COVID-19 unofficially became the Chief Digital Officer of many companies accelerating their digital journeys. Amid the crisis that cast a veil of uncertainty, the extent of digital disruption and acceleration across companies and verticals led to a new digital reality. Reflecting on this trend, research estimated that digital engineering spend will increase to 47% of overall ER&D spending by 2023.
Considering this increased spending, a few questions emerge; how can an enterprise keep pace with the current technology trends and disruptions? Can technology service providers play a strategic role in addressing the challenges faced by enterprises in their digital transformation journeys?
To shed light on these, Vijay Anand Guntur, President, Engineering and R&D Services at HCLTech joined Pari Natarajan, CEO at Zinnov, during a podcast to discuss the megatrends that have emerged in the technology ecosystem post-COVID, how technology service providers are driving the digital agendas of both digital natives and digital migrants, and the nuances of catering to customers in different verticals, especially where digital transformation has taken center stage.
Megatrends in technology – Cloud, 5G, A.I., ML and more
The pandemic has altered the way we live and work. These changes have led to an explosion of new technologies and innovation, forcing businesses to adapt and transform.
“The biggest disruptor has been the adoption of cloud, and the choice it has provided to customers to take this journey faster. The need for working in different locations and having to coordinate teams - enterprises have used collaboration and digital tools. The digital transformation is happening in media—be it streaming, gaming, etc. Collaboration in Cloud is disrupting how people, teams and organizations interact inside and outside.” said Guntur.
Collaborative tools, digital devices, online streaming, robotics and drones need the necessary infrastructure to support a digitized world and stay current.
Guntur added: “The other big trends are 5G networking and A.I./ML. The buzz has turned into a reality. You see rollouts, end-user applications and B2B adoptions - whether it is in manufacturing or industrial IoT. Mixed Reality is becoming very commonplace today. In these situations, it is important to ensure that the data is high-quality.”
Digital transformation challenges
Despite the innumerable business benefits of digital transformation, the transition is riddled with challenges for enterprises, digital natives and digital migrants.
There are three major hurdles to digital transformation that enterprises need to be aware of: change management, technology and capability, and funding.
- Change management: Before any transformation, leaders need to be cognizant of whether the team is ready for digitalization.
Guntur pointed out: “Digital migrants or people who are adopting and transforming their businesses using these Digital Engineering technologies around it, they find it hard to first understand the technology and get their team skilled and capable. Technology is one challenge, but the bigger challenge is change management—the approaches to upskill, support and prepare teams and organizations in making a strategic organizational-wide change. We have seen this in companies that have gone from on-prem to SaaS as an example. Many people are trying different things. Some build, some buy and some partner to build this capability.”
- Technology challenge and capabilities: The technology challenge and building capabilities are an enormous test for enterprises. Technology is volatile, and enterprises planning to transform their digital landscape and create a customer value proposition need to build a team of technology experts and capabilities who are adaptable and implement new ways of doing business.
- Funding: How do you fund this technology change? Some businesses can fund themselves with internal cash accruals, and some borrow and invest. Without a strategy in place, enterprises are bound to make decisions that result in little to no benefit, and an increased budget and timeline.
Successful digital transformation for enterprises
Post-pandemic, decisiveness is a crucial factor, and enterprises that take charge of their digital transformation will have more power.
“HCLTech has built a lot of capabilities for several customers, including digital natives and migrants. All of that capability, experience and process methodologies are helping us enable our customers to solve technology and capability challenges”, said Guntur. He added: “HCLTech’s ability to innovate on risk and reward models resulted in quite a few trusted relationships. Customers who will walk that path with us and co-invest in the technology can gain market share and revenue impact.”
Transformation across industries
The pandemic impacted almost every industry, including airlines, manufacturing, healthcare and insurance.
Despite the disruption, verticals like Hi-Tech witnessed increased investments and growth. The latest ER&D report reveals that Hi-Tech verticals cumulatively accounted for 36% of global ER&D spending in 2020.
Guntur mentioned: “The online and internet segment got the most gain through COVID disruption, because of the consumption of their services, whether it’s collaboration, cloud, gaming or entertainment. Building transferable services—capabilities, processes, tools and solutions—is one way of driving innovation.”
“Today, testing a media service or a streaming service is not only for one device—it needs to work on all kinds of television sets, phones, laptops and desktops. Now, we can translate that same capability to somebody who works in manufacturing space supporting the field with products that have an installed base. Many users do field support using different devices. Now using technology, fewer people need to visit the field in Manufacturing, because a lot of it can be done remotely through connected systems and remote diagnostics. “The technologies we used in the Hi-Tech, Software Engineering and Telecom space now apply to the manufacturing world”, Guntur added.
Enabling hyperscalers to build capabilities
Today, digital engineering represents the intersection of Engineering R&D and digital transformation in the enterprise. Hyperscalers are now building these semiconductor capabilities internally. Commenting on HCLTech’s role in enabling companies to use this technology, Guntur said: “Earlier the differentiation was in the hardware, then it moved to software, and people innovated to build that capability in the software. Now, it has come full circle, where industries want to go look at what differentiation can come from the semi capability or the semi chip capability—in the hardware itself. There are a lot of investments that are going on in the semiconductor chip space by several of the hyperscalers, such as consumer electronics companies.”
“HCLTech is working with different consumer electronics companies and hyperscalers to bring that differentiation and capability and accelerate their products to market. The innovation that we are building there is significantly useful in differentiating the end customer experience,” added Guntur.
Digital Engineering is at an intersection of overall Engineering R&D and digital transformation in enterprises. Two kinds of Service Providers are competing in this area, the traditional Engineering and R&D focus Service Providers and the large System Integrators who have been working with CIOs of large enterprises. By bringing product know-how and expertise in the adoption of new technologies (cloud, 5G or semiconductor), HCLTech is playing a critical role in helping organizations accelerate digital transformation.