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The roadmap to future relevance in high technology requires proactive, rather than reactive, evolution. If the competition is forcing the transformation, it may already be too late. Digital transformation demands are shaping the future of high technology companies’ strategic priorities to generate new revenues through alternative business models that deliver better customer outcomes, create innovative products with instant time to market, and automate procedures, including mission-critical, end-to-end business processes and operations across the global value chain.
Enabled by digital technology and cloud, a new generation of technology startups has emerged, natively born to deliver solutions as a service to consumers, enterprises, and the public sector. These businesses are built on subscription- and consumption-based models, and focused on delivering customer outcomes. As each market embraces the consumption of technology based on the value received, the new growth opportunities are clear. Focusing on delivering great outcomes leads to increased customer satisfaction, more-predictable revenue streams, and an easier path for upselling more value to the customer.
Subscription businesses are built for scale and are using this time to innovate and launch new plans—efforts that will make their businesses stronger when the economy shifts back. Look no further than Zoom. In April, as working from home became a global health imperative, Zoom’s daily tally of meeting participants mushroomed to 300 million, up from 10 million in December. One reason for that growth spurt was that the company, founded in 2011 with a focus on business users, had begun supporting educators and students with a free tier for K–12 schools. Zoom becoming an essential service for enterprises further boosted its usage.
The established leaders in the high technology industry are now in a race to transform their businesses through acquisition and organic innovation—or both—to deliver technology solutions as a service and great customer outcomes. To stay competitive in many technology segments, this transformation is a must. The challenge that the native-born cloud companies do not have to contend with is how to transform without disrupting the current cash-cow business.
To deliver great customer outcomes, high technology companies must pivot and transform their business with a focus on the customer experience. This focus must be threaded throughout how they innovate, design, sell, and deliver their products, and how they service the customers consuming them.
“Customers no longer base their loyalty on price or product. Instead, they stay loyal with companies due to the experience they receive. If you cannot keep up with their increasing demands, your customers will leave you. In fact, 86 percent of buyers are willing to pay more for a great customer experience.”6
With the frantic adoption rate of new digital technologies, companies are racing to penetrate markets. However, being first to deliver a new technology or innovation to market is not a guarantee for success. High technology companies must focus on delivering the right product at the right time at scale to a market that is ready to adopt. First to scale consistently eclipses first to market.
“Most of today’s behemoths—from Google and Facebook to Instagram and Snapchat—were not first-movers.”
Matthijs Rosman, Partner, RevelX
To outperform in their markets, high technology companies need to know not just what is happening in the market, but why it is happening. Once understood, organizations must act to deliver customer outcomes that drive loyalty and growth. To discover new products and services that better serve customers, industry leaders will need to explore the unknown and make the market opportunities tangible. Connected products with automated software updates and real-time, intelligent usage data will enable more-responsive innovation. Innovators will need to build in agility throughout the product lifecycle because, whether the product is installed in the field or still in development on a white board, it is effectively always in development, and always updatable via software.
High technology companies must reinvent their products by combining hardware, software, and business-model innovation in an agile manner to meet the market’s fast-changing needs and deliver great customer outcomes.
Across the high technology industry, supply chain fragility has been exposed by recent, global disruptions and geopolitical uncertainty.
In response, long-established supply chain practices in the industry are being reconsidered. Companies are re-evaluating their supply networks, looking at diversification of offshore suppliers, and bringing some back onshore.
Supplier risk and reliability must be mitigated, but that alone will not be enough. Unforeseen events will still occur, and high technology companies will need a resilient supply chain that can respond quickly while balancing costs.
“The spread of the coronavirus has laid bare supply chain vulnerabilities and their impact on the world economy. As a result, the importance of supply chain resiliency has never been clearer. While all supply chains are vulnerable to risks in a global economy, execution on clear strategic objectives, supported by the correct tools and tactics to mitigate risk and minimize complexity—will make such events more manageable.”
Ben Wright, Associate Editor, Oxford Economics
In order to build a resilient, global value chain, new tools will be required to manage a more-complex supply chain execution model. Modeling sourcing networks and alternative sourcing, planning tools, and market-based analytics will be required for allocation management and managing business performance. High technology companies must begin to remodel their extended supply chains by digitally connecting stakeholders and driving one plan from strategy to execution. New digital technologies will be needed to predict and quickly respond to issues in real time across their entire value chain.
Strategic restructuring of the supply chain takes time and needs urgency to help mitigate the risks of future disruptions.