What is Happening?
We're in the midst of an economic shift in innovation sourcing that will cause significant, ongoing alterations in the abilities of IT providers to compete, while altering the abilities of user enterprises to offshore, relocate, or even outsource their own technological innovation. And like most significant changes in IT, we can see this one coming from a few years away – if we know what to look for.
And what we should be looking at is more than just a shift in where IT innovation is coming from. What needs to be examined and understood are the following:
- By YE2015, the regional economics of innovation will result in more than half of IT Master Brand providers outsourcing or off-shoring the core of their technological development; and
- By YE2016, the shift by enterprises toward new IT being acquired as Cloud-based, IT-as-a-service will accelerate a shift by most IT providers away from technological innovation as a core value, and toward innovation in technology use, application, and management as a core value.
Why is it Happening?
Saugatuck's newest report, “Mapping, Planning, and Benefiting from Global IT Innovation” (Dec. 22, 2011), examines and explains how industry and regional shifts in innovation investment are affecting IT provider profits and user adoption strategies. The report aggregates and analyzes a series of innovation mapping models and techniques to illustrate how centers of IT innovation are shifting toward new and emergent markets, how conditions in those markets will shape and re-shape IT innovation, and what the effects will be on IT providers and buyers alike.
The report presents and analyzes a series of technology innovation models to develop a comprehensive map of what is changing, where, when, and why. Key reasons for the changes include the following:
- Traditional regional and country-specific centers of IT innovation, including the US, are losing influence and leadership;
- Some of that influence – but not all – is shifting toward Asian technology and manufacturing centers; and
- To maintain relevance in an increasingly global economy, IT providers and enterprise R&D groups alike need to broaden their “innovation portfolios” by establishing or expanding innovation investment in areas and locations where innovation is growing -and being rewarded.
Patterns in education/academic investment, patent filings and related activity, and enterprise R&D investment clearly indicate this movement away from the old and toward the new. The pace of movement has been gradual over more than a decade.
But that pace is accelerating as Asian-regional economies build on fast-growing manufacturing economies and trend more toward technology (especially IT)-driven economies. To no surprise, China and India are setting the pace, but they are by no means alone in building intellectual and technological leadership. The Asian “Tiger” countries of Hong Kong, Singapore, South Korea and Taiwan are flexing some growing innovation muscle as well.
An extended version of this Research Alert originally appeared at Saugatuck Lens360.