How Fortune Global 500 Companies Are Grappling With Technological Disruption

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When you look at the current Fortune Global 500 list, [1] one common trend that shows itself across all sectors and nations is that those companies that have embraced technology have better revenue and a more secure position in the market. Companies as varied as BMW, CMB and Enel have all solidified their position in the Fortune Global 500 thanks in significant part to their pioneering focus on digital transformation.

Following those digital transformations, the respective organisations are then able to invest in competitive differentiation via technology. Using facial recognition for payments, taking steps forward in automated driving cars, and other features that resonate with the market and deliver high revenues are only possible once the organisation has completed its digital transformation. In each of these cases, Huawei – which partnered with 211 of the Fortune 500 in 2018 – has been a core part of the transformation strategy.

Fortune Global 500 Business leaders recognise the potential for technology. According to a survey by Lean Methods Group, innovation – closely related to technology – was the third most significant concern for big business CEOs, while technology was fifth. [2] Sixty-five per cent of Fortune Global 500 CEOs polled by Fortune magazine cited the rate of technological change as being “one of the top three or four biggest” challenges, if not the biggest. [3]

How Fortune 500 companies are grappling with technology transformation

Only 12 per cent of companies listed in the Fortune Global 500 of 1955 were still listed in the 2017 list. The others have either shrunk and dropped off the list, gone out of business, or been acquired over the 62 years. [4] Technology drives much of that churn. The American Enterprise Institute (AEI) report notes: “The constant turnover in the Fortune 500 is a positive sign of the dynamism and innovation that characterises a vibrant consumer-oriented market economy, and that dynamic turnover is speeding up in today’s hyper-competitive global economy.” [5]

Digital transformation is no longer optional for Fortune Global 500 companies that wish to remain in that list. By 2018, 67 per cent of the world’s top 1000 enterprises will have selected it as a key strategy. By the end of 2017, 70 per cent of the Fortune Global 500 had set up full-time digital transformation or innovation teams. [6]

A Fortune Global 500 company has the resources to invest in advanced Cloud computing, the Internet of Things (IoT), artificial intelligence (AI), machine learning, and other advanced technologies. Bringing those technologies together under a cohesive vision, and grappling with both the amount of data and the scale of the technology environments is a significant challenge, which only becomes larger as the company gets grows.

For many Fortune Global 500 companies, the first goal in any digital transformation strategy is to break down the technology silos within the organisation. With many large companies, technology is divided by business verticals. However, to deliver consumer-focused innovation, it becomes critical that the company break down those silos and encourage proper cross-department collaboration.

This is just the first step, but it shows that digital transformation needs to be taken as a whole-of-business strategy, and it needs to be driven by a visionary CEO that can build an executive team that shares the vision. Once the leadership team is in place, the next goal is finding the right technology partners and solutions to execute it.

A McKinsey report notes, “Digital transformation is about sweeping change. It changes everything about how products are designed, manufactured, sold, delivered, and serviced – and it forces CEOs to rethink how companies execute, with new business processes, management practices, and information systems, as well as everything about the nature of customer relationships.” [7]

Finding the right solutions

For an example of how Huawei has been able to help companies grapple with the digital transformation challenges and deliver a future-proof platform for innovation, you only need to look at the automotive industry. Few industries have been more affected by technological disruption than the automotive industry, as new forms of power generation start to replace existing, petroleum-driven vehicles, and new start-ups leverage extreme data generation from the behaviour of cars on the road to improve safety and the driving experience. The “holy grail” of fully automated, self-driving cars seems to be just one or two innovations away.

As part of its digital transformation strategy, one of the stalwarts of the industry, BMW, needed to achieve shorter R&D cycles for engineers, more frequent computer-aided engineering (CAE) simulations, and higher simulation precision.

The company turned to Huawei to develop solutions featuring hundreds of servers that would run on minimum power consumption, to keep operation costs low. It was also vitally important the servers were stable. Huawei developed a solution that combined servers that had been tested in extreme conditions and were then placed in Pitea, a small Swedish town near the Arctic circle, where the naturally cool temperatures helped minimise the power drain on the datacentre.

Read more about the solution and the benefits that it brought to BMW here: http://e.huawei.com/topic/leading-new-ict-en/bmw-case.html

For Fortune Global 500 companies – and other large enterprises – digital transformation is critical to their ongoing health. For companies of this size and scale, solutions need to be tailored to the company’s specific needs. Success in these digital transformation exercises hinges on finding the right partner, with the right heritage in finding the right solutions for large enterprises.

As one of the global leaders in R&D, Huawei has a wide range of technology solutions to benefit enterprise and government alike. Click here for more information on the full suite of services.

[1] http://fortune.com/global500/list/

[2]  https://www.leanmethods.com/resources/articles/top-ten-problems-faced-business/

[3]  http://fortune.com/2016/06/03/challenges-facing-fortune-500/

[4] http://www.aei.org/publication/fortune-500-firms-1955-v-2017-only-12-remain-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/

[5] http://www.aei.org/publication/fortune-500-firms-1955-v-2017-only-12-remain-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/

[6] https://e.huawei.com/en/publications/global/ict_insights/201703141505/special-report/201705171500

[7] https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/why-digital-transformation-is-now-on-the-ceos-shoulders

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