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In an environment where margins are rapidly declining and business volatility and complexity are increasing, it is challenging for established technology companies to compete against the digital native startups. They are racing to transform their products and business delivery models to meet the new expectations created by their young competition.
82% of revenues derived from digital business models will be platform-enabled.5
To compete in this rapidly evolving environment, many technology companies are looking toward strategic mergers and acquisitions to acquire new technology, skills, and patents, strengthen their platform ecosystem, enter or grow specific markets, or vertically integrate strategic value-chain components. As a result, there has been a significant rise in consolidation while the industry continues to grow and expand.
Geopolitical uncertainty, a global trend toward nationalism, and related trade tariffs are causing higher costs and global value-chain risks. Increasing global tensions from the US-China trade war are shifting manufacturing out of China to on shore, near shore, or other locales, including Taiwan, Vietnam, and Mexico. Global disruptions, such as natural disasters or recent pandemics like COVID-19, will continue to impact value chains. These events highlight weaknesses and disrupt industry supply chains. In addition, technology companies are under pressure to keep up with increasing regulatory compliance requirements across RoHS, conflict minerals, global trade, export compliance, and privacy.
To survive, high technology companies will need to rely on the industry’s innovations in Internet of Things (IoT), AI, machine learning, blockchain, and cloud technologies to adapt their supply chains to be more responsive, and build businesses that can quickly adapt. The industry landscape will change as companies increase their focus on the need for supply chain resiliency.
“As companies seek to exploit the benefits of greater levels of digitalization, new and innovative technologies, such as blockchain and artificial intelligence/machine learning, can potentially and significantly disrupt existing supply chain operating models.”
Christian Titze, VP Analyst, Gartner