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It’s practically impossible to avoid the buzz about the latest artificial intelligence (AI) tool, ChatGPT. Since its launch in 2022, people have praised its many advantages. These include boosting productivity, content creation, and conversational interaction.

There’s no doubt that ChatGPT and other AI language tools can be hugely beneficial to companies. But amidst the buzz, there are still many questions to be answered.

What exactly is ChatGPT?

I am ChatGPT, a large language model created by OpenAI. I have been trained on a vast amount of data and can perform a variety of natural language processing tasks, such as answering questions, generating text, and translating languages. My purpose is to assist and provide information to those who interact with me.

Source: ChatGPT

ChatGPT is a language tool that is based on the concept of “generative pretraining”, a type of unsupervised machine learning technique that involves training a neural network to generate new data that is similar to a training set of existing data.

Machine learning enables computers to learn from large amounts of text data, such as web pages and books. This training data is used to generate new text with a similar style and content. The result: a powerful tool for businesses that rely on content marketing and sales to drive their digital commerce.

What are its current limitations?

The research interface for ChatGPT includes three major disclaimers, as follows verbatim:

  • May occasionally generate incorrect information
  • May occasionally produce harmful instructions or biased content
  • Limited knowledge of the world and events after 2021

How can I use ChatGPT for business?

Customer Support

ChatGPT and other chatbots offer immense potential for e-commerce. By leveraging browsing history, purchase records, and other metrics related to a user’s behavior, these chatbot technologies may soon become integral components of personalization engines for e-commerce sites.

Automate tasks and workflows

ChatGPT can manage time-consuming tasks like scheduling meetings, generating event reminders, and responding to emails and reviews.

Search Engine

Although ChatGPT isn’t specifically designed to be used as a search engine, it can be a good tool to start research on a project or generate ideas. It’s important to take into account that ChatGPT is limited to the information it has been trained on, unlike search engines like Google or Bing, which are specifically designed to crawl the web and index information.

Content creation

ChatGPT is a great tool for generating ideas and creating short-form content, including copy for social media posts. Ryan Reynolds, actor and owner of Mint Mobile, recently used ChatGPT to write a script for a commercial using just a few phrases. He called the outcome compelling and mildly terrifying.

Employee training

Employees can use natural language to engage with ChatGPT to get quickly educated on a product or service that they do not fully understand or to get guidance on a unique situation by simply providing some of the key issues they are facing.

What should we look out for next?

Open AI launched GPT-4 on 3/14, 2023. This next generation of GPT may be better at preventing hallucinations, the phenomenon of generating extremely authoritative-sounding misinformation at a rapid pace. The new GPT is a multimodal model and is able to accept both text and image inputs.

What actions do you recommend we take right now?

  • Optimize your in-house content creation with GPT-3. GPT-3 is designed to augment the content marketing industry and is good at writing compelling short-form ad copy, even though everything it writes will be derived from content already existing online.
  • Do not replace existing content teams with ChatGPT technology. Even though it can do incredible things, it is still in essence an elevated form of autocomplete.
  • Plan for the future of online customer service today. ChatGPT was designed to disrupt the customer service industry.
  • Realize that GPT-3 and ChatGPT cannot currently disrupt the digital personalization and paid search industries. ChatGPT is currently limited to the analysis of public web content published prior to 2021, but the possibility for disruption of the paid search industry certainly exists in the future.

The proliferation of data is transforming businesses and public administrations, and changing consumer experiences and society. The European Union has responded to the challenge with the ambitious European Strategy for Data (2020). One of the pillars of the strategy is the creation of common European data spaces in strategic economic sectors and domains of public interest.

Europe’s strategic data spaces vision is the next stage of evolution of data sharing. Rather than happening only within the boundaries of one organisation or through bilateral contractual agreements that are costly to manage and not conducive to innovation, data sharing must scale to multilateral exchanges, including beyond industry boundaries.

Building on the experience of the European research community with the European Open Science Cloud, the European Strategy for Data proposes an additional nine data spaces. Since the EU Strategy for Data also left the door open for other data spaces to emerge, other EU preparatory actions are planting the seeds for the development of data spaces in adjacent domains, such as cultural heritage, language, media, smart cities and tourism.

The key features of data spaces are:

  • Federated technology capabilities that dynamically match data demand and supply in a trustworthy and energy-efficient manner
  • Governance policies and processes for secure, transparent, non-discriminatory and fair participation of every data user and data provider
  • The ability to make good quality, interoperable data available within and across industries, for non-profit/altruistic purposes, for-profit purposes or both, in compliance with EU regulation

Accelerating Data Sharing

The bold vision for European data spaces still has some way to go. IDC’s research on the future of industry ecosystems (subscription required) found that over 90% of public and private sector organisations globally share data with external partners, but only 30% do it in a consistent and strategic manner, instead of only when strictly necessary and mandated by law. Among European governments, only 22% of organisations have established public-private collaborations to share data for the public interest. There are many digital sovereignty, governance, semantic and technical interoperability challenges to overcome to fully achieve the European data spaces vision. Nonetheless, many actions are accelerating the realisation of the vision:

  • European Union grants funding for coordination and support actions, such as DATES
  • Implementation of new regulation, such as the Data Governance Act
  • Implementation of industry-specific European regulations, such as the Commission Delegated Regulation (EU) 2017/1926 regarding the provision of multimodal travel information services
  • Multilateral initiatives, such as GAIA-X
  • Individual country platforms that could then be federated across Europe, such as the smart tourism data platforms being developed by the Italian and Spanish governments
  • Individual countries’ investments in digital sovereign computing infrastructure that can support data spaces

We expect data spaces to be realised through different architectural and operating models. For example, some of them could consist of a set of common standards maintained by a non-profit association, while others could be based on a federation of national data platforms operated by member states’ governments that build ad hoc integrations for cross-border data exchange. They could also be centred on a joint platform, owned by one or multiple large private sector enterprises that operate as the anchor for a data space.

The Role of European Government in Data Spaces

As these architectural road maps and operating models evolve, it’s important that European governments take an active role in influencing the trajectory. Governments can play five roles in shaping the future of data spaces:

  • Regulator. Governments act as policymakers to set the rules (laws, policies, standards, etc.) for deploying, operating and participating in data spaces.
  • Operator. Governments provide the core data space platform services such as onboarding, identity management, data aggregation, data catalogues, data access and billing.
  • Enabler. Governments fund and/or provide data space platform infrastructure such as connectivity, cloud and edge computing.
  • Data providers. Governments supply data to the data spaces.
  • Data users. Governments consume data from the data spaces.

Senior government leaders should not just wait and see for EU-wide regulations and programmes to define the European data spaces road map. They should take a proactive approach to realise the benefits of data sharing by:

  • Evaluating what role they want to play to maximise the benefits for the public sector and to incentivise private sector contribution, while setting the example in terms of protecting personal data, intellectual property and digital sovereignty
  • Working with the private sector to identify priority use cases, business models, governance models and technical blueprints that accelerate deployment in a secure manner
  • Collaborating with technology suppliers and academia to accelerate development of technologies that enable trusted data sharing in federated, heterogeneous environments
  • Collaborating with enterprises and industry associations to prioritise the data space in which it makes sense for governments to take an operator or enabler role
  • Nurturing organisational competencies and culture that foster data spaces

If you want to learn more about the role governments can play and the capabilities they need for data spaces, read our new study (subscription required) and join us at the IDC Government Xchange.

Massimiliano Claps - Research Director - IDC

Analyst Profile
Massimiliano (Max) Claps is the research director for the Worldwide National Government Platforms and Technologies research in IDC's Government Insights practice. In this role, Max provides research and advisory services to technology suppliers and national civilian government senior leaders in the US and globally. Specific areas of research include improving government digital experiences, data and data sharing, AI and automation, cloud-enabled system modernization, the future of government work, and data protection and digital sovereignty to drive social, economic, and environmental outcomes for agencies and the public.

Ways to Make IT Seen As a Customer Focused, High Quality Face of the Organization

Organizations regularly complain about the cost level of their IT department. This is by no means a new phenomenon. At IDC, we continuously assist IT managers dealing with challenging cost reduction targets. I find that these cost reduction targets are often determined bluntly, and IT departments have trouble in demonstrating their true value to the organization.

Run and Change: Commodity and Adding Value

The first step to take is making a well-considered distinction between the ‘run’ and ‘change’ parts of the IT budget. In other words, appreciate the difference between keeping the automation of the organization running and enabling the organization to innovate.

  • The running of the automation should be the subject of continuous cost saving projects and optimization. Regular benchmarks and a fitting sourcing strategy are important tools to optimize this part of your IT.
  • On the other hand, we have ‘change’, the innovation. This is where the strategic added value of IT lives. The added value is often found in software development, allowing for digitization of certain process to save cost in the primary functions of the business or to innovate in other ways, such as bringing new products to market faster.

What Are Other Ways for IT to Shine Within the Organization?

User Satisfaction

Another way to present IT as an adder of value instead of a cost center is through user satisfaction. In nearly every IT procurement project guided by IDC, user experience is a major theme. Key steps to take in improving user satisfaction is through simplifying technology and improving user IT practices. These practices like self-service portals, instructional videos, FAQs, and user training improve user self-sufficiency through automation and education. Our benchmark data teaches us that successful implementation of these practices can have spectacular results on both the service desk workload and user satisfaction rating.

Consider the Employee Instead of the User

After implementing these practices, which many organizations have successfully done, an IT organization has the opportunity to engage the employee to add more value during their time with the organization. Yes, we have now transitioned from user satisfaction to employee satisfaction. After all, a user is more than a workplace account. Cooperation with other supporting functions of the organization, such as human resources, becomes an opportunity.

Employees are motivated by more than salary and vacation time. The feeling of purpose and corporate social responsibility are crucial factors for many employees to really connect with their employer and experience satisfaction in their careers. In the work from home climate that we have experienced since early 2020, this connection is at risk.

“In nearly every IT procurement project guided by IDC, user experience is a major theme.”

The logistical processes of the IT organization can play a cost-efficient role in engaging the remote worker. To supply offices with the right hardware and services, IT knows logistical services such as ‘on-site support’ and ‘IMACD’ (install, move, add, change, dispose). During the pandemic, these services have modified somewhat for some organizations as many workers changed their work location. Especially now, these logistical processes allow the organization to engage their remote workers. Take, for example, the onboarding of new employees. When IT delivers the required hardware, why not integrate with HR and include a handwritten note from the manager and overviews of the company culture and mission. With some real attention and coordination with other departments, IT can deliver a warm and welcoming experience at no additional cost.

In summary, if the cards are played right, IT can be seen as a value adding function instead of a cost center. The logistical processes are already in place to position IT as the customer focused, high quality face of the organization towards the employee. If a transparent dialogue between IT and the rest of the organization about the cost level is also in place, the relationship is bound to become value based instead of cost based.

Despite a seemingly never-ending list of headwinds, the CEO word of the year for 2023, according to IDC’s Study, is “growth.” Many CEOs are expressing an appetite to invest strategically prior to the economy stabilizing and, in some cases, capitalize on having the first mover advantage among their competitors. One CEO we spoke with during our interview series stated: “Investing when money is free and everything is growing is easy, but investing in times where stuff is really tough…you’re probably the only one, but once you get out… [once the economy recovers] you get a bigger market share.”  CEOs are confident that technology is a powerful tool to transform, scale, and optimize businesses. 87% of CEOs stated that they are looking to sustain or increase technology spending in 2023.  

Feedback from 395 CEOs across the globe will help technology vendors understand risks, spending priorities, expectations from the role of the CIO, and expectations from strategic technology partners. More will be discussed in an upcoming webinar.  

IDC’s study shows that there are 4 priorities for the forward-thinking CEO in 2023.  

  1. Remain agile in the face of economic uncertainty by doubling down on digital business initiatives and strategies.  

When asked to identify the three risks that will have the greatest impact to their organization in 2023, CEO respondents pushed economic pressures to the top of the list. This included challenges from both persisting inflation and the looming threat of a potential recession. As many of us wait with bated breath for the soft-landing pledged by central banks, it is still unclear what mid- to long-term impact aggressive quantitative tightening will have on regional and global markets.  

This is perhaps why when asked the same question about risks in two years, the top answer from CEO respondents, economic pressures, does not change. CEOs are evidently buckling up for a turbulent economic time – one that is unlikely to go away overnight. In the face of this uncertainty, many CEOs are implementing agility in their organization’s IT budgeting process. Most CEO respondents have identified macroeconomic scenarios that would result in budget adjustments at some point this year.  

The exogenous nature of economic uncertainty also led many CEOs in our interview series to underscore the importance of focusing on factors within the organization’s control. While the economy is unpredictable, the case for digital business strategies is largely in the hands of the executive team. This was reflected in the second most prevalent risk highlighted by CEOs in the two-year time frame – digital business execution gaps. In other words, CEOs understand investment in digital business initiatives is necessary and that the roadblocks to operationalization severely threaten to impact the organization’s long-term viability. Technology investments are under close watch from the executive layer and the direct connection to measurable business outcomes is non-negotiable. In fact, two-thirds of CEO respondents articulated that a critical technology initiative in 2023 will be focusing on using technology to drive more revenue generating activities.  

  1. Raise the profile of the CIO to a strategic decision-maker 

The role of the CIO must also expand to reflect the strong emphasis on using technology to drive revenue generating activities. In 2023, most CEOs expect the CIO to focus on achieving better business outcomes, improving business agility, and leading DX to create new revenue streams. This does not mean that the CIO should forgo the responsibilities of managing cost and risk. Rather, what it does reflect is that CEOs want CIOs to step beyond an operational focus and help drive measurable business outcomes – whether the target is a financial or quantifiable benefit.    

This elevation of the role of the CIO can be observed in organizational reporting lines. In the 2023 study, well over half of CEOs indicated that their organization’s CIO reports directly to them. In the past, many CIOs reported to their organization’s CFO, hindering a direct connection with the CEO. As organizations become increasingly digitally focused, technology permeates every functional area. It’s in the best interest of the CIO to take this opportunity to collaborate across the C-Suite and orchestrate the use of technology across end-to-end business processes.  

  1. Balance business growth and technology efficiency  

According to IDC’s study, CEOs are prioritizing technology spending on security and compliance, infrastructure and operations, and workplace solutions. While it is undeniable that technology investments are vital to growing a digital business, 2023 will not follow the same lavish spending on technology seen during 2021. 

The downside risk of a major security breach materializing can threaten business critical operations, and the negative press associated with such an event is too great for CEOs to ease up on security and compliance spending in 2023. This spending priority aligns well with the CIO sentiment.   

The interest in infrastructure and operations includes cloud spending, which has been a key foundation to enabling digital business. Whether an organization is developing a mobile application or ecommerce site, or the using SaaS products to standardize, automate, and/or expedite business processes, infrastructure and operations is behind the scenes making these things possible.  

There is however, increasing concern over cloud technology costs. Like many of us are overwhelmed with the cost of subscriptions and utilities in our own personal household budgets, so are the CIOs when planning for and paying the bills for their organization’s cloud consumption. While CEOs are focusing on growth, CIOs have expressed focusing on efficiency.   

A focus on growth and efficiency provides a much-needed balance in the C-Suite. Growing without regard for cost is unsustainable. At the same time, there is a limit to how much you can optimize. Both strategic growth and cost optimization are required for a healthy business.  

  1. Build organizational resiliency with a focus on people and skills   

Over half of CEOs believe that diversity, equity, and inclusion need major improvements, or a complete overhaul at their organization. Mohamad Ali, CEO of IDG discussed in one of our interviews why Diversity Equity and Inclusion is really important. He emphasized that when trying to solve hard problems, the best solutions are often at the intersection of various disciplines. A diverse workforce has a great advantage by offering different perspectives, which is critical for innovation.  

In addition to lived experience that informs perspectives, which in turn drive innovation, the lack of digital skills across the organization, such as software engineers, data scientists, machine learning and AI specialists, were highlighted as the second most pressing challenge for the C-Suite, relating to digital business initiatives. While automation can help augment the work of existing employees, the digital skills gap has been top of mind for many business leaders. In 2023, 39% of CEO respondents indicate that spending will increase on attracting and retaining the best talent and skills.  

The forward-looking CEO knows that people are their organization’s biggest asset. They focus on what they can control by establishing strong executive sponsorship for digital business strategies, while adapting to economic uncertainty, and they move forward seeking opportunities to generate profitable growth.  

Teodora Siman - Research Manager, C-Suite Tech Agenda Program - IDC

Analyst Profile
Teodora is a Research Manager for the Worldwide C-Suite Tech Agenda program. Her responsibilities focus on creating research that assesses technology spending and buyer preferences across the C-Suite. This research covers the emerging trends around C-Suite technology objectives. Teodora’s analysis helps technology vendors, IT professionals, and business executives make informed and data-driven decisions on technology strategy.

In our January leadership strategy blog we shared our top four opportunities to create leverage for real changes with limited investment. One of them was to create a good portfolio insight. In this blog we want to dig a little deeper in how you can create that insight and what it can bring to you.

Segment your portfolio

To direct your IT spending wisely you should segment your portfolio over two (main) angles:

  1. Business Value
  2. Technical Value

By doing this you get four quadrants that allow you to prioritize your portfolio in an objective and defensible manner. This will give you an ideal starting point for explaining the changes that need to be made in the way your application landscape is developed and maintained. As an added dimension you can use the size of the circle to indicate functional or technical size of the application or the number of users or maintenance staff to get a better feeling which application needs the most attention.

Segment your portfolio into four quadrants

When you have segmented your portfolio into four quadrants, these are the logical steps you can take:

  • Applications in the upper right quadrant have a high business value and a high technical value. These applications are fit for purpose and deserve the budget and attention to keep them there.
  • Applications in the upper left quadrant have a high business value, but a low technical value. Here you should focus on how to get these applications to a better technical health to make them really fit for purpose.
  • Applications in the lower right quadrant are okay from a technical perspective, but have low business value. When you don’t want to rationalize them, try to keep the technical health in order with the lowest level of maintenance.
  • Applications in the lower left quadrant have both a low business value and a low technical value. These are the ideal candidates to review for rationalization or a minimization of development and maintenance effort.

How to get the information you need

To analyze your portfolio, we use data on the business value and technical value of your portfolio. When business data is not available, we can do a survey campaign to assess the business value of your applications. Every application owner is asked to complete a short survey about the application, its usage and the importance to your company.

When technical data is not available, we select tooling for you that can analyze the technical value in your own environment which helps you to gain the insight in the technical value of your applications. This tooling is non-intrusive in the sense that the tool results don’t contain any direct insight in the software that you are using gain your competitive advantage.

Take a closer look

Especially in the yellow quadrants you might want to take a closer look at the technical value of your applications. The selected tooling gives you the opportunity to look at certain aspects that can guide you to take more detailed action. For instance:

  • Agility
  • Security
  • Resilience
  • Cloud readiness
  • Open Source vulnerabilities
  • Use of Personally Identifiable information (GDPR risks)

We can also help you take a closer look at the business value by segmenting applications into categories of similar functionalities to see if you have options to de-duplicate some business functionalities.

Within weeks we can give you the portfolio insight you need to make guided decisions on how to spend your budget most wisely to avoid unnecessary risk or to use your IT resources optimally to support the business.

Make better decisions, faster with IDC Metri’s data driven insights in our IT Intelligence portfolio.

Learn More

As more organisations embrace hybrid working, the security challenges of a decentralised workplace are becoming increasingly clear. Implementing a robust IT security strategy and using the right products and measurable KPIs will boost security capabilities and minimise risks, bringing huge value to your organisation. Secure by design is the way forward.

The best practices for secure file synch and sharing in hybrid working environments include:

  • Evaluating risks in a hybrid working environment 
  • Enabling secure file synch and share from anywhere (zero trust)
  • Unifying your security through a simple, integrated platform (single pane of glass)
  • Educating your workforce to embrace secure work practices

Evaluate Risks in a Hybrid Working Environment

This is key to making sure the data and information sitting in the files that employees are synchronising and sharing are secured and safe. To evaluate the risks, organisations need to look at four main aspects:

  • Physical: Employees use PCs and probably personal devices such as mobile phones and tablets that may have access to the organisation’s systems. Organisations need to evaluate how these devices are secured in case of theft. For example, when employees are working outside the organisation, unauthorised people shouldn’t be able to access the organisation’s system, sensitive files and information.
  • Technical: Digital files can be stored on the organisation’s servers, in the cloud and on employee devices. Organisations need to deploy solutions that ensure secure access, synchronisation and transmission of files and data. Organisations need to take a holistic view when analysing their whole IT infrastructure and environment to make sure it has no security gaps. Organisations report that around 4 in 10 internet break-ins occur despite a firewall being in place. So, relying solely on encryption and firewalls is not enough if all elements — such as access control and authorisation — are not secured. While some companies enable employees to use personal devices to access internal resources, these devices create significant security risks because there’s no formal process to verify that they are updated and maintained. The solution is continuous, 24 x 7 monitoring of these devices to identify malicious behaviour and respond instantly to mitigate the damage. 
  • IT support: Cybercrime has boomed since the pandemic. Organisations need to evaluate the breadth and quality of their IT support and their IT personnel capability and availability to react to security threats, especially for employees working outside the organisation firewall. Hybrid-working employees are more vulnerable to security risks, and time is usually critical with these security threats.
  • Business procedures and access to files/data: The main purpose here is to identify vulnerabilities and gaps in the workflow where potential risks are higher. To do this, the focus needs to be on how work gets done and by whom rather than on where work gets done. This must go hand in hand with finding ways to ensure data, applications and resources security without affecting the workforce’s efficiency and productivity. This also means it’s critical to assess what type of data/files employees have access to, what devices and applications they use, and what vulnerabilities exist in their environment so that organisations can implement the right controls to react in time. For instance, if employees are accessing protected data stored in the cloud for collaboration purposes, then using multifactor authentication to authenticate user access, VPNs to encrypt traffic and downloading security patches are highly recommended to tighten security.

Enable Secure File Synch and Share from Anywhere (Zero Trust)

An increasing number of organisations are digitising their workflow processes and using the cloud to facilitate and support hybrid working so that employees can work from the office, home or remotely. File and data access, synchronisation, sharing, storing and transmitting are key functionalities that hybrid workers need for their job, which means the number and size of such files and data in electronic format are rapidly increasing. To ensure the highest security measures in such environments, organisations need to implement zero-trust policies — the best way to address the challenges associated with digitisation, the cloud and hybrid working.

Also, implementing the principle of least privilege and ensuring that employees only have access to the data they need to complete their day-to-day jobs is critical to ensure that data doesn’t fall into the wrong hands.

Zero trust assumes that everyone is not trustworthy at the beginning of any action. This means the system performs proactive and automatic authentication to check authorisation before granting access to any application, process or database. In addition, the authorisation status is continuously validated while applications and data are in use. So, the main aim of zero trust is to implement strong identity verification and device compliance validation. It also helps organisations to comply with both internal and external regulations, simplifies the auditing process and enables much easier compliance.

Organisations need to accept that cyberattacks can be successful, and prepare schemes and solutions for effective recovery. Siloed data and processes are the major obstacle to zero trust, so organisations need to make sure everything is under the umbrella of one solution.

Unify Your Security Through a Simple, Integrated Platform (Single Pane of Glass)

It has never been more important to unify the security of organisations’ network environment, IT devices and workers:

  • Cybercrime is on the rise. Since the pandemic, organisations have made greater use of the internet and this has led to a significant increase in cyberattacks, which are now more sophisticated and pose a bigger threat year on year.
  • Organisations are increasingly using information technology and the Internet of Things.
  • Organisations are increasingly challenged by an over-abundance of IT products.
  • Security is becoming embedded everywhere.
  • Managing IT security in hybrid-working operating environments is becoming much more complex and challenging.
  • There is a growing lack of visibility in organisations’ end points.
  • IT and security need to work together to ensure employee productivity and efficiency.

Unification should aim to have end-to-end visibility of the whole IT environment. With a unified cybersecurity platform, organisations can protect data and resources across public, private, hybrid and multicloud environments with end-to-end visibility.

One of the major benefits of unification is that it provides everything that security personnel need in a single interface to help them effectively and efficiently protect employees, systems and assets. Another key benefit is related to cost efficiency because a unified security platform is less expensive to acquire and maintain than individually integrated and proprietary solutions. Organisations with unified security solutions can do more with the current IT staff, which is essential with many organisations facing a shortage of skilled IT workers.

With a unified security environment, organisations will benefit from a more secure environment (across public, private, hybrid and multicloud environments with end-to-end visibility) where all security needs are integrated and aligned by design into all aspects of the organisation’s IT infrastructure, business processes and security strategy.

Educate Your Workforce to Embrace Secure Work Practices

One of the biggest challenges that comes with remote working is ensuring that employees are security conscious when working outside the office — for example, whether they’re downloading all security patches, maintaining devices with antivirus/antimalware solutions and selecting strong passwords.

Security tools alone can’t fully protect the organisation if human behaviour is not also addressed. This means that if employees are not adequately trained on and implementing basic security practices at home, then there will inevitably be a much higher security risk.

Employee security awareness and education is probably the most overlooked and underestimated aspect, despite it being so critical. Reports show that about 8 in 10 cases of file/data loss are caused by employees inside the organisation.

It’s essential that organisations:

  • Educate and train the workforce to embrace secure work practices and make sure employees are aware of the threats of file and data loss
  • Deploy and enforce security policies and make employees accountable for any non-responsible behaviour and actions

 

Further reading:

Secure by Design: File Sync and Share for Hybrid Workplaces

Future of Work: Strategies for the Flexible Work Experience

How Dropbox Makes Asynchronous Work

Why a “Back to the Office” Strategy Will Fail (And Work Will Shift to a “Digital HQ”)

IDC FutureScape Webcast: Worldwide Future of Work 2023 Predictions

Work Automation and Digital Skills — A European Future of Work Perspective

ESG has become more than a buzzword: it is now an imperative for any organization to infuse sustainability into every part of their organization. Vague promises and “checking off boxes” are no longer enough to meet stakeholder expectations and to take adequate action on the most pressing environmental and social global issues. There is plenty of empirical evidence that operationalizing on organizations’ most material issues can not only enhance their risk profiles and lower their cost of capital, but also increase their operational efficiency, improve innovation potential, and help attract and retain new talent. In short, raise organizations’ enterprise value. Doing good for the planet and society and doing well financially do not have to be an “either/or.” In fact, for the most sustainably advanced organizations, they go hand in hand. 

The Foundation of ESG Value Creation 

IDC assesses organizations’ sustainability-related maturity across four dimensions: sustainable business and IT strategy, technology use, organizational adjustments, and the operationalization of these strategies. All four are critical in themselves but even more powerful when addressed together, as their combined power is required to allow organizations and industries to truly transform themselves toward more sustainable business models. We currently see organizations spread out across various maturity levels. Apart from the few most advanced organizations, most companies are currently somewhere between setting their sustainability targets and identifying material issues, getting their ESG reporting right, and (at least from an aspirational perspective) moving from reporting to considering ESG information in their operational decision making. According to IDC’s survey data, nearly 30% of organizations worldwide have embedded sustainability into their business model and overall strategy.  Improvements in operational efficiency, improved brand perception/customer loyalty, and improved employee engagement have been named the most frequent benefits in value creation as a result of ESG initiatives. 

The Growing Importance of Social Sustainability Topics 

While addressing climate change through decarbonization and energy efficiency measures remains one of the top priorities for organizations’ sustainability initiatives, the scope of topics addressed is broadening. Many organizations realize that their industry specific, material ESG issues can be very multi-faceted and complex, and they often time include several environmental issues (e.g., circularity, biodiversity impact, water efficiency, etc.) and social sustainability topics (DE&I, human rights management, community impact, etc.).

Recent IDC survey data shows that social topics in particular are growing rapidly in importance. This includes human capital topics, such as DE&I and employee safety, but also social capital topics that extend across value/supply chains, such as community impact, customer well-being, modern slavery, and child labor. Tracking some of these issues has been difficult due to a lack of visibility and accountability; and making lasting improvements can be even harder. But with the help of new technologies, such as advanced supply chain software, tackling these issues will be more feasible and enable organizations to address their ESG issues more comprehensively. 

Leveraging IT for Sustainable Transformation 

This brings us to the final section of this series overview: the role that IT plays in enabling sustainable transformation. While corporate sustainability strategies are typically formulated at the executive level, involving IT early in the strategy formulation process, and developing an IT strategy that supports the corporate mission is critical. Data is at the heart of any sustainability initiative. Once sustainability goals and objectives are established, organizations need access to data to baseline performance in key sustainability areas, develop metrics to monitor and manage ongoing performance, and report corporate sustainability metrics to internal and external stakeholders.   

While reporting and compliance mandates drive much of the need for sustainability data today, operationalizing this data and embedding it in ongoing business operations will ultimately enable organizations to drive business value beyond reporting and compliance purposes. For many organizations, however, collecting the data needed to support sustainability initiatives, and ensuring the quality of the data represents significant challenges. By engaging IT early in an organization’s sustainability journey, an effective data management strategy can be developed that allows companies to analyze sustainability data and produce actionable insight for key decision makers.  

As forward-looking organizations start viewing sustainability as a lever for driving business value, there will be a range of use cases in various functional areas of the business that will rely heavily on digital technologies. A few examples of technologies used for sustainability purposes include: blockchain technology for tracking and tracing components and materials across the value/supply chain, digital twin technology for sustainable product design, and AR/VR for predictive product support. As an organization’s sustainability ambitions evolve over time, so will their need for IT to support those ambitions.  

This IDC Blog post is the first in a series of sustainability research content which will explore how organizations can create business value through ESG, the rise of social sustainability, and the need for IT to enable sustainable transformation. For an overview of IDC’s sustainability/ESG research, our global analyst team, and more complimentary content, please visit IDC’s sustainability research showcase. 

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Bjoern Stengel - Sr. Manager, Data & Analytics - IDC

Analyst Profile
Bjoern Stengel is IDC's global sustainability research lead. His research focuses on how environmental, social, and governance (ESG) topics impact and shape business strategies and technology usage. He provides insights into market opportunities, adoption strategies, and use cases for sustainability-related technologies and services. Bjoern helps IDC's clients understand the impact of technology-enabled, sustainable transformation processes in the context of sustainable business strategies, operations, and products and services through research reports, news publications, and speaking engagements at industry events such as Climate Week NYC.

German Chancellor, Olaf Scholz said in January that the government had successfully fended off the economic crisis, while the country’s minister of economy also addressed the extreme adaptability of German firms making it possible to avoid the worst scenarios. These statements strike a much more positive tone than those in October when negative growth was forecast for the German economy for 2023.

The panic over energy supplies has eased – at least for now – and the general outlook has significantly improved in the Germany, Austria, and Switzerland region (DACH) over the past 4 months. However, it remains clouded by some serious risks as the storms of disruption continues to rage above Europe. Organizations must remain cautious and stay focused on data to evaluate evolving risks and opportunities.

Business Risks are Hiding Behind Short-Term Improvements

The Russia-Ukraine War marks a critical economic and geopolitical turning point for Europe and the rest of the world – and the functioning of ICT markets has not escaped the impacts of the conflict.

Relying heavily on Russian gas, the DACH region has become particularly vulnerable to the increasing energy prices. Although the governments of Austria, Germany, and Switzerland reacted quickly to ensure energy supply for the winter months, the complete independence from Russian energy products is yet to come. Governments will have to consider that rapid escape from reliance on Russian gas may contravene with climate ambitions on the short term​, therefore reducing energy demand and increasing energy efficiency will need to be in focus.

Although forecasts have been revised upwards during the past months, the latest data still indicate a major economic slowdown for the DACH region in 2023. Germany is expected to grow just 0.2%, while the economies of Austria and Switzerland are projected to see 0.5% growth. These numbers can easily go negative if geopolitical conflicts escalate or there is another major outbreak of COVID-19 in China, for example. Indeed, our Future Enterprise Resilience Survey found that more than 90% of German organizations expect recession this year.

DACH experienced the highest inflation in decades in 2022, and price increases are expected to weigh on households and businesses in 2023 and beyond. Switzerland is the only country in DACH, and one of only two countries in Europe, expected to keep inflation under 2% this year.

Labour shortage will be another major factor impacting IT budgets, while the lack of digital skills within the organization may hinder the completion of digital initiatives. Easing supply chain bottlenecks and declining transportation costs reduced pressures on some of the previously constrained sectors, such as automotive manufacturing, but the possibility of further supply chain disruptions cannot be ruled out.

How is the ICT market impacted by these headwinds and how should businesses approach weathering Europe’s storms of disruption?

Shifting Focus on Tech Investments

Despite volatile market conditions, ICT spending in the DACH region is expected to rise 4.9% this year and 6.4% over the 2021–2026 period, exceeding the European average. However, IT plans have been impacted. Organizations are reshuffling their investments, focusing on technologies that can sustain the growth in uncertain times, reduce costs, improve performance, optimize processes, enhance customer experience, and nurture talent.​

Our identified the following key areas to drive ICT spending in the DACH region:

  • Artificial Intelligence: AI’s tremendous potential to improve customer experience, enable new employee experiences, mitigate skills shortages, and transform the workplace is driving rapid adoption. Augmented human resources, image processing, fleet and freight management will be among the top 10 use cases related to AI. According to IDC’s Worldwide ICT Spending Guide: Enterprise and SMB by Industry, spending on AI platforms will grow an outstanding 46.6% in the DACH region during 2021–2026.
  • Security: The rising frequency and sophistication of cyberattacks are keeping security a top investment priority. Annual spending on security in DACH is growing faster than the European average and is expected to exceed $18.5 billion in 2026.
  • Cloud: Investments are expected to more than double between 2022 and 2026 as organizations continue migrating workloads and data to the cloud to boost cost efficiency, flexibility, and customer satisfaction.
  • Internet of Things: IoT is a critical element of cost reduction, process optimization, and improved performance. Steady, double-digit growth in IoT spending is expected into 2026, with investments related to electric vehicle charging, advanced payments and shopping growing fastest.

Apart from these, enterprise infrastructure, managed services and project/professional services are additional areas where DACH organizations indicated they would continue their investment pace.​

IDC’s Recommendations

Planning the IT budgets and identifying technologies to support growth in these uncertain times is extremely difficult, especially without having the right skills and partners to complete digital initiatives. In response to the current era of uncertainty, industries are embracing transformative new trends and technologies. Adapting to these transformations, being use case-centric, and placing the right bets for growth will be essential to keep afloat and continue delivering value.

 

IDC can help technology vendors stay resilient, competitive, and generate revenue during turbulent times. We offer the following assets to support organizations’ needs for precision planning:

  • IDC Trackers enable organizations to assess their competition and their position by analyzing technology markets, vendor shares, and forecasts.
  • IDC Black Books provide extensive market overviews to help organizations position their products and services for the appropriate audiences.
  • IDC Spending Guides enable organizations to find strategic opportunities according to industry, company size, use case, and geography.

Contact us for more information about how IDC data products can help business leaders target, plan, and execute their most important strategic initiatives. We provide analysis of 100+ countries, 120+ technology markets, 20 industries, and 400+ use cases.

As the digital development of enterprises globally begin to move from the digital transformation (DX) era to the digital business era, the government of China unveiled its plan for the country’s digital development. This further clarifies their goals for China’s overall digital development, sharing for the first time their framework of “2522”, complete with guarantees of implementation. The timely release of this plan, which also sets China’s development goals for 2025 and 2035, will help cope with the current economic downward pressure and safeguard the accelerated development of China’s digital economy. The Plan is expected to greatly promote industrial users’ DX and the development of digital businesses and provide huge business opportunities for ICT vendors.

Building the Road to Digital China

  • Implement new development concepts, accelerate the fostering of new development paradigms, and focus on promoting high-quality development.
  • Balance development and security, strengthen systems and worst-case scenario thinking, and enhance the overall layout of the plan.
  • Follow the strategic path of solidifying the foundation, empowering the whole system, strengthening capabilities, and optimizing the environment.
  • Improve the integrity, systematic approach, and collaboration in the construction of a digital China, and promote the deep integration of the digital economy in the real economy.
  • Drive the transformation of ways of production, living, and governance with digitalization to inject strong impetus into the drive of advancing the great rejuvenation of the Chinese nation on all fronts with Chinese modernization.

2025 and 2035 Development Goals

The Plan sets out to implement 13 key goals in two phases targeted to be completed by 2025 and 2035, respectively. These goals define the pattern and lay the foundation for the construction of Digital China, and are designed to be more reasonable and coordinated developments across all aspects to strongly support the building of a modern socialist country.

Layout

The construction of Digital China will be laid out according to the framework of “2522”, which provides a directional guide for the development of the economy and society, and makes a clearer plan for the future of China’s digital economy:

Guarantees of Implementation

Efforts must be made to strengthen the overall planning, coordination of progress, and execution of all tasks. Specific guarantee measures will focus on five aspects:

  • Strengthening organizational leadership
  • Improving institutional mechanisms
  • Ensuring investment
  • Strengthening talent support
  • Creating a good atmosphere.

Moreover, the Plan specifies that efforts must be made in building digital China as a reference for the evaluation of relevant Party and government leading officials, which guarantees the implementation of the Plan from the aspect of KPIs.  

The Plan’s Positive Impact on the China ICT Market

  1. The Plan further highlights the value of digital technologies and strengthens the ICT industry’s development confidence. For the first time, the Plan proposes the promotion of the in-depth integration of digital technology with economic, political, cultural, social, and ecological progress. The Plan will help China promote a stronger digital economy, develop an efficient and coordinated digital government, build a digital culture with confidence and prosperity, create a digital society featuring inclusiveness and convenience, and shape a green and intelligent digital ecological civilization.
  2. Faster than expected growth in digital infrastructure business opportunities, as well as big data and AI. In November 2022, the China National Development and Reform Commission issued a report on the development of China’s digital economy, which puts forward a plan to moderately deploy digital infrastructure construction in advance to lay a solid foundation for digital economic development. This Plan reaffirms the need to remove the barriers to balanced development of the digital infrastructure across the country and accelerate the construction of infrastructure such as 5G networks, gigabit optical networks, IPv6, mobile Internet of Things (IoT), BeiDou Navigation Satellite System, and national computing network to synergize east and west. The Plan also proposes to promote the big cycle of data resources, accelerate the aggregation and utilization of public data, unleash the potential value of commercial data, speed up the establishment of a system of property rights for data, carry out research on data asset pricing, and establish a mechanism for the participation of data elements in value distribution by contribution.
  3. Digital sovereignty continues to be refined and deepened, and the cybersecurity market continues to grow rapidly. Digital sovereignty and cybersecurity are becoming increasingly important as the losses caused by geopolitics and insecurity intensify. The Plan sets forth to strengthen cybersecurity and data security and improve the data governance ecosystem and systems. It clearly proposes to improve laws, regulations, and policy systems related to cybersecurity, effectively maintain cybersecurity, enhance data security assurance capabilities, establish a basic system for hierarchical and classified data protection, and perfect the system for network data monitoring and early warning and emergency response with the aim of building a trusted and controllable digital security barrier.
  4. The Plan promotes international cooperation and opening up to achieve win-win results and benefit the global deployment of Chinese ICT vendors. The Plan specifies to coordinate international cooperation in the digital field by establishing a system of international exchanges and cooperation with multilevel collaboration and support, and multi-entity participation; build a high-quality Digital Silk Road; and actively develop Silk Road ecommerce. China will expand international cooperation in the digital field, actively join digital cooperation platforms under the multilateral frameworks of the United Nations, the World Trade Organization, the G20, APEC, BRICS, and the SCO, and build new high-quality new platforms for open cooperation in the digital field.  

Learn more about the IDC China Digital Business Strategies research on the impact of government policies on digital business and the ICT market. Talk to IDC experts today.

Lianfeng Wu - Vice President - IDC

Analyst Profile
Mr. Wu Lianfeng, the Vice President and Chief Research Analyst of IDC China, has more than 25 years of experience working in the IT industry. Since joining IDC in 2000, Mr. Wu has extensive research and consulting experience in the areas of overall ICT market, vertical industry market, Internet and new media, smart connected devices, software and service outsourcing, digital transformation, digital economy, and emerging technology, among others. In recent years, Mr. Wu has been leading IDC China's digital transformation research and event. In 2017, he started to build the CXO circle excellence club, the vision of which is to help industry CXOs transform from good to excellent. Mr. Wu holds monthly offline activities and publishes daily articles that focus on digital transformation: business trends, technology trends, industry trends, organizations, and people role trends. Mr. Wu also worked with IDC global analysts to lead China's annual ICT direction forum and Top 10 Predictions (IDC FutureScapes) forum, providing industry forecasts of the latest development directions and business opportunities. At the same time, Mr. Wu works with a team of analysts to explore and discover new research topics and build thought leadership in the ICT market. Recent research areas he has delved in include Future of Work (FoW), Future Industry, Smart City, and DevOps, among others. Mr. Wu is also a guest speaker in all kinds of top ICT summit, CIO summit, and industry digital transformation summit. He gives nearly 50 speeches every year, which greatly promotes the application and development of digital technology in the industry. Prior to joining IDC, Mr. Wu worked with China Academe Launch-vehicle Technology (CALT), China Hewlett-Packard Co. Ltd., Jardine Pacific (JOS) Information Technology Co. Ltd., accumulating 9 years of working experience in the field of IT and telecommunications. Mr. Wu holds an MBA from the University of International Business and Economics in Beijing, a Master's degree in Engineering from China Academy of Launch Vehicle Technology, and a bachelor's degree in Engineering from the University of Electronic Science and Technology.

The IMF has warned that half of the European Union and a third of the world face recession in 2023. This means that economic headwinds such as energy costs and currency fluctuations are forcing organisations to reassess budget decisions.

In our recent Future Enterprise Resilience and Spending Survey (December 2022), IT leaders said they expect inflation to impact spending decisions. IT cost price increases stemming from inflation and currency changes is expected to have the greatest impact on IT spending plans in 2023.

C-suite concerns are related to IT and technology challenges. In our Worldwide C-Suite Tech Survey (August 2022), 60% of European C-suite concerns about the impact on their IT and digital spending was related to challenges coming into sharper focus as macroeconomic conditions worsen. This includes IT price increases stemming from inflation.

So how can tech vendors navigate these issues and thrive?

Planning Is the Foundation for Success

According to research by the Harvard Business Review, companies that not only survived recessions but thrived afterwards were those that were prepared and agile — those that didn’t just slash costs but invested strategically.

Strategy is essential to know where to plan resources, to determine which projects you are going to prioritise and which you are not, and to know how you are going to identify and target the opportunities that will give you the best return.

Download eBook: Essential Building Blocks for an Effective Growth Strategy

A good strategy should help you align with business conditions, so that you can be agile enough to deliver short-term savings without impacting long-term growth.

Informed Decisions

Data becomes more important in volatile and uncertain economic situations. Economic conditions can impact regions and industries differently. Knowing the factors that might impact the market(s) you are selling into is crucial.

Those who are buying tech is changing, with European tech spending moving from the IT department to the C-suite. In Europe, 47% of IT spending is now C-suite funded (source: IDC Worldwide IT Spending Guide: Line-of-Business Forecast, January 2023, European forecast).

Download eBook: Speaking the Language of the C-Suite: Selling Beyond the IT Department

This is an example of how data can give you insight into your customers and how they are buying. Knowing who is buying, where they are spending and what is impacting spending decisions will help you build an effective strategy.

Data-supported decisions are key to effective resource management both internally and externally.

This means you need to know who is buying in your market. Which markets or industries are more resilient? What are their drivers and challenges?

Adapt and Invest

Times of economic uncertainty can also be a time of possibility. Microsoft, Instagram and Airbnb, for example, were all formed during or just after a recession.

Technology is an area where businesses tend to continue or increase spend. 66% of European C-suites believe that IT budgets will increase, even during an economic downturn (source: IDC Worldwide C-Suite Tech Survey, August 2022).

According to our Digital Executive Sentiment Survey (October 2022), European organisations now expect more than 50% of their revenues to come from digital business models on average in the next three years.

Technology is often seen as a critical business differentiator to better deliver business outcomes, increase resilience and accelerate revenue growth. So while caution may continue while the economic outlook is uncertain, investments in projects that improve efficiencies are continuing. According to the Harvard Business Review, prioritising digital transformation and digital technology can help cut costs and improve efficiencies.

In an economic downturn it can be harder to achieve growth, as you have to do more with less. It can also be harder to get customers to spend, so you must ensure that you are targeting the opportunities with the best chance of success.

But there are opportunities. So what you do and where you allocate resources becomes increasingly important.

You need results. To be proactive rather reactive, but still agile enough to pivot to changing market conditions. An effective strategy is essential to that.

Visit our website for more information on how we can help you build for growth.