BearingPoint has ujnveiled the findings from a comprehensive study into digital strategy and the role of partner ecosystems in the IT and Technology sector. The report “Partnership ecosystems: A narrowing window of opportunity for IT & Technology companies?” reveals that ambitions are high for IT and Technology companies around the globe, in driving revenue growth from establishing powerful partner ecosystems – 37% expect an uplift of 11%+ in just two years. A further 44% anticipate 16%+ growth and, of that, 22% forecast a huge 21%+ revenue bump. With this sector naturally sitting in the vanguard of the digital age, the bad news is, IT and Technology companies are not changing fast enough and so are failing to seize the opportunity available to them today to build differentiating new partner ecosytems.
Partnerships: opportunities in abundance, but time is running out
IT and Technology companies are the number one partners (the destination) of choice for companies in other sectors like automotive, banking, insurance, telecoms and media, and transport. This supports the rapid emergence of new cross-industry business models as everything becomes connected and digital. However, only 18% of IT and Technology companies are currently partnering with organizations in other sectors. Instead, IT and Technology companies are today opting to partner with established IT companies (60%), technology providers (53%) and with Internet of Things players (26%). Worse still, change is imminent. Over the next two years, other sectors are expressing a declining need to partner with IT and Technology companies.
“The survey highlights two important trends. IT and Technology companies have incredibly high expectations when it comes to driving revenues, innovation and productivity through partner ecosystems. Yet, today, IT and Technology companies are almost myopically partnering with companies that look exactly like themselves. They are investing in sustaining innovation and not disruptive innovation, adding features to existing products rather than finding the “white space” and creating new products and services,” says Angus Ward, CEO of Digital Platform Solutions at consultancy BearingPoint.
“Our research shows us that the real opportunities lie in the “white space” between traditional industry verticals like automotive, banking and telecoms companies. Not just to enable digital transformation, but to create new sector-specific products and services that can leverage new digital technologies. These sectors need this disruptive thinking as new digital technologies enable them to reinvent and move into adjacent markets. That said, these sectors are now being forced to go out and acquire the knowledge and capabilities themselves to become digital masters, meaning they will be much more self-sufficient in two years time. If IT and Technology companies do not act fast, they will find they have missed this valuable opportunity for immediate and future growth. The window of opportunity is closing rapidly,” continues Angus.
Partner ecosystems: IT and Technology companies understand the value, but are doing very little
79% of IT and Technology companies believe it is important to change business models to underpin growth, and 58% are focusing on business model innovation and launching new products and services as a core part of their digital strategies. However, while IT and Technology companies see the value in developing these partnerships:
- 53% are still in the planning phase for both defining their own digital strategy and building out a partner ecosystem.
- In addition, only 34% of IT and Technology companies are fully engaged in business model innovation and new digital offerings.
“It’s great to see that business model innovation and new products and services are a top priority for IT and Technology companies. The sector has clearly learnt from the past and the impact of highly disruptive new technologies causing flagship brands to fail overnight. Sadly, it is that there is a growing es are d services are need to do and actually executing on it. s model innovation and new digital offealso clear that there is a growing disconnect between understanding what needs to be done and actually doing it. What gives this sector scale and enables it to undertake major technology R&D, also makes change that much more difficult,” says Henri Tcheng, Global Leader Consumer Industries at BearingPoint. “This is worrying, especially for a sector that competes directly with superpowers like Amazon and Google. If they continue to lag in execution, many IT and Technology companies will become defunct like many leading technology brands in the past who failed to adapt to a rapidly changing business environment.”
The tech world’s greatest irony: IT and Technology companies hindered by technology
The challenges facing IT and Technology companies in managing and enhancing their partner ecosystems are mainly technological in nature:
- 51% are struggling with a complex IT environment that cannot support a minimum viable product or fail fast concept
- Nearly half (48%) don’t believe that they have the right technology and platform to manage partner ecosystems, despite 47% agreeing that this is an essential requirement for success
“From experience, we know that businesses that adopt digital platform-based business models grow at twice the rate of those that don’t, simply because this allows them to generate value from vibrant partner ecosystems and network effect in a world that is increasingly winner takes all. IT and Technology companies are well positioned to benefit from this today – opportunities are in abundance. However, it’s time to stop talking about new business models and move quickly into execution, with the right strategies to co-create more compelling products and services with partners that are fit for a digital age. If they do not, they will surely struggle in the future,” continues Angus.
