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Innovation transforming the growth landscapeCapitalising IP in Indian IT-BPM
India Leadership Forum 2014
2© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
What is Intellectual Property?
“Intellectual Property (IP) is the outcome of innovation across the value chain. An IP
asset in IT-BPM is classified over a wide ranging spectrum from reusable knowledge
assets and business processes to high end software products”
Based on the survey conducted by
KPMG India for the purpose of this
report, Indian technology leaders
associated the following objectives in
defining IP to their organizations.
Greater valuation
Non Linear growth potential
Customer Demand
Reusability/ Widespread Application
Competitive Advantage
Ability to protect
Ownership
Commercial value
8%
8%
17%
17%
42%
50%
67%
92%
Percentage of respondents citing the objective in defining IP
Source: Innovation transforming the growth landscape, KPMG in India, 2014
3© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Leveraging IP is one of the key trends that will define the state of IT-BPM industry going forward
Source: Innovation transforming the growth landscape, KPMG in India, 2014
Platform markets and technologies will drive big share shifts. Cloud and platform will act as
powerful contributors to BPM transformation. There will be a shift from traditional onsite delivery
model to cloud based and off-premise/ mobile model.
Rise of SMAC
With IP at its helm, next innovation growth wave will have to concentrate on convergence of
technologies. Innovation ecosystem will change because of convergence and will result in
collaboration of multiple parties.
Convergence of Technologies
Global addressable market for products is already close to 296 Billion USD in 2013 is expected to
grow close to 439 Billion USD by 2020. Going forward, the success of global technology majors
will be attributed to the creation, development and monetisation of IP.
Monetization of Intellectual property
4© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
India will be relevant by 2020 only through Intellectual Property (IP) led growth
Source: NASSCOM Strategic Review, 2012 and 2013Source: NASSCOM set target by 2020
Source: KPMG Projection
2011 2012 2013 2020E Constrained Growth
2020E Innovation Driven Growth
1.3 1.5 1.6
60.4 70.8 77.2
11.712.8 13.3
221.165584341821
300
Total Spend
Indian software product market
Services
Hardware
~79
CAGR – 10.8%
Indian IT-BPM in USD BillionIndustry targets 300 bn USD by 2020
- Indian IT-BPM industry spend is 108 billion
USD in 2013 and is growing at the rate of
10.8 per cent CAGR.
- Projecting on the current growth rate, the
Indian IT-BPM spend can potentially reach 221
Billion USD by 2020 indicating a gap of 79
billion USD to the NASSCOM set target in
2020
Opportunity for Indian IT-BPM
- IDC predicts worldwide ICT spend to reach 5
Trillion USD by 2020 and 98 per cent of
growth will be driven by platform technologies
(SMAC).
- A global addressable market of 439 billion
USD for software related products
by 2020Source: Innovation transforming the growth landscape, KPMG in India, 2014
5© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
On a positive note, Indian IT-BPM leaders are confident of driving innovation
Q: Overall how do you rate the success of your country in enabling technology innovation?
USA China India Japan Korea Israel
Availability of talent 64% 62% 75% 20% 49% 79%
Ability to drive customer adoption in local and international markets
63% 57% 71% 17% 51% 64%
Mentoring and access to innovation network (start up CEOs, founders etc)
58% 58% 72% 29% 42% 73%
Access to capital 63% 62% 65% 17% 48% 68%
Supporting ecosystem (legal, law firms, accounting firms etc) 61% 51% 60% 20% 36% 39%
Educational system 42% 42% 65% 17% 47% 55%
Government incentives 23% 52% 56% 11% 38% 34%
In a recent global innovation
survey conducted by KPMG,
India’s technology leaders have
shown confidence that they
excel in most of the
criteria necessary for
innovation.
India’s experience in the
services sector, maturity
of customer adoption and
availability of quality talent has positioned India positively in
the global context.
Source: Global innovation survey, KPMG in US, 2013
6© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Technology leaders are focused on driving innovation across the IP value chain
Innovation across Creation,
acquisition and collaboration
• Shifting from traditional top down
focused R&D to bottom up
approach in harvesting IP
• Inorganic acquisition for non
linear growth
• Rise of ‘Cluster Model’ and
increasing collaborations within
industry and with academia
Innovation across end to end
management of IP portfolio
• Adopting an IP strategy that is
both offensive and defensive
• Continuous performance
management to track
investments in IP
• Legal ecosystem working with
industry to form a healthy
protective environment for IP
Innovation to extract maximum
commercial value out of IP
• Realistic valuation of IP
• Adopting multi objective driven
monetization strategies
(licensing-in, licensing-out, JV
etc)
• Spinning off product as a
separate business
Source: Innovation transforming the growth landscape, KPMG in India, 2014
7© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
• Increase adoption of disruptive technologies
• Leverage convergence of technologies
• Improve collaborations with industry
• Focus on developing innovation based skills
• Drive ‘Bottom Up culture’ of innovation
• Increase penetration in the SMAC technologies
• Improve promotion of R&D in India through rationalisation of tax & transfer pricing laws
• Enhance protection laws & enforcement
• Change the perception of risk and invest in disruptive technologies
• Set realistic expectations from startups
• Focus on ideas & platforms in SMAC
• Leverage incubation centers and mentorship from VC/ PEs
Players of the IP ecosystem should empower IP driven culture in India
IP Ecosystem
Service Providers
Startups
GovernmentCustomers
Academia Funding Agencies
Source: Innovation transforming the growth landscape, KPMG in India, 2014
© 2014 KPMG Advisory Services Private Limited, an Indian limited liability company
and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All
rights reserved.
Thank you