SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCnet FEATURE

TMCNET eNEWSLETTER SIGNUP

December 14, 2012

Overcoming Widespread Upheaval in High-Tech Industry

By TMCnet Special Guest
Hans Von Lewinski and Artur Meinzolt, senior executive and senior manager in Accenture�s Electronics & High-Tech group

Before the year 2000, enterprise technology providers in the PC and mobile markets could rely on their largest corporate customers to drive sales even when pricing and competitive pressures rose. But times have changed. Corporate procurement officers and CIOs are now taking a much closer look at costs and how IT supports their core businesses. They are now more likely to outsource their IT or replace it with a less expensive solution, leaving established providers of enterprise technology for the high-tech industry without that business.

In the global PC market, for example, many corporate customers are looking at emerging entrants, who can often offer a lower price than more established U.S.-based PC manufacturers. Other drivers behind this trend are the growth in the “bring your own device” movement, in which more employees are bringing their own smartphones and tablet PCs to use for work purposes; and the growing use of competing smartphone and PC operating systems.

In a new report Achieving High Performance by Refocusing on More Profitable Business-to-Business Models, Accenture (News - Alert) outlines three economic realities for providers of enterprise technology for the high-tech industry, and how refocusing their operations on business outcomes, rather than physical boxed products, will better align them to these new realities.

So what are these new economic realities of B2B transformation in the high-tech industry?

  •  Faster Technology Cycles
  • For the past two decades, high-tech product lifecycles have been shrinking. Refresh windows have collapsed to last only two years. Corporate customers are looking to satisfy a growing and more sophisticated user group while reaping support benefits associated with having the most updated technology. Providers of enterprise technology for the high-tech industry see this trend as an opportunity to generate more profits more quickly. But achieving this requires a nimble global supply chain.
  • Competitive Emerging Markets
  • Emerging market players in South Korea, India and China are taking significant market share from traditional enterprise technology providers in Europe, North America and Japan.  These new players were quick in identifying the growth opportunity of smartphones and could offer more competitive prices.
  • The Decline and Fragmentation of Corporate IT Spending
  • Global IT spending, which has taken a massive hit in the wake of the recent recession, is not expected to recover soon. Slashing budgets, refocusing on core processes and investing that money towards non–IT initiatives are the most pressing concerns for corporate IT buyers. CIOs still want to make IT investments, but they need to see an immediate and clear investment return.

Achieving High Performance through Business Outcomes

For enterprise technology providers, achieving high performance outside their traditional B2B relationships requires a new focus on business outcomes. Most are used to offering boxed products, like an individual network printer with standardized features and “plug-and-play” options. But these are relatively commoditized products generating low profit margins and only basic functionality. 

Accenture proposes that these providers broaden their scope by managing the “experience” of using that technology. Rather than a stand-alone product sale, these providers should sell the business benefits resulting from it. In the printer market, for instance, instead of selling a row of printers, the provider should manage the customer’s entire printing process, thereby gaining a recurring revenue stream over an extended time period. The challenge with this is developing intimate knowledge of corporate clients and complex business dealings to help defray costs and risks. This would better acclimate these providers to this new role. Accenture’s new report also examines business-to-consumer players entering this market to achieve further growth.

Taking the Path to High Performance

Stronger, deeper relationships with enterprise customers are the underlying method for achieving a business outcome model. This requires a whole set of new capabilities, including newly appointed managers as main points of contact within their respective accounts. These roles should exist across both sales and customer support. Understanding the trade-offs of profit margin mix and required marketing are also critical.

Collaboration is a key attribute for bringing products faster to market. When working with system integrators or independent software vendors, it’s key to create strategic collaborations that share expectations, objectives, roles and responsibilities. While a collaborative strategy would be controlled centrally, many management activities such as legal or project teaming can be handled locally or regionally. To attract interest in such relationships, enterprise technology providers should establish an incentive program that offers training and access to solution centers, or create B2B-focused conferences for access to potential candidates.

In the B2B marketing arena, providers should establish a consistent brand identity across geographies and product groups. Establishing this should be a closed loop process in which marketing programs are adopted and executed locally with central support, producing results that can be analyzed and fed back into future planning.  Marketing practices such as thought leadership points-of-views, coverage in B2B media outlets, and case studies describing pilots and completed projects will resonate with a B2B audience.

Strong B2B operations reward positive contributions. As such, it’s important to create an incentive structure that refocuses sales teams away from revenue targets and product silos and towards cross-product and cross-division cooperation. It’s critical to institute key performance metrics and incentives applicable across countries, regions and divisions. To measure sales performance, providers should use total revenue as a key performance barometer, followed by new revenue, gross profit, qualitative measures and new accounts.

Final Thoughts

B2B transformation in the high-tech industry requires operational, organizational and cultural changes. It expands enterprise and consumer technology providers into the more extended global market while creating deeper ties between different regions and their markets. The providers that focus on selling business outcomes are well-placed to become high-performance players in the B2B market.

Hans Von Lewinski is a senior executive with Accenture’s Electronics & High-Tech group. He leads the enterprise operations practice. He can be reached at hans.von.lewinski@accenture.com. Artur Meinzolt is a senior manager in Accenture’s Electronics & High-Tech group.  He can be reached at artur.meinzolt@accenture.com.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.




Edited by Brooke Neuman
» More TMCnet Feature Articles

Comments powered by Disqus

LATEST TMCNET ARTICLES

» More TMCnet Feature Articles




LATEST VIDEOS

DOWNLOAD CENTER

UPCOMING WEBINARS

MOST POPULAR STORIES





Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy