New Study by Deloitte and BPM Forum Finds Tech Executives Dissatisfied With Capacity to Anticipate and Respond to Major Market Changes

Only 35 Percent of Technology Executives Say Their Companies Are Very Effective in Managing Market Altering Changes

Technology companies, confronted with growing competition from adjacent and overseas markets, a dramatic shift in power toward the consumer, and the accelerating pace of various technology and web-based deployments, are being challenged to rethink their strategic planning processes and how they respond to market-altering change. This is a key finding from a landmark study, "Competition at the Crossroads: Strategic Planning and Action in Disruptive Markets," conducted by the Business Performance Management (BPM) Forum and Deloitte Consulting LLP's Technology, Media and Telecommunications (TMT) group. The study surveyed more than 180 technology industry executives, including qualitative interviews with senior executives involved in strategic planning. The full report is available for complimentary download at the BPM Forum and Deloitte websites (www.bpmforum.org/csr, www.deloitte.com).

The report finds that companies are having difficulty anticipating market change and are limited in their capacity to make effective course-correcting action, in large part due to insufficient investment in strategic planning, getting the right information and having the required talent that can look beyond today's sales, profitability, current products, customers and technologies.

"Tech executives feel their companies are doing a good job with strategies and execution against current competitors and product markets," said John Ciacchella, a principal with Deloitte Consulting and leader of its technology industry group. "But when it comes to developing winning strategies and taking effective actions to address disruptive market changes, whether it is introduction of a breakthrough technology, developing new business models or entry of a non-traditional competitor, they are not meeting the challenge and may not have the tools, talent and processes they require."

Among the key findings:

--  While most respondents say their companies are able to identify market-
    altering change, only 25 percent believe they can anticipate such changes.
--  Executives also give their companies poor marks for their ability to
    take adequate action in the face of these changes.  Only 35 percent of
    respondents said the executives responsible for managing course-correcting
    actions were "very effective" in this role.
--  The vast majority of respondents, 92 percent, believe competition is
    intensifying in their industry sector.
--  Some 96 percent say their sources of competition have changed in just
    the past two years, including 44 percent who say their sources of
    competition have changed significantly.
--  Respondents indicate that senior management is spending more of its
    time on the strategic planning process, but also that their companies'
    investments in strategic planning processes, tools and talent have not
    increased as fast as revenues.
    

Agents of Change

The study points to a number of factors that are driving the level of competitiveness and change in the technology industry. The rapid growth of consumer technology markets, the rise of global competitors, and declining barriers to entry due to outsourcing and on-demand business models are key factors increasing the likelihood of disruptive competition entering both new and established markets, according to the study.

As one senior executive remarked, "All of a sudden our competitive set has widened dramatically. It's not just about 'what are our traditional competitors doing?' Now there are a whole bunch of other folks we've never looked at before."

Still another spoke about the growing threat from "disruptive competitors from overseas... The potential for a disruptive attack from a low-end Taiwanese or Chinese company is now very, very prevalent."

Impediments to Change

The research also identifies a variety of factors that are impeding the ability of companies to cope with market-altering and disruptive change. Executives believe they lack the resources, in terms of talent and information, to effectively plan for change, which is not surprising given the low levels of investment being made in the strategic planning function. They also say their ability to take course-correcting action is stymied by a focus on short-term profitability, current business issues, and a lack of a quantifiable business case for taking action. As a result, executives say it is difficult to access funding for new strategic directions and also that alignment and consensus are hard to achieve across the organization.

"Competition at the Crossroads raises serious questions about how technology companies can build their capacity to anticipate, prepare for and take action amidst rapid market changes," said Dave Murray, BPM Forum program director. "The BPM Forum and its Competitive Strategy Roundtable, in cooperation with Deloitte Consulting, looks forward to continued industry dialogue that can identify best practices and new approaches for strategic change in our industry."

The "Competition at the Crossroads" study lays the groundwork for a series of future management dialogs that will be hosted by the BPM Forum and Deloitte Consulting to facilitate discussion among high tech strategy executives trying to anticipate, plan and better address market altering changes.

About Deloitte

Deloitte & Touche USA's TMT group helps companies in the technology, media & entertainment and telecommunications industries evaluate complex issues, develop fresh approaches to problems, and implement practical solutions. Clients include some of the world's top software companies, computer manufacturers, wireless operators, satellite broadcasters, advertising agencies, and semiconductor foundries -- as well as leaders in publishing, telecommunications, and peripheral equipment manufacturing.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.

Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu. In the United States, services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP.

About The BPM Forum

The Business Performance Management (BPM) Forum is dedicated to advancing performance accountability, process improvement, operational visibility and compliance in global organizations. It provides support to thousands of senior executives and practitioners representing enterprises with more than $500 billion in combined annual revenues. The BPM Forum's C-level members engage in research, thought leadership, and knowledge exchange programs around a variety of strategic issues and challenges. More information is available at: www.BPMForum.org.

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