Convergence: 2014’s buzzword

This year, “convergence” is set to be one of the big talking points across a wide range of sectors, but in technology in particular, says Peter Robb, practice lead for architecture at Ovations Group. Irrespective of the sector, three main themes emerge around convergence time and again: people, process and technology.

Many disruptive technologies are accelerating convergence on all three of these levels. One of the underpinning reasons is businesses’ shifting focus from product-centricity to customer-centricity, of which mobile services have been a flagship for the process, offering end users contextually sensitive engagement and other tailored content based on their needs, personal profiles or location using analytics, big data and social channels.

Additionally, technological convergence is being driven by the continuing move towards open standards for systems and software, combined with standardised integration processes. A key benefit of this developing trend is the ability for companies to proactively react to changing market events in their value chain – also providing agility in the way they work and respond rapidly to ever-changing customer needs.

Another technology that’s come of age is cloud computing. Cloud services provide convergence in different application, platform and infrastructure offerings. This has created opportunities in the market for cloud brokers to piece together different products or solutions into highly customised solutions, designed for particular clients’ specific needs in a more cost-effective manner. Gone are the days of three-year implementation programmes; speed and agility are the new entrepreneurial success factors.

Clients now have unprecedented flexibility to increase or decrease their technological footprint on demand as a result of the cloud – abstracting all deep, technical expertise from the end user. But it’s not just existing businesses that are benefitting – the agility cloud allows for means in the next three to five years some start-ups will become as competitive as big corporates.

Start-ups or other small businesses tend to be more responsive than larger companies, whether because of differences in corporate culture, a comparative lack of red tape and rigidity, or greater appetite for risk. Moreover, cloud and related services are making it possible for small companies to spin off new commercial ideas faster due to the user-friendly manner in which these services are offered.

Also, it has become cheaper to close down and restart projects if they fail, thus significantly reducing barriers to entry in markets – but also diminished market penetration that may see large acquisition sprees for those organisations with favourable cash flow. Big corporates, meanwhile, have to contend with flooding markets, and have huge investments in legacy systems and approaches that have embedded themselves in business operations.

Convergence and disruptive technologies combined with globalisation means businesses also needn’t be limited to a single geographic market. A sufficiently good idea can be repurposed for additional markets with low cost and effort.

One of the obstacles facing bigger companies when it comes to cloud is that they are slower to adopt new technologies and are more wary of them because traditionally South African companies are market followers. This means while large players are still deciding whether or not to embrace a new technology, smaller players have implemented, profited and birthed new business models from it.

The biggest problem we as a country have in terms of convergence is that services like cloud offerings have become ubiquitous elsewhere. This means South African businesses are already embroiled in a process of catching up, making innovation and “cutting-edge” offerings – let alone thought leadership – all the more challenging.

Regardless of the product or service being offered, and whether it’s global or local, everything is becoming focused on the customer. Companies that ignore this do so at their peril.

Under Porter’s Five Forces Model of Competition, clients used to have diminished negotiating power, but they are now certainly in the pound seats. It’s easier than ever before for customers to move their business elsewhere, and they’re more inclined to do so because of increased consumer rights and reduced brand loyalty. This means time-to-market and quality-of-service over time are more pressing concerns than ever before.

South Africa has seen this first hand with the recently enacted Protection of Personal Information (PoPI) Act. PoPI will enact a major strategic rethink and revenue investment for organisations. Innovation projects and spending will have to give way to run-the-business projects and spending. Organisations who favour innovation spend and are reliant on new products and services to remain competitive will have to trade these key objectives off against regulatory compliance – which, in most cases, will win and potentially stump new thinking to a degree.

In many ways, POPI can be viewed as an example of the convergence in enforced legislation, realising various consumer bodies’ goals in one, and/or supplementing it. For the next three years I expect companies will focus on remaining compliant and limit their innovation efforts to the attractive, low-hanging fruit.

All of these changes will ultimately result in the convergence of talents and insights of personnel. For example, where previously technicians, network engineers and the like were extremely specialised in their domains, it is now critical for them to complement their technical expertise with greater business insight. It’s no longer about knowing how to provide a single solution, but rather how to recommend the best solution for a particular problem at a given budget, or with other business constraints in mind that take both IT and business best-fit considerations into account.

Technical people who knew very little about business are slowly taking heed of these concerns as the new era of knowledge workers flood the market, not only because of the entrepreneurial nature of this new generation – who can add value from having grown up in the digital age – but also because technology is seen as a mechanism for business, as opposed to the old guard who position technology in the innovation quadrant. This new thinking will proliferate in coming convergence trends including smart networked homes, machine-to-machine communications, increasingly customised advertising thanks to analytics, big data and customers’ growing propensity to share information about their preferences.

When it comes to technology, everything is becoming integrated and context-aware. Whether it’s wearable technology manifested as accessories, embedded sensors or the “next big thing”, convergence will need to continually address three critical concerns to succeed: people, processes and technology.

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