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Digitisation encourages hyper-disruptive models

The disruptive nature of digitisation is contributing to evolving business models, says BMI-TechKnowledge's Tim Parle.

The disruptive nature of digitisation is contributing to evolving business models, says BMI-TechKnowledge's Tim Parle.

Due to the disruptive nature of digitisation, business models are changing across various sectors. Organisations should use technology to better position themselves so they are able to remain relevant in an increasingly competitive market.

This is according to Tim Parle, senior telecom consultant at BMI-TechKnowledge, who addressed delegates at the Jasco Smart Digital Enterprise Solutions unveiling in Johannesburg yesterday.

Parle pointed out the increasing business competition brings about business challenges which will force businesses to "adapt to digitisation or die".

"If you look at the traditional telecommunications operators' space in SA, the big telcos are now being challenged by over-the-top (OTT) players; they all have their big pipes in the ground, yet players such as google and Netflix are utilising their infrastructure," explained Parle.

He pointed out the telcos' response to this situation by calling for regulation of OTTs was not the best option to take as it will increase prices.

"Telcos should rather adapt to the change and use their infrastructure to bring new services on board.

"Some of the new incoming technology will force businesses to become disruptive and innovative," he predicted.

He spoke about how digitisation has impacted business models across various sectors and gave a synopsis of the five hyper-disruptive business models that businesses should learn from.

Free model

Parle explained many people who use services such as Facebook and free applications such as Gmail or Google Docs will eventually be lured into paying one way or another.

"If you get the service for free and you wonder where the product is, you are the product.

"They are busy observing and monitoring your data and online shopping patterns to see which sites you spend most of your time on and what online content you consume," he explained.

He added this is done so the free service operators can put customers in touch with other services which will require them to pay for usage.

This results in consumers being glued on to services for which they are required to pay, he said.

If you are a business with an existing revenue stream and someone throws a totally different business model at you, you need to re-evaluate how to compete in the market, he continued.

Marketplace model

Parle noted people and businesses are now looking for different ways to stretch their assets and get a better return on their assets by utilising them 24/7.

Using Uber as an example, he said the ride-hailing service doesn't own any assets, as its assets are owned by individuals and Uber introduces those assets to the market through the company software platform.

He also observed traditional video and music shops will be forced to close business if they don't change their business model.

"There are a lot of online streaming services that are available now and we are seeing fewer people going into CD shops, listening to music and buying the CDs over the counter," he added.

Access vs ownership model

Parle explained businesses and individuals should always be looking for innovative ways to utilise their assets 24/7.

He said most South African citizens have assets which they are not getting a good return on investment for and this reflects a lack of innovation.

"In SA we are used to buying our cars on hire purchase and pay for it over five years.

"But this car stays in the garage for eight hours while we sleep at night and another eight hours while we are at work during the day," he said.

Ecosystem model

Parle advised digitisation stimulation models have to be put in place which will contribute positively to the ecosystem.

"The business model is completely disruptive; some people have lost themselves in the digital ecosystem.

"I've lost myself in the Apple ecosystem: I buy their hardware, use their iTunes, consume their movies and content. Some businesses are now locking their customer in the digital ecosystem for a long-term period."

He explained organisations that want to protect their existing revenue streams in the advent of digitisation should ask themselves three questions;

"Do they continue doing the same things but only better, or do they only focus on innovation – which is doing new things?

"Or is it best to try and be disruptive by doing new things which make the old things obsolete?"

He advised the best option is to do all three.

"If you do not disrupt your own business, somebody else will do it for you," he concluded.

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