As seen in recent world news, political forces and evolving company policies have put avenues for independent content creators to generate revenue at risk. While creators are now faced with the daunting possibility that their income may be significantly cut if a major platform is forced offline, content platforms may, on the other hand, encounter new opportunities to capture share of social media and content platform markets. Two key events unfolding – a potential ban on TikTok by the U.S. government and Meta discontinuing its Reels Play Bonus Program payouts.

IDC’s Future Consumer research team continues to track and forecast online consumer engagement and digital economies, such as independent content creation. IDC’s Consumer Market Model (CMM) definition of independent content creation is non-corporate content offered in ad hoc or subscription-based platforms, such as Patreon, YouTube, TikTok, and Meta (Instagram and Facebook). Independent content creation and consumption is being embraced by consumers and online markets, driven in large part by younger Millennials and Gen Z as more than 50% of users belong to these two generational cohorts. As identified by IDC’s Consumer Pulse service, in the Home & Entertainment May-June 2022 reports, Instagram and TikTok are the leading platforms for posting by Gen Z and Millennial creators.

IDC’s most recent CMM forecasts that independent content creation will experience continued user growth worldwide with the number of people who are creating content increasing at a compound annual growth rate (CAGR) above 12% from 2021 to 2026. This continues to build on the massive growth in recent years as independent content creation have added over 1 billion new users worldwide and 43 million in the U.S. since 2019.

The number of consumers buying both consumer and professionally generated content is also growing quickly. In the U.S., IDC expects the market to add 2 million new mobile buyers by the end of 2026. IDC expects spending to surpass $5 billion in the U.S. by 2026, signaling a large market opportunity with persistent near-term growth. But, as seen in the political and business news in the U.S., it is a market experiencing change and challenges that might jeopardize some creators’ ability to make money.

The U.S. government is currently considering a ban on TikTok, a leading short-form content platform owned by the Beijing-based company ByteDance, as it investigates national security concerns. The previous administration issued an ultimatum to sell to an entity not under Chinese government control. Although this order was rescinded by the current administration, the U.S. government is investigating national security concerns that ByteDance could access private and sensitive data of users that will, in turn, be subject to access by the Chinese government. The Chinese government could request information about ByteDance’s customers, and the company would have to comply, endangering valuable user data like location information or using the platform to spread misinformation. The U.S. government has already banned the app on government devices but now looks to potentially ban the app on personal devices.

There has been uproar by U.S. TikTok users and content creators of claiming that their government is trying to censor them, but TikTok faces scrutiny across the globe. Notably, India banned the app for their citizens in 2020, citing similar concerns. Other major governments and armed forces have also banned TikTok on their devices due to espionage concerns. The ban has spread to U.S. allies who are also banning the app on all government devices and now considering a ban on personal devices. The decision has yet to be made by the U.S. Congress whether TikTok use will be prohibited, but if the U.S. bans the app, its allies may follow suit. Countries that already restrict the usage on government devices include Canada and the United Kingdom.

In March, Meta announced it would discontinue its Reels Play Bonus Program payouts to save money amid its current financial situation, ending certain payments to creators. Meta started the program in 2021 by investing $1 billion for influencers and content creators to earn up to $10,000 for sharing Reels that receive high plays and/or likes. As TikTok dominated short-form content, especially among the younger generational cohorts, this program was meant to combat TikTok’s market position and attract creators. Meta’s current challenging financial times notwithstanding, the move comes as the potential ban of TikTok in the U.S. could drive more creators to use Reels.

Income generated by content creation has become a key objective for many in the younger generational cohorts. The Great Resignation, along with the global pandemic, created an environment that drove consumers to try to earn money through different content platforms. IDC’s 2023 CMM survey revealed that creators making money were represented predominantly by younger Millennials and Gen Z as almost 40% reported some level of earnings. Content creators further reported that they have been earning, on average, over $22,000 yearly in the U.S.; some of which is at stake among the political fallout and business developments.

With the U.S. government potentially banning TikTok and Meta no longer paying for Reels, two of the leading revenue-producing platforms may no longer be options for creators to make income. While this causes concerns for creators, it does create opportunities for other platforms (notably YouTube with its Shorts offering) and app developers pursuing the next big thing. Content creators should continue to look at apps like YouTube to make revenue despite potentially harder and longer editing processes. Content creators should continue to diversify the platforms they distribute on and always look for up-and-coming platforms for new opportunities.

Without providing opportunities to produce income or build personal brands, platforms that host content run the risk of losing traction with top creators and may fail to attract the next wave of popular creators. Demonetizing creators may ultimately demonetize platforms and reduce traffic. These current events create an opportunity for platform creators to become major players. Platform developers would be wise to recognize the impact and risk associated with Meta’s actions when considering demonetizing or reducing monetization opportunities, as consumers will deprioritize platforms that do not align with revenue opportunities.

Money and fame are what content creators seek, and this online activity is continuing to grow. Independent content creation in terms of users, buyers, and spending is only getting bigger as shown by IDC’s CMM, and platforms that offer revenue and exposure opportunities hold a competitive advantage for attracting creators.

Do you become a major player in content creation platforms, or do you lose market share to the next big application due to reduced or discontinued revenue opportunities for your users?

A potential TikTok ban should drive investment in capturing market share rather than a pullback. Despite the news of a potential TikTok ban and Meta no longer paying creators for Reels, the future for independent content creation is bright with expected growth through 2026.

IDC tracks many online activities in the digital economy and clients use IDC’s CMM to identify emerging opportunities across a wide range of technology categories. Interested in learning more about IDC’s Future Consumer research and services?

At IDC Metri, we have witnessed firsthand the challenges organizations face with IT budgeting. Our consultants frequently help organizations adequately budget their IT environments to make sense of the complex and changing IT environment and its cost sources.

The budgeting process can be full of difficulties, from misclassified costs to inadequate attention for changing IT environments. In this article, we’ll discuss five key issues in IT budgeting and provide possible solutions to help IT management worldwide create more effective and transparent budgets.

Misclassified IT-related Costs

One of the major issues in IT budgeting is the misclassification of costs that are not IT-related but should be classified differently, like facility costs. This can lead to an inaccurate representation of IT spending and hinder informed decision-making.

In more detail, misclassified costs can stem from several factors, including unclear definitions of IT and non-IT expenses, inconsistent allocation methods, or a lack of understanding of the specific functions and responsibilities of the IT department. This can result in an inflated IT budget, obscuring the actual costs of IT operations and making it difficult for IT management to prioritize investments and justify expenditures to senior leadership.

Solution: To address this issue, organizations should:

Implement a standardized cost classification system, such as the Component Based Measurement (CBM) framework, to clearly define and categorize IT and non-IT costs. This helps ensure consistency and transparency in cost allocation.
Conduct regular training sessions for IT controllers and finance teams to enhance their understanding of IT cost structures and expense categories.
Set up cross-functional teams consisting of IT, finance and business unit representatives to review and validate cost allocations periodically. These teams can collaborate to identify misclassified expenses and make necessary adjustments, promoting a more accurate and transparent IT budget.

Lack of IT Domain Knowledge Among Controllers

IT controllers often lack the necessary domain knowledge to classify different IT cost sources and types accurately. This can result in a vague and untransparent IT budget that does not provide clear insights into the organization’s IT spending.

The consequences of this knowledge gap can be far-reaching. For example, a lack of IT domain knowledge may lead to inaccurate forecasting of technology-related costs, making it difficult to plan for future investments or identify areas where cost savings could be achieved. It can also hinder the ability to benchmark IT spending against industry standards or competitors, limiting the organization’s capacity to identify opportunities for improvement and maintain a competitive edge.

Solution: To mitigate this issue, organizations should:

Invest in training programs to enhance IT controllers’ understanding of IT cost structures, technology trends and the specific needs of the organization.
Engage IT experts or consultants to assist in the budgeting process, providing guidance and insights to ensure a more accurate and transparent IT budget. These experts can help IT controllers better understand the intricacies of IT cost management and identify potential areas for optimization.
Encourage collaboration between IT controllers and IT management, fostering a culture of knowledge sharing and open communication. This will enable IT controllers to gain a deeper understanding of the organization’s IT needs and challenges, facilitating more accurate and informed budgeting decisions.

Simplistic Budgeting Processes

Budgeting processes that are too simplistic often fail to account for the complexity of an IT environment. This means that changing IT environments, driven by rapidly evolving technology trends and shifting business requirements, are not reflected in the budgeting process and the resulting yearly IT budget.

Traditional budgeting approaches, such as annual or biannual budgeting cycles, can be inflexible and unable to accommodate the dynamic nature of IT operations. This can lead to outdated budgets that do not accurately represent current IT needs or investment priorities, making it challenging for IT management to allocate resources effectively and align IT strategy with broader organizational goals.

Solution: To address this issue, organizations should:

Adopt a more dynamic budgeting approach that can adapt to changes in the IT environment. This may involve implementing rolling forecasts, which provide regular updates to budget projections based on the latest data and insights, allowing organizations to respond more effectively to changing IT needs and priorities.
Incorporate scenario planning into the budgeting process, developing multiple budget scenarios based on various assumptions and potential developments in the IT environment. This helps organizations prepare for different outcomes and enables more informed decision-making when allocating resources.
Implement a cost allocation framework that enables adequate budgeting decisions for each different IT service in the static or changing context that they exist in.

Shadow IT

Shadow can lead to security risks, duplication of efforts and increased IT costs as organizations may unknowingly invest in redundant or incompatible technologies. Additionally, shadow IT can contribute to a lack of visibility into the organization’s IT landscape, making it difficult for IT management to accurately assess the efficiency and effectiveness of IT operations.

Solution: To tackle the issue of shadow IT, organizations should:

Establish clear IT governance policies and processes to ensure that all technology solutions are vetted and approved by the IT department. This may involve creating a centralized technology request process or implementing an IT service catalog that lists approved solutions and services.
Promote a culture of open communication between the IT department and business units, encouraging employees to consult with IT before implementing new technology solutions. This can help prevent the use of unauthorized tools and ensure that IT investments align with the organization’s strategic objectives.
Implement effective user training and awareness programs to educate employees on the risks associated with shadow IT and the importance of adhering to IT governance policies. This can help foster a culture of accountability and responsibility when it comes to technology use within the organization.

Lack of Consolidation

A lack of consolidation is found in many organizations when a multitude of contracts with various vendors offer similar functionality or services. This can lead to increased costs and complexity in managing IT resources, as overlapping contracts may result in unnecessary spending on redundant solutions. Moreover, the lack of consolidation can hinder IT management’s ability to negotiate better pricing and terms due to the fragmented nature of contracts and vendor relationships.

Additionally, managing multiple contracts can strain the organization’s resources, as IT staff must dedicate time and effort to administering, monitoring and maintaining relationships with more vendors than is optimal. This can divert attention from more strategic IT initiatives and limit the organization’s capacity to optimize IT operations and drive innovation.

Solution: To address the issue of lack of consolidation, organizations should:

Conduct a comprehensive review of existing contracts and vendor relationships to identify areas of overlap or duplication. This is typically done in a full scope IT cost benchmark. This should involve analyzing the functionality, performance and cost-effectiveness of each solution to determine whether consolidation is feasible and beneficial.
Consolidate contracts and vendors where possible to streamline IT operations and reduce costs. By reducing the number of vendor relationships, organizations can achieve economies of scale, which can lead to more favorable pricing, terms and service levels. Note that these projects are extensive in complexity and cost, but often lead to high returns.
Implement a centralized contract management system to track and monitor all IT vendor contracts. This can help organizations maintain visibility into their IT portfolio, making it easier to identify opportunities for consolidation and ensure that all contracts align with the organization’s strategic objectives.
Establish a vendor management office (VMO) or designate a dedicated team responsible for managing vendor relationships and contracts. This team can help negotiate better deals, manage contract renewals and terminations, and monitor vendor performance to ensure that the organization is receiving the best value for its IT investments.
Encourage collaboration between IT management and procurement to develop a unified approach to vendor selection and contract negotiation. This can help ensure that the organization’s IT and procurement strategies align, resulting in more efficient and cost-effective IT operations.

By addressing the issue of lack of consolidation, organizations can achieve greater efficiency and cost savings in their IT operations. Implementing a strategic approach to vendor management and contract consolidation will enable IT management to optimize resources, negotiate better deals and focus on driving innovation and value for the organization.

IT budgeting is a complex and challenging process, but by addressing the key issues outlined above, organizations can create more accurate, transparent and effective budgets. Investing in training, adopting agile budgeting processes and implementing strong IT governance can help IT management worldwide better align IT spending with business goals and maximize the value of their IT investments.

Learn how to better demonstrate value to the business and validate budgets with our eBook on cost benchmarking.

IDC defines Web3 as a collection of open technologies and protocols supporting the trustless use and storage of decentralized data, knowledge, and value.  Content is decentralized on DAOs (decentralized autonomous organizations), with control and value retained by users. 

Blockchains, NFTs, and smart contracts will play a critical role in establishing immutable transaction, communication, and collaboration that is seamless and does not have to be validated every time. Without needing validation it becomes “trustless”.  This decentralized, interconnected foundation for industry ecosystems can also serve as the enabling force of the metaverse which is a collection of 3D virtual assets, content, knowledge, and places where people can communicate, collaborate, and transact.     

We think as industry ecosystems evolve to include a varied set of partners, customers, suppliers, service providers, and public entities, that Web3 will be leveraged as a complement to classic enterprise business networks. This evolution will provide new sources of data, innovation, applications, and expertise. 

Our 2022 Future of Industry Ecosystems Global Survey (July 2022) and Future Enterprise Resiliency Survey (FERS, October 2022) shows that although interest in Web3, as well as DAOs and Metaverse, is strong, IT investments have not followed suit.  While it is still the early, experimental days, organizations see how Web3 can provide a foundation that can assure trust, enable innovation, and, perhaps most importantly, scale and/or enhance activity as needed.

How can the Metaverse fit into an Enterprise and Ecosystem Strategy?

Metaverse has been a hot topic over the past year, and although the initial buzz has faded a bit, the question remains: how beneficial can this be for enterprises? We think the answer is very, if implemented in a complementary way across domains and processes in the organization.  Experimentation with the metaverse is now predominantly driven by B2C companies such as retailers and banks that are looking for new ways to engage with existing and new customers.  As one CEO of a digital bank said: “Metaverse technology, while still evolving, could also fundamentally change the way banks interact with customers and communities”. 

The fact is that most organizations are still figuring out the best way to implement it, and many of their experiments will initially fail which is a normal part of the process.  But there are many opportunities for every enterprise to incorporate metaverse as a complement to their existing way of working:

Speeding product development – a place to view, create, and enhance new or existing products in context, through VR and simulation technologies; this could be with internal colleagues, or external ecosystem partners.
Delivering products and services digitally, wherever the end customer, citizen, consumer, or patient wants – i.e. achieving that ultimate blend of digital and physical experiences.
Improving ongoing customer engagement and experience and providing another data feed into demand sensing and planning models.
To the last point, complementing ecommerce opportunities and activities, which many retailers and consumer brands are already exploring.

DAOs as Future Enterprises? 

Decentralized autonomous organizations (DAOs) are token enabled, self-organizing, Web3 communities that are based on distributed ledgers and run with a decentralized protocol, so are not dependent on any one contributor. 

Members contribute code, data, knowledge, and IP to enhance the DAO. DAOs, much like industry ecosystems, are driven by missions and solving common problems. They are natural extensions and complements to industry ecosystem strategy. While we do not think DAOs will be future enterprises per se, we do think that DAOs present an opportunity for existing, Web2-centric organizations to complement and enhance their operations. 

In our recent 2023 Future of Industry Ecosystems FutureScape, we predicted: By 2028, consortium-based DAOs will be the de facto standard for complex industry ecosystem ventures that involve a combination of process, application, and data sharing for new revenue growth.

Industry ecosystem ventures are complex, typically involving multiple participants, large data models, and shared applications not within the same system. Consortium DAOs can be a unifying, digital place for initiatives, data, and applications.  There are already many DAOs in existence today that span finance, healthcare, consumer products, entertainment, and smart cities. Data and knowledge is shared, and applications are created and shared within these environments.  Which is exactly what we see happening within industry ecosystems today – DAOs can build off of this evolution by encouraging constant innovation, as well as application, data, and knowledge sharing.

Concluding Thoughts

As organizations share data and insights, processes, applications, and expertise within diverse industry ecosystems that will begin to include participants outside of the core industry, Web3 use cases and related IT investment will evolve.  We expect organizations to consider, or reconsider, distributed ledgers, smart contracts, and NFTs, as part of a Web3 strategy that empowers trusted industry ecosystems.

We asked in a recent Future Enterprise Resiliency Survey, what technology is your organization currently using in support of sharing data and insights, shared applications, and shared operations & expertise among your Industry Ecosystem partners?  Top answers: cybersecurity, cloud applications/infrastructure, customer data platform (CDP), and IoT.  Where did decentralized computing tech fall globally? At the bottom of the list: DAOs (11%), Blockchain (9%), Web3 (9%); Metaverse, based on our 2022 Future of Industry Ecosystems global survey, is also being considered, but not yet invested in extensively.

IT investments for industry ecosystems are still very fundamental at this point. This reflects the early-stage maturity of most organizations, according to our recent 2023 Future of Industry Ecosystems MaturityScape Benchmark survey – report forthcoming. Experiments will continue with Web3 and decentralized computing.  Organizations see the value in finding the optimal use cases across industry that complement the current Web2 approach of centralized control of data and applications.  We think there are multiple domains, processes, and use cases within organizations in every industry and across their ecosystems that are ripe for this decentralized, complementary approach.

Understanding your total addressable market (TAM) is crucial for the growth of your business. It helps to determine the size and scope of your potential customer base and allows you to set realistic goals and objectives. It also aids with making informed decisions about marketing and product development strategies as well as pricing and distribution.  

Defining your market today and understanding where your opportunities lie in the future helps your team focus on the right customers and competitors at the right time.  

An economic downturn can make this exercise difficult. Inflation, rising costs, global conflicts, and the still-felt effects of the pandemic have led to budget reallocations and cuts.  

Luckily, there are actions you can take today to grow your market and your business. 

Become More Visible 

When economic times are hard and budgets are tight, the gut reaction of many companies is to slash advertising spend. But reducing ad spend is associated with declining sales and weakened performance in the long run.  

We are moving into the next era of digital business. Maintaining a prioritized investment in marketing will separate out the market leaders from the rest of the pack. 

Laurie Buczek, Vice President, CMO Advisory Practice, IDC  

Try to maintain your share of voice by using affordable online advertising like Pay per Click (PPC) and display as well as social ads, and include some of these strategies to increase visibility when budgets are tight: 

Develop a strong digital presence by optimizing your website and social media accounts.  
Use Search Engine Optimization (SEO) to optimize your website and online content to rank higher in search engine results. 

Leverage social media. Platforms like LinkedIn, Instagram, and Facebook can help you reach a wider audience and increase brand awareness. 
Build your relationship with existing consumers through relevant and impactful messaging and thought leadership. Third-party content, for example, analyst briefs and whitepapers, will establish you as a leader in your field and give you instant credibility. 
Network with other businesses at industry events and local business associations to expand your reach. 

Be Customer-Centric 

Even though the first instinctive action in an economic downturn often is to cut spending, this can be a flawed approach. Now more than ever you should take a data-driven approach to understanding your customer.   

Connecting with consumers in an empathetic and insight-driven way is key. Buyers want to see the impact your products or services are making on their business. 

Take these steps to better understand your customer:  

Analyze your data: Analyzing customer data such as purchase history, demographics, and online behaviors can help you gain insight into your customers’ preferences. This can help you identify trends and patterns that can allow you to tailor marketing activities to different segments. 
Create buyer personas: By creating personas, you can better understand your customers’ needs, preferences, and behaviors, and tailor your marketing, sales, and tone of voice accordingly. 

Use customer feedback: Feedback can easily be gathered through surveys, reviews, or customer support, and will help you to improve your products and services and address any issues or concerns. 

Use Data to Investigate New Markets 

If your current market is saturated or unable to commit to purchasing, it’s a good idea to branch out to other markets or regions, or even demographics to remain competitive.   

When Walmart founder Sam Walton was asked what he thought about the recession, he famously said “I thought about it and decided not to take part.” 

If you, like Mr. Walton, want to outsmart the potential recession, you should use a data-driven approach to research potential markets and define your new niche instead of trying to compete with everyone in your current market to stand out and appeal to a more specific audience.  

Then, analyze customer behavior to understand how potential customers in the new market currently behave, what products or services they already use, and what factors influence their decision-making process. 

Finally, develop a market entry strategy based on the insights you have gathered, and remember to stay focused on your goals, continually improve your offerings, and differentiate yourself from your competitors. 

Leverage Digital Marketing 

During an economic downturn, many businesses rely more than ever on digital marketing to reach a larger audience and increase their TAM at an affordable price. IDC’s Marketing Investment Planner for 2023 identified digital as the predominant type of programming, with display ads at its highest spend over the past 11 years. 

Advances in emerging technologies like artificial intelligence (AI) and the shift of the consumerization of B2B buyer behavior have heightened the need to move beyond the classic marketing playbook of database and email marketing. Budgets for content syndication, search engine marketing (SEM), and building customer intelligence and analytics have grown, and the marketing mix has shifted towards the digital-first buyer. 

Your digital playbook could include some of these strategies: 

Use social media and assets like IDC’s social tile to reach a larger audience to expand your TAM, drive brand awareness, and attract new customers. 
Optimize your website or organic search with search engine marketing (SEM) techniques like keyword research, content optimization, and link building. This can help to broaden your TAM by driving more organic search traffic to your website. 
Use visually attractive assets like videos to generate new leads and stand out from the competition. 

While you can’t change the fact that some consumers are tightening their purse strings, you do have a choice about how to pivot your business accordingly. In fact, with proper planning, resource allocation, and strategy shifts, smart brands not only can stay afloat during turbulent times but can increase their market share. 

Partnering with the right analyst firm can help you reach your goals in a much shorter time and within budget. Find out how IDC’s Emerging Vendor Solutions will help you grow your business today. 

I recently had the opportunity to fly on a Delta Airlines flight for a conference and was offered a rather welcome feature that, as customers, we take for granted on the ground, but isn’t yet common in the air – “Free WiFi”!

What is notable about this service is that, at a time when most airlines continue to charge for an on-board internet connection, Delta was offering customers WiFi as a “free service”. Such a service could certainly be viewed as a value-add to the onboard customer experience (CX). To avail of the service, one is required to register or sign in (existing members) to the airline’s frequent flyer (loyalty) program.

Further interesting was when a day later, Ed Bastion, CEO of Delta Airlines, highlighted this very same point during an on-stage discussion with the CEO of the firm hosting the conference. This point was discussed in conjunction with how Delta Airlines incorporates customer experience insights gleaned from their voice of the customer efforts as a way to improve different elements of their customer experience.

As a long time CX thought leader and practitioner, I am constantly listening to, or observing for, “CX-related signals”. In the Delta example, there really are two elements at play. On one hand, by encouraging customers to sign up (or login) for their loyalty program, Delta gains firsthand information about their flyers in the form of zero- and first-party data. On the other hand, in exchange for sharing that information, customers benefit from being able to access the internet for the duration of the flight. A quick note on zero- and first-party data:

First-party data is the data that brands acquire from customers directly. It also includes analytics data that brands might derive from customer behavior signals and customer propensity insights. For example, but not limited to, segmentation analysis, cohorts, personas, or propensity for loyalty, advocacy, and churn that brands are laying over on top of the initial data that is gathered from customers.
Zero-party data is a special category of first-party data that customers explicitly provide to brands. The difference between zero-party data and first-party data is that customers know that they’ve explicitly given zero-party data. For instance, if a customer wants to order something online, they provide their name and address, credit card information, and billing information if it’s different from shipping address. All of which customers expect to provide because that information is directly related to fulfilling a customer need.

With so much of the value exchange between customers and enterprises hinged on customer data, CX insights can enhance and optimize empathetic experience outcomes when applied in a trusted manner. From a CX standpoint, Delta’s inflight WiFi service is a good example wherein Delta attempted to offer an equitable value exchange when customers engage with the company. IDC has previously discussed how enterprises can deliver value parity for their customers and improve the perception of customer empathy based on the experience they deliver. Establishing customer value parity is crucial since an imbalance can lead to poor customer sentiment and often results in customer attrition.

With zero- and first-party data, a company now has the ability to operate with unique customer insights – i.e., insights that their competitors don’t have access to. With an active portfolio of customer intelligence, enterprises can offer more contextualized offers, products, services, and work across their ecosystem of partners (in the example noted earlier, based on browsing behavior) to amplify the value exchange for both customer and brand.

Now, fundamental in the above narrative, is the ability to engender customer trust. In a deeply connected society, digital trust is the currency that facilitates future innovation and prosperity. For example, sharing CX insights between a brand’s ecosystem partners should occur via a trusted data exchange mechanism. Further, enterprises must recognize that every time a journey or a micro-moment is personalized for a customer, the company reveals that they know something about the customer. To this end, enterprises have an unequivocal responsibility to ensure they don’t fall into the trap of surveillance capitalism where customer data is considered a commercial entitlement.

To achieve customer empathy at scale, customer data must be treated as a currency and thus, a fiduciary responsibility of the brand. In the above example, the airline must not only gain customer consent for capturing data, but also be transparent and adhere to promises made about why customer data is being asked, the purpose for which it will be used, and the duration for which it will be stored.

At a time when enterprises are facing greater uncertainty in a tough economic environment whilst also facing increasing pressure to differentiate with their customers, experiences are the tip of the spear to innovate. Owned customer insights based on zero-and first-party data enable organizations to do so in a profitable manner.

Visit our Future of Customer Experience website to learn more about achieving customer empathy at scale and get more insights on our thought leadership for how CX can drive profitable growth.

Eight years ago, IDC initiated its research on digital transformation, tracking early enterprise innovation and experimentation that typically focused on solving problems within siloes. Unfortunately, this focus on silos often resulted in disconnected islands of digital innovation where success didn’t always scale, and ROI wasn’t always clear. As digital transformation initiatives matured, enterprises increased their spending on digital technologies and associated services while focusing on achieving positive financial impact.

Now, IDC’s extensive digital transformation research has identified another important milestone – the digital business era. After iterations of transformation, business leaders and investors are now looking for sustainable growth built on digital-first strategies. The C-suite recognizes that at some point, transformation must yield to a bigger and more purposeful long-term goal – business outcomes built on a digital foundation. Our recent survey data reveals that 48% of organizations now consider themselves a digital business; the rest are pretty close behind.

Organizations increasingly recognize that requirements for operating their new digital businesses at scale are different from the digital transformation requirements required to build those digital businesses. Business must figure out how to grow revenue while clamping down on technology, labor, and customer acquisition costs and avoiding delayed decision making associated with new digital sovereignty requirements.

IDC defines a digital business as an organization where value creation is based on the use of digital technologies, including internal and external processes; how an organization engages with customers, citizens, suppliers, and partners; how it attracts, manages, and retains employees; and what products, services, and experiences it provides.

To run their digital businesses at scale, organizations must successfully operate five levers:

Technology Investments

Organizations will need to optimize technology investments, particularly around cloud. IDC estimates that 42% of core IT spending is now related to the cloud.

With cloud as the backbone of their digital businesses, organizations are seeing their cloud costs grow at the same rate as their revenue and utilization – and that’s not good for them. To address that, organizations will pivot their focus from building cloud-first businesses to the economics associated with running a cloud-first business. One area of investment we expect to see is FinOps – still an emerging function in many organizations – as a way to bring together finance, business, and engineering organizations.

As FinOps matures, businesses will move beyond simply forecasting and tagging costs to enforcing cloud expenditure policies and making strategic architecture and workload placement decisions.

Labor Utilization

IDC’s recent survey of tech decision makers reveals that labor shortages still rank as a top three risk factor in 2023. And, while organizations will continue to try and attract and retain talent, they will increasingly recognize that simply throwing bodies at the problem is not scalable. They must pivot to a focus on leveraging their existing talent, which means they will need to leverage more automation.

Whether it’s AIOps, value stream management, or RPA, automation is used in many enterprises today. But it’s still early days for automation. IDC’s data shows that while a third of organizations have automation initiatives, only one out of 10 are mature. There are islands of automation within enterprises, but business will not really be able to solve the labor utilization issue until they harness these efforts under an enterprise automation strategy, presenting opportunities for tech vendors that can help connect and orchestrate activity across the organization.

Customer Acquisition Costs

Despite the pivot toward digital, customer acquisition costs continue to grow because consumers are looking for more personalized, immersive, and real-time experiences across channels and devices, while simultaneously demanding greater data protection. Today, most businesses are not doing a great job of leveraging customer data across the enterprise. IDC’s latest study shows that only 12 percent of organizations connect the data between departments.

Going forward, we expect to see businesses shift their investment focus to customer data management, with the goal of enhancing customer experience. That means we will, in turn, see more investment in customer data platforms, which, to date, have played a minor role. Over the next year, however, IDC predicts they will evolve into enterprise customer data services that use data streams and AI to improve customer interactions

Decision Making

Despite spending $290 billion globally on technology and services to increase decision velocity, 42% of enterprises report that data is underutilized in their organizations.

Why?

Simply put, they are drowning in data. IDC’s Global Data Sphere predicts that by 2026, seven petabytes of data will be created every second. Organizations are trying to harness that data, glean insights, and get it into the hands of frontline decision makers. And, in their efforts to speed that process up, they will shift their investment focus from data generation to decision velocity. They will invest in enterprise data architectures to help reduce the time it takes to turn that data into value generating decisions and they will invest in efforts to bring their business, IT, and data teams together to reduce complexity.

Technology Ecosystems

Trust is at the heart of the digital business – almost 80% of technology decision makers report that trust programs are a priority. However, as more countries put laws and policies in place around digital sovereignty, particularly as it relates to data in the cloud, a new dimension of trust is emerging. An IDC Europe study shows that 71% of decision makers expect digital sovereignty will increase their costs of doing business.

To help address these new trust requirements, organizations will look for additional help from their technology suppliers, essentially “partnering” with them as part of new – and essential – trusted technology ecosystems.

These are the critical business agenda items that businesses must focus on in the coming year. And, technology suppliers must engage with their customers to identify where they can provide additional strategic, technology, and business value. Interested in learning more about the transition to the digital business era? Read IDC’s eBook, Beyond Digital Transformation: What Comes Next?

An organization’s management, both executives and board, need to view cybersecurity as not just a cost center but a way to enable the business to move forward at a faster pace, instead of slowing it down. Managing risk exposures with proactive cybersecurity tools and platforms should be a mindset, not a technology requiring investment. Since good risk management is the foundation of trust, organizations that do it well achieve the trust outcomes mentioned in our framework, benefiting themselves as well as partners and customers. Engendering trust within and outside an organization helps build loyalty; it only takes one lapse in the management of cyber-risk exposure to tear down what took time to build.

IDC’s expanded view of risk exposures includes:

Unknown IT assets, including cloud assets, which are left unprotected by endpoint security tools
Open ports that can be accessed by attackers from outside the organization
End-of-life software because discovered issues are no longer being fixed
Unsupported/antiquated devices that lack innate protections such as printers or IoT/OT assets
Forgotten/unused/unauthorized applications, including SaaS applications, because the security team is not paying attention to vulnerability issues in that software, nor the data that is being stored in and transferred to or shared through that application, and nor misconfigurations in user access policies or password policies
Remote desktop protocol (RDP) open to the internet
Misconfigurations in cloud access policies
Unknown domains/subdomains and forgotten subsidiaries
Data in the cloud that is inadvertently exposed to cloud administrators through improper cryptographic key management
Sensitive or confidential data that is stored improperly with a “trusted” third party
Expired certificates because the browser cannot tell whether the website is authentic (If the users do connect, they cannot be assured that their communications with the website are secure and not through someone in the middle rerouting their traffic.)
Unknown application programming interfaces (APIs) since APIs are being used to share information between applications (The APIs may be created by the organization or a third party to share information or integrate with partner applications.)
Vulnerabilities in the code and applications the organization writes or assembles from open source
Data exposed through lazy backup practices such as information stored in public folders during routine backup maintenance
Hardcoded credentials/secrets such as API keys stored where they are accessible to attackers

The search and discovery of risk exposures needs to be continuous; there should be continuous scanning to enable continuous discovery and monitoring for continuous assessment and analysis of the data. Environments have grown complex with hybrid work, hybrid cloud, ephemeral workloads, and no traditional perimeter that can be protected by a firewall, so point-in-time data is not good enough. The days of monolithic software applications that are updated twice a year on a planned cadence have passed, replaced with a reality of a CI/CD-fueled microservices software architecture that experiences up to thousands of code drops daily. Today much of the code is open source as opposed to being developed internally.

In addition to new types of exposures, the sheer number of common vulnerabilities and exposures (CVEs) is growing as more are being identified and they are also being weaponized more quickly. Security teams need help to make sense of what is important.

Today, many point security products identify and report on these exposures including attack surface management (ASM), cloud workload protection, application security orchestration and correlation (ASOC), SaaS security, API security, certificate management, and vulnerability management. The data may come from various types of sensors: passive sensors, network scanners, internet scanners, agents, virtual scanners, secrets scanners, cloud connectors, APIs, and SaaS connectors. Each point product has its own reporting system and possible integrations with other platforms, making it harder, if not impossible, to correlate the data.

Ideally, all risk exposures should flow into a singular system, no matter how they are discovered, to ensure they can be comprehensively prioritized so the security team can direct their efforts accordingly and ensure it is maximizing cyber-risk reduction across the organization. The risk exposures need to be assessed, measured, and risk weighted based on a singular, homogeneous scoring criteria instead of individual security tools each measuring risk in its own unique fashion. Then the risk score is a comprehensive measure of cyber-risk that can then be integrated into the ultimate assessment — business risk.

Consolidation of point solutions provides a view of risk that, when combined with threat intelligence, provides a reality context weighted view. For example, a vulnerability that is recognized to have a known rootkit being leveraged within your market vertical and geography has a higher risk, all other things being equal, than one that does not. Other benefits may include a reduction of agents, simplicity in implementing automation, volume-based pricing available from a single vendor, and potential tool consolidation because fewer vendors require less time to manage.

In the meantime, some organizations could take even smaller steps towards better proactive cybersecurity by improving the percentage of assets scanned or scanning for vulnerabilities more frequently. According to IDC’s December 2022 Security Operations Center Survey, though device vulnerability management/scanning solutions are used by 82% of U.S. organizations with more than 500 employees, only 34% scan at least weekly. Only 26% report scanning 85% or more of their known IT assets. And that is the known assets; organizations may find around 30% more assets in their shadow IT that is unknown until an external scan is done.

In conclusion, cybersecurity risk management is not an end goal but a journey because the threat environment is continuously evolving, as is the organization. Being proactive means understanding the risk, determining what risk exposures are acceptable and remediating those that are not. Trust is an outcome of successful risk management.

Thinking and management of risk exposures needs to be more broad than traditional vulnerability management.
Visibility into the IT environment is key to proactive cybersecurity because a security team cannot protect the unknown, whether that is assets or applications.
Proactive cybersecurity focuses on controlling the controllables, not just reacting to an attack.
Recommended Actions:
Monitor the environment continuously for previously unknown risk exposures because cyber attackers are doing the same.
Investigate holistic risk exposure platforms in order to use standardized risk scoring to report on cyber risk from all parts of the IT environment.
Remediate the risk exposures as soon as possible using automated workflows when feasible because attackers are moving faster than ever before.
Share the risk data throughout the organization to make good cyber hygiene part of everyone’s job.

“With IT environments growing more complex and potential risk exposures more numerous, organizations need to think about using a holistic proactive cybersecurity management platform that brings all cyber-risk exposures to one place, so they are scored in the same manner. One management platform also simplifies prioritization and reporting.“

Michelle Abraham, research director, Security and Trust, IDC

Many organizations do not work in a shared, co-innovative way with industry ecosystem partners.  They may have limited or no sharing and collaboration other than the day-to-day connection with suppliers or service providers.  For some, that may be enough. 

We think, however, that every organization can benefit from expanding the breadth and type of industry ecosystem partners, from a variety of industries.  In fact, our global Future of Industry Ecosystems survey showed that by the end of 2023, almost 60% will be expanding the number of partners they work with outside of their core industry.  This is the ultimate state of an industry ecosystem, but accessible to any size organization, even for a specific short-term project, initiative, or use case. 

However, it could be that extending outside of a core industry is not feasible or desired for an organization, so the goal is to establish a diverse industry ecosystem of partners within the core industry that support and enhance decision velocity within, and outside, their organization.

The maturity of an industry ecosystem will vary from organization to organization – and may change from a simple, short list of organizations working on a specific project or venture, to a complex, multi-participant ecosystem. 

In February 2023, we set out to determine the current state of industry ecosystems by fielding the Future of Industry Ecosystems MaturityScape Benchmark survey (report forthcoming). The survey asks respondents to self-rank themselves based on the IDC Future of Industry Ecosystems maturity curve (full report here: IDC MaturityScape: Future of Industry Ecosystems 1.0). The majority of respondents see their organizations as having a dynamic value chain in place, well beyond an ad hoc or opportunistic approach. 30% of respondents feel they have a broad range of partners that constitutes an industry, or business, network.  While under 20% of respondents note that they are actively and regularly working with partners outside of their core industry. 

While many organizations have a standard value chain in place, half of respondents do not have a multi-faceted, expanded industry network to support their business operations.  We know from our Future of Industry Ecosystems 2023 survey data that there is indeed a focus on this expansion, both inside and outside the organization’s core industry.  Partnering outside of the core industry is a nascent approach, although desired in the future, as organizations consider the use cases for the various functions within their businesses that could benefit.  This would be in addition to the standard industry network partnerships that are in place. 

Organizations are expanding their industry ecosystems to include a vast array of different participants, so that they are complemented by a varied set of knowledge, skills, capability, or capacity that they may not possess.  These participants may be classical design and supply chain partners, but also the customer, end consumer, citizen, and patient which can provide input on products, processes, and quality.  Competitors are joining forces to address common challenges or team up for innovation that benefits and progresses an entire industry – we have seen this, for example, in the oil & gas, automotive, and transportation industries.  Maturing industry ecosystems to this approach is the goal for organizations that want an on-demand, flexible approach to running their businesses – whether there is disruption to address, or opportunity to pursue.

IDC defines industry ecosystems as including a set of partners, customers, suppliers, service providers, industry organizations, governmental entities, experts, and competitors within and outside your industry that you can dynamically collaborate and innovate with as necessary. This could include industry clouds, business networks, consortia, expert forums, industry and governmental (public) organizations, supply chains, cloud platform services, consulting and systems integrators (SIs), and the end user — customers, consumers, citizens, and patients. 

As our Future of Industry Ecosystems MaturityScape Benchmark survey research shows, the first steps have been taken by many organizations to expand their industry ecosystems, establishing a network of capability, capacity, support, expertise, and knowledge that can be scaled up and down as required. The next step, according to IDC’s 2022 Future of Industry Ecosystems Global Survey as well as this MaturityScape Benchmark analysis, is to incorporate partners from outside the core industry, learn best practices, and add assets, resources, and knowledge that may not be present within their core industry.

We will continue to watch, analyze, and predict this evolution as part of our Future of Industry Ecosystems research practice, in 2023 and beyond.