Future Enterprise

How Vendors Succeed in the Growing Digital Economy

When enterprises become digital innovation factories, software vendors need to step up their technology offerings.
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Enterprise Digital Innovation Factories Require Software Vendors to Step up their Technology Offerings

The growing digital economy is requiring many business leaders to rethink their strategic plans for the next 3 to 5 years. Technology is increasingly becoming part of not only our daily lives, but the lives of every enterprise operating in today’s economy.

The evolution of how future business decisions are made requires today’s CEOs and business leaders to embrace the seismic shift of producing their own software rather than just being a consumer of purchased software.  Organizations will still consume software from technology vendors, but the need to produce their own software will become increasingly essential to the success of their business. 

IDC recommends that all enterprises -regardless of industry- focus on becoming their own “digital innovation factory”. Businesses need to consume business critical software such as CRM, finance, HCM, procurement and other enterprise applications but they also need to produce software to meet growing customer needs, expectations and experiences.

IDC predicts that by 2025, over two-thirds of the G2000 will have become high-performance, large scale producers of software-based digital innovation.  Most of this production of digital innovation will be focused on creating new value for customers, though some may augment internal digital workstreams. 

New technology, developed in-house, will be embedded into the organization’s own products and services, to compete within their own industries. The biggest focus of business leaders and CEOs will be creating new value for their own customers with digitally enhanced product offerings and services.  In addition, new technology will also be developed in-house to support operations internally and fulfilling the move from a manual long tail business process to a digital one, enhancing the organization’s operations and profitability. 

“By 2023, IDC predicts enterprises’ ability to rapidly develop their own digital innovations will be a core competitive requirement, as more than half of the world-wide economy will be digitally driven.

Further underpinning the shift is our IDC CIO research which found 75% of companies believe it is significantly important for them to refocus their product development programs from digital innovation development to digital innovation delivery by developing software capabilities.

How Can Tech Suppliers Succeed in this New Economy?

For tech suppliers, this shift to the business becoming a digital innovation factory can leave a lot of questions about revenue stream. It’s understandable to think that if companies are creating their own software, there may not be a need for them to purchase what you’ve created. A reduction in revenue can be avoided with several strategic decisions that will lead tech suppliers to becoming more of a tech partner rather than just a supplier. 

  • Become Part of the New Software Supply Chain.  Your customers are developing capabilities around becoming software producers, not becoming your competitor. They are developing the longtail applications unique to their industry and ecosystem. 
  • Integration & Inclusion.  Make products or services available as APIs, so they can more easily be consumed by customers as they are trying to build new things.
  • Create an Ecosystem.  Work on building a platform and a robust developer and innovator ecosystem that that enterprises can tap into. For example, SaaS adding PaaS/platform services.
  • Dedicate Resources to your customers.  Suppliers need to tap into LoB teams and establish new digital supply chain relationships. This is about going to the product innovation teams, the product management teams, the product development teams and saying, “we want to be part of your digital supply chain”.
  • Embrace the Opportunity.Accept this huge opportunity to help enterprises envision, build and manage this new organization-altering emergence of the digital innovation supply chain.
  • Help distribute the new applications invented by your clients.

It is clear the digitally innovative enterprise has arrived and is working towards a digitally enhanced experience both for its customers and itself.  As enterprises shift their focus and commit to using digital innovation to enhance the enterprise, there will be an explosion in new digital apps and services.

Tech suppliers can take advantage of this important shift by focusing on more technological advancements, new business partnerships and guidance. More information can be found at ‘Every Enterprise is Becoming A Digital Innovation Factory’.

Program Vice President, Enterprise Applications and Digital Commerce