The focus of our CEO Survey this year was directed towards four areas: business transformation, customer expectations, finding capital/financial sourcing and cybersecurity.
This year’s survey includes CEOs from Serbia exclusively. In the previous years, our survey included both domestic CEOs and their foreign counterparts working in Serbia, rendering us a full picture of the current state of affairs.
The largest number of CEOs participating in this year’s survey were from the sectors in technology and consumer products, followed by the industrial sector and financial services. However, it is important to note that representatives of all industries, including the government, education and non-profit, took part in this study, enabling us to gain a comprehensive insight into the opinions of those standing at the helm of Serbia-based companies, public enterprises, and government institutions.
Over 40% of the respondents have been CEOs for over ten years, while somewhat less than a third have occupied such positions between one and three years.
Business transformation processes are complex initiatives aimed at promoting business through all the functions of an organization. Such methods help re-evaluate and prompt fundamental changes in the manner in which a particular task is conducted and integrate various dimensions of strategy, structure, processes, human resources, and technology, subsequently demanding a holistic approach.
The experiences accumulated by the participants of our survey indicate that business transformation in the Serbian market is triggered most frequently by customer demand, followed by technological change and competition.
Comparing our findings with the results of similar global surveys, we note that the Serbian market is progressively falling into step with global market trends, and that customer demand is at the top of the list of business transformation drivers. Access to the global market is becoming increasingly more straightforward, and consumers around the world are offered the possibility to acquire a large number of products that satisfy their needs, at low cost and considerable speed of delivery, regardless of geographical distance. Apart from caring for their customers, companies need to keep a vigilant eye on the activities of their competitors, striving to adjust their business activities to theirs and to outshine them possibly.
Apart from struggling to provide the best possible response to customer demand, companies must also respond to technological changes and those who choose to take a different approach run the risk of losing a step with the market very rapidly. The speed and scale of technological changes we have been observing in the global market over the past few years are central to business transformation, even when they are not directly aimed at it. Business transformation is being identified more and more frequently with digital transformation, which implies redirecting company activities and management from traditional models to technologically-oriented business modes - something that has become imperative to companies of all sizes.
When asked to identify the primary drivers of the business transformation process, the respondents referred to their management or headquarters most frequently. Responses such as R&D, customers, and their needs, and company employees were least frequent.
Judging by the responses given, the Serbian market is customer-oriented in line with world trends. At the same time, Serbian companies also need to take into account the various factors transcending territorial limitations, such as changes within the specific industries they operate in and technological change. The past few years have seen a standardization and harmonization of business practices on a global scale, and it is gratifying to note that companies doing business in the Serbian market are making efforts to harmonize their business operation with these trends. Nevertheless, the answers collected in our survey indicate that domestic competition has primacy over that on the global level, which may be the result of the volume of business conducted by companies in our market.
When speaking about the internal drivers for business transformation, CEOs traditionally consider revenue increase to be the most significant. In the survey, they also point to increased productivity and organizational restructuring as equally important, with changes in corporate culture following close behind.
From a global perspective, we note that many companies approach the issue of business transformation with the same objective in mind – revenue growth. However, tendencies fostered by large firms are somewhat different. Namely, they are more focused on company expansion, primarily towards the Asian market which has been the focal point of attention among all significant corporations over the past years, principally because of its rapid growth and their efforts to position themselves on this market, technological innovations, cheap labor, etc.
Leadership capabilities of a company’s management team and support from senior management have been singled out as being by far the most important success factors for business transformation. Buy-in from employees and collaboration across functions within the company were also emphasized as important. Interestingly enough, based on the experiences of CEOs in Serbia, sufficient and adequate resource allocation has been ranked as the least important factor.
More extensive research at the global level shows that the support and competence of a company’s senior management are deemed to be a decisive factor for success in conducting business transformation, which is understandable since top executives of all companies play a vital role in the implementation of such projects. Employee trust, communication of objectives, collaboration across sectors, and all other factors primarily depend on the manner in which top executives approach changes.
As in the case of the prior questions, the opinions of the participants of our survey match global practice to a great extent. If we are to focus on factors that contribute the most to business transformation failure, global research will show us that buy-in from employees, both at the management and non-management level, has a decisive impact. Before embarking on business transformation undertakings, it is necessary to identify key individuals at all levels and select a suitable strategic approach to change to ensure that the appropriate corporate vision is communicated adequately across the organization.
CEOs in Serbia lay equal emphasis on lack of competencies and insufficient acceptance by the company’s management level employees as the most frequent reasons for business transformation failure. On the other hand, they do not think to exceed the planned budget is a decisive factor for such failure.
It is interesting to note that somewhat less than a third of the respondents have experienced the transformation strategy becoming obsolete in the process of its implementation, which says a lot about such endeavors, and probably about the agility of companies as well.
CEOs taking part in our survey believe that mergers and acquisitions, outsourcing and value-chain optimization are the most frequent focal points of business transformation. Over the past years, mergers and acquisitions have also come to the fore as the most frequent business transformation projects in all broader markets, with companies placing their focus on expanding business activities towards the Asian market.
According to our respondents, information concerning customer expectations in the Serbian market is most often collected to an equal degree through traditional communication channels and through omnichannel.
Omnichannel has lately been central when speaking about the collection of information from customers, and vice versa. This strategic, comprehensive concept focuses on buyer/customer needs, brings down barriers between different sales and marketing channels, and creates a single integrated whole centered on the buyer and not the brand. It also implies overcoming the detachment between offline and online sales, marketing and customer services, since all channels are mutually synchronized. Customers do not only shift quickly from one sales channel to another but also use all channels simultaneously for an enhanced experience and more considerable knowledge about the product and purchasing process. Over the past years, all significant global corporations have noticeably been changing their strategies towards this paradigm given the development of technology. It is gratifying to note that companies have recognized this as a significant concept, either on their own or under the influence of their headquarters, and have made appropriate changes towards its realization.
Companies operating in the Serbian market strive to respond to customer demands to a great extent, and we are pleased to note that, at least judging by our sample, there are no companies that react only upon receipt of customer complaints.
Judging by the answers of the CEOs taking part in our survey, the Serbian market also follows world trends. Namely, the demand for more personalized products/services have been singled out as the factor that has the most significant impact on changes in customer expectations. Customers expect information on products/services to be visible and easily accessible to them, and also expect their queries to be answered promptly. According to the latest surveys, half of the consumers will desist from purchases if they are unable to obtain prompt information enabling them to assess whether a particular product/service fits their needs.
Surprisingly, the use of new technologies for purchasing purposes is the least important factor, according to CEOs taking part in our survey. The question arises as to whether this is a consequence of the situation in our market, a characteristic of the industries our respondents come from or a reflection of consumer habits in the domestic market. It would indeed be interesting to examine this matter further.
Half of the companies operating in the Serbian market do not have an individual budget allocated exclusively for the examination of expectations/innovations that would help respond to customer requests, which is surprising considering the respondents’ assessment that demand for personalized products/services have the greatest impact on customer expectations.
A large number of participants in our survey ranked the readiness of banks to follow the growth of companies in the Serbian market as high or very high.
Nearly one-third of the CEOs have no particular opinion about access to external credit sources concerning their amount and credit cycle period, while about half of them rate this item as high or very high.
CEOs doing business in the Serbian market maintain that the price of loans for their company is realistic considering their credit rating and the average price of capital in the market.
When it comes to availability of alternative sources of financing for the growth of their companies, the CEOs of Serbia-based companies rated strategic investors most favorably. Funds ranked second, while initial public offerings (IPOs) received the least favorable ratings.
Cybersecurity is a topical issue both in Serbia and worldwide. A shift of focus from cybersecurity viewed as a technological issue to it being considered a matter of every company’s critical strategic decision is of prime interest.
In light of the ongoing business digitalization, it is believed that the time has long passed since companies could merely forward their cyber risks/threats to the IT department, which makes business operation increasingly vulnerable to the numerous threats it is facing today. Large companies have already shifted their focus significantly and do not contemplate on the issue of what “if” a threat occurs, but rather “in what way” they can react “when” such a situation occurs.
In nearly half the companies operating in the Serbian market, cybersecurity is based most frequently on the existence of a particular department/person dealing exclusively with this issue, which is, judging by current global trends, an obsolete system of managing this particular type of risk. Nevertheless, we are pleased to note that other forms of security do exist in a large number of companies, which indicates that the Serbian market is heading in the right direction.
As mentioned above, data security is becoming a field organizations need to address strategically. As such, it needs to permeate organizations entirely, which is why keeping every link in the chain informed in a proper and timely manner is crucial.
Judging by the answers given by our respondents, companies in the Serbian market are making significant efforts to ensure that their staff is kept abreast of information security. Hence, nearly 80% of the companies have an established security awareness programme across all departments, including the management. However, the percentage of companies with no form of awareness programme is not negligible either, and amounts to nearly 15%, while one out of 10 companies has only a partially established application, designed for just some departments. Considering the ubiquitous threats and risks burdening companies on a daily basis, both in the global and local market, we see that there is much space for improvement of security mechanisms in companies operating in Serbia.
Internal audits are by far the most frequent ways of conducting information security risk assessments in companies managed by our respondents.
In half of the companies, 0-5% of the IT budget is allocated for cybersecurity.
Cybersecurity threats are not encountered in business alone. State institutions and other types of organizations are also targeted quite often. Last year, some of the most striking incidents of this kind were precisely those directed against organizations such as the U.S. NSA and British National Health Service, which were targeted by different ransomware. A large number of incidents last year seem to have been linked to this type of threat, where the party under attack is subjected to a data lockdown and is then asked to pay a ransom (hence the name ransomware). Quite often, if the ransom is not paid within a certain time frame, all data is deleted. It is estimated that 6 to 10 percent of all cybersecurity-related incidents involve ransomware that attacks in the business world occur every 20 seconds, that no industrial sector is left out, and that 7 out of 10 attacks are successful. Such incidents are expected to be on the rise. The dark web and Bitcoin enable practically everyone to sell stolen data without identification, subsequently rendering no possibility to apprehend the perpetrators.
When it comes to the most frequent incidents connected to cybersecurity that have occurred in the past year in the Serbian market, viruses are the most common. However, the number of ransomware incidents is not negligible either. We note that the Serbian market is gradually leaving behind web portal and internal system hacking, as well as confidential data theft.
We are pleased to note that our domestic market is “lagging behind” the global market in this sense and hope that we will learn the lessons we need to learn and be prepared for a wave of substantial attacks liable to hit our market in the near future
With the ubiquitous digitalization taking place all around us, the number of devices demanding higher security measures and posing as potential targets for a cyberattack is on the rise. Mobile phones, tablets, devices supporting the Internet of Things (IoT) and similar devices all have deficiencies with respect to their protectedness. New technologies, such as artificial intelligence, open new avenues for attack.
As much as 3/4 of the respondents in our survey have identified the human factor as the most significant risk factor connected to cybersecurity in their companies. One-Quarter of them believe that there is an insufficient level of informedness/awareness of such risks in our market, while a fifth see mobile devices as a potential risk for the business.
Taking everything into account, we are happy to report that over half the CEOs participating in our survey acknowledge that the process of identifying risks in their company should be improved. Since the threat has been recognized it is necessary to work on dealing with this issue continually, as cybersecurity is an incredibly dynamic and volatile field.