2. Experiment with platform ecosystems to disrupt the market
Enterprises meet, compete and deliver services over globally connected cloud platforms, turning the cloud into one giant marketplace, where all the ingredients for new solution development are readily available. Instead of a linear process, innovation in cloud platforms is a process where several partners cooperate simultaneously. By thinking bigger, collaborating with third parties, organizing around common goals, and leveraging technologies like blockchain, Web3 and the metaverse, innovation partners can multiply the speed and the reach of innovation outcomes. Technology companies should explore these opportunities, reach out to allies, research institutes and competitors, and partner to disrupt existing business models, even if it puts them in competition with their own legacy business.
3. Double down on localization, even if it comes at a cost
To address the structural risks from geopolitical conflicts and natural disasters on the supply chain, last year’s efforts to build redundancies into the supply chain will not be sufficient. A major makeover is required, as the sector needs to spread its industrial footprint across multiple geographies. A recent EY survey found that 78% of technology executives are looking at decoupling their supply chain, including nearshoring and reshoring. This requires large investments over the next few years that will inevitably lead to substantial cost increases. Companies cannot be deterred by these additional costs. They will be supported by regulation and sponsored by governments providing funding and tax breaks. They will also be rewarded by customers who are willing to pay a premium to reduce their dependency on geopolitically instable geographies.
4. Prioritize environmental sustainability
While all aspects of environmental, social and governance (ESG) are important on the corporate agenda, EY professionals think that next year the tech sector will be impacted most by environmental sustainability. Tech and non-tech companies have to comply with incoming regulation on disclosure around emissions and climate change risks and steer clear of emission-related taxation penalties. For reporting purposes, the entire supply chain will be relevant to include scope 3 emissions from all suppliers. For tech vendors, this means that running data centers on renewable energy or lowering the environmental footprint of their hardware will lead to a competitive advantage because this lowers emissions across the entire supply chain. In addition, with current energy prices and a fight over earth’s rare metals and minerals, the return on investments in energy efficiency, carbon reduction and recycling efforts is high.