Suppliers stream up the value chain

Collaboration needs to be enabled amongst city, industry and citizens and cut across national, public-private and sector silos. This approach results in new forms of organizations within stakeholders as well as redefines their role towards other companies and customers.

The traditional product solution will make way for the design of “satisfaction”. Innovation no longer happens on product level, but in ways existing technology is systemized. As a result traditional product suppliers are likely to loose relevance in their former established markets if they remain in their value chain position. In order to survive they have to look how to deal with the new business environment “City”. Especially as new entrants with focus on holistic solutions, often based on data services and project management, turn into disruptive forces.

There seems to be a tendency that the value chain of a pure product-supplier will be shortened and there seems to be deminishing room for the accustomed long term business in future. The sale of isolated products to municipalities looses relevance in the context of holistic solution approaches. These are composed of products but further more of data management components. Pure component- and product suppliers become exchangeable, their products commoditized and they slip down the ladder of TIER positions.
On the other hand there are market entrants that had nothing to do with segment modernization in the past. Companies based on ICT are cross entering and by bridging segments (e.g. energy, mobility) start shaking traditional markets. In addition their software focussed business has normally a better EBIT than the traditional hardware oriented solutions.

A disruptive development for those product suppliers that don’t see a need in streaming up the value chain.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s