In the ever-shifting world of global enterprise technology, certain trends stand out. While organizations make sincere efforta to play "catch-up" and implement existing trends, new trends arise that rebalance global manufacturing capacities. Some trends are obvious: Visible market trends indicate a movement towards products that are more convenient to use and of course green and eco-friendly. Other trends including globalized competition, factors such as rapid innovation, country specific regulations, unforeseen risks and business dynamics is causing us to rethink manufacturing paradigms constantly.
A key trend that is not so obvious, and is still driving growth in technology and business today, is convergence points. Convergence points of differing technologies and functional areas open up new business models, new applications and markets. These points are important to observe and step into, in times of reduced spends, growth and margins. Moreover, it becomes critical to identify the foundations that have helped create these points of convergence.
Re-hauling Operations Through Convergence Points -- What it Means from a Technology Perspective:
A classic example of convergence has been the iPhone. The injection of Apple and its design skills into the market is a good thing. It has suddenly transformed an ordinary phone through the integration of an existing technology for human-device interaction into an iconic device. Enough functionality has been pumped into it that it sometimes doubles as a laptop replacement.
The iPad is doing the same thing now by integrating a touch pad model of computing device with e-readers, browsers and good old-fashioned client-server computing, to open up another set of markets. It is essentially a giant iPod touch, allowing you to use all your existing "apps," a movie and a music player, a photo display device, and a rich e-book reader.
These are the well-known points of convergence -- convergence of a known device form with other technologies that were not necessarily associated with such devices previously. These convergence points, from a technology perspective, are important to note and identify. Each company is unique and can only leverage and win with some of its convergence points.
But first, it's important to identify four key technology trends that are acting as building blocks to leverage as points of convergence.
Rising Technology Trends: Core Building Blocks
While convergence is redefining the way businesses work and innovate, consumers are the primary beneficiaries. It provides the opportunity to mix and match services to cater to market demand for flexibility, quality and value. None of the trends below in themselves are new, but how they're used as drivers of innovation, by creating new convergence points, is always unusual.
Deployment Convergence: The business model with respect to where customers keep their data, how they pay for their infrastructure and where they access their business-critical applications has changed and is changing rapidly in dimensions that we have not seen before. Specifically, this is not just a case of changing technologies but fundamentally a different way of doing business for many companies.
Device Convergence: Consider this: Where should middleware be? According to some networking hardware vendors, in your router. Where should your browser be? In your e-book, says Amazon. RIM and Apple are spending hundreds of millions of dollars on new application development, and smart phones are only a small part of the newly converged device market. But who develops the software , how do you build applications for these and what other new device forms are possible are the questions yet to be answered.
Changing Face of Applications: Mashups (web2.0), SOA, Cloud APIs, IaaS and other technologies are now integral parts of what constitute an application. Your application and where its components reside and how you pay for it have completely changed in just the last three to four years. An application that uses the consolidation of these technologies opens up different kinds of application-themes and development models.
As an example, Social CRM that ties together back-end CRM packages with mashups and social computing tools present a whole new set of customer-care functionalities. Most companies understand each of these technologies in them and are also beginning to realize the implications of convergence on these technologies. Sample application areas include:
- Collaborative applications such as social-CRM, employee care, customer care, Rapid Innovation
- Supplier collaboration using an entire new set of tools
Each of these areas has available markets with sizes larger than a few billion dollars. Also, collaboration between organizations for quicker issue resolutions (such as delayed orders, quick responses to customer needs etc.), customer-involved collaboration across supply chain and customer support, and even supply chain collaboration across OEMs, suppliers and distributors.
Information Visibility & Analytics: Transactional systems have been the basis of enterprises for a long time now. However, the key focus for quicker growth is the ability to make better decisions. Consolidated systems are rapidly becoming the backbone for most manufacturers. The synthesis and consolidation of information systems from BI/DW, ERP-analysis tools, MDM, visualization and data quality into a loosely coupled but finely choreographed set of systems presents the biggest shift between market leaders and market laggards. The shift allows companies to leverage their disparate systems to transform themselves into deeply connected and quicker decision-making companies.
Several trends and technologies are coming together -- BI/DW with MDM systems, with attributed data-modeling tools bring together a set of business-use models; pervasive performance management turns business performance into something that makes a measurable impact on the bottom and top line of companies. It's a trend that is beginning to drive new form of growth.
Impact on Functional Areas:
Manufacturers must look at the functional areas where these convergence points of differing technologies open up opportunities towards better business models, applications and markets. In this paper, we will study the two areas that are particularly relevant to manufacturing sector and where there is convergence-led strategies laid for future growth:
a) Supply Chain Management: How supply chains function and perform is undergoing significant change. This is due to globalization, newer channels of procurement, varying governmental regulations, new technologies and environmental concerns, to name a few. Three specific areas of change are particularly important. First, green and sustainable supply chain approaches to manufacturing are reshaping how we build products, source components, optimize our processes and so on. Regulations vary across nations, but these will only become stronger and more onerous, which will open new opportunities. Second, most companies look at reducing risk across their global supply chains. The recent Japanese earthquake and its associated effects on several different industries is a perfect reason for looking into this hard. Finally, as emerging economies grow, newer procurement models often trim fat from the value chains. Without this, attractive product price points in emerging markets would not be possible.
b) Customer Centricity: As emerging markets grow and some existing markets stagnate and even shrink, it's time to take a look at what this means for OEMs and retail sales/fulfillment.
A few key things are clearly evolving -- this includes customer demographics, customer buying patterns, customer decision making processes and fulfillment expectations of customers, as well as the needs of retailers/OEMs to react quickly to such variations in the market. Social computing, product competitive analysis, retail operations centers, predictive demand mapping are just some of the approaches being used to change this space. All of these are directed to capture more market share and attract and keep a larger number of customers.
A formal approach to leverage technology and enable convergence has become imperative in the globalized world. This approach must be driven with a people-centric view to ensure that it simplifies their daily life. An understanding of these technology trends can help manufacturers devise strategies to craft their futures.
Arindam Banerji heads Technology and Solutions consulting for the manufacturing unit at Infosys.
