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High Tech companies are in the forefront of innovation – either through product & process innovations or business model transformation.  This is part of a series that we plan to release over the coming weeks on how companies are trying to out-smart each other to get first mover advantage.

What are the key factors that helped accelerate the innovation and transformation over last few years? 

  • Great Recession – companies are holding their cash more than ever before – technology companies led the charge and are moving from CapEx to OpEx models
  • Companies are simplifying their procurement process by reducing their number of suppliers. Companies are doing their own research for their specific solution needs instead of relying on vendor’s recommendations.  In fact according to this CEB Study, 57% of the purchase decision is complete before a customer even calls a supplier.
  • Technology & business innovations in the areas of cloud, big data, mobile, social and Internet of Things – see IDC top 10 predictions
  • Platforms are accelerating this hardware adoption in a big way.  Read the GigaOM on next big thing in hardware and platform adoption ramps by asymco

     

What are some of the responses by the companies to the address these trends?

  • Differentiating themselves from their competition by taking advantage of emerging technologies:
    • Lexmark’s Managed Printer business – shift from outright printer purchases by customers to pay as you go model and ensuring efficient running of the printers – often engaging 3rd party service provider and replenishment of consumables such as papers, inks supplied through established retailers.
    • Cisco Intrusion Prevention Systems making use of vulnerability-focused detection to provide comprehensive threat protection against malicious activities on the network
    • New software entrants with their disruptive technologies and delivery models have pushed established players to either innovate in-house or acquire to stay in game.  According to this PWC paper, IDC projects subscription revenue (including SaaS) to grow at a 17.5% compounded annual rate, reaching 24% of total software revenue by 2016 from today 5% SaaS revenue (for top 100 Software companies).
    • SaaS vendors offering 99.5% or greater uptime and performance guarantee
    • Proactive monitoring and support of the hardware/software before it effects the business
  • Working closely with more partners (sometimes with competitors) to address to address specific solution need of better informed customers.
  • Offering complete solutions and providing flexible payment options – leasing, subscription models, pay-as-you-go models. Some examples
    • Manage Printer Services by Lexmark – the whole notion of moving from sell printers to selling printing
    • Bose offering flexible payment plans with their audio devices
  • Moving towards platform play, companies investing to create vibrant eco-system and offering flexible revenue share models to retain partner loyalty. Some examples – Apples App Store, Google Play, Amazon Web services, SAP HANA Cloud Platform
  • Consolidation to expand the solution portfolio strategically and offer differentiating solution to the market. Few examples – Intel acquired McAfee, Lexmark acquired Perceptive Software

                 

These are exciting times and being a first mover has both advantages and risks involved. In the next blog, we will provide further insights into the challenges that companies faces and what are the steps they are doing to address the new world.

Please share your thoughts on what you are seeing at your enterprise and how you are responding to these changes.

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