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4 accelerating architectural trends are driving industry disruption

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Man working at computerNew technologies are disrupting the technology industry itself, along with every other industry. Today there are four prominent drivers — community platforms, the internet of things (IoT), digitization and analytics, and blockchain. Each of these architectures will demand reorientation of strategies, product portfolios, revenue sources and customer engagement. The organizations that take control of an architecture will, within disruption, gain fresh ways to expand market share and increase profits.

Platforms are transformative business models
One architecture transforming the industry is not a technology per se, but rather a business model enabled by multiple technologies.

A platform business model is built to engage customers in a community defined by common needs and expectations, and sometimes by demographics. To assure customers’ continued participation in the community, an organization continually evaluates preferences and confirms the value of its products and services. Rather than have a customer for life through a perpetual license, now the value of the platform must be reinforced every day with every customer.

Platform business models conform to one of three formats:
  • Multiple bond, with users participating in several platforms; e.g., social media
  • Strong bond, with users participating in one of several competing platforms; e.g., mobile phones
  • Winner-take-all, with one platform claiming greater than 90% of the market; e.g., Google search

An effective community platform can be centered on any of the three, with your business strategy setting the target and prioritizing investments and activities to achieve it, preserve it, and monetize it.

While technology is an essential, embedded foundation for a community platform business model, three technology architectures — the IoT, digitization and analytics, and blockchain — promise to more conspicuously transform almost all aspects of industry.

“These technologies are going to be disruptive to our businesses,” said Steve Perkins, national managing director of Grant Thornton LLP’s Technology Industry Practice. “But we can be intentional about how we drive our performance associated with them.”

The IoT fosters relationship management
The IoT represents the convergence of decades of technology innovation. Through a network of physical objects that collect data and communicate with people, applications and other objects over the internet, the IoT connects information systems to the physical world. Historically standalone information sources become systems that manipulate the physical world in real time for practical support of your platform.

Via the IoT, explained Dan Garretson, Grant Thornton Digital Transformation consultant, a wealth of data is gathered and interpreted for insights and outcomes. “The value is in creating interactive relationship management through mobile devices and other tools,” said Garretson.

The benefits of the IoT are increasing with ubiquitous connectivity, falling sensor costs, rising bandwidth, and expanding data processing and artificial intelligence capacities. According to Garretson, “We expect to see it in everything from office security to energy usage to outside logistics and transportation, to tracking assets across the supply chain to factory optimization to monitoring work site processes and retail environments.”

Organizations realize IoT business value in three areas:

Operations

Operating costs and inefficiencies can be significantly reduced. For example, predictive maintenance devices monitor a factory floor, indicating when systems are about to break down and identifying bottlenecks to decrease downtime and inventory shortages.

Customer preferences
Deeper insights into product usage and brand loyalty are possible. Much of the potential is in mobile digital platforms — for example, to gather data about internet browsing.

Revenue models
The IoT provides the basis for new business and revenue models. A key sector is durable goods, expanding from solely goods-as-a-product to include goods-as-a-service — for example, airline manufacturers delivering hours of jet engine service and ensuring maintenance and uptime, or Caterpillar Inc. selling agricultural consultation.

Digitization and analytics boost innovation
Digital transformation leverages new technologies to disrupt traditional business models and processes, value propositions, interactions with value chain participants, and customer relationships. Analytics supports the transformation in enhancing productivity and profitability. Dramatic change can be made within your organization and in your relationships, including the customer experience and the quality or usability of your goods or services.

Use cases are key to the transformation. As you formulate a use case, ask these questions: What is the business objective or strategic imperative? How will this meet my customers’ needs or wants? Is it feasible? What insights are needed? Roll out a benefit-driven business construct within 12 weeks by determining outcome goals with three primary improvement components:

  • Organizational processes
    The processes and how people engage with them, recognizing the futility of applying digital concepts to old processes
  • Customer experience
    Marketing approaches and customer engagement
  • Business models
    New value propositions, and products and services that can be blended in

“Speed is critical to success,” said Richard Cline, managing director of Grant Thornton’s Data Analytics Center of Excellence. “Whether you’re digitizing to optimize production or engage your customers in a new and meaningful way to understand what they want and need, or utilizing these technologies in a disruptive and innovative way, you have to respond quickly.”

Engage constituents in putting analytical insights to use
Adoption is much more likely when, instead of building an isolated construct, you roll out a solution built on input from constituents. Solicit feedback from within your organization, customers and partners. Integrate these insights, a flexible platform, appropriate methodologies and a model of how to manage data to apply analytic insights. Constantly monitor how the process is being adopted and used.

Blockchain offers security and efficiency value

Blockchain is a digital public ledger maintained by interconnected computers. The technology is secure and anonymous, relatively low in transaction cost, and transparent — all transactions are visible. In addition, fraud is minimized because of a verifiable presence, with a smart contract embedded in a digital ID. Through blockchain, a platform can be based on a virtually secure connection to customers and partners.

Best known for recording transactions via bitcoin, many practical applications are being found. The music industry has drawn popular attention to the technology, doing away with the old system of artists’ reliance on layers of service providers to receive payment. Now, smart contracts allow access to songs in exchange for immediate payment. An artist is paid in real time on a pay-per-play basis.

“Blockchain technology has the potential to reshape how federal, state and local governments handle assessment and collection of taxes,” said Joel Waterfield, managing director and national Tax leader of Grant Thornton’s Technology Industry Practice. As examples, he cited streamlining processes and compliance in nexus, state and local tax compliance, local business licensing, and abandoned and unclaimed property, as well as providing a public audit trail for all transactions.

Security and efficiency via blockchain
An example is in medical transactions such as vaccination record keeping. Information is kept private from all except authorized users, who are allowed convenient access.


Security and efficiency via blockchain

Drive value by taking control of transformative trends
Community platforms, the IoT, digitization and analytics, and blockchain — all four architectural trends are disruptive factors that will transform the industry. Organizations that are positively transformed are those that claim the driver’s seat and align their businesses to the speed of technological change.

Learn more

Contacts
Steven Perkins
National Managing Director
Technology Industry Practice
+1 703 637 2830

Dan Garretson
Consultant
Digital Transformation
+1 214 561 2612

Richard Cline
Managing Director
Data Analytics Center of Excellence
+1 980 282 1980

Joel Waterfield
Managing Director
National Tax Leader
U.S. Technology Industry Practice
+1 703 847 7595