For decades, the high tech industry remade markets and changed how people lived. Today, the disruptors are facing disruption themselves. The explosive growth of 5G, the Internet of Things (IoT), cloud computing and artificial intelligence (AI)/machine learning (ML) have driven increased demand for traditional high tech products and created entirely new product categories.
But hardware alone is no longer a guarantee of success. Consumers and enterprises alike increasingly prefer “as-a-service” offerings over discrete products. In addition, more customers seek integrated solutions that combine hardware, software and services to deliver a compelling experience or business outcome across the entire lifecycle of the product. The traditional hardware-centric business models need to be transformed, and for the industry leaders who embrace this change, tremendous opportunity awaits.
I am starting a blog series on the c-suite imperative for the high tech industry to navigate this transformation. In this first blog, I will focus on building resilient supply chains and modernizing the infrastructure to address these new market challenges.
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Particularly in high tech, which requires specialty materials and components with often limited sourcing, companies need diversified, dependable supply chains that can be rapidly reconfigured to address unexpected swings in supply and demand. The COVID-19 pandemic exposed the vulnerabilities of the global supply chain in a profound way. According to an early survey by The Economist, 71% of companies did not have a business operations contingency plan in case the outbreak lasted longer than a few weeks. Global pandemics are relatively rare but natural disasters and geopolitical strife are becoming increasingly common. The solution is to focus on digital-powered, data-driven supply chain planning and operations.
High tech leaders are implementing intelligent supply chains that harness real-time data flow from multiple sources to predict what will happen and when, as well as help manage complexity and re-build supply chains for today’s demands and tomorrow’s opportunities. These new supply-chains are typically cloud-based and leverage AI and ML to transform demand projection and supply planning. AI powers supply-chain control towers, which orchestrate global supply across all vendors, supply chains and company locations. With a combination of digitalization and AI-based analytics, companies can have complete visibility into every supply-chain transaction, from sourcing raw materials to delivery to the customer. This level of insight doesn’t just ensure smooth operations of the system, it also provides input for ML models to leverage in order to forecast future demand, evaluate current decisions, and uncover unexpected insights.
The data-driven process is already underway for leading organizations. In an Accenture global survey of 1100 executives, 76% report full-scale or widespread data use, an increase of 2.5X from three years prior; by 2023, 98% plan to have data in wide use or at scale.
By driving investment in more resilient supply-chain processes and technologies companies can mitigate risk and protect revenue.
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Surveyed executives that reported full-scale or widespread data use.
By 2023, plan to have data in wide use or at a scale.
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Modernizing the enterprise
Transforming the entire enterprise – including the supply chain – requires a digital transformation encompassing core processes, technology platforms and the workforce.
Most high tech companies designed their core processes and implemented enterprise resource planning (ERP) applications decades ago that were optimized for a transactional product sales world. The shift to new as-a-service business models and new classes of connected products requires a new digital foundation and other digital tools. Today’s high tech leaders are migrating to next-generation ERP platforms like SAP S/4HANA and enabling a digital thread that links data from multiple applications such as product lifecycle management (PLM), manufacturing execution systems (MES), ERP and supply chain. The goal is to become a far more agile company that can support multiple new business models, enable new customer experiences and reduce operational cost and complexity.
This new digital foundation embraces the cloud and not only offers the standard benefits of scalability, elasticity and resilience, but also provides an opportunity to test new products and demonstrate their value to potential customers in a much faster cycle time. Working with cloud service providers (CSPs) can significantly reduce infrastructure and IT administrative costs. Studies have shown that moving to a cloud-based architecture can save companies up to 40% in capital expenses.
On the product innovation front, the cloud can increase speed to market and transparency for engineering teams. All members have joint access to designs test data and the results of analytics. The approach can give engineering teams immediate access to compute and storage resources at needful times without requiring organizations to make a massive infrastructure investment in data center servers that may sit idle for substantial periods.
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Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors.