Embed Size (px)
Citation preview
White Paper
Top 7 Trends Transforming the High Tech Industry Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Top 7 Trends Transforming the High Tech Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Shift in Global Buying Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Supply Chain Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Plug-and-Play Manufacturing Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Depreciation of Legacy Infrastructure Hardware and Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tightening Compliance and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
New Channels for Customer Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Internet of Things Meets Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Top 7 Transformative Technologies for the High Tech Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
End-to-End Demand and Supply Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Real-Time Supply Chain Response Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cloud-Based Manufacturing Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
In-House and Outsourced Manufacturing Operations and Service Parts Planning . . . . . . . . . . . . . . . . 12
Integrated and Transparent Product Compliance and Rights Management . . . . . . . . . . . . . . . . . . . . . . . 13
Multi-Channel Customer Service and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Machine-to-Machine Communications and In-Memory Business Intelligence/Analytics . . . . . . . . . . . 14
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
®
®
About Ziff Davis B2BZiff Davis B2B is a leading provider of research to technology buyers and high-quality leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over 50 million in-market technology buyers every month and supports the company’s core mission of enabling technology buyers to make more informed business decisions.
Contact Ziff Davis B2B100 California Street, 4th Fl., San Francisco, CA 94111 Tel: 415.318.7200 | Fax: 415.318.7219 Email: [email protected] www.ziffdavis.com
Copyright © 2013 Ziff Davis B2B. All rights reserved.
ziffdavis .com 2 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
ziffdavis .com
Introduction
The last three decades have seen a profound shift in how and where tech manufacturing and services were done . There remains considerable risk to manufacturers that follow the outsourcing model but there is no doubt that globalization fuels a remarkable explosion in growth opportunities too .
For one thing, the consumers market in emerging markets, projected to be at $30 trillion in 2025, will become almost as large as that of developed markets, which is expected to be at $34 trillion in the same year, according to McKinsey & Company . The emergence of these new markets and sales opportunities is almost solely attributable to the globalization of business .
But it is up to the high tech industry to adapt to address the new challenges and new opportunities that have sprung from globalization and that in turn requires the use of other high tech technologies .
This report provides a broad overview supported by research from respected third parties of the trends and technologies transforming the high tech industry today . The goal is to share the successful strategies and woeful shortfalls in each . Top 7 Trends Transforming the High Tech Industry
The last three decades have seen a profound shift in how and where tech manufacturing and services were done . India was the first winner in the global outsourcing game . That success came from a lifting of regulations in the U .S . and elsewhere in the Western world coupled with the entrepreneurial wherewithal of a handful of poor engineers in India who successfully convinced Western companies that they could do the work much, much cheaper .
What followed this shift in work was nothing short of miraculous . The Economist reports that “some 3 million Indians now work in well-paid formal jobs .” And with such prosperity now infused into a near-bankrupt economy, a new market for consumer goods was born .
It was a formula for success that was repeated many times as other poor countries jumped into the competition and manufacturers sought ever-cheaper labor markets .
While the birth of new markets was celebrated by manufacturers that were previously locked into stale and mature markets, it came at a high cost . Mature markets give little opportunity for high growth but they offer a level of stability that new and emerging markets lack . Thus, rather than a straight line surge in profits from this model change, many high tech manufacturers saw a trade-off between a drop in sales in mature markets where unemployment and work consolidation subsequently rose, and an increase in sales in new markets that were hobbled with problems they had not encountered before .
The problems incurred included quality concerns, some of which led to costly compliance
ziffdavis .com 3 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
problems in the Western markets, particularly in regards to product safety issues . Not only were fines, penalties and massive product recalls expensive for manufacturers – typically far-exceeding any savings gained from cheaper production – but they negatively affected future sales in mature markets as well .
“Some consumers have been wary of products made in China since a series of safety scares in 2007 and 2008,” reports the U .S . Food and Drug Administration (FDA) . “That’s when contaminants in the blood thinner Heparin, pet food, toothpaste, seafood, and other products caused illnesses and some deaths in the United States and other countries .”
The ill-effects were not contained to one side of any ocean or border, however . Nor were the high penalties incurred by just a few partners in the new global partnerships .
The FDA reports:
“The Chinese also suffered the consequences of contaminated products . In 2008, about 300,000 Chinese babies were sickened and six died from infant formula contaminated with the toxic chemical melamine, which is used to make concrete and plastics .
Some manufacturers purposely added melamine to formula because the chemical made it appear that the product contained more protein than it actually had . The incident resulted in numerous criminal prosecutions, and China executed two people connected to the scandal .”
Problems with potentially serious product tampering extended into the high-tech industry as well . Perhaps the best known case of this is the declaration of the U .S . House Intel-ligence Committee that doing business with China-based Huawei and ZTE “put national security at risk .”
“We have to be certain that Chinese telecommunication companies working in the United States can be trusted with access to our critical infrastructure,” The Chairman and Ranking Member of the House Intelligence Committee, Mike Rogers (R-MI) said in a statement to the press . “Any bug, beacon, or backdoor put into our critical systems could allow for a catastrophic and devastating domino effect of failures throughout our networks . As this report shows, we have serious concerns about Huawei and ZTE, and their connection to the communist government of China . China is known to be the major perpetrator of cyber espionage, and Huawei and ZTE failed to alleviate serious concerns throughout this important investigation . American businesses should use other vendors .”
Beyond a host of deadly and “predatory disruptive” products and a continued run of poor production quality control, other quality issues arose as well . Content creation -- such as technical writing intended to help consumers and business users install, use, repair, and maintain everything from microwave ovens and TVs to smartphones, computers, and apps
ziffdavis .com 4 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
– also suffered from low quality requiring additional expenditures to correct the problems through extensive editing and rewrites stateside .
That is not to say that workers in one country are, as a group, superior to those in another for such is not the case . It is, however, prudent to recognize that quality issues are more difficult to predict and control in a far-off location where the people are bound to differing cultures the hiring culture doesn’t understand, and where the governments offer few regulations to clear the path of misunderstandings that can and do lead to serious manufacturing problems .
While steps are being taken by government bodies as well as manufacturers to curb or resolve many of these problems, there remains considerable risk to manufacturers that follow the offshore outsourcing model .
Still, there is no doubt that globalization fueled a remarkable explosion of growth oppor-tunities too . Nor is there any doubt that the cost reductions found in outsourcing and otherwise globalizing the supply chain led to serious competitive advantages .
Let us then move on to an exploration of the good, bad and ugly in the top seven trends transforming the high tech industry from this point forward… . Shift in Global Buying Power
Global management consulting firm McKinsey & Company predicts that “by 2025 more than half of the world’s total population will have joined the consuming classes, driving annual consumption in emerging markets to $30 trillion .” That means the consumers market in emerging markets will become almost as large as that of developed markets, which is expected to be at $34 trillion in 2025 .
The understandable urge wrought from this information is to immediately move into these markets, establish a presence, and proceed to profit from such high-growth opportunities . But that urge may result in a less than satisfying move .
“Yet the largest companies headquartered in developed economies derive only 17 percent of their revenues from emerging markets, even though these markets represent 36 percent of global GDP,” says the McKinsey & Company report . “Despite advantages in scale, technology, and access to capital, multinationals often lose out to local competitors .”
While there is no clear-cut and sure winning strategy to follow in emerging markets, there are ways to compete for the disposable dollars there . The first means of doing that is through Internet and mobile channels . That may be easier said than done, however, considering that Internet penetration is still limited in many emerging markets .
ziffdavis .com 5 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
According to The Economist, in India:
“[Internet] Penetration is just 3-4% of the population, if judged by the number of moderately fast fixed internet lines and smartphones that use 2 .5G and 3G services . About two-thirds of these connections are mobile . If you include people who access the web through cafés, at work, on friends’ computers or through basic phones with small screens, penetration is 10% . Most surfers are young . Many live in provincial towns that the IT revolution has hitherto bypassed .
That 10% is a big figure in absolute terms—122m people—and it will rise as smartphones get cheaper .”
Appealing to buyers in India and many other emerging markets via the Internet means taking into account slow upload and download times as well the interest in – and limita-tions of – websites viewed on mobile .
But even that simple understanding of India’s infrastructure and culture may not be enough to net significant sales .
McKinsey forecasts sales in India from e-commerce sites will near $100 billion within the next five years but veterans in the area dispute that . The Economist reports:
“It is at this point that veterans of the telecoms industry chortle . India’s 700m mobile subscribers are stingy . Only 5% pay for mobile broadband and only a fifth of those engage in e-commerce, says one network boss . Handsets using Google’s Android operating system are available at $100 or less, but their quality is poor . About a fifth of smartphone buyers use them only for voice calls and as a fashion accessory .”
So, while buying power is appearing to be shifting from mature markets to emerging markets, those opportunities do pose significant challenges .
A second way to cut a piece of the emerging market pie for your company is to partner with locally established firms to leverage their appeal to local buyers in your behalf . The third is to leverage your supply chain partnerships to aid you in local buyer acceptance particularly from the PR advantage of touting local jobs supported or created by your company’s presence in that economy – a theme that is resonating well in every economy at the moment .
The global consulting firm McKinsey offers additional ways to tap emerging markets: “target urban growth clusters; anticipate moments of explosive growth; devise segmen-tation strategies for local relevance and global scale; radically redeploy resources for the long term; innovate to deliver value across the price spectrum; build brands that resonate and inspire trust; and, control the route to market .”
ziffdavis .com 6 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
But however your company chooses to proceed, the fact remains that the growing buying power in emerging markets is simply too large to ignore .
Supply Chain Risk Management
The modern day information and communications technology (ICT) supply chain is fraught with both intentional and unintentional security risks made all the harder to find and control by the perplexing and complex web of interconnected players, all with different agendas and modi operandi .
It is therefore incumbent on all producers to actively and proactively contain risks throughout the supply chain .
A report produced by the National Institute of Standards and Technology, U .S . Department of Commerce, called the NIST Interagency Report 7622, Notional Supply Chain Risk Management Practices for Federal Information Systems, suggests 10 best practices for supply chain risk management:
1) Uniquely identify supply chain elements, processes and actors2) Limit access and exposure within the supply chain3) Establish and maintain the provenance of elements, processes, tools and data4) Share information within strict limits5) Perform supply chain risk management awareness and training6) Use defensive design for systems, elements and processes7) Perform continuous integrator review8) Strengthen delivery mechanism9) Assure sustainment delivery mechanisms10) Manage disposal and final disposition activities throughout the system or element life cycle
While the report specifically addresses supply chain risks to U .S . federal information systems, the best practices it lists are applicable to all entities .
It is important to note that many of these best practices must be implemented through technology as manual procedures are largely incapable of handling such a huge workload . Specifically, supply chain management tools are built for just such a purpose but providers of such tools must also be examined with care for potential security risks .
Plug-and-Play Manufacturing Plants
The National Electronics Manufacturing Initiative’s (NEMI) plug and play Factory Project began in 1997 with the backing of the Factory Information Systems Technical Implemen-tation Group . Its goal was and is to reduce the amount of time and difficulty involved in
ziffdavis .com 7 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
integrating a new piece of electronic assembly equipment into a shop floor environment, hence the resulting intercompatibility or interoperability standards, commonly referred to as plug-and-play .
“By demonstrating an order of magnitude reduction in the amount of time and the cost of implementing a new factory information system on an actual electronics manufacturing line, the project achieved its goal of drastically reducing the break-even point for implementing a new factory information system,” reads the Project’s official report as first published in the International Journal Of Computer Integrated Manufacturing, 2000, VOL . 13, NO . 3, 225-244 .
The NEMI plug and play framework was built around the assumption that the Internet could serve as a distributed computing platform .
The development of web technology has greatly simplified the development of client/server applications . By implementing pure web-based equipment communication using the HTTP and XML protocols, commercialization should be possible at a much lower price point and with a much wider available resource pool than is possible with GEM,” continues the authors of the report .
Read the full NEMI report for more technical details and drawings, but for the purpose of this report, suffice it to say that the plug and play project has proved commercially viable and an enhancement to factory production . Indeed, the project has moved to a full-blown practice, far removed from the simple notion of a “trend .” Like so many technologies before it, standardized manufacturing electronics are rapidly replacing legacy, customized machinery . Depreciation of Legacy Infrastructure Hardware and Systems
Equipment depreciation is a time-honored tax relief for many companies . However, the advent of disruptive technologies can disrupt these savings or cost offsets for some companies that have yet to claim the tax break to its fullest extent . Therefore, many companies postpone plans to move to the cloud or to adopt other new technologies until depreciation is fully exploited on existing hardware and systems . Such companies typically wait to implement new technologies until their regular refresh cycle .
That strategy can be precarious, however, in the way of the “penny wise and pound foolish” vein as cost savings presented by transformative technologies such as the cloud are postponed, i .e . lost, for the same time period .
Further, more aggressively competitive companies will seize advantage in the interim, potentially leaving companies that cling to legacy equipment far behind .
Additionally, the costs of upgrading and patching legacy equipment and systems to meet compliance and security requirements have become untenable to many organizations . By
ziffdavis .com 8 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
comparison, the cloud minimizes such depreciation, i .e . the costs of aging equipment, and largely eradicates the need for costly system replacements Tightening Compliance and Regulation
Compliance and regulation are tightening as top concerns for global companies . According to an Ernst & Young survey, “In every sector, regulation and compliance ranks among the top four risks . In fact, in four out of the seven sectors we surveyed, regulation and compliance risks rank first .”
That same survey found that respondents in emerging markets (China, India, Russia, Middle East/ North Africa [MENA]) expected compliance and regulatory risks to fall somewhat in 2013 which Ernst & Young attributes to a stabilization of regulatory regimes in these areas . Meanwhile, respondents based in the U .S . are bracing for a perceived increase in impact .
Even with the fluctuation in perceived regulatory and compliance risk levels, companies in all regions are actively responding . According to Ernst & Young, “more than 60% of organizations surveyed report that they have implemented measures to address these risks .”
New Channels for Customer Communication
Despite the many changes and upheavals the market has seen of late, one business rule holds true: To lose touch with the customer is to lose touch with the business . That is, if you do not communicate with customers, soon you will have none .
There is no business where there are no customers . Customers are people, even in a B2B sales relationship . No one ever sells anything to a company, but rather to the humans within that company . And no machine ever buys anything except at the command of a person .
Therefore humans and human relationships are at the very core of every business . Effective communications between humans must be maintained at all times .
Unfortunately, communications is a moving target . The channels are many and fragmented and customers tend to move from one to another in a span of seconds . Refusing to communicate on one channel, despite having numerous other channels open, can and often does result in offending or off-putting many customers and not just the few you might think use that one forfeited channel .
It is incumbent on all companies to open all channels and then incorporate the communiqués into individual customer files in order to keep the conversation with any given individual coherent and flowing . It is also important to enable the customer to switch channels mid-conversation .
That can be a daunting task but fortunately several technologies are at the ready to assist, including unified communications (UC) .
ziffdavis .com 9 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
A report by COMMfusion found that:
“The worldwide Total or UC-capable market for premise-based UC was $12 .23 billion in 2011, up 8% from 2010, growing to $20 .76 billion by 2016 . The component with the highest growth is conferencing/collaboration, with a 17% CAGR . Turning to the Net or True UC market, revenues were $2 .7 billion in 2011, up 20%from 2010, and expected to grow to $8 .47 billion by 2016 . The conferencing/collaboration component remains the fasted growing, with a 50%C AGR .”
However, there are still communication channels that have yet to be tapped or tapped fully . For example, customer self-service content is commonly not sufficiently reactive to speech and keyword nuances resulting in search results that often miss the mark . The same is true of document search; few systems pull up the needed sections and rather offer an entire document instead thereby frustrating the customer . Nor does such content offer a means for comment other than a rather unhelpful request to check a box if the information was helpful . This is not communicating; it is throwing info at the reader in the hopes that something within will quiet the request .
Further, manufacturers rarely use technical manuals, product instructions, shipping labels, bills of laden, invoices, or statements, particularly in their digital forms, as a means of communicating with partners and customers . But in truth, any messaging form currently in use can be broadened into a useful communications channel . Internet of Things Meets Big Data
The phrase Internet of Things refers to connection of millions of devices to the Internet ranging from manufacturing plant sensors, to consumer devices and cars and everything in between .
Machina Research, in a study for GSMA, estimates that the number of connected devices will grow from 9 billion to 24 billion between 2011 and 2020 . That represents many new options and opportunities as well as a hefty challenge in managing an explosion in data growth .
There is a term for that explosion in data: Big Data . It refers specifically to all the raw information all these machines generate and transmit .
While all industries are faced with the opportunities and challenges that the Internet of Things and Big Data present, the high tech industry is arguably more so in that practically everything it produces must be able to generate automated data and/or make sense and use of large quantities of automated data . For the high tech industry, the Internet of Things and Big Data are double the challenges and opportunities faced by other industries .
Add to that the upheaval in manufacturing coming on the uptick of additive manufacturing, aka 3D printing, in replacement of traditional subtractive manufacturing in which products are chiseled, pressed, stamped, and cut from slabs of raw material, and the high tech industry is facing an evolution of enormous scale .
ziffdavis .com 10 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
Additive manufacturing has matured to the point that it can be used in general production . In The Economist article titled “Print Me a Jet Engine,” the author writes it “…is further evidence for those who believe that product innovation will increasingly go hand-in-hand with manufacturing innovation . So proximity of production and R&D will matter more .”
There is no doubt that the Internet of Things and Big Data will play a central role in production and R&D in ways not yet imaginable . Top 7 Transformative Technologies for the High Tech Industry
With all of the above in mind, it is prudent to examine what transformative technologies are currently available to aid the high-tech industry in overcoming new challenges and profiting from emerging opportunities . Such work is simply beyond the capabilities of most legacy and quite a few traditional, commercial systems . End-to-End Demand and Supply Planning
End-to-end demand and supply planning treats the entire supply chain as one entity regardless of how many parts (or partners) is within it . It allows a company flexibility and agility in responding to market changes and a means to control a rolling “just in time” supply chain which in turn diminishes waste and frees cash for other uses .
That short explanation sounds nice, neat and succinct . In practice, however, it is a bit trickier . Markets are fickle and agile which makes accurate forecasting difficult .
Gartner says the top three best practices in demand planning are to define the balance between statistical modeling and collaborative forecasting; use demand sensing and shaping capabilities; and, measure forecast accuracy at the item, location and customer levels .
“Organizations are struggling to find the process that fully utilizes the alignment of organization resources,” said Steven Steutermann, research vice president at Gartner . “The balance between bottom-up collaborative approaches versus top-down statistical modeling is challenging, and the ability to understand baseline volumes from promotional volumes — as well as mix and shift within portfolios — is an equally daunting task .”
To that end, it is imperative to have a sound and agile end-to-end demand and supply planning system in place . Real-Time Supply Chain Response Management
This technology is essential, even critical, in addressing the inevitable issues that throw kinks in a normally functioning supply chain . A short-term promotional offer, for example, may require a temporary adjustment in the supply chain .
An unexpected inventory shortage, perhaps created by an event such as the Japan earthquake of 2011 had on the entire high tech industry supply chain, can seriously change the best laid supply plans .
ziffdavis .com 11 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
A month after the great Japan earthquake and resulting tsunami, MIT Professor Yossi Sheffi, director of the Center for Transportation and Logistics, noted how many high tech industries worldwide would be affected by a sudden inventory shortage, and he specifically pointed to the likely impact on Apple’s iPad 2 production .
MIT News reported on April 15, 2011:
“The company relies on Japanese suppliers for many parts, including the iPad’s lithium-ion batteries and the overlay glass that covers the screen . Sheffi said the overlay glass supplier has suffered serious damage in two of its plants, and the battery manufacturer, located 37 miles from the damaged Fukushima Daiichi nuclear power plant, has shut down .
In addition, a subsidiary of Mitsubishi that manufacturers an epoxy resin, used in the iPad printed circuit board, has shut down as a result of the earthquake, though it is working to get production restarted . Sheffi said that in the normal supply chain of events, the resin would have been shipped to a manufacturer in Taiwan, which builds semiconductors and sends them to China, where the iPad is assembled and then distributed all over the world . ‘And here’s a fourth-tier supplier, four-deep into this supply chain, who may be causing real problems in the manufacturing and supply of the iPad,’ said Sheffi, who is also director of MIT’s Engineering Systems Division .”
From such unexpected or previously unplanned events, or even from a pleasant surprise such as a sudden sales surge, comes the immediate need to make changes in the supply chain in real-time .
Real-Time Supply Chain Response Management enables a company to do exactly that: respond and prosper . Cloud-Based Manufacturing Infrastructures
Manufacturing, like nearly every other industry, is fated for the cloud . For now, the industry is moving towards that end in measured steps .
According to researchers at the Georgia Institute of Technology (Georgia Tech), computer-aided product development was the first to move to the cloud, most commonly in regards to computer-aided design (CAD) software . Such greatly reduced the costs of licensing fees, upgrades and maintenance as well as the time involved in the same .
However, the researchers noted that data transfer is faster over an internal local area network than over an Internet connection . For some, an Internet lag would be of no consequence or simply annoying; for others it could be costly .
Fortunately for manufacturers seeking to retain the savings found in the cloud, the Georgia Tech researchers found a resolution for the problem .
“One way of minimizing the response lag is to store CAD data and software on the same server . The less data one needs to transfer through the cloud, the better (and faster/cheaper) .
ziffdavis .com 12 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
In light of this and as alluded to in Section 1, it becomes apparent that providing/renting storage space as a service through the cloud is yet another interesting business model to consider,” they wrote in their paper “Distributed Collaborative Design and Manufacture in the Cloud – Motivation, Infrastructure and Education .”
But CAD is not the only step being taken to move manufacturing infrastructures, or elements thereof, to the cloud . In particular, the report says additive manufacturing, aka 3D printing, is attracting interest in “extending the cloud computing model to physical resources such as 3D printers for distributed and Internet-enabled additive manufacturing machines such as mills, lathes and other manufacturing-related resources .” The researchers refer to this new model of seamlessly integrating both virtual resources, such as CAD systems, with physical resources, such as additive manufacturing machines, as “Cloud-based Design and Manufacturing (CBDM) .
So, while some manufacturers are pondering what processes to move to the cloud, others are already leaping ahead to set up the future, i .e . a cloud enabled and entirely new shop floor . But in any case, they are all moving to the cloud in one capacity or another .
In-House and Outsourced Manufacturing Operations and Service Parts Planning
There are almost as many models of in-house and outsourced operations as there are companies to use them . Such is always a strategic decision based upon an individual company’s determination of how it might best profit and compete in an increasingly competitive global marketplace .
While the rationales behind and the benefits of outsourcing are well known and thoroughly documented, there are considerations beyond those that must be part of the strategy development and forevermore tracked and accounted .
Namely, the cons to outsourcing operations or service parts, whether near or far, that must be considered in the overall strategy are inadequate governance; loss of control over intellectual property; loss of control over technical and highly skilled staff; underestimation of costs or hidden costs; loss of control over delivery time and quality; potential competition from a supplier and/or leaks of competitive information from the supplier to a competitor; and the potential impact on business continuity .
One example of how business continuity can be severely impacted by a competitor’s use of the same supplier:
“Supply chain bottlenecks can be an opportunity to create strategic advantage by taking those sources away from potential competitors,” wrote Jeff Wallingford, vice president of Supply Chain Strategy at consulting firm Riverwood Solutions, in Industry Week . “I once worked for a company that made inductive heaters . The heater wire had unique braided insulation . While it was otherwise an easy part to outsource, we bought all the equipment from our supplier and made our own wire in order to prevent
ziffdavis .com 13 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
competitors from selling replacement heaters using the same wire .”
It is important to note that some of these same drawbacks are also present in in-house operations . That is to say that it is vital to use technologies capable of dealing with these issues, or at least making them visible, regardless of which model, or even a hybrid model, is used . Integrated and Transparent Product Compliance and Rights Management
If there is a single area that makes companies most susceptible to serious problems, it would be product compliance and rights management . These two issues carry severe penalties resulting in everything from exploding budgets and expensive court costs, to company closures .
The core of the problem is the sheer number and complexity of regional, national and worldwide regulations that require proof of compliance .
For example, Restriction of Hazardous Substances (RoHS) regulates and restricts the use of materials used in the manufacturing of electronics and electrical equipment in the European Union . It is important to be abreast of this regulation and all others worldwide, before contracting a supplier to provide parts or products if you intend to sell them in regulated markets . Further, regulated markets will require transparency throughout your supply chain and proof of compliance through the end of the part’s or product’s lifecycle .
That situation is further aggravated by the need to establish rights in the increasingly complex supply chain and partnerships . Managing the product value chain is therefore essential from the beginning of any product oriented process .
However, by using Integrated and Transparent Product Compliance and Rights Management, you can not only avoid expensive problems but also identify innovation opportunities that actually leverage market regulatory conditions . Multi-Channel Customer Service and Support
Multi-channel customer service and support is important in delivering a great customer experience and thus brand loyalty but it is also vital to serving a customer base spread around the globe . For example, customers and prospects in some countries overwhelmingly use mobile phones over desktops whereas in other countries, shoppers are likely to research a product in a brick-and-mortar store and then order it online . Therefore, limiting the channels customers can use limits the markets to which you can sell and the efficiency with which you can sell .
For example, in Europe broadband use is nearly ubiquitous according to the European Commission . By comparison, India “ranks behind over 100 countries, in broadband penetration –fixed or wireless” according to a 2012 TU-UNESCO report . Such disparity affects your ability and available means to communicate with customers in both geographical areas .
ziffdavis .com 14 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
It is not only important to have all channels open for customer use, but to integrate the data collected from these channels and the conversations therein into a single venue from which to improve efficiencies and customer relationships through service and support .
“Historically, retailers have segregated their planning by channel or business . In today’s multi-channel environment, retailers should gain an understanding of total sales by market regardless of channel,” reads a Deloitte report titled “A Race to the Bottom: How to Survive in the New Retail Environment .”
Technologies that enable such unified and comprehensive customer views and access are thus imperative to the profitability of any company and are not applicable to only retailers . Multi-channel communications must be open to all customers of any type and throughout the supply chain as well . Machine-to-Machine Communications and In-Memory Business Intelligence/Analytics
As detailed above, machine-to-machine communications are prevalent and growing both in number and importance . Machine-to-machine communications are enabled by the Internet of Things and they are the source of a significant percentage of Big Data .
Because of this explosive growth in capabilities and raw data, business intelligence and related analytics had to adapt to keep pace . This created the necessity for a shift from querying data on physical disks to one of querying data in a server’s RAM, i .e . a shift to in-memory analytics . In-memory analytics have more speed, higher performance, and increased reliability over disk-based analytics . It is of particular significance in time-sensitive business scenarios and real-time functionality .
Forrester Research analyst, Boris Evelson defines the five types of business intelligence in-memory analytics as:
• In-memory OLAP . Classic MOLAP cube loaded entirely in memory
• In-memory ROLAP . ROLAP metadata loaded entirely in memory .
• In memory inverted index . Index (with data) loaded into memory
• In memory associative index . An array/index with every entity/attribute correlated to every other entity/attribute
• In memory spreadsheet . Spreadsheet like array loaded entirely into memory
The use of in-memory analytics are imperative to competing in a marketplace increasingly driven by real-time events . The rise in machine-to-machine communications simply ups the ante .
Yet a 2012 Big Data Survey by Information Week found that despite respondents, all of whom managed a minimum of 10TB of data, stating overwhelming and emphatically that speed of
ziffdavis .com 15 of 15
Ziff Davis | White Paper | Top Seven Trends for Transforming the High Tech Industry
accessibility was their top concern, 85% of them are still using disk .
This situation will have to change if companies are to leverage Big Data, and they certainly will have to do so in order to remain competitive . Conclusion
While there are seven trends that are significantly impacting the high tech industry today, there are also seven transformative technologies in play to help them overcome the new obstacles and capture all the new opportunities . Strategy still plays the most significant role in obtaining success but no strategy, regardless how well done, can be implemented without the use of these new technologies .
Big Data by its very nature is too big and too far-flung for traditional computing processes to cope, much less for manual attempts such as spreadsheets to address . So while the world is shrinking in that global industries now work, sell, employ, and partner globally it is also growing to gigantic proportions in terms of data produced and devices reached . It is a bit of irony that technology shrank or flattened the world and yet also expanded the business universe which in the end requires more technology to tame .
The high tech industry, of all sectors, is under additional pressure to keep up because it is defined by all things high-tech . That means each innovation is expected to be incorporated and used by this sector before any other . To do less is to lose the mantle of high-tech .
While the world will continue to change it is the high-tech industry that will spur that change if and only if it keeps itself moving forward .
