The Rapid Convergence of IT and Engineering
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The document discusses the rapid convergence of IT and engineering, highlighting the opportunities in engineering services outsourcing (ESO) projected to grow from $70 billion in FY14 to $120 billion by FY20, driven by disruptive technologies. It emphasizes the need for enterprises to adapt through innovative approaches and new delivery models to meet challenges in the evolving manufacturing landscape influenced by Industry 4.0. Additionally, it outlines the priorities and impediments faced by service providers in improving their offerings and aligning with client needs.
The Rapid Convergence of IT and Engineering
- 1. © 2015 Information Services Group, Inc. All Rights Reserved.
- 2. © 2015 Information Services Group, Inc. All Rights Reserved. The Rapid Convergence of IT and Engineering Sampath Kumar, Partner, ISG
- 3. © 2015 Information Services Group, Inc. All Rights Reserved 3 Agenda o The opportunity in Engineering Services Outsourcing o The new, integrated enterprise o How enterprises are preparing for disruption o How service providers are adapting to the change
- 4. © 2015 Information Services Group, Inc. All Rights Reserved 4 What is the opportunity in Engineering Services? THE PROMISE OF ESO: $70 B in FY14 à $120 B in FY20 A key for enterprises to • adopt to disruptive technologies • improve efficiency • address emerging markets Global Corporate R&D Spend by Geography 2009: $ 446 B 2014: $ 559 B 2020: $ 650-‐750 B US 35% Japan 26% US 34% Japan 26% US 29% Japan 20% Europe 28% China 3% Europe 26% China 4% Europe 23% China 18% US$ 446 billion US$ 559 billion US$ 650-750 billion Automotive Consumer Electronics Telecom Machinery Semiconductor Computing Systems Aerospace Energy Medical Services Construction Industrial Automation 2009 2014 2020 Global Corporate ER&D spend
- 5. © 2015 Information Services Group, Inc. All Rights Reserved 5 The changing face of Engineering Services Outsourcing New technologies like IoT, analytics, big data and mobility are transforming the way products are developed, manufactured, maintained and consumed. Technology Changes Wave I Late 1990s onwards Software & electronics embedded in products Emergence of smart products • Automotive • Smartphones ecosystem • Telecom Wave II 2010 onwards IoT/M2M, ubiquitous connectivity, digital technologies Smart & connected product ecosystem • Automotive • Smart homes and buildings • Airline Wave III 2015 onwards Extension of IoT/ M2M, digital to manufacturing; 3-D printing Smart manufacturing, Industrie 4.0 • Smart Factory • Digital Oilfields • Additive Manufacturing Industry Examples
- 6. © 2015 Information Services Group, Inc. All Rights Reserved 6 The new, integrated enterprise CTO Org. Engineering Manufacturing CIO Org. Design & Develop Smart Manufacture Demand & Distribute Product in Use Support & Maintain Smart Product Development Smart MaintenanceSmart Inventory Mgmt. Smart Supply Chain
- 7. © 2015 Information Services Group, Inc. All Rights Reserved 7 How are enterprises preparing for disruption? KEY CHALLENGES: o “AS IS” à “TO BE” vision o Change management o Impact on business, customers, providers and employees Enterprise Manufacturing Product R&D, Engineering IT – OT Convergence Digital Technologies (SMAC) Smart & Connected Products Industrie 4.0 / Smart Factories Emerging Markets Focus Engineering Analytics Insights Additive Manufacturing
- 8. © 2015 Information Services Group, Inc. All Rights Reserved 8 How service providers are adapting to the change BIG QUESTIONS: o What are the right investments? o Are you delivering innovation? o Are your business models aligned ? o What are the new delivery models? o SLA-aligned pricing o Fixed-price, outcome-based & risk-reward o Shared, upfront investments o Labs, infrastructure, IP stacks o IoT, DevOps, Industrie 4.0 o Global workforce, more SMEs o Hybrid GEC-ESP models o Increased ownership, managed services o Project-based, end-to-end o Partnering in new product development/introduction o Co-ownership in sunset products, sustenance eng. o Creating IPs for clients Service Provider
- 9. © 2015 Information Services Group, Inc. All Rights Reserved. Changing Paradigms of Global Engineering Outsourcing Sudhi Sinha, VP Engineering, Building Efficiency, Johnson Controls Incorporated
- 10. © 2015 Information Services Group, Inc. All Rights Reserved 10 Discussion points o Macro influences o Emerging opportunities o Top engineering priorities o Blind spots for services providers o How service providers can best help their clients
- 11. © 2015 Information Services Group, Inc. All Rights Reserved 11 Macro influences o Recovering but sluggish global economy o Shift in focus from cost savings to growth o Non-traditional competitors enabled by technology and hyper-innovation o Pervasive connectivity; disappearing digital divide o Intertwined fields: research, engineering, manufacturing, service o Globally integrated development and rising captive influence
- 12. © 2015 Information Services Group, Inc. All Rights Reserved 12 Top research and engineering priorities o Significantly reduce cycle time o Increase productivity and return on engineering o Improve quality and reliability of products and services o Make everything communicate; leverage IoT, big data, analytics o Differentiate value proposition for products and services o Globalize engineering; rapidly establish partnerships
- 13. © 2015 Information Services Group, Inc. All Rights Reserved 13 Impediments to growing the engineering outsourcing wallet share o Lack of matured outsourcing models in engineering o IT-centric approach of service providers o Risk aversion to new business models o Inadequate contextual understanding around products/markets/business value chains o Rapid pace of change in organizations and market place
- 14. © 2015 Information Services Group, Inc. All Rights Reserved 14 Turn your customers into clients. Study the core of your customer. Understand the context of your customers. Design the connect to turn your customer into a client. 1 2 3
- 15. © 2015 Information Services Group, Inc. All Rights Reserved 15 Understand your customer. Get to know their: o Products and services o Economic model o Definition of value for its customers o Definition of value for its enterprise o Strategy and focus for its business o Competitive landscape o Context in terms of macro-economic and technology trends 1
- 16. © 2015 Information Services Group, Inc. All Rights Reserved 16 Study the core of your customer. o What is its organizational model and structure? o What is its process model? o What are its skills, competencies, key strengths, gaps and geographic context? o What are its current and future outsourcing and subcontracting initiatives? o What are its key research and engineering initiatives? 2
- 17. © 2015 Information Services Group, Inc. All Rights Reserved 17 Turn your customers into clients. o Identify the synergies between your capabilities and your customers’ needs. o Co-develop the engagement model. o Build a development plan to better understand how you can add value. o Co-develop a business plan. o Create a model on how to co-exist with captives. 3
- 18. © 2015 Information Services Group, Inc. All Rights Reserved 18 Tap the market for Engineering Services Outsourcing. o Enjoy better customer relationships and more profits. o Develop a deeper and differentiated understanding of your customers. o Turn customers into clients.
- 19. www.isg-one.com imagine your future™ let’s connect…