Disrupting the Future

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1 Virgin Media Business Digital Insights Report

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3 Disrupting the Future The pace of change for Irish businesses is accelerating. Some of this is very positive for example, better growth prospects but some of it is challenging as old ways of working don t work anymore. This the third report on Irish businesses by Virgin Media since Our report is based on a survey of 200 senior decision makers in 200 businesses throughout Ireland in Q by Amárach Research. The survey replicated core elements of similar studies in 2014 and This note sets out the key themes emerging from the survey. But if there is one clear message it is that the pace of change is accelerating and that disruption in the new normal for Irish businesses, whether they are ready or not. A virgin media business report supporting positive business disruption 1

4 Enabling Growth At the start of, Irish SMEs and corporations are looking forward to strong growth, enabled by digital but driven by new products and exports, a growing share of which will be online. Growth prospects for the next 1-2 years Current vs past prospects Very good Good Poor Very poor Don t know Exports will play a bigger part in growth than before. Where future growth will come from Current vs past growth sources Selling more of the same products/services to customers in Ireland Selling new products/services to customers in Ireland Selling more of the same products/services to customers outside Ireland Selling new products/services to customers outside Ireland Don t know 7 9 A virgin media business report supporting positive business disruption 2

5 Investment in digital technology will driver growth out to 2018, while those most optimistic about their growth prospects attach greater importance to investment in digital technologies than others. Importance of investment in digital technology for future growth plans 47 Fairly Important 48 Extremely Important 1 Don t Know 4 Not Important Likely growth prospects and the importance of digital technology Importance of Digital Investment Growth Prospects: 2016 All Not important Fairly Important Extremely important Very good Good Poor Very poor We have seen large shifts in the percentage of sales generated online in recent years and it looks like that shift will accelerate in the year ahead Online percentage 0 of total sales NOTin the past IMPORTANT year FAIRLY IMPORTANT EXTREMELY IMPORTANT 1 DON T KNOW A virgin media business report supporting positive business disruption 3

6 Expected online percentage of total sales in the year ahead Not surprisingly, given the expectations for export sales in, the share expecting online sales to customers outside Ireland has risen sharply in recent years. Expected share of online sales to customers outside Ireland Year ahead outlook Increase Stay the Same Decrease 2 1 Don t know, don t sell to customers outside Ireland The growth momentum we have identified in our survey means that turnover growth generally is expected to be much higher in the year ahead, while the potential contribution of an ideal digital and online strategy to higher growth is also higher than before. Expected growth in turnover Expected growth in turnover if an ideal digital and online strategy is deployed A virgin media business report supporting positive business disruption 4

7 Flexible Workforce Recruitment is a key focus for businesses at the start of, especially in relation to digital skills. Many firms are working to become more appealing by enabling their staff to work more flexibly, including working from home. We have seen a jump in recruitment intentions in our most recent survey. Hiring intentions (-2018) Current vs past outlook Yes No Don t know Moreover, IT skills will be even more important in the year ahead than in our last survey, especially analytic skills: Importance of IT skills as a pre-requisite for new hires Extremely Important Important Not important A virgin media business report supporting positive business disruption 5

8 Type of IT skills in most demand Analytics skills Social media skills Programming skills Digital marketing skills We have seen a profound shift in the incidence of working from home, with close to 6 in 10 saying their staff work from home as part of their normal hours, while the share of staff doing so has also risen: Percentage of businesses enabling some staff to work from home Yes No Don t know 3 1 Percentage of staff working from home (in companies enabling this) A virgin media business report supporting positive business disruption 6

9 Average number of days that staff work from home (in companies enabling this) Irish businesses are clearly more positive than before about staff working from home, as reflected in their perceptions of the impact of home working on staff and on the business. Impacts of working from home Strongly Agree Slightly Agree Slightly Disagree Strongly Disagree Staff who work from home are happier than those who don t Staff who work from home are more productive than those who don t It s more difficult to arrange meetings that involve remote workers It s more difficult to monitor performance of remote workers It s more difficult to contact remote workers A virgin media business report supporting positive business disruption 7

10 Digital Maturity Digital practices and tech usage are maturing in Irish businesses, and face fewer barriers to going digital, as well as growing evidence that they are more focused on leveraging the tech they already have alongside key skills to deliver growth. However, not all digital tech is equal and we have seen big shifts in the usage of different products and services, with some declining sharply. A virgin media business report supporting positive business disruption 8

11 Digital products and services used by businesses in Ireland 2013 Business website that can receive/process sales queries and orders from customers Company supplied laptops for staff working outside the office Company supplied smartphones for some/all staff Customer Relationship Management (CRM) system for capturing and processing customer information Customer /e-zine for keeping in touch with clients Intranet for staff; hosting internal information and services Online training services for staff (either internally sourced or externally sourced) Extranet for customers to access information, services and support Data analytics One or more mobile phone apps developed by your business for staff and/or customers A Facebook page for your business A blog for your business A twitter page for your business A LinkedIn account An online ordering/purchasing service for customers Online ordering/purchasing from suppliers Wifi access for your customers on your premises 35 n/a n/a A virgin media business report supporting positive business disruption 9

12 We are beginning to see big improvements in business perceptions of their broadband speeds, with more and more considering them to be sufficient. Speed of broadband service at work Under 10 Mbps Mbps Mbps Mbps Mbps Mbps Mbps 12 7 Don t know Sufficient broadband speed for business needs 2013 Yes No Don t know But for those who don t have sufficiently fast broadband, the downside implications are quite serious. Impacts of insufficient broadband speed for business A virgin media business report supporting positive business disruption 10

13 More starkly, if businesses did not have access to broadband, nearly half would simply not exist. Impact on businesses if they didn t have broadband A virgin media business report supporting positive business disruption 11

14 Digital Customers As Irish businesses become more digitally mature, so also the delivery of customer experiences becomes more dependent on digital. We see this in the simple fact that 3 in 4 businesses think it important that their customers have broadband. Importance to business that customers have broadband Another driver is the extent to which customer feedback is more and more important, and something that more businesses are now monitoring. Importance of online ratings and reviews by customers on business Yes No A virgin media business report supporting positive business disruption 12

15 Percentage of businesses who actively monitor online reputation Yes No Monitoring is one thing, but changing in response to feedback is another, and so it is reassuring to find that a growing majority of businesses are doing just that, in the expectation that it will become even more important in the future. Changes to business behaviour following online customer comments and feedback Yes No Percentage who expect online customer comments and feedback to play a bigger part in future business performance Yes No A virgin media business report supporting positive business disruption 13

16 While online feedback is important, there are many other channels available to Irish businesses to communicate with their customers, but looking ahead to, it is clear from our survey that channels such as will become even more important. Most used communications channels (with customers) Less Same More Inbound Phone Outbound Phone Post Text messaging Facebook/twitter Web chat Other (specify) Finally, thinking of future customer needs, we find that the majority of Irish businesses at the start of are confident of their ability to meet the needs of the next generation of younger customers the Millennials as their numbers and influence grows. Is your business ready and able to meet the needs of younger customers and decision makers in the future? A virgin media business report supporting positive business disruption 14

17 Disruptive Change While digital services and technologies play a powerful and mainly positive role in business performance in, there are also downside risks that must be managed. A growing majority of Irish businesses expect digital technology to drive part of their business growth in the form of opportunities, but at the same time a growing minority expect digital disruption to shrink some of their business. Will some of your business grow due to digital technology / new digital opportunities? 13 NOT SURE DONT KNOW 17 NOT SURE DONT KNOW 13 NO YES 22 NO 61 YES Will some of your business shrink due to digital technology / online competition? 24 NOT SURE DONT KNOW 27 YES 22 NOT SURE DONT KNOW 18 YES NO 60 NO A virgin media business report supporting positive business disruption 15

18 If anything, Irish businesses are more realistic about the impact of digital technology in their business, while many have benefited from digital change in the past and expect to continue doing so in the future they are also more aware of the downside of digital disruption as the speed of change and range of competitors increases. Digital technology perceived opportunity or threat to businesses Only a threat 4 - Mainly a threat but sometimes opportunities 19 8 Mainly an opportunity but some threats Only an opportunity Don t know 7 6 The type of concerns businesses have reflects the changing nature of the digital landscape. With cybersecurity and data protection among the main risk drivers. Likely risks identified by businesses Data protection infringement 52 Cybersecurity breach 61 Online reputation damage 49 Social media abuse by customers 35 Digital disruption by competitors 24 Increased competition from UK due to Brexit 20 None of the above 5 A virgin media business report supporting positive business disruption 16

19 Biggest digital threats for businesses Hacking/Cyber Attacks/Data protection concerns 31 Competition 15 Reputation damage (eg negative reviews) 6 Viruses/Malware 4 Connection problems 3 Other 5 Don t know 3 No threats 39 In terms of digital opportunities, access to more customers is the main opportunity resulting from digital disruption, while on balance, most businesses see digital technology as a net benefit on reflection. Biggest digital opportunities for businesses Access to wider audience/customer base 16 Online Sales 11 Advertising/Promotion of business 8 New developments (apps, cloud services) 6 Can target/communicate with customers directly 6 Social Media 4 Reduced costs/increased profits 4 Access to data 4 Other 17 Don t know 7 No opportunities 31 A virgin media business report supporting positive business disruption 17

20 Digital technology good or bad for business? 17 Mix of both 6 Bad for business 2016 new 77 Good for business A virgin media business report supporting positive business disruption 18

21 First Disruptors The Virgin Media business survey shows that Irish businesses are gearing up for a strong performance in, driven by the potential of digital technologies to improve how they work, staff productivity and customer interaction. But it also highlights the need to be among the first disruptors in your sector or market in order to reap the benefits of digital technologies and to better manage the possible negative effects on older business practices and sources. THOSE WHO WILL WIN THE FUTURE

22 Local Office Virgin Media Business Building P2 East Point Business Park Clontarf Dublin 3 T: +353 (0) Virgin Business and Amárach Research, the content of this report may be used and republished freely once Virgin Media Business Digital Insights Report is credited.