Is the High-Tech Industry Driving Digital Disruption or Being Driven by It?
We’re living in exciting times. All around us transformative technologies are enabling us to navigate unfamiliar territory, eliminate mundane tasks, gain unprecedented insights into our businesses, monitor our health, learn new skills, and explore the world in ways that were impossible only a few years ago.
At the same time these technologies are causing considerable disruption, blurring the lines between industries and spawning hungry start-ups that are just waiting to take a slice of established companies’ action.
The high-tech industry is at the heart of these developments, delivering the devices, applications and solutions that are making this new world a reality. Indeed, according to IDC 70% of all high-tech revenue will be directly related to other industries adopting the digital economy by 2020.
But the industry itself is not immune to the disruption that is taking place. In a recently published e-book, IBM and SAP set out their joint vision of the challenges and opportunities facing the industry.
Recent research by IBM shows that CxOs know only too well that they cannot stand still with 72% switched-on to the potential of new business models, 60% re-examining their operating models, and 83% looking at overhauling their product/service portfolios.
Creating new business models
When it comes to business models the high-tech world is shifting from selling products and services to selling outcomes. In our own business the emphasis has gone away from selling software for people to run in their data center to cloud computing, where companies subscribe to the functionality they need to support their business.
Other high-tech companies are looking at usage-based pricing, entitlement models, and subscriptions. Traditional hardware vendors are evaluating how new software services can boost revenue, software companies are moving into hardware, and born-virtual companies are taking real-estate in the shopping mall.
Automation, Big Data, analytics, machine learning, and cognitive computing are having a major impact on operating models. The ability of machines to intelligently analyze and act on massive quantities of data will boost efficiency significantly, as well as support better decision making.
For example, directors in the SAP boardroom now have instant access to real-time data from across the company. Using predictive analytics they are simulating various future business scenarios and, as a result, making better decisions. It’s a far cry from the days when any questions had to go back to the financial team for analysis and presentation at the next meeting.
In manufacturing machines are being taught to identify defects in parts, components, and products. They match patterns to images of defects that have been previously analyzed and classified and then automatically initiate corrective action. Similarly, with asset management, artificial intelligence is being used to optimize maintenance schedules, preempt failures, and maximize return on investment.
Of course, high-tech companies do not exist in isolation. Developing, manufacturing and delivering products to their customers involves a complex eco-system of partners and suppliers. A problem at any point in the chain can influence the owner’s experience.
The Internet of Things, Big Data, and analytics offer the opportunity to develop fast feedback loops that deliver information rapidly to very partner in the eco-system, in order to not only rectify the situation rapidly but also adjust manufacturing and operational processes to improve quality.
Overhauling product portfolios
For companies wanting to overhaul their product portfolios it is clear that digital reinvention can fundamentally change how products are developed. R&D teams can continuously capture new ideas, product usage information, and new customer requirements. While digital tools can be used to rapidly test and prototype new products, creating a “fail fast, fail cheap” environment that rapidly exposes the options with the most market potential.
In our e-book you’ll discover more ideas about how high-tech companies can digitally invent themselves, as well as information about how IBM and SAP are developing intelligent solutions that increase customer value through cognitive computing, enhanced customer and user experiences, and high-tech industry specific functionality.