What is Happening? 

Saugatuck’s latest global survey of executives and managers shows very clearly that enterprises worldwide are still working their way through recovery mode, emphasizing improvement in operations, market presence, and customer influence over expansion into new markets. In short, firms of all types and sizes, in all markets, are focused first and foremost on doing things better and improving their profitability in existing markets and relationships.

Our analysis of February 2012 survey data from 228 participants in North America, Europe, and the Asia/Pacific region shows business and IT leaders focusing on business goals that emphasize revenue growth from their existing business footprint, combined with improving profitability. Figure 1 uses Saugatuck research data from 2006 through 2012 to illustrate how business priorities have shifted toward improving management to improve margins and market share, and away from new customers and new markets.

Figure 1: Enterprise Business Goal Prioritization, 2006 – 2012

Source: Saugatuck Technology Inc. annual SaaS/Cloud survey data, 2006 – 2012

Figure 1 uses Saugatuck’s heatmap framework to illustrate the relative degree of importance of these priorities, as well as the relative change in that importance over time. Top priorities are shaded in red (i.e., “hot”); low priorities are shaded in blue (i.e., “cold”). This allows us to quickly see not only how priorities rank, but how they shift over time.

The most obvious shifts (outlined in red) are the major increase of internal focus on managing budgets, and the shift away from the external focus on reaching new markets. Other, more subtle (but still powerful, based on their high priorities) are reaching new customers, increasing margins, and increasing market share, all outlined in orange in Figure 1.

Saugatuck sees this as enterprise leadership shifting more and more toward improving what exists instead of expanding into new areas. Clients of Saugatuck’s Continuous Research Services (CRS) will see more in-depth examinations of these priority shifts and their impacts on enterprises, IT providers, channels, and markets – and more importantly, how to benefit from these shifts.

Why is it Happening? 

The most obvious factor driving this focus on business improvement is that a majority of worldwide firms are still operating in “recovery mode” after years of economic uncertainty. Key factors in this include recession, recurring periods of slow/no growth, channel shakeups, and a squeeze on credit and capital in many markets that is just beginning to loosen up. It’s all forcing more (and hopefully better) focus and investment in improving the ability of the business to manage itself, and then to anticipate and respond to market changes.

If that sounds familiar, it should: the concept of “enterprise agility” has been bandied about for decades. Unfortunately, centuries-old organization hierarchical management structures and approaches led most firms to implement rigid business and IT management structures that prevent agility. The confluence of easily-acquired Cloud-based IT, user-centric device and application development, and mobility, has helped loosen up most of these structures and modes of operating.

That brings up the second major factor behind this shift: SaaS/Cloud. Widespread use in all aspects of business and IT has opened up the eyes of business and IT leaders to the possibilities of improvement, and to the necessities of change. We see an openness to business and IT change where we previously saw obstruction and disinterest.

What relatively few enterprises, and their leaders, realize right now is that these changes are really strategic in scope and impact. They will not only enable strategic improvement in business operations (which will lead to improvements in margins and market presence if properly managed). They will also change the mission, roles, and responsibilities of most groups and departments within the enterprise; they will change the enterprise itself.

For an extended version of this Research Alert for registered Saugatuck members, click here.

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