81 Percent Of US Businesses Cite Cloud Computing As A Competitive Advantage Over Rivals

NetSuite Study Reveals the Top Drivers Motivating Organizations to Transform Their Businesses

SAN MATEO, Calif., Nov. 18, 2014 — (PRNewswire) —  NetSuite Inc. (NYSE: N), the industry's leading provider of cloud-based financials / ERP and omnichannel commerce software suites, today announced the results of a study titled, 'Disrupt, Collapse, Transform: The Role of the Cloud in Industry Transformation', sponsored by NetSuite and conducted by global industry analyst firm Frost & Sullivan. The study, completed in October 2014, surveyed 1,500 senior executives across multiple industry sectors in seven countries – the US, Australia, Singapore, the UK, Japan, Hong Kong, and the Philippines. Two-hundred of the surveyed participants were from the US.

The study was conducted to examine the drivers for disruption across all industries and how modern businesses are responding to that disruption. Among respondents, 81 percent of US cloud-based software users told Frost & Sullivan that the cloud has provided them with a competitive advantage over their rivals – particularly with regard to entering new markets – and has helped them react more quickly and effectively to change.

"The pace of transformation in US industry is accelerating," said Lynda Stadtmueller, Vice President, Cloud Services Program at Frost & Sullivan. "Widespread cloud adoption has helped US companies stay ahead of competition and make the most of the new business models that emerged as a result of the digital revolution. Coupled with shifting economic conditions, the need to constantly innovate and to accelerate time to value, organizations simply need to be more efficient and adaptable in order to survive."

Drivers for industry transformation

Survey respondents in the US and around the world identified four significant disruptive drivers that are impacting their businesses and motivating them to transform. The four drivers are:

  • New disruptive competitors (cited by 46 percent of US survey respondents)
  • Digitalization (cited by 37 percent of US survey respondents)
  • New business models (cited by 24 percent of US survey respondents)
  • Productization/Servitization (cited by 24 percent of US survey respondents)

Companies are keenly aware that the advent of cloud computing has significantly contributed to the advancement of these disruptive drivers by enabling industry transformation. Survey respondents also highlighted other factors for change including evolving customer needs, new regulations impacting their specific industry and the increasing costs of doing business.

Companies need to respond to the emergence of new disruptive competitors

New market competitors have shaken up many US industries. In many instances, these new entrants are using cloud computing to quickly establish operations, scale up those businesses, and build out their geographic reach. Market incumbents need to be able to respond at similar lightning speeds to compete effectively with fast-moving cloud-powered startups.

  • 59 percent of US survey respondents have experienced the entry of a new disruptive competitor into their industry in the past five years.

Companies need to make effective use of digitalization

Digitalization is the use of digital channels to do business, sell to customers, or transact with suppliers. According to Frost & Sullivan, all survey respondents believe their businesses are being, or will be, impacted by digitalization. So far, media and entertainment, IT and telecommunications, and retail are the sectors most impacted by digitalization. But surveyed executives in healthcare, manufacturing, and education also believe that a total digital transformation will occur within their own industry sectors. Among those surveyed in the US, 35 percent are selling directly to consumers (B2C), 29 percent are selling directly to other businesses (B2B), and 27 percent are selling to customers via wholesalers, retailers, and distributors (B2B2C).

  • 22 percent of US survey respondents do not currently sell online to customers but plan to do so in future.
  • 31 percent of US survey respondents expect to change their distribution channels within the next 12 months.
  • Of those planning to change their distribution channels, 50 percent are likely to sell directly to end-users, 66 percent are likely to use new distributors or wholesalers, and 58 percent are likely to sell online.
  • 64 percent of US survey respondents believe the impact of digital change is very significant on their industry.

Companies need to embrace new business models

New business models continue to emerge, often enabled by cloud and other technologies including mobile broadband, 3D printing, and low-cost data sensors. These business models represent a significant competitive threat to established industries driving them to change the way in which they operate their businesses.

  • Frost & Sullivan identifies mass customization within the manufacturing sector as a good example of a new business model set to impact the entire industry. The cost-effective customization of goods and services for individual customers is being enabled by 3D printing as well as digitalization, enabling customers and manufacturers to work more closely together.

Companies need to adopt productization and/or servitization to compete more effectively

Productization occurs when service companies package their services in a similar way to how many products are presented. Servitization is where product manufacturers also provide services and solutions that supplement their traditional product offerings. According to the survey:

  • Servitization is a rapidly growing trend in the US with 58 percent of US manufacturing respondents now providing services and solutions that supplement their traditional product offerings. This puts the US manufacturers ahead of their peers in the UK where 40 percent of manufacturers are using servitization as well as Japan (31 percent) and China (20 percent).
  • 59 percent of US product businesses surveyed either provide services now or think they will need to do so in the future.
  • 47 percent of US services businesses surveyed either provide products now or think they will need to do so in the future.  

The cloud enables companies to transform their businesses and adapt to change

Frost & Sullivan believes that cloud computing is both a contributor to industry transformation, as well as a necessary response for organizations to survive. According to the research, greater adaptability to industry change is now a main driver of cloud adoption in the US.

  • 62 percent of those surveyed in the US describe cloud computing as representing an opportunity for their business as compared with their peers in the UK (68 percent), Japan (59 percent), and Australia (48 percent).
  • 51 percent of US respondents said they are leveraging the cloud to access elements of their business management software, with customer relationship management (CRM) and ecommerce being the cloud-based business applications they most commonly use.

"Given industries are changing so quickly in such an unpredictable way, companies need to have the ability to adapt quickly to launch new products and services, develop new revenue or business models and access new geographical markets," commented Frost & Sullivan's Stadtmueller. "That adaptability is being enabled by cloud computing – it has become a necessary response to the rapid pace of transformation."

"The reality of fast-changing market conditions is that businesses need to stay ahead to generate future revenue and remain relevant," said Andy Lloyd, NetSuite General Manager of Commerce Products. "We continue to see a big shift in cloud computing in the US, as more businesses of all sizes move beyond initial adoption to using cloud solutions to better recognize and deliver on the needs of their customers and emerging opportunities. Cloud provides greater flexibility, speed and agility for businesses to move quickly as the market changes, enabling them to achieve their broader growth strategies."

NetSuite cloud provides the valuable tools to enable businesses to adapt

NetSuite's cloud-based business management software solutions play a crucial role in helping businesses expand more easily and cost effectively, by giving them the agility, flexibility, and speed to set up new business operations or change business models. NetSuite's leading solutions remove the hassle and weighty costs of traditional on-premise software that cramp business growth. CRM, enterprise resource planning (ERP), financials, ecommerce, human resources, manufacturing, inventory, distribution, supply chains and more can be managed from one NetSuite cloud-based business management solution. This single unified solution provides deep, and up to the minute visibility of every interaction, transaction, and relationship occurring within a business in every market, anywhere in the world.

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