virgin media business digital insights report · this the third report on irish businesses by...

Virgin Media Business Digital Insights Report2017

Disrupting the FutureThe 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 2012. Our report is based on a survey of 200 senior decision makers in 200 businesses throughout Ireland in Q4 2016 by Amárach Research. The survey replicated core elements of similar studies in 2014 and 2012. 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

Enabling GrowthAt the start of 2017, 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.

Current vs past growth sources2017-18

%2015-16

%

Selling more of the same products/services to customers in Ireland 28 37

Selling new products/services to customers in Ireland 31 25

Selling more of the same products/services to customers outside Ireland 21 16

Selling new products/services to customers outside Ireland 13 12

Don’t know 7 9


Growth prospects for the next 1-2 years

Current vs past prospects

2017-18%

2015-16%

2013-14%

Very good 30 14 15

Good 56 66 65

Poor 8 13 17

Very poor 1 3 3

Don’t know 5 5 0

Exports will play a bigger part in growth than before.

Where future growth will come from

Importance of investment in digital technology for future growth plans

Online percentage of total sales in the

past yearNOT

IMPORTANT

0

10

20

30

40

50

4

47 48

1FAIRLY

IMPORTANTEXTREMELY IMPORTANT

DON’T KNOW

48ExtremelyImportant

4NotImportant

1Don’t Know

47FairlyImportant


Likely growth prospects and the importance of digital technology

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.

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.

Importance of Digital Investment

Growth Prospects: 2016 AllNot

importantFairly

ImportantExtremely important

Very good 30% 0% 21% 43%

Good 56% 78% 63% 46%

Poor 8% 0% 9% 8%

Very poor 1% 0% 1% 1%

Expected online percentage of total sales in the year ahead

21%

Expected growth in turnover

Expected growth in turnover if an ideal digital and online strategy is deployed

Not surprisingly, given the expectations for export sales in 2017, the share expecting online sales to customers outside Ireland has risen sharply in recent years.

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 share of online sales to customers outside Ireland

Year ahead outlook2017

%2015

%

Increase 49 25

Stay the Same 37 40

Decrease 2 1

Don’t know, don’t sell to customers outside Ireland 12 34

Importance of IT skills as a pre-requisite for new hires

Flexible WorkforceRecruitment is a key focus for businesses at the start of 2017, 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.

Moreover, IT skills will be even more important in the year ahead than in our last survey, especially analytic skills:


Hiring intentions (2017-2018)

2017 Outlook

%

2015 Outlook

%

Extremely Important 46 33

Important 42 42

Not important 11 21

Current vs past outlook2017-18

%2015-16

%2013-14

%

Yes 75 59 55

No 13 25 30

Don’t know 12 16 15

Percentage of businesses enabling some staff to work from home

Percentage of staff working from home (in companies enabling this)

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:


2017 Outlook

%

2015 Outlook

%

Yes 61 54

No 36 46

Don’t know 3 1

Type of IT skills in most demand

2017 Outlook

%

2015 Outlook

%

Analytics skills 70 66

Social media skills 49 37

Programming skills 60 41

Digital marketing skills 51 34

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

StronglyAgree

%

Slightly Agree

%

Slightly Disagree

%

StronglyDisagree

%

Staff who work from home are happier than those who don’t

38 48 8 1

Staff who work from home are more productive than those who don’t

23 45 20 5

It’s more difficult to arrange meetings that involve remote workers

22 31 25 19

It’s more difficult to monitor performance of remote workers

19 37 27 16

It’s more difficult to contact remote workers

13 25 30 29

Digital MaturityDigital 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.



Digital products and services used by businesses in Ireland

2017 Outlook

%

2015 Outlook

%

2013Outlook

%

Business website that can receive/process sales queries and orders from customers

51 49 53

Company supplied laptops for staff working outside the office 58 73 77

Company supplied smartphones for some/all staff 57 76 79

Customer Relationship Management (CRM) system for capturing and processing customer information

41 45 46

Customer email/e-zine for keeping in touch with clients 38 58 65

Intranet for staff; hosting internal information and services 38 65 70

Online training services for staff (either internally sourced or externally sourced)

43 47 43

Extranet for customers to access information, services and support

24 34 33

Data analytics 50 42 33

One or more mobile phone apps developed by your business for staff and/or customers

21 22 22

A Facebook page for your business 39 52 50

A blog for your business 22 26 21

A twitter page for your business 31 41 33

A LinkedIn account 38 45 38

An online ordering/purchasing service for customers 33 33 32

Online ordering/purchasing from suppliers 29 33 32

Wifi access for your customers on your premises 35 n/a n/a

Speed of broadband service at work

Sufficient broadband speed for business needs

Impacts of insufficient broadband speed for business

But for those who don’t have sufficiently fast broadband, the downside implications are quite serious.

2017Outlook


2017Outlook

%

2015Outlook

%

Under 10 Mbps 7 22

11-30 Mbps 7 19

31-50 Mbps 12 10

51-100 Mbps 23 14

101-250 Mbps 11 10

251-500 Mbps 16 5

501+ Mbps 12 7

Don’t know 13 13

We are beginning to see big improvements in business perceptions of their broadband speeds, with more and more considering them to be sufficient.

2017Outlook

%

2015Outlook

%

2013Outlook

%

Yes 81 72 83

No 16 25 16

Don’t know 2 7 1

Impact on businesses if they didn’t have broadband

2017Outlook

More starkly, if businesses did not have access to broadband, nearly half would simply not exist.


Importance to business that customers have broadband

Digital CustomersAs Irish businesses become more digitally mature, so also the delivery of customer experiences becomes more dependent on digital.

Importance of online ratings and reviews by customers on business

We see this in the simple fact that 3 in 4 businesses think it important that their 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.

2017 Outlook


2017 Outlook

%

2015 Outlook

%

Yes 67 53

No 33 47

Percentage who expect online customer comments and feedback to play a bigger part in future business performance

Percentage of businesses who actively monitor online reputation

Changes to business behaviour following online customer comments and feedback


2017 Outlook

%

2015 Outlook

%

Yes 74 65

No 26 35

2017 Outlook

%

2015 Outlook

%

Yes 80 60

No 20 40

2017 Outlook

%

2015 Outlook

%

Yes 73 62

No 27 38

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.

Most used communications channels (with customers)

Is your business ready and able to meet the needs of younger customers and decision makers in the future?

71% YES

9%NO

20%NOT SURE

Finally, thinking of future customer needs, we find that the majority of Irish businesses at the start of 2017 are confident of their ability to meet the needs of the next generation of younger customers – the Millennials – as their numbers and influence grows.

2017Outlook


Less Same More

Inbound Phone 36 55 9

Outbound Phone 29 60 11

Post 53 40 7

Email 2 40 58

Text messaging 27 51 22

Facebook/twitter 19 52 29

Web chat 16 49 36

Other (specify) 23 69 8

While online feedback is important, there are many other channels available to Irish businesses to communicate with their customers, but looking ahead to 2017, it is clear from our survey that channels such as email will become even more important.

Disruptive ChangeWhile digital services and technologies play a powerful and mainly positive role in business performance in 2017, there are also downside risks that must be managed.

Will some of your business grow due to digital technology / new digital opportunities?

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.

17%NOT SURE

DONT’ KNOW

13%NOT SURE

DONT’ KNOW

61%YES

74%YES

22%NO

13%NO

2016 2014

22%NOT SURE

DONT’ KNOW

24%NOT SURE

DONT’ KNOW

18%YES

27%YES

60%NO

49%NO

2016 2014

2017Outlook

2017Outlook

2017Outlook

2017Outlook


Will some of your business shrink due to digital technology / online competition?


Digital technology – perceived opportunity or threat to businesses

2017Outlook

%

2015 Outlook

%

Only a threat 4 -

Mainly a threat but sometimes opportunities 19 8

Mainly an opportunity but some threats 40 42

Only an opportunity 29 45

Don’t know 7 6

2017 Outlook

%

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

Likely risks identified by businesses

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.

The type of concerns businesses have reflects the changing nature of the digital landscape. With cybersecurity and data protection among the main risk drivers.

Biggest digital threats for businesses


Biggest digital opportunities for businesses 2017

Outlook %

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

2017 Outlook

%

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.

Digital technology – good or bad for business?

77Good for business

6Bad for

business

17Mix of both

2016 new2017

Outlook


THOSE WHO

WILL WIN THE FUTURE

First Disruptors The Virgin Media business survey shows that Irish businesses are gearing up for a strong performance in 2017, 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.

Local Office

Virgin Media Business

Building P2

East Point Business Park

Clontarf

Dublin 3

T: +353 (0) 1 245 8200

© 2017 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.

www.virginmedia.ie/insights

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