A few thoughts on forces reshaping the technology industry, by Steven Perkins, national managing director of Grant Thornton's Technology Industry Practice. Download the Grant Thornton report, The future of growth and the technology industry: Reinventing the "new,” again, to learn how today’s business leaders are reinventing themselves through innovative technologies.
Technology has always been a potent agent of business change. But the pace at which innovation is recasting entire industries has never been faster or the impact so overwhelming. The same technologies that are dramatically reshaping many businesses are powerfully affecting the technology industry itself.
One example of these forces is cloud computing and the everything-as-a-service business model it nurtures. Slicing the time and investment required to launch operations, cloud computing allows companies to enter new markets with increasing ease. The cloud is also extremely scalable, giving businesses enormous flexibility as they seek to grow. At the same time it forces technology companies to migrate from an end user license model, to a usage model. This forces changes across the entire value chain of a technology company, and along the way changes the way revenue is recognized, and the way companies are valued.
Cloud computing and other technologies also boost company efforts to globalize their operations quickly and efficiently. When technology companies go overseas, however, they often face unfamiliar legal and regulatory requirements. Both national governments and supranational political unions are focusing attention on the tax optimization strategies of technology companies. Seeking to boost revenue, tax authorities are closely monitoring where businesses locate their support, sales and innovation activities. Of course the cloud is not the sole catalyst reshaping the technology sector. As internet platform technologies, the internet of things, robotics, digitization, 3-D printing, artificial intelligence, deep learning and other innovations develop, their impact on tech companies will continue to grow. This wave of new technologies will compel tech companies to join forces, as they seek to assemble the deep reserves of collective knowledge and the know-how needed to succeed. And as the industry consolidates, tech companies will partner with players across information technology, telecommunications and media sectors to provide enhanced products and services — accelerating the current pace of industry consolidation.
Increasingly, these technological advances enable tech companies to continue their disruption of other industry sectors. But in clearing obstacles to entry and disrupting historical markets, tech companies become more vulnerable to competition not only from their own sector but from technology-sophisticated rivals elsewhere. The companies with close proximity to their customer and ready access to tremendous values of data, AI and deep learning technologies will drive disruption back into the technology industry.
All the above depends on having the best people in the right places. As tech companies expand their operations into other industry sectors and markets, finding and retaining top talent to develop and manage new products will be a top priority. The industry is wary of Western populism that decries immigration and foreign workers, such as a focus in the U.S. on the H-1B program, which critics say unfairly favors nonimmigrant aliens over U.S. citizens. Other populist targets include multi-country trade agreements and outsourcing of production, which the IT industry has used to substantial advantage.
And central to all is the need for both consumers and corporates to have trust in the digital ecosystem. Although spending on cybersecurity is a big driver of IT growth, enhanced cyberrisk is a source of vulnerability across the information supply chain. The advantages of big data must be set against privacy concerns. And technological innovations raise concerns about robots and AI replacing humans across a wide range of industries
The accelerating pace of change will challenge the industry’s leaders. They will have to manage their businesses in an environment of continual disruption. At the same time, they must address anxieties about the impact their innovations have on societies. The next generation of industry leadership will be tested as it works to achieve both goals. Get an abundance of information in our report The future of growth and the technology industry.
To discuss this topic further, contact Steven Perkins
In addition, see Disruptor or disrupted? Make the right technology choice
for more on how to position your organization for greatest advantage.