—both notably higher than the global average.

However, while both IT professionals and business users in the Americas believe that decentralization is impacting IT and opening up security vulnerabilities, decentralization is viewed as largely positive. Almost three-quarters of respondents believe decentralization brings more freedom to innovate (74 percent) and to launch products more quickly (72 percent). Further, the data shows lines of business in the Americas feel the need to innovate faster, and IT can’t move quickly enough to support their efforts.

Digital Disruption Is Global, but With Regional Differences

The research conclusively showed that digital transformation is affecting businesses across all industries and regions. Business unit leaders are increasingly becoming key decision-makers for technology purchases, which drives innovation but decentralizes technology across the enterprise and can overwhelm IT. These impacts vary by region and industry, but this is a global dynamic with wide-ranging consequences.

In more mature markets, the stress on IT is felt more acutely, as decentralization forces a reevaluation of IT responsibilities and upends traditional roles. In nascent markets, there is less to disrupt and digital transformation delivers clear business benefits, even as it creates potential vulnerabilities for businesses. Regardless of market, businesses that embrace digital transformation and focus on resolving tensions between IT and business leaders can both increase competitiveness and leverage new technologies for long-term growth.

To learn more about how digital transformation is affecting businesses around the world, explore this infographic.

Business Innovation infographic

Listen to a podcast series with the Economist Intelligence Unit (EIU), in which VMware further explores the topic of IT decentralization with EIU senior editor West Coghlan.