In past months, V Siva Raja has covered several of the large corporations that are driving digital transformation globally. Among his technology insights which are of immense interest to media organizations, he says that they cannot avoid digital transformation, and that the giant tech companies are all shifting from a product-based approach to subscription-based models.
Apple, Microsoft, Google, Cisco, Amazon, SAP and a few others are large conglomerates who have acquired a number of startups or innovators in recent years and have grown – in technologies, tools and products as well as in size. Mainly located in the USA, they have incomparable infrastructure in the US and Europe and often, some software development in India. Their products and services are sold globally, with a few organizations controlling the end-to-end data.
An organization’s data was in-prem (in the premises) in the past. However, digital transformation and Cloud computing technologies are moving the data out of individual organizations to the large data farms of these corporations. Cloud computing services are today the fastest growing tech segment and every large tech company has thrown its hat in the ring.
If you are traveling across the city with your smartphone, the entire route and all transactions are monitored and recorded as data. The entire data of individuals across the world, their preferences and transactions, are available to Google, Apple or Samsung or other Cloud platform managers. Within a few years, the commercial data of all businesses would also be available on the Cloud. Not limited to personal and commercial data, the data of entire countries is also (or will be) available to at least a few large corporations. This is inevitable and our choice in this matter has become largely rhetorical. We are deeply entrenched and being pulled along the only pathway – the corporate digital Cloud.
In the recent past many regions have given rise to independent countries and nations formerly ruled by great powers like Great Britain, France, Spain, Portugal and a few others whose empires gained sovereignty over their colonial possessions. In the information era, we sign agreements with a click and give away our hard won rights as citizens of democracies. Every time we use our devices, log on to a website or app or service, or buy new software we are all legally bound by these agreements – actually too complicated and too long to read. The average plugged in citizen or user finds it pointless to even download and save, let alone print out these supposedly legal and voluntary agreements.
While in the previous half a century, organizations profited by selling products with a one-time software license, they increasingly sell devices as mere hosts to continuously changing operating systems, apps and services. In the future they will additionally or mainly profit by selling storage and services in the Cloud.
Devices will continue to be sold and there will be new customers in countries like China and India. However, in the main, organizations like Apple, Microsoft, Google, Cisco, Amazon, SAP and a few others will keep making money from connecting these to data storage, analytics and services.
iPhone sales decline 15% while services grow by 19%
Originally an innovative computer and device company, Apple’s growth has plateaued in the last couple of years. In its latest results, Apple’s revenue from iPhone sales declined by 15% over the previous year while its services business grew by over 19% CAGR.
Apple expects services to drive its revenue growth and to contribute at least US$ 50 billion by 2020. Hardware revenue basically differs in comparison to the seemingly much smaller but regular annuity receipts of the subscription model for content and services. Moreover, with the increase in services, hardware revenue from the iPhone and other devices is also expected to grow, with new users continuing to buy devices to view or use the new content and services. However, as comprehensively reported in these pages earlier, Apple’s recently announced subscription-based Apple NEWS+, Apple TV+, Apple Arcade and Apple Card are expected to drive future revenue.
As we get ready to upload this story, Apple has released some of these services to the Indian market in its announcements on 10 September. Apple Arcade and Apple TV+ are each now available at Rs. 99 a month. The iPad 7th gen and Apple watch 5th gen will be available in India on 20 September 2019. Other important launches were the iPhone11, 11Pro and 11 Pro Max with the A13 bionic chip and a new version of IOS 13. By the time you read this article in print, the latest iPhone can be in your hands.
Google Cloud – already used by leading media organizations
Google has traditionally been a global internet service provider with immense infrastructure for data storage and retrieval across the world for its legions of users. Potentially an ideal Cloud provider, apart from its numerous products, it has put increasing focus on Google Cloud – a platform that is perhaps already used by 9 out of 10 leading media organizations. Actively working with the financial services and healthcare industry, it will be interesting to watch Google grow in markets where its innovations are expected to simplify open source access and add flexibility.
Cisco’s security Umbrella
Cisco is working to improve data analytics insights for its client base of more than 50 million networks globally. The company plans to provide a comprehensive set of products that include malware protection, Cloud security, multi-factor authentication and threat response. In the last 23 years, Cisco has acquired more than 300 innovative companies and technologies at a cost of US$ 70 billion to provide seamless integration for its existing and potential customers.
Cisco’s intent-based networking has reinvented how networks are built and managed. Umbrella, its Cloud-based solution, now offers safety and security to networks. These new software advancements are being delivered via software subscriptions, granting customers access to ongoing innovation. As a leader in cyber security, Cisco is leveraging its security innovations across all domains, and providing the end-to-end security that customers need.
SAP’s X factor
SAP, one of the largest ERP companies predominantly focused on the ‘Operational’ data factor for the past 47 years, has now started working on the ‘Experience’ factor. With the acquisition in January 2019 of Qualtrics for US$ 8 billion, SAP SE has filled its X factor gap.
Qualtrics is a feedback and survey software maker that collects and reveals brand, product, customer and employee experience. With Qualtrics providing the customer experience (X) and feedback, SAP plans to touch 78% of global transactions giving visibility across the entire customer journey, including orders, product creation, delivery, invoicing and so on.
Digital transformation observers note that today, organizations are disproportionately rewarded when they deliver a great experience, and absolutely punished when they do not – “The difference between the companies that will win is determined by their understanding of how X-data and O-data work together to tell the story of what is happening in an organization, why it’s happening and how to act in real time to deliver breakthrough business results and close the gap between what people expect and what people receive. When that gap exists, customers get frustrated and go elsewhere.”
In the re-architectured S/4 HANA, storage is separated from computation. This was necessary to accommodate the massive influx of data from social networks and the internet of things (IOT). It allows for the processing of structured and unstructured data stored in data centers or the Cloud. This could also make the SAP Cloud Platform (SCP) attractive to non-SAP customers to build applications.
Cooperation for synergy in AI, machine learning and AR
Another major trend has been the cooperation between these large corporations to provide technologies and create synergy for the customer. These include Apple’s intelligent iOS apps powered by SAP Leonardo to use machine learning and augmented reality and provide optimized solutions for the customer.
Google has partnered with and is working closely with more than 30 hardware, software and system integration partners ready to help customers leverage Cloud capabilities. Partnership with Cisco, VMWare, Dell, EMC, HPE, Intel and Lenovo have helped in delivering Anthos on their own hyper-converged infrastructure for their customers.
System integrators like Accenture, Arctiq, Atos, Cognizant, Deloitte, HCL Technologies, NTT Communications, Tata Consultancy Services, Wipro and WWT are building services and solutions to help their customers integrate with Anthos.
Digital is a human and cultural transformation
Finally, digital transformation is not just about IT investment and implementation. As per Forbes, around 84% of digital transformations do not take off. The path to digital transformation is a creative and human journey and requires a major shift in the mindset, processes, organization and culture that encourage constant innovation to meet ever-changing customer expectations and business goals.
For a digital transformation to be successful, it is absolutely necessary to have a clear and committed end-goal, which is linked to the needs of the customer rather than a great IT implementation. All the stakeholders are required to work together without silos and have clear understanding and a roadmap for success.
It is necessary to have a business leader who understands the needs of the customer to lead the project rather than an IT leader. The IT team should be competent to plan, train and implement the project. A digital transformation requires a major cultural change and a very positive and powerful communication system to avoid failure.
A successful digital transformation brings in a superior customer experience by providing analytical tools to monitor feedback, improve consistency optimize cost and reduce delivery time by reducing the process time. With reduction in repetitive processes manpower is also optimized.
All these takeaways should be clearly discussed and agreed with the team and highlighted during implementation, for a focused end result and sustainable benefits.
A newspaper industry veteran on the technology and printing side, V Siva Raja is based in Noida. Recently a founder of the Five-I Innovation factory LLP, he can be contacted at firstname.lastname@example.org +919818278760.