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How do you stay on course when the direction keeps changing?

What technology companies need to do to create an agile operating model in today’s unpredictable world.

Questions to ask

  • Can your operating model stand up in an unpredictable world?
  • Will your operating model propel you into the future?
  • Is your operating model agile enough?

The recent rise in global trade-related risks and technology nationalism has had many effects on the technology industry. These range from export restrictions; tariff hikes; tighter privacy rules, including data onshoring; and shifts in employment requirements to closer scrutiny of mergers and acquisitions (M&A) and ownership rules.

Technology companies are facing this imperative at a time when the boundaries between technology and other sectors are rapidly disappearing due to digital disruption. The convergence across industries is being reinforced by a common need for data and technologies — and by cross-sector trends. These include the creation of industry ecosystems, the formation of partnerships around data and technology, rising investments in new hybrid technologies, and digitalization of everything — as well as exploration of new business models.

To gain deeper insights on the growing risks and challenges that technology companies must overcome while operating in a truly global environment, EY teams conducted a global research survey. The findings were supplemented with additional insights and recommendations from the EY Global Technology Sector team to better understand what technology companies need to do to be successful in an ever-changing world.

Key study finding: What executives are doing
of executives are acting to change their operating and supply chain model.
of executives are decoupling their supply chain, including nearshoring and reshoring.
Key study finding: Operating model challenges
of respondents said they are addressing regulations around trade and taxation, antitrust policies, and data transfer.
indicated that political instability is impacting their operating model somewhere in the world.
Key study finding: Operating model effectiveness
of executives said they evaluate the effectiveness of their model at least annually — 46% more than annually.
say their companies lack the right operating model given the external environment.
Key study finding: Operating model outlook
rated employee satisfaction/well-being as a key to their future success.
rated supply chain optimization as one of their top three priorities in the next three years.

There is not a single model to address the myriad of issues and priorities. Developing an agile operational structure, reimagining the workplace, redefining global compliance policies and embracing environmental, social and governance (ESG) commitments are key principles in the drive to a future-fit operating model.


Chapter 1

In an uncertain world, will your operating model stand up?

Despite driving the connected platform economy, today’s technology companies must adapt to uncertainty.

Technology companies are entering a new era of uncertainty relating to how they design their global operating models. Decisions on sourcing, supply chain, product and service production, and distribution are influenced by the rapid pace of change impacting complex economic, political and regulatory changes in the broader business environment. Taken together, these actions are adding a new layer of complexity into the planning and execution within the operating model.

In terms of political and economic challenges, the survey findings indicate that technology company executives are grappling with political instability, changing political costs and new constraints that are creating both opportunities and challenges for their operating models and supply chains.

Tariffs and rising labor costs have created a situation in which many technology companies have adopted a “China-plus-1” strategy. In Asia, countries such as Vietnam, Malaysia, Thailand and India are benefiting from new investments to diversify supply chain risk. There’s also an increased threat perception as companies globally could face heightened cyber-attacks impacting their operations.

Depending on their role in the value chain, technology companies are increasingly seeing government involvement in the sector through a bifurcated lens. On the positive side, governments that are concerned about securing their access to critical technologies are creating new multibillion-dollar incentive programs such as the proposed US Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act and the European Union’s proposed Chips Act to incentivize the building of new research and development (R&D) and fabrication capacity.

For those in the cross hair, governments are adding to the complexity with new laws and regulations. The US government has imposed national security-driven procurement restrictions on federal contractors that impact their supply chains. The European Union passed the Digital Markets Act to impose limits on digital platforms, including rules on how they can expand and the obligation to offer customers access to rival services.


Further, recent geopolitical challenges have also resulted in new export control measures, including new bans on export of sensitive technology, semiconductors, telecommunication, encryption security, software and sensors, that further increase complexity to ensure compliance.


For example, the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security are “extraterritorial,” with restrictions that also apply to items made outside the US from US-origin software or technology. As a result, technology companies will need a holistic view of their upstream value chains to ensure they are in compliance with these and any future regulations.

Key regulatory challenges impacting technology companies’ operating models

  • Digital services tax, trade tax, sales/use tax, value-added tax
  • European Union competition policy
  • The OECD Base Erosion and Profit Sharing (BEPS) 2.0 projects with Pillars One and Two
  • Executive order aimed at anticompetitive practices
  • Executive order to review critical supply chains for manufacturing of semiconductors and other cutting-edge technologies
  • Taxation of intellectual property (IP)

Across the world, a growing wave of changes to the regulatory and tax environment are having an increasing impact on technology companies.

Globally, countries are targeting a broad-based taxation of their digital economy and its transactions, and recent political changes are potentially accelerating this trend.

Evolving digital services and operating models such as over-the-top and Software-as-a-Service (SaaS) have legislators focused on new tax and regulatory regimes. In the survey results, the regulations related to trade and taxation, transfer of data and efforts to update technology sector competition/antitrust policy consistently emerged as prominent factors impacting operating model changes.

A closer analysis of the survey data reveals some significant divergences between different aspects of the industry. Executives at IT services/cloud and internet/e-commerce companies consistently placed a higher degree of concern for the impact of nearly all of these regulatory issues — with respondents averaging 10 percentage points higher in their concern than the overall response noted in the chart.

Legacy technology executives indicated they are impacted by digital services taxes, European Union General Data Protection Regulation (GDPR) and global minimum taxation. Emerging technology company executives were more focused on the impact of sector competition/antitrust policy and sourcing of raw materials.

Technology companies rethink their supply chains after the unanticipated impact of the pandemic and a host of new “black swan” events.

The global supply chain, which was already absorbing the impact of the US and China trade challenges, came under additional stress during the global COVID-19 pandemic.

Driven by a global shutdown of factories and a shortage of shipping containers, importers experienced delays in receiving manufacturing components, while exporters faced challenges in getting bookings on shipping vessels.

Perhaps not surprisingly, 95% of the executives surveyed indicated their companies are taking action to change their supply chain and operating model. The semiconductor sector stands as an example of the “perfect storm” that is leading executives in this sector and across many sectors to rethink their supply chain operating model.

The move to remote working led to a surge in sales of electronic devices, and this, combined with the digitalization of everything, created and continues to create unprecedented demand for semiconductors and sensors for a wide range of historically non-digital products. Combined with other unanticipated supply bottlenecks, including natural disasters taking select chip fabricators offline, it created a huge scarcity for semiconductors — impacting 169 industries ranging from consumer products to automotive.1

If we look closer at the survey respondents who indicated that they have passed these additional costs onto their customers, an interesting subplot arises, indicating that emerging technology companies have not been as successful in increasing their prices:

  • 73% of industry leaders have passed additional costs on to customers vs. 53% of industry followers.
  • 65% of large technology companies (US$10b-plus) have passed additional costs to customers, compared with 53% of small technology companies (US$50m–$499m).
  • 59% of legacy technology companies have passed these costs to customers, compared with 53% of emerging technology companies.

With the pandemic’s effects on supply chains intensifying the focus on resiliency and sustainability, the desire of technology executives and their companies to nearshore and reshore their supply chains was prominent in the survey results. While 19% of executives indicated their companies have already moved their manufacturing to be onshore or more localized, 71% indicated they plan to do the same over the next three years. A related factor that also builds the case for near/reshoring is likely the fact that 68% of the executives indicated that tech firms will need to take stronger actions to reduce global emissions over the next three years.

When we asked how executives planned to adapt their operations, respondents indicated that recent changes triggered by the global pandemic and the challenges throughout the supply chain have led to increased business resiliency throughout the organization and across their value chains and ecosystem.


Chapter 2

Will your operating model sit idle or propel you into the future?

Technology company executives are frequently reviewing and changing their operating models.

Recognizing the need to proactively and continuously update one’s operating model, executives indicated that they look for benefits such as higher revenue growth and employee satisfaction as the top benefits realized from operating model changes, but many are addressing tactical and functional issues, creating a sense that there is much more to do.

Industry leaders were more bullish about the benefits from implementing the right operating model. These gains are expected to be visible across financial performance and customer or employee satisfaction and showcase a direct correlation between having the right operating model and material improvements in business performance.

Sixty-five percent of technology company executives we surveyed indicated that they have amended their operating model at least once in the past year. While this points to the role leading technology companies play in the quest to be adaptive digital enterprises, these same executives acknowledge they still have challenges they must address.


As a result, the pace of planning and review is accelerating. Technology executives indicated that they regularly evaluate their operating model — either in total or in part — in light of the fast-changing operating environment. Almost half now said they carry out this evaluation a few times a year. 


However, despite more frequent evaluation of their operating models and more regular adjustments based on these reviews, 55% of executives said they still believe their operating model needs change, and 50% are actively planning enhancements.

As companies’ size and revenue increased, their confidence in having the right operating model also rose. High-revenue technology firms believe they have the right operating model, but most small and medium-sized companies or companies with low to medium revenue believe they do not and are planning for further enhancements.

While the majority of autotech and technology infrastructure executives believe their companies have the right operating model, executives in other sectors were evenly split or indicated that they need to plan for new enhancements.

Building a future-fit supply chain and operations model

Change is often faced with inertia and a sense of uncertainty. In a recent EY return-to-work survey, nearly 54% of global employees indicated that they would consider leaving their job post-COVID-19 if they were not afforded some form of flexibility in where and when they work.2

As a result, executives in nearly all industry sub-sectors surveyed ranked employee satisfaction and well-being as the most important criterion. FinTech executives placed a higher degree of importance on tax and other statutory regulations in first place, followed by the ability to access/manage labor and skills at second place, and employee satisfaction and well-being in third place.

Company size (in revenue)

Taking a closer look at specific areas of change and focus over the next three years, the importance of ESG and agility, speed and flexibility are high on the agenda. ESG emerges as a consideration in both supply chain and operations changes. Other prominent themes include creating a holistic view of supply chain; nearshoring and reshoring; a willingness to work across ecosystems; and a desire to diversify risk.

Technology companies that want to change their operating models face roadblocks around business uncertainty, reluctance to change and internal constraints.

Yet change is not without risk. While executives were fairly consistent in their concerns around the challenges, they thought would most likely hold the organization back, there was a wider variance when comparing the concerns between legacy and emerging technology companies. Given emerging companies’ more recent formation, their executives were less concerned about uncertainty around the business environment (28% vs. average of 38% for all tech executives). However, emerging company executives indicated a higher degree of concern about their own IT/system limitations (53%) and concerns about implications of changes in their business (47%).


Chapter 3

Is your operating model agile enough for an unpredictable future?

Transformation – agile and flexible operating models with a focus on employee satisfaction, tax and legal protections.

To thrive and accelerate growth in this constantly changing business environment, technology companies will need a comprehensive and cohesive global trade strategy through an agile operating model. It must have the ability to be ready to pivot and be ready to update with changes to global compliance regulations, reimagine workforce and commit to ESG needs.

The question every C-suite executive needs to evaluate today is “Is my operating model ready to support new strategies and drive future success in the wake of an unpredictable future?”

Today, two out of three technology executives (68%) highlighted the need to be agile and flexible and have plans to amend their operating model to support existing and evolving business needs over the next three years. But do they have the technologies and platforms in place to make real-time adjustments with a view of the holistic impacts that each discrete change will have on the company’s financial situation and operational efficiencies?

Overall, the executives in our survey indicated that technologies and tools related to customer transactions, relations and support (58%); supply chain optimization (53%); and supply chain transparency (45%) will be the most significant areas they will invest in as enablers to improve their operating models over the next three years (with a slight variance when ranked in terms of their top three priorities).

Sixty-four percent of the executives surveyed plan to change their corporate structure to help improve financial reporting and tax management. This is driven by a need for global visibility and risk management due to increasingly complex compliance and reporting obligations across the world.

While constantly adapting their own capabilities may be challenging and costly, companies can leverage consolidated tax and financial operating platforms to facilitate their complex requirements. The finance functions can leverage advanced analytics and standardized methodologies to minimize risk and improve visibility and efficiencies that will help them stay ahead of the digital curve.

Key considerations to ensure effective global compliance and reporting

  • Have a coordinated approach to changing global tariffs.
  • Reduce cost, risk and delays from trade network.
  • Build a strong data foundation to improve the efficiency of compliance and reporting.
  • Leverage appropriate technologies.

The commitment to a sustainable future will increasingly have more prominence as technology companies transform their operating models over the next three years. Sixty-six percent of the technology executives we surveyed acknowledged that a focus on ESG was key when designing their operating model.

Reduced shipping cost and quantum of energy usage are going to be important factors while designing operating models. This includes creating long-term sustainability and ESG value by having the right strategy, supply chain, capital allocation and portfolio optimization, as well as creating evaluation frameworks to measure both financial and nonfinancial outcomes.

Key considerations in reimagining work include

  • Determine how roles may change, and what new opportunities will emerge, as a result of the new and more collaborative ways of working
  • Ensure the organization supports purpose, culture, productivity, and performance with new ways of working
  • Assess the real estate footprint and the need for — and use of — space, while establishing provisions for home workspaces and technology enablement
  • Assess the global employment tax, corporate tax, payroll, and regulatory implications, while also taking cybersecurity implications into account in decision-making.

Technology companies said they are also addressing the changing ways of working. Talent is a critical asset across the industry. Talent availability, employee satisfaction and attrition rate are key performance indicators.


Driven by COVID-19, 87% of technology company executives indicated that their companies have reduced their occupation of physical workplaces, and 66% plan to increase their employees’ work-from-home options in the next three years.


New operating models and ways of working should successfully integrate people, space and technology, transforming how people work across multiple working environments, all while maintaining the core values and cultural elements unique to each company in a post-COVID-19 environment.


Technology companies can achieve high sustainability performance while providing profitable returns to stakeholders by taking the following steps:

  • Understand the maturity and effectiveness of the current approach to ESG.
  • Assess ESG risks, impacts and opportunities.
  • Integrate ESG into the organizational strategy.
  • Engage with stakeholders and report on ESG performance.


The one truism in the global economy and technology industry is that the pace of change is increasing and relentless. Whether it a game-changing innovation or a once in a thousand-year black swan event, the complexities are multiplying at a rate that is challenging even the most adaptive of companies to stay one step ahead in this era of unprecedented change.

Through our survey, we find that technology company executives are focused on continuously reviewing their business and operating models, but often trying to respond to challenges that impact their functional issues. It is addressing the issue at hand versus recognizing there will always be issues, and they need to have a holistic way to address continuous change and grow the business. This manifests in the nuances the executives shared around their key challenges.

Technology executives also indicated that they are looking for supply chain simplification to increase agility in their operating model. This new operating model must foster profitable agility and scalable innovations while enabling real-time decision-making. Companies must also design the right financial and operational management structure to help deliver improved transparency, greater compliance and a strong financial position across areas including profitability, tax and treasury.

While there are new tools like AI that are enabling companies to reimagine their future, we also see that successful companies are focused on putting their people at the center of their new models, giving them the tools to think through significant strategic change in ways that would previously rely on long planning cycles and endless meetings trying to get buy-in and business alignment.

Taken together, we see the focus on people and technology manifesting itself in an “enterprise control room” that allows adaptive enterprises to build a set of linked enterprise decisioning platforms that bring together a wide range of functions from risk management to tax and treasury to visualize and model the impact of change — planned and unanticipated — in areas like global trade and supply chain in near real time. These types of models will allow technology executives to see new possibilities and spot potential bottlenecks and pitfalls as a group and lead to more agile and
accelerated decisions.

Connected enterprise control room graphic

Two other interesting observations we see in the survey results and in our own clients’ observations. Operating model changes to drive greater enterprise resiliency and to focus on matters like ESG are not separate initiatives. Instead, they become guiding principles that surround the organization and factor into nearly all future organizational change initiatives in the quest for technology companies to become truly adaptive.

Further, these changes are not just confined within the organization but also increasingly extend into the enterprise’s ecosystem relationships — from suppliers to customers — and other key stakeholders.

EY teams understand these same issues and are intentionally disrupting ourselves through new service and delivery models that mirror the issues our clients are facing. We start by putting humans at the center as we work with clients to define their challenges, model the art of the possible and then test new business models in our TMT convergence network of innovation centers.

Executives are focused but are often trying to respond to challenges that impact their functional issues. It is addressing the issue at hand vs. recognizing there will always be issues, and they need to have a holistic way to address continuous change and grow the business. This manifests in the nuances the executives shared around their key challenges.


Our survey results indicated that technology executives are focused on continuously reviewing their business and operating models. Often, they are trying to respond to challenges that impact their functional issues – addressing the issue at hand versus being able to holistically address continuous change and grow their business. Technology executives must increase agility in their operating model to better optimize their supply chain.

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