MARCH 2019CIOAPPLICATIONSEUROPE.COM 19HUGO NORDELL, VICE PRESIDENT, CENTER OF DIGITAL EXCELLENCE, SANDVIKs cloud technology becomes ever more pervasive, boundaries between industries start to blur, opening up possibilities for new business models that unbundle existing supply-chains. New market entrants with zero legacy are quick to leverage the Internet as their main mode of value delivery to customers, while incumbents struggle to find their footing as buying behaviors change. To survive and thrive, established companies must come to terms with what they bring to the table that others don't. They must divest from operations that don't provide any means of differentiation and invest in assets that strengthen their competitive edge in order to secure and accelerate innovation. Those that don't face the risk of falling into irrelevance faster than ever before.Over the past decade, digital disruption has manifested itself in a number of ways. From a technology perspective, the proliferation of cloud technologies and the subsequent shift in management of IT operations are perhaps the most well known. From a business perspective, however, it is perhaps the competitive effect these cloud technologies have given rise to in the past decade that is most disruptive, namely industry convergence.Industry convergence is a term that describes how the boundaries between previously distinct industries start to blur as a result of economical, cultural and technological disruptions that change how customer value is created, packaged, distributed and consumed. The founder of MIT Media Lab, Nicholas Negroponte, first talked about this kind of convergence in the 1980s when he predicted that media, communication and computing would have converged by the year 2000. Another example is the introduction of the smartphone, where Internet connectivity, the camera and an entirely new way to consume content have merged to create an experience that goes far beyond a regular phone.It is industry convergence that is at play when telecom companies enter into media and entertainment to compete with the rise of Netflix, automotive companies enter into partnerships with technology companies such as Google and Apple to compete with Tesla, and when high-street retailers buy e-commerce platforms in pursuit of a strategy to take on Amazon. Cloud technology, with the Internet as its underlying delivery mechanism, enables, accentuates and accelerates this industry convergence at every level of doing business.The change of pace the cloud enables is simultaneously unbundling and digitizing traditional supply-chains. Information is now readily available online, a mere click away. This has shifted control away from suppliers and directly into the hands of customer. A new form of buying behavior has emerged. Companies now win by controlling demand, rather than supply. The resulting market transparency is a double-edged sword that poses both opportunities and threats to incumbents.Nimble and lean new entrants that offer cloud-based solutions are able to enter previously unavailable markets at an unprecedented rate and with outsized customer impact. AcXoinsightsDivesting, Investing and Innovating in the Face of Industry Convergence
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