Customers Say OEM Partnerships Are Driving Huge Value in the Digital Economy
- January 19, 2019
Children constantly ask “why?” I know that it can be tough for a parent to always provide an adequate answer of the why behind what we are asking our child to do, but honestly, knowing “why” helps children make sense of the world.
A clear understanding of “why” is as important to your child’s development as it is to keeping clarity in one’s business decisions and strategy. Why did we launch that product or service again? I know what it does, but why did this new solution need to be offered? Did we ask enough of the “why” questions before moving forward with our business plan?
Still asking “why?”
As a father of three and as a kid at heart, I continue to ask “why,” As a marketer, the big question that has piqued my curiosity over the last year was this: Why is the OEM market continuing to grow so fast, particularly over the last few years, and why is Dell EMC OEM seeing such rapid growth in revenues? As much as I would like to say – great marketing, and as much as Sales would love to say that it is all due to an amazing sales force, we know there are more reasons behind the increased market demand for OEM relationships. By OEM, I’m talking about companies that purchase third-party technology to embed or integrate into a solution that they are building to market and resell to their customer.
Of course, as Dell EMC OEM, we are delighted to be serving a market that has seen rapid demand for more OEM partnerships, but when we analyzed external contributory factors, like the improving global economy, our acquisition of EMC, and the formation of Dell Technologies, we knew that as important as these were to offering more to our customers, there had to be other growth drivers. Why are OEM partnerships on the rise? Why now versus the last two decades?
Curiosity is the mother of all knowledge
Whenever you have questions related to your business challenges or successes, always ask the customer – “why?”
Customer feedback was actually the impetus behind our OEM business – you can read more here. And so, when we have questions, we naturally turn to our customers for answers. With this in mind, we commissioned Futurum Research to conduct The OEM Partnership Survey. This captures the voices of more than 1,000 senior decision makers in OEM-type business models across the globe, examining the ability of OEM and third-party partnerships to drive innovation, improve time to market, and increase competitive value.
Published today, the survey report makes for compelling reading. It validates and reflects many of our own experiences in the OEM marketplace, while also providing fresh insights. It’s a real treasure trove of interesting data. Today, I want to share just a few of the key takeaways that jumped off the page for me, as well as some customer use cases to help bring the data to life.
Partnership speeds innovation and delivers increased revenue
Most respondents cited OEM partnerships as being very or critically important in achieving key business objectives, like increased revenue and improved customer experience. For example, more than 88 percent of respondents say that existing OEM partnerships are helping them overcome barriers to innovation, with close to 83 percent indicating that OEMs had helped them accelerate their own product and services initiatives. As a result, two-thirds of the panel stated that they had been able to translate ideas into market offerings with their OEM Partnerships.
Time to market matters more than ever
Let’s look at a great customer case in point. Bionivid, a genome IT company based in India, says it reduced its development costs by at least 50 percent by collaborating with Dell EMC OEM. By avoiding the expense of building hardware platforms, Bionivid was able to seize the right opportunity at the right time and gain an advantage over its competitors.
Likewise, Tracewell Systems, an Ohio, USA-based provider of standard and custom electronic hardware systems for the military aerospace, automatic test equipment (ATE) and custom-of-the-shelf (COTS) markets realized its business goals by partnering with Dell EMC OEM. The integration, manufacturing, and global supply chain capabilities that came with the partnership allowed Tracewell to scale rapidly and get its products to market faster.
Finding the right technology is critical
Survey participants also believe that finding the right technology can make all the difference between winning and losing, with 81 percent saying that OEMs are helping them embrace emerging technology such as artificial intelligence (AI), multi-cloud, and the Internet of Things (IoT).
Digital transformation case study
Let me share one customer story to help illustrate the power of partnership, particularly in the adoption of new technologies. Olivetti – an Italian brand established in 1908 and now Telecom Italia Group’s IoT specialist – provides small-and medium-sized manufacturers with an IoT-based plug-and-play solution to make their machines and plants smarter, and their operations more efficient and effective. To achieve this, Olivetti is working with Dell EMC OEM Solutions and Alleantia, a Dell EMC IoT Partner and Intel IoT Alliance member. The three companies have collaborated to develop a turnkey solution that enables the digital transformation of production processes into an Industry 4.0 implementation.
Time waits for no one
Based on the survey’s findings, I would argue that time has become a more valuable commodity than the technology itself. Don’t get me wrong, technological innovation is arguably the biggest driver of human progress and advancement. However, most people – however smart and capable – no longer have the time to build bespoke, specialist technology. There’s so much technology out there, that it’s impossible to be an expert in everything. To succeed, you must collaborate where it makes the most sense to enable your business model.
Businesses are feeling increasing pressure to drive new innovations into their operations or offerings, as more and more companies across every industry are becoming increasingly dependent on technology to bring their ideas to market. With time and expertise in short supply, forging or deepening the right technology partnerships is a business imperative. Why spend valuable time and resources developing technology that’s already available, when an OEM partner can help bring your solution to market faster and more efficiently?
OEM market growth will continue to accelerate
It follows that as more and more companies are becoming time-poor but technology-enabled, there will be a corresponding increase in the need to build partnerships. As a result, the world of ecosystems and OEM relationships looks set to dramatically expand.
In fact, one of the most exciting predictions to come out of the report is that OEM partnerships have the potential to grow at a compound annual growth rate (CAGR) of 20 to 25 percent over the next 10 years. Over 75 percent of the survey panel say they expect to increase their use of OEM partnerships over the coming 12 to 18 months, with over 25 percent anticipating that their use of OEM partnerships will increase dramatically.
The expert vs the renaissance person
Here’s a question for you to reflect upon: are you an expert or an adapter? While society has traditionally valued expertise, I believe that being an expert is no longer the main prize. Instead, the ability to adapt to change is what matters most in today’s dynamic world. In many ways, companies are going through the same challenges now that today’s young people will face in the future. Despite specializing in an area of study, our kids will likely have to switch careers, maybe several times during their lifetime. Companies need to develop that same agility, and partnerships are a way to get them there.
Winning or losing – you decide!
For me, the key takeaway is this: to survive and thrive in today’s world, you need to be well-rounded and versatile – somewhat of a renaissance person. However, there’s a caveat – renaissance person or not, you still need to use the tools of the future to stay ahead of the competition.
The survey shows that forging the right partnerships will make all the difference between winning and losing. One prediction is that companies that engage in above-average levels of OEM partnership have the opportunity to accelerate sales growth and cost reductions by 35 and 45 percent by 2025.
On the flip side, the survey also predicts that by 2025, up to 50 percent of current business will cease to exist in its current competitive state, driven by new technology and customer evolution. Here’s the burning question – where will you be in seven years’ time? Most importantly, “why?”
What’s your take on the OEM market? Do you have insights to share? We would love to hear your comments and questions.
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