Masters of Technology Innovation also Need to Change

Publish date:

We recognize the great impact of Cloud Computing, Mobility, Internet of Things and Big Data analytics made possible by the technology industry affecting industries like retail, manufacturing, insurance, life sciences, government and education. However, what is not fully appreciated or understood is what this means to the operations of the leading High-Tech companies likes Cisco, […]

We recognize the great impact of Cloud Computing, Mobility, Internet of Things and Big Data analytics made possible by the technology industry affecting industries like retail, manufacturing, insurance, life sciences, government and education. However, what is not fully appreciated or understood is what this means to the operations of the leading High-Tech companies likes Cisco, Microsoft, HP, EMC and others that represent the esteemed group of technology leaders. This article outlines five major themes underlying the disruptive technologies that have become significant in how High-Tech companies are managing change to their core business:

  1. Bigger is not better – Significant disruption in all layers of technologies from storage, networking, security has challenged large diversified High-Tech companies the premise of having very broad and diversified portfolio of products and services to stay competitive and relevant. For example, Flash and solid-state storage technologies are disrupting traditional magnetic tape disk, software-defined networking is challenging traditional physical routers and switches and dynamic security approaches is questioning the signature-based approaches for security and virus protection. This rapid change has resulted in High-Tech organizations to take major decisions like spin off or splits of diversified businesses to double up on innovation while increasing speed and time to market of products/services. Cisco sold its Linksys business to Belkin to focus on Enterprise and Service Provider Customers, HP split with HP Enterprise focusing on businesses and HP Inc focusing on PC, printing and consumer segments. Symantec announced creation of two independent businesses one focused on Security and another on Storage. Google sold off Motorola’s mobility business to Lenovo earlier and now has announced restructuring to ensure that the brand Google remains strictly associated with internet technology related businesses. Non-core businesses will be represented by separate brands and they, along with Google, will become subsidiaries of a parent company called ‘Alphabet’[1]. Microsoft took a huge write-off around Nokia devices business and decided to simplify to bring sharper focus on only small number of devices that work well with its Windows 10 and unified personal computing strategy. Only segment of technology industry that is seeing an exception to this and greater consolidation is semi-conductor industry driven by decline in the PC market and need to expand in other areas opening up through the massive potential of Internet enabled devices or commonly now referred as the trend of Internet of Things (IoT) which is estimated to be a $19 trillion global opportunity over the next decade[2]. Intel recently announced acquisition to acquire Altera and Broadcom was also recently announced to be acquired by Avago. The growth of IoT has also set off consolidation for tiny embedded chips and sensors. Cypress Semiconductor of San Jose merged with Spansion, based in Sunnyvale, in an acquisition announced in December 2014. The trend is likely to continue with two of the manufacturers, Maxim Integrated Products and Xilinx, both based in San Jose, are said to be likely acquisition targets for Avago in near future[3].
  2.  Dealing with consumption economics – The way technology is being purchased and consumed is making an irreversible change. At its basic level, traditionally technology was purchased upfront through formal Capex budgeting and approval process and consumed later over the course of next several years. However, according to a Gartner CIO survey, majority of  Enterprises are now motivated to shift their operational systems to Cloud IaaS. This is also reflected in the forecast for global spending on IaaS which is expected to reach almost US$16.5 billion in 2015, an increase of 32.8 percent from 2014, with a compound annual growth rate (CAGR) from 2014 to 2019 forecast at 29.1 percent[4].With Cloud Services like Infrastructure-As-a-Service (IaaS), Platform-As-a-Service (PaaS) and Software-As-a-Service (SaaS), technology consumption and payment model has moved to pay-as-you-go model or utility billing model. This shift is forcing High-Tech organizations to redefine aspects of sales forecasting, sales compensation, pricing methodology, licensing and entitlement, and revenue recognition of sold subscription services. As one can imagine, these changes touch entire operations of the company and also cannibalizes current revenues streams while the new revenues streams take time to become dominant part of the business.  Adobe, one of the leading technology companies specializing in Creative Design products went through this journey and is now seen as a pioneer that fully embraced this paradigm while driving changes to its value chain from design, sales and delivery of its product and services. Microsoft with its Azure offering, Cisco and its InterCloud investments and VMware with its VCloudAir are all set in this direction of enabling consumption of technology on pay-as-you model. 
  3. Who is the customer – With Cloud Computing trend further fueled by open source projects like OpenStack which is expected to reach $1.7 billion in revenue by 2016 and $3.3 billion by 2018 as per analyst reports[5], question begs who is the ultimate customer who will pay for underlying plumbing that involves storage, network, and server / computing infrastructure. For example: leading High-Tech companies like NetApp, EMC, Hitachi, that made great storage products are finding that their enterprise end customer have started to move several of their application workload on to public cloud, thus they don’t really make all buying decision on storage. While it is understood not all the workloads will move to public cloud and enterprises will have hybrid and private cloud options, it is clear these end-customer businesses are not making all “Storage” decisions. Thus it is imperative that these High-Tech companies either develop a strong differentiation and value proposition as part of this convergence while dealing with the new economics or strategic business plans that include aggressively looking at other High-Tech and Cloud Service Providers like AWS, Microsoft Azure, Google Apps, Adobe, as their customers. A different phenomenon is playing out for Semi-conductor segments where they were traditionally selling to larger technology OEM’s made up 70% of their business and are now findings markets and customers in other segments like Auto, Manufacturing, Energy/Utility and Transportation / Logistics industries. For example, Qualcomm is helping Daimler to explore wireless recharging of mobile phones in cars as well as recharging of electric cars without cables[6]
  4. A new kind of Sales – Selling technology have moved from days where Sales Representative from High-Tech company would visit customer-site, provide demonstration and walk through of product and its feature set, with submission of configuration/Bill-Of-Material and price quote. With customer’s becoming always connected they carry significant prior knowledge of product/service and alternate options from self research, peer reviews and ratings. This change requires seller to be far savvier in showcasing how their products/services can have direct impact on business outcomes of their customers, selling sustained value to customer versus going for a single one time sale. Furthermore, given the of economic reality of  smaller transactions versus larger deals,  sales management has to drive cost down through use of different types of account and sales teams  that manage ongoing subscription, renewals and incremental adoption of product and services. 
  5. Make it work fast on your own business – With the pace of change, it has become every bit essential for every High-Tech organization to showcase how they run their business on the latest and greatest of their own technology and innovation. Microsoft is aggressively migrating its entire internal IT applications portfolio to run on Azure, VMware is certifying running its own business  on VMware’s virtualized cloud and Cisco now runs all of its applications built on its own Unified Computing Servers (UCS) based private cloud while taking it a step further to maximize on its ACI (Application Centric Infrastructure) architecture. This transition and “showcasing” of underlying technology is a risky proposition as it involves need to move fast and be exposed to the risk of technology not having been fully developed. But the opportunity in the market place is so significant that every leading High-Tech company takes on this challenge as a critical priority including allocating significant funds towards such initiatives.  This challenge is further mitigated through aggressive adoption of DevOps paradigm and agile methods inside the organization. For example, the IBM Watson teams used a DevOps approach to support continuous delivery of complex new releases, resulting in teams moving from 9-week to 3-week sprints, three times greater delivery velocity, reduced costs and fewer disruptions for clients[7].

Above highlighted select themes that will continue to drive changes to the core of high-tech businesses. What remains to be seen is with the pace and degree of change how well High-Tech companies are able to adopt and navigate impacts that are not yet visible. However, what can be conclusively said is, as customers, this change to technology industry can undoubtedly deliver immense value not seen since the internet revolution.

Related Posts


Can AI save the security operations center?

Geert van der Linden
Date icon November 30, 2021

AI technologies can also perform threat modeling and impact analysis, activities that...


Mastering the critical art of cybersecurity in Automotive

Geert van der Linden
Date icon November 3, 2021

Steps OEMs need to take in order to get ahead of cyber threats


Improving the adoption of Privileged Access Management across the organization

Date icon October 26, 2021

Using best practices to drive increased adoption of effective Privileged Access Management...