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Don’t underestimate digital disruption, warns EY

Don’t underestimate digital disruption, warns EY

Killian Plastow
— 1 minute read

Australasian executives are underestimating the disruptive effect technology will have on their businesses, a new EY report has found.

Only 15 per cent of Australasian executives listed the impact of digital technology on the business model as their most prominent concern, EY’s Capital Confidence Barometer (CCB) reveals.

Globally, the impact of such technology was listed as the most prominent issue for more than a third of executives involved in the study.

EY Oceania managing partner of transaction advisory services David Larocca said Australasian executives undervalue the gravity of digital disruption.

“Digital disruption is not an issue on the horizon. It’s already here and the data suggests digital may not be high enough on the board agenda for companies in Australia and New Zealand, and the significant impact on their business [is] underestimated,” Mr Larocca said.

The CCB also revealed 54 per cent of Australasian executives see mergers and acquisitions as key to business growth amid the ‘new norm’ of digital disruption, slow economic growth and geopolitical uncertainty.

“Political instability is a growing concern among executives but it is not derailing merger and acquisition sentiment,” Mr Larocca said.

“A few years ago, it might have seen dealmakers apply the brakes, [but] now the landscape is different. We have a prolonged low-growth environment in many countries and companies have to look inorganically as well as internationally for growth at a time when their next competitor could be a new digital player or start-up.”

According to the report, 65 per cent of Australasian businesses have five or more such deals already in the pipeline, and Mr Larocca said this “uptick in deal pipelines” indicated that mergers and acquisitions would be a foremost concern for executives.

“However, the types of deals will be different – smaller, smarter – and we will see greater use of alliances and strategic partnerships to leverage capabilities,” he said.

 

Don’t underestimate digital disruption, warns EY
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