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Enterprise ER&D Strategy & Focus – Digital Engineering To Build An Antifragile Future

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Download our latest report on Enterprise Engineering R&D (ER&D) Strategy & Focus and get a comprehensive view of the latest ER&D trends that are disrupting the #engineering landscape. Here are some of the key trends and findings:

- The overall global Engineering R&D spend stayed resilient through 2020 and will touch a massive USD 1.9 Tn by 2023.

- Digital engineering spend is accelerating across industries and will represent 47% of the total ER&D spending by 2023, underscoring the relevance and criticality of the rapid adoption of #digital technologies across verticals.

- ER&D spending by #hitech and services-led verticals will surpass #manufacturing-led verticals by 2023

- Spend on #DigitalEngineering-led initiatives will provide an impetus for future growth amidst #COVID19 headwinds.

What does this mean for Technology #ServiceProviders (SPs)? What are the opportunities that will open up for SPs in the wake of this massive spending? How have enterprises across verticals channelized their Digital Engineering spend?

To get answers to these questions and more, download the report now: https://bit.ly/3gF9TAK or write to us at info@zinnov.com

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Enterprise ER&D Strategy & Focus – Digital Engineering To Build An Antifragile Future

  1. 1. Click to edit Master title style Zinnov Proprietary Confidential 1 Zinnov 2020 Enterprise ER&D Strategy & focus - “Digital engineering to build an anti-fragile future” May 2021
  2. 2. Click to edit Master title style Zinnov Proprietary Confidential 2 Agenda Digital engineering pillars – 5G, digital thread, and sustainability engineering Top 10 ER&D predictions Expectations from sales leaders Enterprise ER&D spend priorities and focus on digital engineering A Addressed market opportunity C D E B
  3. 3. Click to edit Master title style Zinnov Proprietary Confidential 3 USD B 1,504 USD B 1,928 ER&D spend stayed resilient & grew despite COVID-19 1 Digital engineering spend is accelerating across industries and will represent 47% of the total ER&D spending by 2023 2 ER&D spending by high-tech and services-led verticals will surpass manufacturing-led verticals by 2023 3 GAFAM+BAT will account for 21% of the digital engineering spend by 2023 4 Services-led verticals will account for 27% of the digital engineering spend by 2023 5 North America is the largest fastest growing geography in terms of spend; APAC will pip Western Europe by 2023 6 Global ER&D Spend Global ER&D spend trends Source: Z1000 database, Zinnov Research & Analysis
  4. 4. Click to edit Master title style Zinnov Proprietary Confidential 4 997 959 1017 469 545 911 2019 2020 2023E 1,466 1,504 1,928 ER&D Spending has remained resilient despite COVID-19; Digital Engineering will drive ER&D spend amidst headwinds LEGACY ER&D SPEND DIGITAL ENGG SPEND All figures in USD B ER&D Spend (2019-23E) 2% 9% 19% CAGR -4% 16% 3% YoY ER&D spending at an overall level has been resilient and grew by 3% YoY Manufacturing-led verticals bore the brunt of the pandemic and de- grew by -4.6% in 2020 Services and software-led verticals grew by 11% through continued investments in digital engineering focus areas The pandemic serves as an inflection point for digital engineering-led transformation across industries The wave of adoption of new-age tech such as Tele-X, digital thread, spatial computing, and contactless will help enterprises be anti-fragile Source: Z1000 database, Zinnov Research & Analysis *2020 numbers are based on publicly available R&D spend numbers of enterprises in Annual reports in the year leading to March 2021
  5. 5. Click to edit Master title style Zinnov Proprietary Confidential 5 Digital engineering spend is accelerating across industries… USD 545B Digital Engineering Spend (2020) USD 911B Digital Engineering Spend (2023E) 19% CAGR Automotive Connected Vehicles MANUFACTURING HI-TECH SERVICES-LED Industrial Pharmaceuticals 219 39 18 62 29 58 37 33 100 62 53 33 54 27 41 12 19 382 Software & Internet Consumer Electronics Telecommunication BFSI Healthcare* Retail Wearables Industry 4.0 Autonomous Remote Patient Monitoring Smart Service AI/ML 5G IoT Cybersecurity SDN/NFV AI/ML Robot advisory Contactless Telemedicine Fraud Detection AR/VR Remote Monitoring 19% 15% 18% 20% 17% 18% 20% 19% 17% 2020 2023E CAGR *Healthcare Payers & Providers Source: Z1000 database, Zinnov Research & Analysis 47% Digital engineering spend will account for 47% of the Global ER&D spend by 2023 19% CAGR 19% CAGR 16% CAGR
  6. 6. Click to edit Master title style Zinnov Proprietary Confidential 6 …This focus on digital engineering will help high-tech and services-led verticals to surpass manufacturing-led verticals in terms of ER&D spend by 2023 3% CAGR AEROSPACE 19% CAGR RETAIL 20% CAGR BFSI 23% CAGR MEDIA & ENTERTAINMENT 17% CAGR HEALTHCARE* HI-TECH MANUFACTURING SERVICES-LED 16% CAGR SOFTWARE & INTERNET 8% CAGR SEMICONDUCTORS 8% CAGR CONSUMER ELECTRONICS 6% CAGR TELECOM 5% CAGR INDUSTRIAL 6% CAGR AUTOMOTIVE 6% CAGR CONSTRUCTION & HEAVY 36% 10% 54% 39% 13% 48% ER&D SPEND 2023E USD 1928 B ER&D SPEND 2020 USD 1504 B ER&D spend from Hitech includes verticals such as Computer Peripherals and Storage ER&D spend from Manufacturing includes verticals such as Energy & Utilities, Mining & Metals etc. Source: Z1000 database, Zinnov Research & Analysis *Healthcare Payers & Providers
  7. 7. Click to edit Master title style Zinnov Proprietary Confidential 7 GAFAM + BAT* will account for 21% of the global digital engineering spend by 2023 107 187 GAFAM + BAT – Digital Engineering Spend (USD B) Focus on talent for digital engineering • Scaled up talent for digital engineering across areas such as AI/ML, UX design, AR/VR, & Cybersecurity • Amazon, Microsoft and Google opened development/Innovation centers in US, Western Europe, Taiwan, India, and Ukraine in the last 12 months India is the largest offshore location • India is the largest offshore location for the software giants • Bengaluru & Hyderabad are also top outsourcing buying centers for Microsoft and Google. 2020 2023E GAFAM+BAT* to account for almost half of the Software & Internet digital engineering spend by 2023 Increase in R&D headcount of Microsoft and Google over the last 12 months Number of offshore R&D centers in India by GAFAM+BAT* ~50% 10-15% 15+ Source: Z1000 database, Zinnov Research & Analysis 21% GAFAM + BAT’s* share of digital engineering spend by 2023 Enhanced focus on vertical integration • Increased spending on developing chipsets, connectivity solutions and hardware • Leading Chinese firms are accelerating efforts in the healthcare space *Does not include Apple’s digital engineering spend which is captured in the consumer electronics vertical Amazon Alibaba Group Google Facebook Microsoft Baidu Tencent
  8. 8. Click to edit Master title style Zinnov Proprietary Confidential 8 27% Services-led verticals’ share of digital engineering spend by 2023 DRIVING THE CORE 58 100 33 53 37 62 14 25 20% 19% 17% 23% BFSI Healthcare* Retail Media & Entertainment 2020 2023E 2020 2023E 2020 2023E 2020 2023E • Payments Tech • Robot advisory • Telematics based insurance • Fraud Detection • Customer Insights & Intelligence • Contactless • Transformation of in-store shopping experience • Omni-channel experiences • Robotic automation • Remote patient monitoring • Diagnosis prediction • Healthcare robots • Patient experience platforms • Physician assistance tech • OTT • AI/ML based content recommendation and tagging • Targeted advertising using intelligent platforms BFSI firms to accelerate digital engineering spend by 2023 1.7X Retailers have blitz-scaled their digital transformation initiatives and increased the digital engineering spend amid COVID 1.6X Uberization of patient care to drive digital engineering spend in next 3 years 1.6X M&T firms to almost double digital engineering spend by 2023 with a focus on OTT 1.9X Source: Z1000 database, Zinnov Research & Analysis *Healthcare Payers & Providers Services-led verticals are blitz-scaling their digital engineering investments through tele-X and contactless initiatives
  9. 9. Zinnov Proprietary Confidential 9 Click to edit Master title style Zinnov Proprietary Confidential 9 281 270 290 97 110 180 2019 2020 2023E 378 380 471 North America is the largest and fastest growing geography in terms of spend; APAC will pip Western Europe by 2023 320 302 319 79 91 148 2019 2020 2023E 399 393 467 North America Western Europe APAC 383 374 395 290 340 576 2019 2020 2023E 673 715 972 2% -4% 18% 13% 8% 1% -5% 15% -1% 2% 18% 5% 2% -2% 19% 17% 13% 6% Source: Z1000 database, Zinnov Research & Analysis Top Verticals ER&D Spend, 2023E USD 1,928 B CAGR YOY North American enterprises contribute to the largest share of spend geo-wise; The region also has the highest growth rate given the higher penetration of software & internet firms and will account for 50% of the global ER&D spending by 2023 50% Rise of APAC APAC lags Western Europe marginally in terms of spend; however given the digital engineering focus of hi-tech firms in the region it will grow faster and surpass spending by Western European firms in 2023
  10. 10. Click to edit Master title style Zinnov Proprietary Confidential 10 CLICK HERETO DOWNLOADTHE REPORT

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