How An Industry In Transition Fuels A Historic Revolution

Thomas Pohl

Part 7 of the “Intelligent ERP-Driven Industries” series

In this series, we have discussed how various industries are dismantling their business models to seize the hearts and minds of customers accustomed to the convenience, speed, and ease of digital experiences. But perhaps one of the most interesting business transformations is happening within the fundamental backbone of this historic digital movement – the high-tech industry.

Positioned as the world’s greatest enabler and disruptor, the high-tech industry will significantly grow when an expected 60% of all enterprises fully articulate and implement their organization-wide digital transformation strategy by 2020. But first, they must shake up the status quo by evolving their one-size-fits-all business model into four or five smaller business models to create new markets and generate new revenue streams.

High-tech companies transform themselves with new strategic priorities

By shifting away from selling only products and devices to selling outcomes, high-tech companies can invest their capital and energy towards four strategic priorities.

1. Subscribing to outcomes 

This business model structure requires customers that are willing to pay for a specific outcome – and yes, there is growing demand for this approach. Many high-tech companies are preparing for this emerging customer expectation by acquiring, building, and joining the platforms and ecosystems needed to support the outcome economy.

2. Creating a digital supply chain

Moving from a conventional supply chain to a responsive network, high-tech companies are facing head-on volatile customer demand and heightened expectations for responsiveness. Innovative technologies can help with this effort by providing vital information across the business network, improving real-time analysis, and enabling better collaboration with departments and trading partners.

3. Delivering digital smart products

When products provide intelligence on usage and can be upgraded remotely at any time with the latest features, the high-tech industry offers differentiating value to customers that deliver highly commoditized offerings. For example, data-based services are monetized, individualized offerings are provided cost-effectively, and the Internet of Things is used to connect products to R&D and sales processes.

4. Achieving customer intimacy

By considering the perspective of the end user at the center of every business decision, high-tech companies are guiding themselves – and their customers – towards success in the digital economy. This purpose goes beyond sales messaging, buzzwords, and platitudes. Now, it’s all about building the products and offering the services that customers need throughout their transformation.

Reimagined business models call for a stronger, more-connected foundation

As companies outside the high-tech industry continue to evolve every aspect of their business, IT architectures need to support core enterprise processes with long-term flexibility, stability, and reliability. Such demand means that high-tech providers must undergo a transformation of their own, which includes four fundamental elements.

  • The digital core: A next-generation ERP foundation for core enterprise processes enables consistent and uninterrupted operations. It creates a consolidated platform for real-time business transactions and intelligent insights, access to Big Data, and connectivity with the rest of the IT landscape.
  • Digital products and assets: Equipment and machinery on the factory floor and products purchased and used by customers should be connected to the digital core. Doing so brings new opportunities for generating revenue and innovating value-added services for the customer.
  • Customer-centric strategies: High-tech providers need to deliver products, services, processes, and experiences that are flexible enough to keep customers engaged through and across a variety of interaction channels.
  • Business networks: Building and expanding business networks can change the game for the entire network – including employees, suppliers, partners, and customers. By adding flexibility and adaptability, suppliers and partners can collaborate with the business to shift supply orders, minimize inventory, and recommend alternatives quickly and intelligently. And for the customer, this means high-quality products delivered on time and at the right price

Digital transformation is a journey for every industry – even the one powering it all

After spending years incubating, developing, and delivering a diverse technology ecosystem, high-tech providers have inspired disruptions that have rendered the traditional rulebook for running a successful business useless. Software is now embedded in nearly every consumer device, plant equipment, transaction, network, and organization. Most products are providing services that are more valuable than themselves. And new competitors are emerging quickly from unexpected places.

High-tech companies may have been the source of this digital revolution, but they are definitely not immune from it either. By embracing the digital journey that their customers are experiencing, providers can redefine their core competencies and strategies to uncover innovative new ways to remain competitive, profitable, and enduring for years to come.

Check out how high-tech companies are deepening their competitive position with a next-generation ERP suite. Access our library of keynote and session replays from the Intelligent ERP Industry Virtual Summit to hear from top customers and experts as they discuss how intelligent ERP, industry roadmaps, and implementation can guide your business throughout its digital journey.

Thomas Pohl

About Thomas Pohl

Thomas Pohl is a Senior Marketing Director at SAP. He supports global aerospace and defense companies to simplify their business by taking innovative software solutions to market.