Turbulent Tech Trends: 9 Forces That Are Changing The Way Businesses Run4:00 PM EST Thu. Oct. 10, 2013
"If the only constant is change, why are we so bad at it?" a PricewaterhouseCoopers study asked Wednesday of the technology industry.
While technology has always adapted, the changes affecting the industry right now are different than ever before, the study said. Changes are coming faster and are overlapping one another, Tom Archer, PwC’s U.S. Technology Industry Leader said, while also turning toward an end-user focus.
The bottom line is that technology companies are being forced to scrap their old models and engage differently, Archer said. CRN breaks down the nine factors that are driving this shift, according to the study, and what it recommends companies do about it.
On the most basic level, rapidly changing technology means that the business environment will have to adapt just as quickly to keep pace, the study said. PwC's Archer compared the situation to how today people often look to purchase a car for its fuel efficiency, but in the future may choose based on mobile capabilities or another reason. New products and services are the key, Archer said, as they create more personalized value to the package the company offers. Just staying static isn't going to be enough to remain viable in today's market, he said.
Tech businesses remain on the forefront of the change, with 37 percent of tech CEOs saying that new products and services are an opportunity for growth, compared to 25 percent of CEOs across the board, according to the study.
IT is helping companies manage costs by moving them to the cloud, allowing them to get better information, faster and cheaper, according to the report. However, with increased opportunities for cost-cutting comes the need for an agile operating model to support the changes and increase collaboration internally and externally.
"It's not just the traditional move to best practice or best-in-class; this is about the fundamental paradigm cost cadence flexibility [that needs] to change as the tech industry moves to these new business models," Archer said.
As an example, as more companies move from a licensing model to purely SaaS, no one seems to have really figured out how to adapt the old models to the new cost paradigm. The top quarter of pure SaaS companies only show margins of 7 percent, while trade software is in double digits, he said.
As technology becomes more prevalent, consumers and businesses are starting to get on the same page and use the same technologies, the study said. But it's also much more than that -- they are using them in the same way, according to the report.
"It’s hard to make a historical analogy for the convergence trend. Never before have consumer and corporate capabilities merged so quickly and so intractably as they have recently," the study said.
The key is realizing that it is no longer about being just a business-to-business model, Archer said. All businesses also must focus on the end user and provide that 24-7 connection to the customer, similar to how business-to-consumer models work.
With 91 percent of the country with a cellphone in their pocket, according to a Pew Research Center study, people are becoming increasingly comfortable with using technology and, because of that, are raising their expectations.
In a recent interview with CRN, CEO of Autotask Mark Cattini said that consumerization was the biggest change to the market in 10 years, and he expects it to become the fastest-growing area for SMBs.
In order to keep pace with consumerization, the study recommends developing user-friendly enterprise applications that also can be used on mobile devices.
Businesses are being forced to turn toward emerging markets as the data shows they are growing much more rapidly than already established economies, the study noted. The significance of this for technology companies is that the products they develop need to also be usable for people with different educational levels and technology training.
"To prepare for this trend, technology CEOs should think about rationalizing their global operations, simplifying and standardizing business processes and products so that development can be applied across any region, but then tailored for a particular region. That provides the best of both worlds -- mass production with appropriate personalization," the study said.
According to the study, 84 percent of CEOs are turning their focus to social media to get ahold of new customers and maintain control over their public relations, which almost all executives believe is an important aspect for their business.
"Harnessing social media is the foundation for everything from increased customer engagement to improved corporate communications and marketing strategies," the study said.
As the business cycle continues to shorten, it also cuts the time available for marketing. Social media can be used to harness customer reactions, and interact with them over the product and what features they would like to see in a more constant engagement model.
There is more data than ever being collected on business functions to use toward internal decision-making, the study said, and because most of the data is self-created, the trick is making sure a company is in a position to harness the information to help the business.
"This means companies must be able to accommodate input from unstructured social media with input from structured sales results in order to harness the broad flow of information," according to the study.
To do that, businesses have to make sure to have the right infrastructure, including data centers, storage and business intelligence, the study stated.
With all of the data and information out there, the next challenge is making sure it is secure, the report said. Beyond data protection, companies also must defend their intellectual property from attacks to make sure they are able to stay competitive in the marketplace.
"Companies need to ensure that their systems are accessible to their friends and unavailable to their enemies -- and sometimes it's hard to tell which is which," the study stated.
And the threats are getting even more expensive to defend against, a new study by the Ponemon Institute said. The study placed the annual cost to a company to fight against cybercrime at close to $12 million, an increase of 26 percent over 2012.
As the political sphere continues to hurt the economy across the board with the ongoing partial government shutdown, there is also the issue of increasing regulations on the tech sphere. According to the study, 58 percent of CEOs were concerned about the effect regulations would have on their business. The regulations vary widely, from financial transparency to what metal can be used in computer equipment. The direct effect of regulations are that resources have to be allocated to make sure a company is complying, which is an added cost for which it should be prepared.
Government continues to extend its reach in taxation, as well, most recently, for example, in Massachusetts with the infamous Tech Tax. The tax on software services was swiftly repealed, however, after local technology businesses banded together in protest of the negative effects it would have on their businesses. Still, it's a consideration for technology CEOs.
When attempting to figure out what to do with this information, the challenge becomes finding strategies that can deal with multiple trends in one shot, the study said. "Perhaps the biggest uber-challenge these trends represent: Many of them are interrelated and thus cannot be tackled with an independent strategy," the report said. The other problem is that these trends and problems are changing right alongside a just-as-quickly-evolving technology industry. The study recommends that tech companies should start by addressing the major nine trends, and then prepare to be flexible and ready to adapt to new challenges as they appear.
"The tasks at hand are difficult but not impossible. It requires long-term, courageous thinking and action -- qualities that are not always as constant as change. Technology companies now have the opportunity to equate courage and change -- if only because those are the ingredients to remaining relevant and thriving in a world rife with both shifting competitive pressures and new opportunities," according to the study.