Struggling European Businesses Fear Disruptive IT

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Many European businesses are avoiding updating their IT resources, viewing it as an unnecessary strain during a time of recession

Nearly three quarters of European businesses believe they could be exposed to “disruption” from new technology, according to a report from management consultants McKinsey.

In the paper, Time to Raise The CIO Game: A Call to Action for European Companies, McKinsey outlines an argument for businesses keeping up with developments in technology and IT, despite cost pressures from the global recession. Around 74 percent of the European businesses questioned by the consultants said that their company was ‘very’ or ‘extremely’ at risk to disruption by competitors using new technology.

But despite the concerns about not keeping up with the latest advances in IT, the survey revealed that only 18 percent of companies believe their businesses are very effective when it comes to adopting technology.

Unsurprisingly, tech companies such as Cisco, referenced in the statement supporting the report, are keen to push the threat of not keeping up with the competition when it comes to new technology. Commenting on the report, Chris Dedicoat, president of European markets at the networking specialist, said that CIOs had an even greater role to play in tough financial times than during periods of economic stability.

“As European businesses adapt to the ‘new normal’, technology provides unprecedented opportunities for CIOs to transform their businesses,” he said. “More than ever, technology underpins every move a business makes and game-changing technology-based innovations can disrupt markets and change competitive landscapes. In this economic environment, the role of the CIO will become critical to a business’s ability to embrace change, increase business agility and drive growth.”

But despite the views of Cisco and McKinsey on the importance of IT in giving companies a competitive advantage, as some economies begin to emerge from the recession – such as the US – not all businesses are convinced that technology is that key to their future success. According to the McKinsey report, around a third of the IT and businesses execs questioned did not rank IT in the “top three levers in creating a competitive advantage”.

In a report in October, analyst firm Gartner said that the IT industry is beginning to emerge from the recession but a period of full recovery will not begin in a “sustainable” way until next year, at the earliest. “The first signs of growth will be led by seasonal buying patterns in the PC market during the third quarter of 2009, although other major sectors will not begin to show first growth, year-on-year, until 2010,” the analyst stated.

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