The IT sector is going through a techtonic shift as its reach goes beyond technology companies and into the board rooms of every organisation. Here are some of the trends that will govern how businesses can successfully leverage technology to win
Can you guess what is common among the world’s largest music company (Apple’s iTunes), the world’s largest bookseller (Amazon Kindle), today’s fastest growing entertainment company (Zynga), one of the best movie production companies (Pixar), the world’s fastest growing telecom company (Skype) and the world’s largest recruitment company (LinkedIn)? All of them are software companies. Technology is disrupting nearly every business today, with venture capital firm Kleiner Perkins estimating that industries with a market capitalisation of US $1 trillion will be reinvented through the use of technology.
The technology boom goes hand-in-hand with an interesting trend in today’s economic scenario – the rise of India. While companies from developed nations face bankruptcy, India Inc. is not only surviving but thriving. The business landscape is active with over 50 million small and medium businesses (SMBs), second only to China. Over 100 Indian firms are contenders for being among the global top 2,000 companies. The IT services sector has peaked and the day has come for product firms to shine, accelerated by the adoption of technology trends such as cloud, mobility, analytics and social technologies. The Internet user base in India is expected to surpass that of Western Europe as a whole, and we are racing to be a nation of over a billion mobile subscribers and 250 million social networking users. In such a scenario, it is evident that technology can be a key determinant of success in business.
However, its adoption has both drivers and constraints, and we see six broad trends that will govern how businesses can successfully leverage technology to win.
Shift from focusing on IT to reduce costs to an era where businesses turn to technology to drive value and efficiencies: Convergence of modern IT (cloud, enterprise mobility, big data and social consumerism) is creating new opportunities, with global corporations looking for the next phase of business growth through technology and information-driven innovation. For example, oil companies are gaining unparalleled insights by investing in the ability to process petabytes of data generated by seismic sensors through new approaches like big data. Social media data and sentiment analysis are creating new possibilities. Companies today, including leaders such as GE and Kimberly Clark, collaborate more effectively using social platforms. Imagination is the only limit to the value that modern technology can create for organisations.
Large banks are investing in new technology to comply with rules that require them to fill automated regulatory reports. State data centers are being converted to private clouds. Social media is playing a role in politics; the Gujarat chief minister recently interacted with citizens on a Google Hangout – viewed by over 4 million people on TV and online.
Disruption of traditional business models: A range of exciting new companies are developing new innovations, at a rapid pace, leveraging technology for scale as well as insights. For example, Airbnb, a startup, has disrupted the hospitality industry with over 100,000 rooms in 192 countries that can be selected and booked online. They have done over a million bookings already and are valued at over US $1 billion in a short time. Larger companies, on their part, are also starting to invest in technology to protect their turf from agile and aggressive startups. In short, traditional business models are transforming into technology-empowered models to survive.
Rise of the connected business: Large organisations are leveraging efficiencies gained through tighter integration with partners, suppliers and the ecosystem, and IT is following this pattern too. An ecosystem characterised by manual interventions is now witnessing automated interfaces, driving smaller or mid-sized partners to also embrace IT. For example, Google runs all their procurement through their e-procurement engine that is built on the same model as their ad bidding engine. IT systems operating at the intersection of the various ecosystem players will add significant value to the enterprise.
Growth of product firms: Over 70 per cent of all the software product companies started in India in the last three years are based on modern IT technologies. As IT services reach a peak, it is now time for product companies to demonstrate their value-add. Indian IT product companies are building disruptive innovations, and one example of this is Capillary Technologies. Capillary allows companies to understand the customer as soon as they enter the store and offer real-time deals. The company received over US $15 million dollars to replicate their Indian model in other countries. The ecosystem is also contributing to the growth of startups such as initiatives by companies like Microsoft, Qualcomm, Citrix and IBM. Industry associations such as NASSCOM are driving initiatives to build the startup ecosystem by providing access to funding, customers and market visibility.
Regulatory environment: While the four trends detailed above expand the possibilities of technology, the regulatory environment will define its boundaries. Technology has made geographical boundaries irrelevant and countries are beginning to realise the need for a digital code of conduct. Today, the Internet is like the ‘Wild West’ but we are starting to see some tough – and controversial – regulations starting with where data centres are located, what is free speech and so on. On the other hand, government can also spur technology adoption and infrastructure. Large banks are investing in new technology to comply with rules that require them to fill automated regulatory reports. State data centres are being converted to private clouds. Social media is playing a role in politics; the Gujarat Chief Minister Narendra Modi recently interacted with citizens on a Google Hangout – viewed by over four million people on TV and online.
Changing data protection paradigm: As the world increasingly depends on technology, business continuity and security are critical issues. Shutdowns experienced by a cloud provider impacts not only its business but also that of its customers, which we witnessed last year. Hacking and digital attacks question the credibility of computer systems. The security system protecting online transactions still has not evolved to prevent frauds and can adversely impact adoption. Companies that can address these challenges can potentially experience huge success.
Knowledge democratisation has spread awareness about the potential of technology beyond the IT community and into the board room. CEOs and business heads are asking CIOs (chief information officer) about their cloud, mobility or big data strategy. CIOs are tasked with driving innovation and business growth. Security and compliance are board-level discussions, laying the foundation for technology adoption. India has the unrivalled position of being a software powerhouse. To leverage this advantage, maximise IT possibilities and win, CIOs need to understand their role. An increased risk appetite coupled with the startup mindset of experimentation and ideation is critical. CIOs must constantly be a step ahead, developing new ideas and use cases rather than being an implementer of systems. Knowledge of contract structures, service-level agreements is a must as they will fundamentally change in the next few years.
Today, the CIO is at the centre of a tectonic shift in Indian business. The possibilities are limitless for those who can excel in the new paradigm, generating value for their companies and disrupting traditional industry.