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84% manufacturing firms globally embraced software over hardware: Report

NEW DELHI: With the device manufacturing industry embracing software over hardware as its primary business model, a new report said on Friday that 84 per cent of the organisations in the sector globally have already put software at its core in delivering services and generating revenue.

Originally appeared in Telecom by the Economic Times on Dec 16, 2017 – Article Link.


According to a report by global IT security firm Gemalto, nearly all (94 per cent) device makers have invested in software development in the past five years and 88 per cent of the enterprises believe the Internet of Things (IoT) is driving growth within the manufacturing industry.


“Companies who adopt software-based revenue models will reap three main benefits: long term relationships with their customers, predictable revenue streams and a clear competitive advantage,” Shlomo Weiss, Senior Vice President, Software Monetisation at Gemalto, said in a statement.


“From gaining insight into product usage, to pay-per-use payment structures and on to new market penetration – all the companies we surveyed identified a real need to transform how they do business,” Weiss added.


Out of the 84 per cent companies who have moved on to a software-centric approach, 37 per cent firms have had 11 per cent average increase in revenue. They expect growth in the next five years, with the revenue from software projected to rise from 15 per cent to 18 per cent.


“Germany is leading the charge. All (100 per cent) German organisations surveyed have boosted their software-based services over this time in last five years followed by France (98 per cent) and the US (93 per cent),” the report said.


The report also noted that businesses that have moved to software-based selling have seen other benefits.


Over eight in 10 (86 per cent) firms have driven diversity in hardware with software features, 84 per cent implemented remote feature upgrades and 84 per cent improved customer experience.


Seventy nine per cent businesses also report having a more flexible strategy that allows them to adapt to market change, 76 per cent have better control copy protection and 73 per cent are becoming more competitive in the market.


These changes are also having a positive impact for employees. The majority of businesses have retrained their employees (64%) and hired new ones (58%), with three in five (61%) also revealing they have or intend to reshuffle employees into different roles.

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