December 3, 2021

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Is Technology Changing Existing Business Models Or Simply Adding A Digital Layer?

By Lucas Escouto, SAP

We live in a world dominated by technology companies. We see new IPOs every month, stocks are constantly reaching all-time highs, and the number of apps in our pockets grows by the hundreds every year. All businesses rely on technology to deliver their services and products to customers – tech has become the standard.

However, does that mean all companies are tech companies? Is technology truly changing existing business models or simply adding a digital layer? Teri Hamann, Senior Vice President at SAP, and Mike Maiolo, CEO of Rizing, spent some time looking for answers on the first episode of the podcast series Ready. Set. Transform.

Ready. Set. Transform.Are All Companies Becoming Technology Companies?

The increased adoption of technology by every company in the world has blurred the lines of historical classifications of what companies are and which industries they belong to. One or two decades ago, the associations used to be a lot more straightforward. If you make toys, you are a toy company. If you sell food, you are a food company. But companies like Amazon, Facebook and Tesla, are difficult to define based only on what they sell.

According to Teri Hamann, it’s less about the product being sold and more about the how your business model is built around technology.

“Through technology you will enhance your customer’s lives and ensure the success of your business,” said Hamann. “In that case, you can call yourself a technology company. It doesn’t matter if you are building cars or selling actual software. If technology touches every area of your business, in my opinion, you are a tech company.”

Using of tech for what matters most

Reflecting on the evolution and future of your business is fundamental, but evaluating your technology investments to get there is just as important, according to Mike Maiolo.

“I don’t think you have to say you are a tech company, but you certainly have to figure out how to use tech to be the best company you can be,” said Maiolo. “You have to look at what you are in business to do, and that doesn’t mean what you sell, necessarily, it can be what experience you are trying to address. You have to embrace the use of technology for innovation, for being as efficient as you can be, at whatever it is you’re choosing to be.”

Better customer experience, higher margins, talent attraction, loyal customers, brand awareness, faster product cycles – anything can be achieved with the use of technology. Embracing technology and applying it to all areas of an enterprise will help companies grow faster and become more successful.

Companies will evolve and definitions will follow

Companies that started in business a few decades ago were easily defined. The world was different and much less complex. But it doesn’t mean that today, those same companies can’t be viewed or classified as tech companies. Their current focus and how they tackle business challenges are far more relevant to understanding what they are.

“We are playing a different game than we were 10, 20, or 30 years ago,” said Hamann. “We can look at companies in any industry, any geography, or customer segment, and all of them are relying more and more on technology to be successful.”

That technology could mean a number of different things, whether an ERP module to run financial processes, the apps where consumers buy their products or their presence on social media.

“All modern companies leverage technology to remain competitive,” said Hamann. “That’s the norm, and it’s no longer the exception.”

And in line with the technological evolution of enterprises, the definitions we use today might end up evolving too. Singular definitions could become a thing of the past as companies adopt hybrid definitions of their business. What we can tell for sure is that the next tech company – old or new – is just around the corner.

Listen to the full conversation and get more insights from the podcast series Ready. Set. Transform. presented by RISE with SAP.

https://www.forbes.com/sites/sap/2021/11/01/is-technology-changing-existing-business-models-or-simply-adding-a-digital-layer/