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High Tech Point of View


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Capgemini High Tech Point of View

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High Tech Point of View

  1. 1. The Changing Face of the GlobalHigh-Tech Industry
  2. 2. Contents The Global High-Tech Industry 3 Challenges Facing the High-Tech Industry 5 Key Levers to Manage the Challenges 8 Solutions that Meet these Changing Business Needs 9 Select Case Studies 15 The Collaborative Business Experience™ 18 About Capgemini 192 The Changing Face of the Global High-Tech Industry
  3. 3. The Global High-Tech IndustryIn the high-stakes quest for leadership, companies in While the shape of the industry may be constantlythe global High-Tech industry are in a constant contest, shifting, analysts have predicted that the sector isjockeying for market position. Innovation is at the poised to grow to over a trillion Euros by 2012, withheart of numerous strategic initiatives to develop a continuing growth rate of 6.2% over the periodcompetitive and first-mover advantage - breaking new 2009-20121. Factors driving demand will includeground in product and service offerings, forging spikes in medical and pharmaceutical technology,cross-boundary partnerships, sometimes even with mobile devices, virtual security applications andformer competitors, and bringing on-stream, new consumers’ attachment to laptops, iPods and cellcapabilities through mergers, acquisitions and joint phones, together with the speed of technologyventures. investment and new product launches.The global High-Tech industry has a broad reach, so Capgemini’s High-Tech Practice helps companies toit can be defined in a number of ways. Capgemini’s respond rapidly and intuitively to changing marketdefinition of the industry comprises Consumer demands. Based on our experience of working inElectronics, Computer & Peripherals, Print/Imaging, collaboration with the largest manufacturers andTelecom Equipment, Medical Equipment, suppliers in the High-Tech industry, andSemiconductors and Software. All of these industries supplemented by our analysis of the specificare shaped and defined by the advances in technology challenges of this highly competitive market, ourthat are themselves defining the emerging business, solutions help companies to develop successfuleconomic and social landscape. leadership strategies and optimize operations to sustain strong earnings and a competitive positioning.1 Source: CC India Analysis, Datamonitor 2008, Gartner 2008-2009. The Changing Face of the Global High-Tech Industry 3
  4. 4. 4 The Changing Face of the Global High Tech Industry
  5. 5. Challenges Facing the High-Tech IndustryThe fast-paced global High-Tech industry is not While these industry trends are not new or unique,without its own distinct and complex challenges. the combination of these challenges and theEvery player in the industry is striving to gain and opportunities they potentially offer means thatmaintain competitive differentiation by adopting new organizations cannot be complacent; they need toapproaches or by realizing latent sources of success in be particularly attentive to market dynamics if theyexisting operations. are to continue to generate the level of shareholder return that the market has come to expect.However, while each of the sub-segments face specificchallenges, the High-Tech industry is being shaped by Increasing globalizationthree shared, fundamental and pervasive trends: The ‘buy anywhere, make anywhere and selln Increasing globalization: more and more, High- anywhere’ concept is most aptly demonstrated in Tech firms are moving towards a ‘buy anywhere, the increasing globalization of R&D and make anywhere and sell anywhere’ concept; manufacturing functions. The strategy of migratingn Rapid product innovation: companies are these key facilities to low-cost offshore countries, continually and rapidly upgrading their product ranging from Russia and Mexico, to India and portfolios to meet ever more demanding customer China, is now well-established as a necessary, rather and regulatory requirements; than optional, element of operations.n Increasing revenue and margin pressures: manufacturers are resorting to production cuts and Together with a rise in sub-contract manufacturing, restructuring initiatives as demand in certain areas this situation is generating significant reductions in falls and inventory levels increase. labor costs, as well as leveraging the benefits of proximity to raw materials and a better The Changing Face of the Global High-Tech Industry 5
  6. 6. understanding of local market buying preferences. Rapid Product Innovation However, this is not without its own complications; A constant stream of new products and faster highly complex supply chains, extended management of obsolescence of the existing manufacturing pipeline dispersed operations and quality and counterfeiting is the reality of commoditization and issues all contribute to the need for proactive and standardization of today’s markets. This situation is fast-moving operations. also subject to the impact of rapid technological modifications. The impact of shrinking product With traditional markets slowing down, emerging lifecycles, is increased pressure to gain ‘first to markets in Asia, Eastern Europe and Latin America market’ advantage and leverage this myriad of are driving High-Tech sales growth. But indigenous technological advances. players, particularly from China, are starting to pose their own serious competitive threat both at home And the days of a simple product portfolio have and in western markets, which is leading to the gone forever. The bundling of content, services and erosion of the multinationals’ share in developed and applications with their device offerings has added even developing markets. an additional layer of complexity. For High-Tech businesses, it means constant innovation and Accessing these emerging markets and segments has diversification of the product portfolio, keeping a meant adopting a multi-channel strategy to reach end focus on convergence opportunities and threats and customers more effectively. One channel is no longer managing a network of content and application enough. Embracing retail outlets, own company retail partnerships across multiple markets. stores and other direct-to-customer channels, companies are exploring every option, adapting to Product proliferation and mass communication channels changing customer buying trends and ensuring give rise to more knowledgeable and demanding maximum sales penetration. customers. And as the cost of buying replacements outweighs the cost of repair, customers are more likely to switch brands to benefit from new features.6 The Changing Face of the Global High-Tech Industry
  7. 7. Retaining consumers requires more and more products, such as mobile and enterpriseinvestment, as does meeting the increasing regulatory infrastructure and medical equipment. The result?requirements for greener products. Environmental Unrelenting pressure on cost reduction to keepregulations, such as the Kyoto protocol, REACH profitability levels stable.directives and other governmental requirements,oblige manufacturers to comply and look for new As distributors and retailers throughout the supplymaterials and design techniques to deliver greener chain respond to the credit squeeze by cutting backproducts. on inventory, manufacturers are making similar moves, by cutting production to avoid a pile up ofThe economic downturn has intensified the focus on inventory that could become outdated withinadditional revenue generation through the provision months.of managed and maintenance services as the demandfor a company’s core products falls. For many, this Finally, management has to consider operationalmeans channeling management attention to increase restructuring to sustain growth amid thethe efficiency and capability of these ancillary challenging market environment. Measures includemanaged services. reductions in capital spending, general overheads and overall headcount, as well as the restructuringIncreasing Revenue and Margin Pressures of business units and a withdrawal from non-coreThe economic slowdown has inevitably put a sharper business areas. Restructuring initiatives requirefocus on protecting margins, managing positive cash significant management attention if they are to beflows and maintaining revenue levels, as its impact on effective.certain sub-sectors makes itself felt. Demand forconsumer products in the retail segment has fallen,due to a reduction in disposable incomes, corporateclient delays and the cancellation of new projects,leading to lower demand for capital-intensive The Changing Face of the Global High-Tech Industry 7
  8. 8. Key Levers to Manage the Challenges To address these challenges, there are six key suppliers to better understand buying behavior; management levers that High-Tech companies can n Green initiatives: Devise and deploy sustainable use – separately or together – in the short-, medium- products and implement a green IT strategy. and long-term. Leading High-Tech companies are already using a The key levers are: combination of these levers with significant success. n Product innovation: Bundle product offerings For example, some have acquired additional R&D with value-added services, leverage technology and software development capabilities, while others partner relationships and build close collaborative have set up discrete joint ventures to distribute ties with both customers and suppliers earlier in devices in emerging markets. Green modes of the product lifecycle and across the value chain; transport are being adopted, and online customer n Cost reduction: Establish or increase the communities developed to encourage user feedback. outsourcing and/or offshoring of manufacturing, and undertake restructuring initiatives; The options are almost limitless, which means that n Sales growth: Reassess market entry and go-to- recognizing which levers will be the most effective market strategies and develop multi-channel sales for any given market context, business model or and distribution plans; product portfolio is a complex decision. Also relying n Operational excellence: Optimize the supply on just one lever is unsustainable or suboptimal, chain, rationalize the supplier base and undertake and therefore, a non-competitive response. integrated business and inventory planning; n Customer centricity: Provide highly efficient after- sales service and collaborate with customers and8 The Changing Face of the Global High-Tech Industry
  9. 9. Solutions that Meet these Changing Business NeedsCapgemini offers a number of tailored solutions for Capgemini’s High-Tech solutions aligned to the six keythe High-Tech industry, based on the expertise of levers for short-, medium- and long-term changeboth our specialist sector teams and the widerCapgemini organization. We have developed theseinnovative solutions, often in close collaborationwith our High-Tech clients, to ensure that results aredelivered quickly and cost effectively. 1 P ro d u c tOur services are grouped around six key levers for In n o va tio nshort, medium- and long-term change, and these are 6always customized to meet the specific industry 2 G re e n In itia tive s Costcontext or company needs. C a p g e m in i R e d u c tion S o lu tio n s to H e lp C lie n t1. Product Innovation M a n a g e To p C h a lle n ge sProduct innovation is the lifeblood of the industry, 5 3 C u s to m e rdemanding a continual well-managed product funnel C e n tric ity S a le s 4 G ro w thof concepts and products in development. Therefore, O p e ra tio n alselecting the right projects at the right time presents E x c e lle nc ea huge challenge for firms operating in such difficult-to-predict markets. Two recurring questions are: Howto undertake better portfolio management inuncertain markets? And what is the best way tomanage investment resource allocation? The Changing Face of the Global High-Tech Industry 9
  10. 10. 10 The Changing Face of the Global High Tech Industry
  11. 11. Our PLM services encompass a variety of techniques for Capgemini’s cost reduction solutions include:creating and managing products and services Outsourcing and offshoring strategy, Capgemini’sthroughout their lifecycle, including: Innovation & Rightshore® managed services; BusinessLifecycle Management, TechnoVision Mapping, Transformation; shared services and BusinessAccelerated Solutions Environment®, scenario-based Process Outsourcing (BPO); and cost reductionRAIN2 centers, and M&A strategy and integration. planning.We have successfully conducted ASE sessions with 3. Sales Growthover 600 international clients, including over 50% of Optimizing customer interactions across multiplethe Fortune 100 and 44% of Business Week’s Top 100 channels, departments, business lines and regionsGlobal Brands. Capgemini’s ASE combines a patented results in measurable improvements to sales revenues,methodology with a unique, open work environment yielding increased cash flow and higher earnings perto deliver large scale facilitated sessions geared at share. The key foundations for sales growth includeaccelerating timelines, gaining alignment and mitigating successful channel management and selectiverisks. We have also helped clients evaluate and visualize investment in sales initiatives that deliver the mostthe commercial possibilities of their pipeline through user value, drive customer acquisition and builda variety of insightful scenario techniques. retention.2. Cost Reduction Multi-channel Optimization strategy, Sales andWith significant investment in product innovation, Marketing roadmap development, Price andHigh-Tech companies need to manage their operational Revenue Optimization, and Sales Effectivenessand investment expenditure very closely. Preserving programs are some of the solutions that we can delivermargins and lowering the cost of production are critical to improve market penetration for maximizingto ensuring the final product is competitively priced. Inmany instances this means adopting a different profit margins and improving asset utilization.manufacturing model or re-evaluating support services.2 Short for RApid INnovation, RAIN is a physical and virtual environment dedicated to transforming organizations into Service-OrientedEnterprises (SOEs). The RAIN centers are operated by Capgemini and Intel. The Changing Face of the Global High-Tech Industry 11
  12. 12. Using segmentation analysis and realistic cost/benefit achieving benchmark inventory levels, greater assessments, we have helped clients both rationalize category domination and increased financial and expand their global channel structures particularly predictability. in developing markets, and focused clients’ initiatives on adding value throughout the sales lifecycle. 5. Customer Centricity Understanding the essentials of the customer 4. Operational Excellence experience and their impact on purchaser In a culture dominated by R&D and marketing and satisfaction and retention is critical in such a sales, High-Tech operations has never had the dynamic market when ‘second chances’ are rare. prominence it deserves and has been taken for More than just the smooth functionality of a service granted. Yet this is an essential component for or product purchased, it is the consistent user competitive success, especially now, with such experience at each point of contact in the customer extended supply chains and distribution networks experience chain that is important. across the world. In today’s environment, customers have abundant Capgemini solutions help organizations to improve opportunities to switch, and brand loyalty is transitory. the performance of their processes and achieve Capgemini’s solutions address these challenges with greater efficiency, agility and control through services including CRM selection and optimization, Inventory and Supply Chain Optimization and call-center strategy and sourcing, service and parts Transformation, Sales and Operations planning, management strategy, and business intelligence. specialist operational excellence techniques and ERP/IT solution deployment. We have helped clients to bridge the gap between marketing, sales and service functions, accelerate Collaborating with clients to develop a highly their return on CRM investment, introduced device- tailored, integrated end-to-end approach, we have led self-diagnostics and repair, and have developed been able to enhance value chain effectiveness, outsourcing call-center strategies.12 The Changing Face of the Global High-Tech Industry
  13. 13. 6. Green InitiativesHigh-Tech companies are increasingly aware of theircorporate responsibilities to the wider environmentand sustainability in general, with the need to reducewaste, conserve energy, encourage recycling or reuse,and improve raw materials management. Fortunately,improvements in green technologies often equate toimprovements in efficiency.Capgemini has developed specialist services such ascarbon-neutral IT solutions, particularly green datacenters and desktop strategies, as well as sustainableproduct development. We also collaborate withspecialists on solutions to reduce the impact of IT onthe environment through energy efficiency,virtualization of data centers and IT asset reuse anddisposal.We have worked with expert suppliers to developstate-of-the-art data centers that reuse waste heat,procure energy-efficient product replacements andthat both virtualize and consolidate infrastructure.Using ASE facilitation, we have also helped clients toprioritize technological developments for greenerproducts. The Changing Face of the Global High-Tech Industry 13
  14. 14. Helping High-Tech Companies Respond More Rapidly and Intuitively to Changing Market Demands Capgemini works for: technology expertise. We continue to contribute n 90% of the largest manufacturers and suppliers in significantly to industry thought leadership and the High-Tech industry technology advancement, including research and n 8 of the 10 largest networking and telecom studies. equipment manufacturers in the world n 8 of the top 10 consumer electronics The High-Tech division of our sister company, manufacturers. Sogeti, is among the top five market leaders in Engineering and Technology Consulting Services. Our suite of solutions is geared toward developing With over 20 years of expertise, Sogeti undertakes successful leadership strategies, optimizing major technical and engineering innovation projects operations and growing revenue in this highly for the R&D departments of global industrial firms. competitive market. Their expertise includes Research and Development, requirements, design, development, testing, We are aligned with many service providers that are integration and operational maintenance of complex at the leading edge of technology. Working together systems, focused on three business lines: as an integrated team, we can deliver a collaborative n Systems and Software Engineering (SSE) and tailored, best-in-class, business solution for the n Physics Engineering and Testing (PET) benefit of the client. n Industrial Engineering (under the brand name ‘Sinfor Automation’). Our 16,000+ strong practice delivers solutions to High-Tech companies around the world, with experts drawn from the industry sector, with specialist14 The Changing Face of the Global High-Tech Industry
  15. 15. Select Case StudiesAccelerating Global Integration for a Division of a Global ManufacturerThe Situation interfaces enabling each site to communicateThe semiconductors market is truly global. Product effectively with the rest of the client’s network. Ondevelopment and manufacturing span all continents, completion, all remaining legacy ERP systems wereand relocating labor-intensive manufacturing activities to taken out of service.Asian countries is an economic imperative. Flexibilityin working with third-party suppliers and joint The Resultventures are key. The client’s semiconductor division had The SAP implementation has achieved a number ofa diverse systems architecture in place to support its benefits, most notably the establishment of a singleclassic ERP functionality. To regain a top 10 position global Business Control Model for manufacturingin the industry, it needed to pursue a strategy of sites, together with standard systems, procedures,growth and cost reduction. An integrated system for processes and documentation. This has resulted inthe client’s manufacturing environment on a global improved delivery reliability and speed at thebasis was seen as a prerequisite for the execution of manufacturing sites. And with more accurate demandthis strategy. planning techniques, there is now better scheduling, reduced cycle times and inventory levels, as well asThe Solution accurate, timely and complete management information.The client decided to phase-in an SAP system for allof its worldwide manufacturing sites. The With the replacement of a multitude of ‘end-of-life’implementation program included ADEXA, SAP- local legacy environments, the total cost of ownershipBusiness Warehouse, SAP Plant Maintenance and has fallen, and efficiency and data quality haveEnterprise Buyer Professional standard applications - increased by minimizing multiple keyboarding.all highly integrated, and supporting manufacturing Overall, business control has increased due to morebusiness processes. The program was rolled out site transparent, fully integrated processes andby site across the world, with a set of common management information. The Changing Face of the Global High-Tech Industry 15
  16. 16. Analyzing and Mitigating Product Failure for a Manufacturer of Precision Products The Situation The Result The client wanted to understand the rate and timing The Capgemini team identified primary sales of end-of-life product failures for several of its key opportunities based on marketing equipment that products as its own historical analysis was not robust needed to be replaced at key customer sites. It also enough to predict the rate and timing of future provided a data infrastructure and statistical failures. Faced with revenue challenges, the client methodology that could be leveraged to perform planned a marketing campaign focused on promoting periodic analysis for future marketing campaigns. the replacement of equipment, predicted for end-of- Finally, the team identified products with a high life failure in the near term. failure rate during the first few years following product launch, and developed recommendations The Solution for the New Product Introduction process to address Capgemini assessed the client’s data systems to this issue. identify the necessary customer purchase and equipment failure data required to perform detailed analysis. A predictive model was built based on historical data and statistical techniques that examined patterns in the data. The statistical results were analyzed to develop recommendations for key products and customers that could be the focus of near-term marketing initiatives.16 The Changing Face of the Global High-Tech Industry
  17. 17. Transforming a Supply Chain Strategy for a Global Solutions LeaderThe Situation and sourcing collaboration, as well as to define areasThis global solution provider’s huge product scope has of commonality in terms of process and capabilities.created one of the largest and most diverse supply In addition, Capgemini helped to implement achains in the world. The existing supply chain portfolio dashboard capability in measuring and managingof programs was developed as a result of ‘adopt and go’ key supply chain fulfillment metrics. A majorstrategies, pursued as a result of a merger. The portfolio supply chain transformation allows the technologyneeded to be refined as its markets had changed and company to better leverage its businesses, reducegreater opportunities for increased leverage had costs and enhance its competitive positioning.emerged. The company needed to redefine its next-generation supply chain strategies and portfolio. The Result The new direction – vision, set of capabilities andThe Solution commonality definition – has helped the clientCapgemini worked with the company to realign its achieve a higher degree of cross-functional leveragedesired supply chain capabilities with the strategic and energy across its various business units andneeds and direction of its various businesses. geographies. The ASE workshop helped theCapgemini, through its Accelerated Solutions company bring its supply chain leadership together,Environment® methodology (ASE), initially helped from various business divisions and geographies, todefine the company’s next-generation supply chain develop a common direction. Capgemini’svision and a set of key capabilities, together with a intervention has helped the client to definegovernance model. The team then worked to define strategies, as well as rationalize its budget andtwo further key capability areas, end-to-end visibility saving the company millions of dollars. The Changing Face of the Global High-Tech Industry 17
  18. 18. The Collaborative Business Experience™Capgemini works differently from other consultancies. Rather thancoming in to implement a solution that has already been agreed, weaim to get involved at an earlier stage, helping clients to explore theproblem and shape its solution. We share our ideas, suggestobjectives, pool our resources and concentrate on gettingstakeholders to a point where they are aligned and committed to acourse of action that they feel they own themselves. In short, webelieve that effective and durable change comes from teams that aresupported, not led, by their consultants.Capgemini’s overall approach, the Collaborative BusinessExperience™, is faster and more productive than conventionalconsulting, is particularly suited to the High-Tech industry.To support our approach, we maintain a range of traditionalconsulting capabilities spanning strategy, demand generation,operations, supply chain and the principal back-office functions. Inaddition, we draw on our own experience and that of ourcounterparts in Capgemini’s Technology and Outsourcing Servicesdivisions. With years of experience behind them, our people have adeep understanding of what makes a course of action both feasibleand beneficial.18 The Changing Face of the Global High-Tech Industry
  19. 19. About Capgemini Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business ExperienceTM. The Group relies on its global delivery model called Rightshore®, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs 90,000 people worldwide. More information is available at Rightshore® is a trademark belonging to CapgeminiThe Changing Face of the Global High-Tech Industry 19
  20. 20. www.capgemini.comContact Capgemini’s Global High-Tech PracticeFloyd D’Costa Gary Baldwin+91 22 6755 7000 +1 404 806 gary.baldwin@capgemini.comGuido Kamann Kevin Poole+41 44 5602 400 +1 415 738 kevin.poole@capgemini.comNick Gill+44 870 904 5699nick.gill@capgemini.comCopyright © 2009 Capgemini. All rights reserved.