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Oracle News | March 31, 2016

Companies Spending Billions to Keep Disruption at Bay

By: Michael Hickins | Sr. Director of Strategic Communications

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From financial services to the automobile industry to even shipping, a fire called disruption is raging in the prairie, and companies are spending billions of dollars to keep it from consuming them.

For example, M&A spending in automotive reached nearly $50 billion in 2015, PricewaterhouseCoopers says, more than three times the level in the prior year, fueled by “the industry’s need for new capabilities,” according to The Wall Street Journal.

Carmakers have been investing in self-driving technology for the past couple of years, mostly in reaction to Google, Tesla, and other industry newcomers. Indeed, the pressure of digitization is forcing companies to “morph” from one industry to another, as Bob Weiler, Oracle executive vice president of global business units, put it in an interview.

Banks and other financial services companies are also spending big time to head off digital disruptors, against the backdrop of a complex regulatory environment and their patchwork of highly customized legacy systems. “CIOs are in a tough spot trying to drive innovation without exposing risk to core systems,” says Rebecca Wettemann, vice president of research at Nucleus Research, in an interview with CIO Journal.

Elsewhere, a team of MIT researchers is working on a concept that could revolutionize urban deliveries: underground vehicles. Although the prototype is nowhere near commercially viable, it’s not unreasonable to think that transportation companies will be taking a hard look at this technology—and perhaps investing in it—before someone from an adjacent industry decides to give it a whirl themselves. Just as the likes of FedEx and UPS have started taking drones more seriously now that Amazon has made noises about using those flying machines for package delivery.

The challenge facing most companies, however, is that they don’t have a billion or so dollars lying between the sofa cushions to invest in moonshots. Most of them recognize the danger of digital disruption, but addressing it is another matter.

For many, the way forward is to spend dollars they free up by moving internal applications and systems to the cloud. The cloud can not only be more economical, but it can have inherent business advantages as well, such as giving a restaurant chain the agility to propagate a new menu to tablets at hundreds of locations overnight, letting a retailer change product pricing instantly, and letting a hotel chain’s guests check in and update their loyalty status from their smartphones.

The cloud also allows companies to benefit from the most up-to-date technology without having to wait months or years for the next software upgrade cycle, so they can innovate faster. “The driving force of transformation is the cloud,” Oracle’s Weiler says.

If you’re interested in hearing more on this critical subject, come see Weiler speak at the annual Oracle Industry Connect conference in Orlando, Florida, April 11 to 13.

Sr. Director of Strategic Communications

Michael Hickins is a senior director of strategic communications at Oracle. He is the former editor of The Wall Street Journal's CIO Journal.

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