High Tech Industry Viewpoints

The high tech industry is at the leading edge of an epochal transformation that sees a century’s worth of progress crammed into every decade.

Digitization is everywhere—in every process, in every product, in every machine, even the factory itself—and it’s changing the high tech industry forever. Groundbreaking technologies including the internet of things, 3D printing, artificial intelligence, and cloud are redefining what’s possible, putting businesses under pressure to increase innovation velocity.

In this ebook, we’ll explore the drivers behind the high tech industry’s digital transformation, and the opportunities it’s made available. We’ll discuss potential bumps in the road and the disruptive influence of technology, before examining the growing as-a-service business and monetization models enabled by digitization. We’ll explore how the shift from linear to continuous product development models has transformed the product lifecycle and enhanced the speed of innovation, and how cloud capabilities can help high tech businesses take advantage of the opportunities that come their way.

We believe swift cloud adoption for all applications and workloads will allow high tech companies to exploit the opportunities of technological transformation, and embrace new business models. Failure to do so will see businesses fall behind.

Digital Opportunity

The high tech industry has never had such a huge opportunity. Transformative new technologies are a chance to enhance innovation, reduce time to market, and create new market opportunities and business models, while the wealth of data they create and capture has the potential to produce valuable insights.

Digitization is changing the high tech industry forever—rapidly accelerating industry transformation. Businesses with the agility to embrace breakthrough technologies can capitalize on the opportunities they offer, and accelerate their own business transformation.

Game-changing technologies:

Artificial intelligence and machine learning.

According to Accenture, artificial intelligence will double the economic growth rate of 12 developed countries by 2035. Tech entrepreneur Elon Musk, meanwhile, described it as humanity’s “biggest existential threat”. The impact of artificial intelligence will be profound, and what’s certain is that it promises to transform the high tech sector.

AI allows businesses to automate processes usually associated with human intelligence. Today’s AI-enabled computers can recognize images, understand language, and perform complex reasoning while making decisions based on sophisticated mathematical analyses. AI enables better-informed decisions and AI systems learn over time, becoming better at spotting new opportunities and exposing unseen risks. It augments human intelligence with powerful computing and decision-making informed by precise data analysis.

Machine learning exploits and uncovers unseen patterns in human, operational, and system activities, delivering significant benefits for all functions—extending to the enterprise ecosystem. It can help to enhance customer experience with technologies such as intelligent chatbots, and arm operational staff with the knowledge to improve performance and outcomes. For the high tech industry, machine learning presents an opportunity to add value through prediction, personalization, and customization.

AI and machine learning will impact the high tech industry by:

• driving new software innovation

• creating new value-generation opportunities through AI-enabled product and service offerings.

Oracle is in a unique position to deliver AI across all cloud services—including Adaptive Intelligence embedded within business applications, AI services within Oracle’s cloud platform, and an AI development environment running on the high-performance compute and network infrastructure required for accelerated model training.

The internet of things.

The growing importance of internet of things (IoT) technology has been widely discussed. IDC predicts the worldwide install base of IoT-connected devices will be close to 30 billion by 2020, along with a revenue opportunity of 1.7 trillion USD. The possibilities offered by IoT can be broken into two distinct parts: ‘products’ and ‘data’. IoT is giving rise to a wealth of new connected products and services—from smarthome gadgets, smartwatches, and connected cars to smart cities, assembly lines, and even entire smart factories. However, the explosive data volumes generated by an ever-growing number of connected devices is arguably an even more important factor.

The internet of things is only beginning to reveal its true promise.

The high tech sector is the driving force behind the technology that underpins the internet of things, but the industry also stands to benefit from the proliferation of connected devices.

Within the factory, IoT connectivity has enabled a business transformation, where Industry 4.0 can improve quality, minimize lead times, improve efficiencies, and reduce costs. In the supply chain, IoT provides real-time delivery and performance status. This connectivity enables new business models—such as remote monitoring, and connected, automated services.

The vast quantities of data generated and captured through IoT will become a value-generating asset for the high tech industry, enabling companies to create new business models, enhance existing business processes, reduce costs, and offer new value-added services. Oracle looks at IoT from the business applications out—not the edge devices in. Oracle’s strategy is to help extend the reach of business applications to devices, gather insights from those devices to drive actions inside business applications, and have those applications act securely upon devices.

Blockchain.

A blockchain is a digitized, distributed ledger that records every transaction across a peer-to-peer network. In so many ways, blockchain is a game-changer—it’s reliable, effectively tamperproof, and secure. It removes the ‘third party’ element from all kinds of digital transactions, removing the need for trust when transferring funds or sharing classified information.

According to Tapscott Group CEO Don Tapscott, blockchain has the potential to “revolutionize the world economy.” Blockchain has the potential to fundamentally transform how global business transactions are conducted. Currently, some business-to-business transactions are routed through third parties to ensure integrity and protection. These third parties can introduce delays and additional costs.

Blockchain enables the participants in a trusted business network to transact directly, while ensuring the validity and nonrepudiation of their transactions. Once the proposed transactions are validated and agreement is reached on their results, blockchain participants record them in cryptographically-linked blocks that cannot be repudiated.

Because blockchain effectively guarantees data ownership, protects data privacy, and prevents unauthorized duplication, it’s going to enable countless new business models while disrupting many existing ones. For the high tech industry, that means revolution across the supply chain. The potential use cases for blockchain technology include design IP protection, tracking product genealogy, production process assurance, supply chain business-to-business transactions, simplifying supplier onboarding, smart contracts, compliance monitoring, and recall management. Blockchain has the power to enhance supply chain scalability and efficiency, automate existing processes, and improve transparency, trust, and security.

Virtual reality and augmented reality.

It’s easy to dismiss VR and AR as fads—the short-lived Pokémon Go! phenomenon and the flop that was Google Glass adding further fuel to the argument. However, both technologies are finding a host of new practical applications—from Snapchat filters to the heads-up displays in executive cars to the entertainment industry.

But VR and AR are enabling fundamental changes to the way we see things in—and interact with—the real world. When the virtual world can effectively simulate real-world conditions, costs fall dramatically. Training, production, quality, testing, and service are all areas where virtual interaction offers improvements at significantly lower costs—through both simulation, and active engagement with a virtual twin of the product or service.

Writing for Industry Week, Wipro’s K.R. Sanjiv explains how Lockheed Martin and Bosch are using AR-enabled headsets to improve health and safety, and enhance engineer performance.

Drones and autonomous cars.

The technology that underpins self-driving vehicles like drones and autonomous cars is being perfected. Drones are fast becoming the delivery mechanism of choice for remote locations. And as the technology evolves, they’ll become even more disruptive—completely replacing the final leg of the delivery supply chain. Autonomous vehicles will take this a step further, as the technologies evolve to change the way businesses, supply chains, cities, and consumers interact with each other. The technologies will impact how we transport, sell, buy, and manufacture products.

In addition, as such technology becomes more commonplace, society itself will have to adapt—new infrastructure and new legislation is necessary if drones and autonomous cars are to be used safely and effectively.

For the high tech industry, autonomous vehicles represent one of the largest new growth markets for technology. There’s an enormous opportunity for the semiconductor industry, with demand for components driving innovation ever further.

3D printing.

Not only is 3D printing changing the way products are designed and manufactured, it’s transforming the competition—and how products are sold. Intellectual property protection must be managed as a critical factor in determining how files are shared. Companies are beginning to print products on demand—disrupting how spare or maintenance parts are supplied. The delivery model is evolving. Companies like Carbon are now offering 3D printing services exclusively, rather than selling the printers themselves.

According to the 2016 Price Waterhouse Coopers (PwC) Manufacturing Institute report, 71.1 percent of manufacturers had already adopted 3D printing. While integration issues have hampered early adopters, 3D printing has already transformed the medical technology, automotive, fashion, and manufacturing industries, and many more are likely to follow.

Digital Disruption

From the first integrated circuits to modern systems on a chip, from mainframe computers to smartphones and cloud computing, from telephony to the internet and wireless 5G networks, technological advancement has long been a powerful enabler—driving innovation across the high tech industry. But it’s about more than the evolution of technology products themselves. The fourth industrial revolution, or Industry 4.0, is upon us. It’s changing everything—from the way products are manufactured to the way they’re serviced and sold. Companies must rapidly adapt to new technologies as they emerge—or they run the risk of going out of business. Over half of the Fortune 500 have gone bankrupt, been acquired, or ceased to exist since 2000. Businesses ignore these evolving technologies at their peril. High tech companies are far from immune themselves, and must adapt to the digital disruption they’ve helped to create.

Disruptive digital technologies like cloud computing, IoT, artificial intelligence, and 3D printing are creating opportunities for high tech companies to accelerate innovation, streamline operations, exceed customer expectations, and create new market opportunities and business models. The challenge is for legacy high tech companies to adapt their businesses quickly enough to exploit new these digital technologies. Younger startups built on cloud-enabled business models have shown how rapidly they can innovate their offerings and meet the evolving needs of the market, while legacy companies struggle to modernize and transform their businesses.

For many, staying competitive means strategic acquisition of these proven newcomers.

Closing the innovation gap means adopting the cloud agility to take advantage of these disruptive new technologies.

Innovation versus efficiency.

The high tech industry is under constant pressure to innovate, but product innovation sometimes comes at the expense of efficiency. If it’s a sliding scale, with innovation leadership at one end and operational efficiency at the other, how can you strike the perfect balance?

First-to-market innovators could arguably be seen as market leaders, but there is such a thing as bringing products to market too soon. Again, think of Google Glass—Google released their wearable hardware before the market was ready for it. Sometimes, the fast followers can benefit just as much—following in the true innovators’ footsteps, but with a more cost-effective product offering that’s been refined and perfected rather than rushed into production. Apple might have been first to market with the iPhone, but their original innovation triggered a smartphone revolution—it didn’t take the fast followers long to saturate the market with their own attractive offerings.

Whether a first-to-market pioneer or a fast follower, success depends on timing market entry right.

Compliance and sustainability.

High tech companies face a rising flood of new compliance regulations, as countries around the world grapple with growing problems such as e-waste, changes to Restrictions of Hazardous Substances (RoHS) requirements, conflict mineral compliance, and other regulatory requirements. Rules and requirements can vary by state, country, and region. This adds tremendous complexity to the compliance picture, and creates challenges for organizations trying to implement compliance management systems.

It’s not enough just to meet compliance requirements—high tech companies must think about sustainability, too. And sustainability isn’t simply about making choices and building processes that are more environmentally friendly. For businesses, sustainability also means eliminating inefficiency, finding more cost-effective solutions, building brand equity, managing risk, and streamlining processes that damage both the environment, and your bottom line. What really matters is recognizing how sustainability is applied across your business—and most critically—how it’s embedded into every stage of your supply chain.

Globalization and the evolving workforce.

Cloud hasn’t just made your competitors more agile, fluid, and innovative—it’s also made them more plentiful. In a globalized, internet-enabled world, competition is no longer limited by geographical proximity. Your next disruptive competitor could come from anywhere.

And these competitors aren’t just rivals where products and services are concerned—they’re also competing for the best talent. There’s a global shortage of engineers with the skills required to get the most from disruptive new technologies, so high tech companies are forced both to look further afield for talent, and to get creative in their search. Big data and analytics can be used to identify potential candidates early—sometimes, before they’ve even started looking for work. Many companies are investing in training facilities in developing nations, in the hope that they can hone their own generation of highly-skilled engineers. Meanwhile, the industry is changing to a millennial workforce, and the pressure is on to deliver a highly digitized working experience attuned to the experiences of this new generation of employees.

To stay relevant, high tech companies must embrace the cloud—enabling real-time visibility and enhancing external and internal collaboration.

Cybersecurity.

No industry is immune from the threat of cybercrime, and high tech is certainly no exception. In fact, Deloitte describes the high tech industry as ‘ground zero for cyberattacks’.

The industry is under attack, with some of the information held by the high tech industry of considerable value to cybercriminals. And because high tech companies tend to operate at the leading edge, they often adopt new technologies and processes with unproven levels of security. Naturally, this puts them at risk.

And yet, the majority of cyberattacks are preventable. Many successful cyberattacks only find a way in because their victims failed to keep up to date with critical security patches. To effectively secure their sensitive data, high tech companies must partner with a proven cloud provider with a business built and developed around data security, and use cloud services for automatic assurance that the latest patches are downloaded and applied.

To ensure users are working in the most secure environment, Oracle Public Cloud features automated installation of critical security patches—helping users stay secure by default.

Accelerating Innovation

Innovation in high tech companies has shifted from hardware to software. Digitization and emerging technologies increase the pace of innovation—reducing time to market, minimizing product lifecycles, and opening up potential new revenue streams. Software-driven innovation and pressure to compete will push product lifecycles from a linear development process to a continuous model.

The digital thread.

Put simply, the digital thread is about creating a connected data flow across every aspect of a product’s life—from initial concept to design and manufacture, through sales and distribution, customer utilization, and servicing. Internet of things products, processes, and even entire factories mean that once-siloed processes are now connected through digitization.

For manufacturers and high tech companies, the digital thread presents an opportunity to capture and analyze reams of new data across the product lifecycle—delivering the right insights, at the right place, at the right time.

The digital thread is a chance to enhance collaboration, transparency, and planning with a model-based enterprise (MBE) and 3D model-based definition (MBD).

The possibilities are significant. With the help of detailed usage data, we can design and create better products—we have an opportunity to better understand customer requirements and experiences, designers can make more informed decisions, and high tech manufacturers can minimize risk and expense.

But the digital thread is a twofold opportunity for the high tech industry. As well as delivering the ability to design and innovate more quickly, respond to insights in real time, automate processes, and reduce time to market, the internet of things-driven digital thread will increase demand for the sensors and other hardware that enable connected devices. It’s a significant growth area for the high tech sector.

Enterprise product record.

High tech companies can use an enterprise product record to track the digital thread and make best use of its insights. It’s a complete record of the product lifecycle, closing the loop of the digital thread and feeding the innovation process.

It tracks the product as shown in the diagram below:

The digital twin.

The aim of the digital twin is to provide a virtualized environment in which to design, build, and test products, and to monitor live hardware at the customer. A digital twin is a virtual representation of a physical asset or piece of equipment that enhances traditional analytics approaches. The object model includes multi-faceted views into current, historical, and predictive data, as well as operational and behavioral dimensions of that asset. This enables design engineers to simulate and identify potential issues earlier in the design process, and allows remote users to prevent failures before they occur—monitoring the health of product assets at the customer, and running ‘what-if’ simulations in the context of business processes. With a digital twin, organizations have a new operational paradigm to interact with the physical world, allowing accelerated product design cycles, lower operational and capital expenditures, minimizing downtime, and optimizing asset performance.

With a digital twin, high tech companies have an effective sounding board against which to test and develop new products and monitor live assets. They can use it to assess the capabilities of existing systems, simulate results, determine product sustainability, and refine designs on a continuous, ongoing basis.

Accelerating innovation with the digital thread and digital twin.

With the insights provided by the digital thread and digital twin, high tech companies can make better, more accurate decisions—focusing on the best ideas, investing in the right areas, and effectively accelerating innovation.

Building a smart connected factory requires a modern cloud platform capable of tracking the product lifecycle from ideation to obsolescence.

The result is an opportunity to bring the right products to market at the right time, enhancing customer satisfaction.

Oracle provides a range of industry solutions to support the high tech manufacturer in the digital age, utilizing a modern cloud platform that combines SaaS applications with IoT, social collaboration, analytics, and mobile cloud services to enable accelerated innovation and streamlined operations.

• Digital Innovation to Launch enables a digital thread to track the complete lifecycle of products from idea inception through release, in-field use and service. This closed-loop innovation cycle integrates quality data, user feedback, IoT-enabled product usage analysis, and collaboration across the value chain.

• Digital Supply Chain modernizes supply chain processes to competitively meet current and future requirements by aligning business strategy with supply chain execution metrics, enabling integrated business planning and leveraging blockchain technology.

• Connected Smart Factory helps high tech manufacturers better predict and resolve maintenance requirements, correlate quality issues to machine and environmental factors, reduce downtime, and improve quality.

• Connected Digital Service enables high tech companies to dive deeper into the insights provided by connected devices, and allows for increased visibility, self-help capabilities, automatic engagement and preventative and predictive maintenance.

Integrating M&A

Mergers and acquisitions (M&A) are an opportunity for high tech companies to gain market position, access higher-growth markets, or adopt the technologies and capabilities of agile, cloud-native startups.

But M&A poses its own difficulties. Many established high tech companies struggle to integrate their acquisitions—their legacy, on-premises systems make it difficult to work with the enterprise resource planning (ERP) systems of the companies they’ve absorbed.

Pursuing innovation through mergers and acquisitions is only sustainable if high tech companies adopt the business agility necessary to integrate often diverse IT architecture.

Whether their business plans include M&A or not, business users need a single order management hub with global order promising, capable of bridging business systems to reduce lead times and fulfillment errors, minimize cost, and increase customer satisfaction. In a market that demands agility and flexibility, the ability to integrate diverse business systems and platforms is crucial.

Oracle offers a cloud platform capable of orchestrating orders across multiple ERP systems, while providing a single quote and order hub to improve lead-to-cash processes and provide a consistent, seamless experience across multiple business systems.

From Rigidity to Agility

Whether software, semiconductor, or original equipment manufacturers, most high tech companies were built on an established set of business processes: receive orders, ship physical products, invoice customers. In many of these businesses, on-premise enterprise resource planning (ERP) systems have been highly customized to align with legacy business models. But increasingly, these business processes have little or no place in a cloud-enabled world.

How can high tech companies adapt from traditional business processes—and the legacy IT that underpins them—to entirely new business models, such as product-as-a-service?

Adopting new business models.

Cloud and the internet of things are enabling new business models, like product-as-a-service. The as-a-service model differs drastically from legacy business processes. With this new approach, hardware, software, and services are bundled together, and billing is based on various subscription and/or usage metrics—not just the delivery of physical goods. Delivering products via a subscription-based as-a-service model lets high tech firms take advantage of significant aftersales opportunities, helping to monetize further and improve customer retention. And for customers, products become more attainable—a subscription-based payment structure is often more palatable than an expensive, one-off investment.

We’ve seen time and again how disruptive these new business models can be. The examples are familiar, but bear repeating. Empowered by cloud, agile startups like Uber, Airbnb, Netflix, and others emerged from nowhere to turn their respective industries upside-down. The same thing is happening across several segments in the high tech industry, and the rate of disruption continues to intensify.

Only those companies with sufficient business agility will have the capability to support and deploy new business models rapidly, and respond to evolving market demands.

Oracle's Lead-to-Cash for the Digital Age solution provides the foundation for an omnichannel customer experience, giving your company the flexibility to support new revenue models—such as product-as-a-service. Oracle Marketing, Sales, and CPQ Clouds empower direct sales and channels partners to engage customers earlier with smarter selling practices, while better managing the sales force through insights into pipeline and performance. Order Management Cloud orchestrates the resultant orders across fulfilment systems. Oracle Monetization Cloud Service enables the product-as-a-service revenue model, and Oracle Commerce Cloud rounds out the solution by empowering manufacturers to create exceptional online buying experiences for both consumers and businesses.

Customer Experience.

Potential customers are no longer simply visiting resellers or contacting sales reps as they’ve done in the past. They’re doing much more upfront research on their own, and any influence needs to begin well before the buying cycle starts—true in both B2B and B2C interactions. Compounding this are millennials entering the business world, and demanding the simplified buying experiences they’ve become accustomed to. And in this age of social networking and constant connectivity, customer feedback is immediate. Years of brand building can be destroyed by one careless act, or by ignoring a series of complaints. The result is that high tech companies have become hyper focused on the customer.

Providing a user-friendly omnichannel experience—along with proactive monitoring and relationship cultivating—is critical to success. Customers expect complete solutions, where hardware, software, and services are bundled and work seamlessly together. More complete insights into these customer behaviors are also driving supply chain and innovation to more effectively match product/service offerings and delivery to the needs of customers.

Competing with cloud-native rivals.

Many high tech companies are now being built in the cloud. They’re cloud native—they don’t have cumbersome legacy architecture standing in the way of innovation, and they don’t need to spend time and resources shifting to the new cloud business model. In order to compete with these agile, innovative businesses, traditional tech firms are under pressure to migrate to the cloud themselves. But it’s not as simple as merely flipping a switch—for these businesses, cloud migration represents a fundamental business change. As large, established tech companies begin their move to cloud environments, they’ll face a challenge to integrate new hardware with legacy and standalone systems.

With a modern cloud platform, IoT connectivity, big data analytics, predictive intelligence, and a digital supply chain, high tech businesses can modernize production and enhance competitiveness, by:

• improving visibility to cost, efficiency, and quality across factories

• monitoring production performance and predicting maintenance needs

• monitoring assets and predicting failure

• monitoring quality and applying best practice training.

Conclusion.

Change has rocked the high tech industry.

With progress rapid and constant, success will belong to those with the willingness and agility to embrace disruptive new technologies.

The scalability, flexibility, agility, and cost-effectiveness cloud provides will ensure high tech companies have a modern platform that’s ready for the future—whatever it might bring.

The Latest News and Updates

Adapting to the high tech industry’s rapid and continued transformation—and thriving in this new, tech-enabled world—will require all the insights and information available to you. But it’s impossible to read everything. That’s why we’ve hand-picked a selection of links to provide you with the best information and opinions on the hottest topics in high tech.

Will blockchain for supply chain change everything?

Discover how blockchain—the technology that underpins disruptive cryptocurrencies like Bitcoin—could revolutionize supply chain processes. John Barcus—Vice-President, Industry Solutions, Manufacturing, High Tech, and Automotive at Oracle—explores how blockchain enables new levels of trust, transparency, and efficiency capable of significantly transforming how companies do business.

Read the full article and find out more about the future of the supply chain.

Read article

Adapting manufacturing for the digital age.

Like it or not, change is being forced upon manufacturers and the high tech industry, and businesses must be prepared to adapt—or perish. Read John Barcus’ exploration of how digitization is transforming the industry, and how manufacturing can adapt for the digital age. With new business and revenue models to adapt, smarter interactions between machines and processes to develop, and value chain collaboration to enhance, those who act now stand to benefit considerably.

Read the article and discover the new face of manufacturing.

Read article

Deliver an omnichannel customer experience.

High tech must seek new ways to engage customers earlier in the sales cycle, and make order orchestration and execution as seamless as possible. Oracle Lead to Cash for the Digital Age acts as the foundation for your omnichannel customer experiences. Find out how Oracle’s cloud platform can help your business automate sales processes, enhance marketing engagement, enable new purchase models, and more.

Discover solution

Build a smart connected factory.

By connecting devices to processes, manufacturers can build a smart connected factory capable of delivering deep insights across the product lifecycle. Find out how Oracle’s Smart Connected Factory solution helps manufacturing companies better predict and resolve maintenance requirements, correlate quality issues to machine and environmental factors, reduce downtime, and improve quality.

Discover solution

Bring digital innovation to launch.

Digitization is shrinking product lifecycles, and forcing high tech companies to accelerate the pace of innovation. Oracle's Digital Innovation to Launch solution is a modern cloud platform that enables a digital thread to track the product lifecycle—from idea inception through release, in-field use, and service. Discover how Oracle’s cloud solutions can help you build an innovation pipeline, better plan and manage product releases, quality management, and resources, and drive best practices.

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