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Since we last reported on IT inflation in June, the situation has evolved as both buyer and supplier behaviors have adapted to the new reality that inflation is most likely here to stay.  The reasons for the price increases may be changing, as well as the areas of IT most impacted, but navigating rising prices for IT supplies, services and talent remains a challenge as we finish 2022.

Hardware

“Technology buyers have now had a full budget year to adjust to the reality of rising costs.  What began initially as COVID-related supply chain disruptions coupled with COVID-related demand for remote work technologies soon erupted into huge price increases for key IT components such as CPUs, storage, and cabling,” says Chris Murphy, VP for IDC’s vendor benchmarks.  Looking back into the Summer of 2021, this was the start of the first IT hardware increases lasting into first half of 2022, a period with 20% price increases on client devices and 15% on servers, storage, and networking respectively, as vendors could no longer absorb rising component costs which kept prices relatively stable from the start of the pandemic early in 2020.

Now entering the Fall of 2022, our review of hardware list pricing history and recent transactions with customers show that hardware price increases have been minimal. Stability of hardware prices is a positive trend but not a full correction to the normal price dynamics of hardware in which prices decline as a hardware generation ages. Much like used cars holding their value, the cost of technology as measured by performance or capacity is stable. Last year’s hardware offerings continue to sell for roughly the same price this year, with newer generation hardware costing more, therefore upgrading hardware with newer technology still costs more that pre-COVID. The net effect is that IT budgets are still being stretched by the cost of hardware. Stable prices are an improvement from earlier this year, but a hardware market without price decreases is still out of the ordinary and costing technology buyers more of their IT budget.

Software

Unlike hardware, software costs are not influenced by supply only by demand. During the height of the pandemic, key software categories led the transformation to remote work, leisure and learning and price became no object for many technology buyers who needed to enable these solutions. As the market moves past COVID, software vendors in most categories have found a way to extend user acceptance of higher prices. The race to subscriptions is accelerating and many vendors have discovered new ways to influence conversion like requiring a subscription over perpetual licensing for portability to the cloud. Annual subscription terms cost up to three times higher than a software maintenance renewal, and therefore subscription conversion provides vendors in most cases an automatic increase in annual revenue from a customer.

Subscription licensing and its outgrowth into PaaS and SaaS-based implementations shifts pricing power to the vendor. A user can no longer waive support and continue to use their perpetual licenses or seek out a lower cost third party software support provider. Vendors who have wooed customers into their PaaS platforms with low cost or free services to create applications and integrate their data, are now capitalizing on the “stickiness” created. Users can no longer separate and shop for the most economical hosting options for infrastructure.  Renewal discussions have a clock that runs in the vendor’s favor and comes with poor choices for migrating to any near-term alternatives if discussions fail to achieve user goals.

For these very reasons, private equity interests have accelerated their push into software.  Large conglomerates Broadcom and the newly formed Cloud Software Group (Citrix/TIBCO merger) will continue to capitalize on user software technology setups that are difficult to abandon, and these conglomerates are trying to make it even more complicated to negotiate on price by creating bundles and dependencies between solutions to achieve the best pricing.  “Recent customer experiences show flat installed base renewals running up to 400% higher in price among these conglomerates, and that will incent the investors of these conglomerates to further tailor price extraction methods and find more acquisition candidates to move to their umbrella,” says Neil Stewart, a Senior Research Director in IDC’s Sourcing Advisory Service.

Even those software vendors not part of a large conglomerate realize that the environment is ripe for raising prices whether it is just feeding off the bandwagon effect of the conglomerates, the expectation of future inflation or the resignation among users that software will cost more. Most software historically has around a 3-4% annual increase in price at renewal, increases are not new, but in 2022 software vendors are pushing this range to 6-10% price increases.

Labor

AWS recently raised consulting day rates by 7-8%, Adobe increased pro-serve rates by 20% and plenty of more examples exist as the cost to deliver professional services continues to rise due high demand for this service and a corresponding critical IT skills shortage. Will demand for these services continue or is the knee jerk reaction to build the new post COVID technology infrastructure that is now nearing completion. Recent rounds of layoffs within the high-tech community may alleviate labor shortages, but their focus will be on internal operations. The security or Kubernetes expert is expected to remain in high demand.

Infrastructure as a Service

Following both general component price declines and increasing operational efficiencies gained by hyper scaling, cloud computing services have a history of average decline in price. This trend downward in price eased late in 2021 to where we are at present with most of the cloud providers now enacting price increases across their offerings as they are not immune to higher component, labor and energy costs no longer have as steep of an efficiency curve as their businesses have matured.

Advice to Technology Buyers, Can You Wait?

This very well may be “peak market” from a technology cost standpoint, no category hardware, software, labor nor services is immune to increased cost. Being selective on new installations, expansions, renewal terms and projects conserves limited IT budgets and acts as a hedge that markets work in cycles and buying conditions may become more favorable soon. Instead of doing a storage upgrade now while storage controllers are scarce and generally reserved for new installations, wait, and buy a complete storage replacement later. 

For software, finding savings might be trickier as software vendors are having their moment to shine with higher prices, but besides working closely to optimize usage to spend, many users are shortening renewal terms from 3 year to 1-year terms. This protects cash flow and bets that windfall price increases seen at present will not last if the economy changes for the worse as forecasted, making next year’s renewal more favorable to the buyer. This can be a risky move as 1-year terms can cost up to 30% more than locking into a 3-year term, but today’s market shifts the focus to the short-term given the mixed outlook that may bring relief to today’s exorbitant pricing, so why lock in large price increases now?

Our advice for professional services is similar, demand is still high for these services but there is plenty of good reasoning pointing to a return to a normal spend on digital transformation projects without the accelerators brought by recent macro trends. Thus, slowing down the implementation of new projects or waiting until next year when the labor market offers more availability may benefit IT budgeting.

For many if not most technology buyers using a cloud first approach, IaaS remains a runaway cost item.  Accurately forecasting cloud consumption costs is a daunting task, and the first step to controlling costs is identifying costs by investing in spend management tools that specialize in the cloud. Incentivizing internal users to be cost efficient, using cloud optimization tools to buy spot instances, scaling resources to avoid costly overprovisioning will help, but one of the clearest ways to save is to keep an open mind to all possibilities. “We have seen moving some workloads back to on-premise or managed off-premise infrastructure result in savings of one-third the cost of running equivalent workloads in the cloud,” say Freddie Diaz of IDC’s Sourcing Advisory Service. In fact, many vendors now offer robust hybrid cloud solutions that still offer the flexibility of the cloud but reside on-premise (i.e. Dell APEX, HPE Greenlake) and we find these solutions priced well below the equivalent cloud solutions and only 10-20% more expensive than a traditional on premise capital purchase.

For more information and guidance on IT spending, IDC’s Sourcing Advisory Services provides clients with the world’s leading price benchmarking service supported by a core team of sourcing experts who help IT buyers drive new savings and efficiency across any of their technology purchases & partnerships, spanning all categories across IT hardware, software, services, and labor rates. Click the button below to access IDC’s Sourcing Advisory Services.

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Brian Clarke - GVP, Research - IDC

Analyst Profile
Brian Clarke, Group Vice President of IDC's Pricing Evaluation and Sourcing Advisory Services, is responsible for managing a global portfolio of research services examining the value of information technology equipment, software and services. Mr. Clarke developed several innovate research practices and tools that bring an understanding to complex and ever changing pricing structures resulting from digital transformation. Mr. Clarke consults on pricing and financing strategies to IT manufacturers, and reviews purchasing, contracts and provides deal analysis to technology buyers. Recent projects include helping software vendors evolve from perpetual to cloud based pricing, and providing technology buyer's with guidance on how to measure and compare on premise costing with cloud and other utility-based solutions.

Retail has undergone a huge transformation in the past few years. It’s also still under pressure from external forces and changing buyer behaviour. With buyers changing how they shop and why they shop, retailers need to ensure that their brand purpose aligns with their customers and enhances their internal operations. At the recent IDC Retail Summit, IDC analysts and industry leaders got together to discuss how retailers can operate in a purpose-led world.

Watch IDC’s 2022 Retail Summit on demand here.

The Need to Bridge the Gap Between Online and Offline Retail Experience

The pandemic has forced many changes in retail and now, with offline beginning to expand again, retailers need to bridge the gap between expectations created by online experiences.

Customers are used to a certain experience online, and this can cause friction between their online experience and their experience in brick-and-mortar stores. Technology can help bridge this gap, bringing aspects of the online experience such as personalisation, rewards and speed into the offline experience.

A huge part of bridging this gap is identity management. Identity management isn’t just about security. As digital shopping experiences pick up, retailers can gather more and more data on buyer behaviour. Customers and the way they buy are changing quickly. Understanding who your customers are and how they are buying is important to ensure your company can adapt to a changing buyer.

Digital Transformation Needs to be Practical

Digital transformation is a key part of retailers’ development, and is key to bridging the gap between offline and online experiences and communicating and demonstrating brand purpose. But with all change, it must be effective. Technology that is implemented must be useable and easy to adopt, for employees and customers. Incremental changes that bring value without too much disruption are ideal.

Technology can be a bridge between stores, HQ and employees. Implementing technology as part of digital transformation can help break silos in retail organisations and drive innovation and collaboration by streamlining processes. It can empower teams in stores by giving them information and connecting them to the wider team. It can provide HQ with real-time store data and ensure that teams that work in all parts of the retailer work together effectively and efficiently. Collaboration and communication are vital. When introducing new programmes, tech or functionality, being able to communicate why is important across the organisation. Retailers’ key personas and employees need to understand business priorities but also feel that changes are there to help them and build towards achieving their goals and brand purpose.

Brand Purpose Impacts Everything from Buying Decisions to Employee Productivity

Purpose is becoming increasingly important to brands, but especially those in the retail sector. Customers are becoming more conscious of the social, ethical and environmental impact of the products they buy, and purpose is now part of many customers’ buying decisions.

Customers have expectations for a brand or company experience, not just for the retailer itself but for the whole supply chain. While some of those expectations might not be realistic, retailers have to ensure that their brand purpose is as much a part of their messaging as product information.

Brand purpose is also important for employees. A clear brand purpose that aligns with the products sold is effective in both recruitment and in creating a strong company culture. A strong company culture impacts productivity and improves the customer experience. A company purpose that reflects the core values of your staff and products is now crucial.

Purpose connects value for retail optimisation. It defines the what, the why and the how of a retailer’s business, and it is one of the most influential connectors for retail proceedings and a powerful facilitator of operation and process optimisation.

Retailers are operating in a shifting environment. Purpose is key to ensuring they continue to align with their customers. It also promotes internal coordination and the drive towards an aligned and connected organisation that delivers value. It enhances performance and creates value. This is why, of all the topics discussed at IDC’s 2022 Retail Summit, purpose stood out.

For more information, please watch IDC’s 2022 Retail Summit on demand here. For more insights and key takeaways from the summit from IDC Retail Insights analysts, see Retail Operations in a Purpose-Led World: Key Insights from the IDC European Retail Executive Digital Summit 2022.

For more on our coverage of the retail sector, please visit our website.

Agile development empowers teams with many benefits but also presents challenges around managing and measuring its effectiveness. The way to resolve these is Function Point Analysis.

From business impediment to business enabler, IT development has come a long way since Agile has become the favored practice. Now empowered with speed and responsiveness, organizations have left the days of slow, cumbersome, inflexible, and unresponsive practices behind in the dust. Instead they’re able to support business needs and experience better alignment with changing business environments better than ever before.

It’s easy to understand why Agile is experiencing a strong increase in adoption; as companies become more nimble to embrace the pressures they’re facing in digital transformation, IT development is able to respond aggressively to evolving competitors and exploit markets more easily. But these benefits rival the frustrations on the management side of Agile teams. The nature of Agile makes it so that IT has lost visibility and scope control while the business has lost predictability. While Agile might make teams fast and responsive, businesses don’t know when projects will be delivered, and quality of delivery is often poor.

This is due to story points. Story points is a relative and subjective effort measurement that allows teams to estimate how much work of a certain item is required compared to a certain reference story with a fixed number of points. Story points can be used as an assessment method within a team. But how do these points happen? In an Agile Scrum environment, productivity is often associated with delivered story points, often expressed in Velocity as an estimation unit. The problem is that story points are not standardized, and productivity based on story points means nothing outside of a team itself. Even within a team, story point deflation is always lurking.

Is it even possible to objectively measure productivity? This blog will show that using a ratio scale is the way to objectively measure productivity as proven by IDC Metri’s years of helping clients turn around this common challenge. Management information can be established through a ‘unit of measurement’, bringing answers to long-sought after questions such as which teams are performing well, which teams are not performing so well and when is which functionality ready at what cost?

If you want to use productivity to compare teams, departments, organizations and/or suppliers, or the market, it’s a necessity to use a standard measure of output. Even when this data is about trends on your teams, this insight creates a unified and common view.

For years IDC Metri has been offering function points to create this factual view to clients. Function point analysis was developed in the 1970s to determine the productivity of development teams when it was impossible to do this by counting lines of code. By making function point analysis independent of the technical implementation (programming language, architecture, etc.) and the development method (Waterfall, Agile, etc.), it’s also relevant today and fits into the solution that Agile teams and management need to resolve the challenges that story points create. In short function points are the de-facto standard to express the amount of functionality in a standardized size unit.

Several manual standards are available and one international ISO standard is available for automated function point analysis: ‘Automated Function Points (AFP)’. IDC Metri prefers to use automated measuring of functional size but also employs certified analysts who can manually measure when automated measuring is not possible for whatever reason.

To measure the size of the output of a team, it is also important to not only look at the added functionality but also at the changed and removed functionality. IDC Metri uses automated measuring of ‘Enhancement Function Points (EFP)’ to measure how much functionality has been added, changed and/or removed during a sprint, release or project. This gives the ‘Project Size’ in EFP, a standardized method to measure the output of a sprint or release.

While Agile is hard to measure and manage for full value, the IDC Metri proven approach of using function points transforms a team-driven, fast-moving, rapid iteration process that evaluates progress on qualitative measures into something that can be quantified and predicted.

I recently attended a tech vendor conference and an analyst from another company presented on how we should all be “customer obsessed“. This set me thinking in a Carrie Bradshaw (from Sex in the City) kind of way: is customer obsession really a good thing?

When I think about obsession, I think about Glenn Close in Fatal Attraction, boiling bunnies and doing other strange non-functional things. The Clint Eastwood film Play Misty for Me is equally unsettling.

Google defines obsession as “a persistent disturbing preoccupation with an often unreasonable idea or feeling” which is consistent with the above observations. Meaning, too much focus on one thing can severely damage everything else. For example, former British Prime Minister Liz Truss’ obsession with her growth agenda revealed a lack of balanced thinking that had calamitous consequences.

Balancing the Books

There are good reasons why the most important financial statements are “balance sheets” and “profit and loss”. They are designed to show a balanced, objective and factual view of the business performance and viability. There is no room for an emotionally charged item such as “customer obsession” in these documents.

The most famous management framework of the 1990s was Kaplan and Norton’s “Balanced Scorecard”, which suggested good management is about balancing the needs of four constituents:

  • Customers
  • Finance
  • Internal staff and process management
  • Innovation and learning

Jim Collins’ extensive research on top performing companies in the book Good to Great revealed that “success comes from many tiny, incremental pushes in the right direction”. Richard Branson gleefully puts customers second in importance, putting his own staff in first place.

The old idea that “the customer is always right” has thankfully largely been debunked. The customer is sometimes right, but not necessarily always. As Steve Jobs said, “It’s not the customer’s job to know what they want.” Henry Ford famously said of the Ford Model T car’s success: “If I had asked people what they wanted, they would have said faster horses.”

Conformance to Customer Requirements Is Key

As any quality manager will tell you (spoiler: I used to be a quality instructor), quality is about conformance to customer requirements, not about customer obsession. Really listening aggressively and taking customer requirements seriously and then harnessing the power of your organisation to deliver on those requirements is the real trick to customer experience and customer success.

Contrary to what some corporate executives may believe, this success does not come overnight by announcing that you are a customer-obsessed company. Actions (and investments) speak louder than words. You need to be fully committed to customer experience (CX) for the long term to build an end-to-end customer-centric organisational culture. This is how Amazon and John Lewis have created powerful and successful brands that are synonymous with excellent customer experiences and customer service.

Since its founding in 1999, customer success has been one of the five Salesforce “core values” (the other four being trust, innovation, sustainability and equality). This is Salesforce’s “Balanced Scorecard”, which is customer centric, not customer obsessed. This balanced customer focus has enabled Salesforce to surpass SAP as the world’s leading enterprise software applications company — despite SAP having a 27-year head start.

The Bottom Line

I can understand the allure of the customer obsession idea. Some might believe that the customer obsession phrase will differentiate their CX from their competitors in an “ah, look, this proves our CX is better” sort of way. I believe the opposite is true.

Customer obsession puts a dangerous false expectation of primacy in the mind of the customer, pressure on customer-facing staff to bow to unreasonable customer demands and the opportunity for competitors to heap derision on your well-meaning intentions.

My advice: Customers don’t want to be obsessed over, so don’t creep them out with a feeling of unhealthy over-attentiveness. Seek to serve them better, not obsess over them. Keep a laser-beam focus on customer requirements, CX and EX (employee experience) and leave the idea of obsession on the film set or on the perfume counter. Build customer-centricity and customer success into your mission, vision and values and then operationalise your execution, using technology and positive employee attitudes and senior management support as your key enablers.

 

For more information, please contact Gerry Brown, or head over to https://www.idc.com/eu and drop your details in the form on the top right.

Bauma is one of the world’s biggest trade fairs for construction machinery and mining machines. It takes place in my hometown, Munich, and this was my first visit to the show. I was very impressed. Not just because there is a lot of very big construction machinery, but also because digitalisation is happening there. In this blog post, I will briefly share my key takeaways on digitalisation (in particular) and sustainability (in passing).

Digitalisation Is All About Utilising Machine Data

When it comes to digitalisation, construction machinery manufacturers are primarily concerned with harnessing the data generated during the use of their machines. For example, data can be used to automatically generate reports on how accurately special drilling machines have drilled the holes. This is particularly relevant when there are specific documentation requirements. Data can also be used to remotely monitor machine condition and performance in visualised dashboards.

Data-Based Services: Still Only a Moderate Share of Revenues

I asked manufacturers about customers’ willingness to pay for these data-based services. Their replies were mixed, as it strongly depends on the investment volume and the costs incurred in the event of a machine standstill. The competitive situation also plays a role in whether customers simply expect these data-based services as an add-on free of charge. My general impression is that the share of revenues accounting for data-driven (connected) services is still fairly low on average, but there are exceptions.

The Drivers of Investments in Data-Driven Services Are Most Likely Not the Customers

Interestingly, it’s often not the client itself that drives investments in data-driven services, but rather the client’s customers or other stakeholders. In road or tunnel construction, for example, it’s often the clients who demand that certain drilling documentation be available. Or financial stakeholders who demand the use of data-based machinery monitoring services.

Lack of Skills

Software is becoming an increasingly important component of every machine. It’s quite a challenge for manufacturers of large construction machines to meet the demand for the necessary software skills. It seems these manufacturers are seen more as large plant and metal manufacturers and — compared with smaller industrial machinery manufacturers — less so as potential employers for programming talents.

From Egosystems to Ecosystems

While machine manufacturers are promoting their own digital platforms — such as Herrenknecht (which manufactures tunnel boring machines, and its Herrenknecht.Connected customer portal) and Liebherr (one of the largest construction machine manufacturers in the world, and its MyLiebherr portal) — the longer-term goal seems obvious: connecting all those different machines via a single data communication standard. This makes a lot of sense. In factories and construction or mining sites where there are different machines it makes sense for the construction machine industry to agree on a common data format for machines from different vendors.

Communication Standardisation — Still a Long Way to Go

Machines in Construction 4.0 (MiC 4.0) is a working group in the German Mechanical Engineering Association (VDMA) whose goal is to develop a uniform, cross-manufacturer and machinery-independent communications form for the entire construction process. I believe there is still a lot of work ahead as it’s not just about communication among construction machines on sites — it’s also about ensuring secure connections from the edge to the cloud, which, from my perspective, would also require collaboration with cloud hyperscalers such as AWS and Microsoft or cloud-based IoT platforms and connector providers.

Sustainability Drives Investments in Electric Vehicles

A lot of vendors were exhibiting products with electric motors. This is driven by the need to develop construction machines that generate fewer CO2 emissions. Besides cutting emissions, electric vehicles are also low maintenance and are quieter than vehicles with combustion engines. This makes them suitable for low-noise areas such as near hospitals and at construction sites in the city.

 

For more information, please contact Stefanie Naujoks, or head over to https://www.idc.com/eu and drop your details in the form on the top right.

ICT Governance – Does the New Environment Mean You Need to Make Changes?

Thursday 27th October 2022 17:00 CET

Recent IDC research shows that ICT Governance is a growing area of concern for Digital Leaders. New facets such as API, IoT and data governance are expanding becoming recognized as business issues. The success of ICT governance – making the right decisions at the right time – can, increasingly, make a huge difference to the success of the whole organisation. The concepts of Agile and Pervasive Governance should be part of your thinking and be incorporated urgently into your organisation. In this session topics we expect to cover are:

  • Is your current governance structure really fit-for-purpose?
  • Given the importance of IT in the future of your organisation are the right people involved in your Governance processes?
  • How do you really build an agile pervasive governance structure?
  • Do you really need to change anything or are sure your processes are right?

Are Business Process Discovery Tools Worth the Cost and the Effort?

Thursday 24th November 2022 17:00 CET

Every business initiative needs a solid business case. Back in the day when businesses grew by intuition rather than by design there was scope for experimentation and IT had to “catch up” and provide the systems to match the processes that were already in place.

In this session we will look at the rise of tools discover how your organisation actually works and can serve as a template for the changes that should be made to obtain the best business return.

In this session we expect to discuss:

  • The reality of using business process tools,
  • The impact of tools on business agility and successful ROI,
  • The challenges of implementing these tools and the changes they imply to the way the organisation functions.

Web3, The Metaverse and the Bight Distributed Future. Why It Really Is Something to Consider Today, or Maybe Not?

Thursday 8th December 2022 17:00 CET

Will going to work as an avatar be any different from a video meeting today. I cannot imagine going back to purely voice calls for my meetings with clients – will we feel the same in a few years about being present in the Metaverse?

From a business perspective how could a distributed economy where commerce has moved into the virtual world change your organisation? Is there going to be an advantage to being a first mover in your industry? How do you explain the importance, or lack of importance, of this area to you less digital knowledgeable collegues?

In this session we will discuss the how we should approach this topic:

  • Developing a presence in the Metaverse – is it a priority?
  • Are Web3 wallets and apps going to survive hype, regulation and cyber-crime,
  • Managing the complexity increased distributed data,
  • The security, sovereignty issues around the use of these technologies?

 

We hope you will join us.

 If you already receive invitations to our sessions, I hope to see you there. If you would like to join this community, please email us at mdowd@idc.com.

 

https://www.idc.com/eu/digital-leadership-advisory

https://www.linkedin.com/groups/8992748/

We were delighted to host the third quarter IDC Digital Leadership Think Talk of 2022 on September 29. Around 40 digital leaders from across Europe joined the call to share their challenges, successes and experiences of data and how it is managed within their organisation.

Marc Dowd and Tracy Keeling from the IDC Executive Advisory team led the discussions.

All About Data

At the start of the session, Marc Dowd set the scene by asking the audience to think about how they manage data access, secure data as it is transferred, manage data cleansing, data integrity, duplication, building data culture, and how to align the business and IT with data.

Our first CIO contributor explained that you need a data glossary as well as a data catalogue as everyone will have a different definition of what they believe data is and what it involves. Secondly, it is important to have a clear view of the data types, including human and machine created data, and how to manage it via stewardship.

Another contributor described how they had also used data journey maps to show where data comes into or is generated by the organisation and how it is transformed and stored as live or archived and allocated ownership to the people closest to the data mainly within the business. This helps them to manage the difference with dealing with your own data versus external data, which may have to be given back to the owner in some cases or returned to you by the vendor at the end of a contract if moving to another product.

Ownership and Management

This sparked a lot of comments from other CIOs on the call — one spoke about democratization to give bounds to data by starting with regulatory rules and GDPR, then you can decide who can have access, how they can access it, and how long it should be kept.

Our next contributor, from the government industry, responded to the question on whether data stewardship is an IT function or business function.

They compared IT to a car leasing company that provides the asset with a set of rules. It is up to business owner to drive the car (or use the data) in the way they want. This was reiterated by another member who mentioned the exception — that machine-generated IoT data, by far their biggest source, is managed by technical teams.

A further comment was around data management in government. One CIO felt it depends on the size of the organisation and that it should sit in IT, but only if the organisation is not too large. If it is a private sector organisation, they felt it was best to push ownership towards the business side, with business ownership of the quality of the data. IT could then manage the system side of where data sits and flows.

Another member from the pharmaceutical industry explained the segregated model they use. One area was where they have a local person who is responsible for data from local trials, while a central team provides governance and IT provides the infrastructure for it to demonstrate and manage its integrity.

Practical Examples

The discussion then moved towards practical examples. We discussed low code/no code and how data was managed within this. Although they worked differently to standard applications, the participants agreed they still need system architects to create a reliable system.

An example of this was an AI low code/no code chatbot solution for doctors. Another contributor highlighted the complexity by explaining that they can consume data from 25 different sources. The healthcare business stakeholders were responsible for the quality of data and set up content checkers to ensure that what the doctors created was understandable.

Another CIO said they asked an important question before they created the data — do they really need the data they intend to collect or create? Once you have established what you need and why it is important, you have to check the quality of the data. The example discussed was around automated systems that are taught about relationships between entities and how to eliminate bias in algorithms for better quality data. Another person mentioned the need to have independence in the process and diversity in the people designing/reviewing algorithms for automatically generated data.

The conversation continued, demonstrating the wide range of data management strategies and use cases. The exchange of information demonstrated the value of these meetings and the value of peer conversations and experience.

Moving to Best Practices

One contributor talked about how they started their data journey with a small step. For example, if you are exploring data mesh or data virtualization, it is best to start with PoC in one region. If successful, you can productize across the whole company with a business change champion to face off to other areas of the business.

To achieve better data governance, you could either “blame” the risk compliance teams, etc., to get business to develop and stick to data governance rules (stick), or you could also explain to business the value they will get from smart use of data (carrot).

Another idea discussed involved getting line of business leaders to “sell” the data initiative to the rest of the organisation, then go back to IT to provide the tools. Sometimes, the result is that too many business-focused colleagues will ask for access — but that is a good problem to have.

Marc Dowd asked about approaches to governing the demand pipeline for data work, prompting several responses. One was if the business becomes super excited about new data streams, etc., you need a steering committee to prioritise data investments based on business return. Some contributors had set up monthly reviews with a data governance board and an executive committee making the final decision.

We discussed the “carrot or stick” approach and which one the contributors used in their businesses. The biggest “stick “is regulatory, often requiring a separate analytics platform gathering data from many systems, including people and machine generated data for compliance.

Just as important, even for the quality of data and even if there is a big “stick”, is that business users need to understand the value of the exercise, with one comment with a quote from Simon Sinek’s work to “repurpose the why”.

It was felt that leadership needs to understand that data-based decisions are better than pure intuition and be informed enough to know all measures are in place to trust the data. And they need to spread that belief throughout the organisation to promote data as an integral part of business operations.

As we ended the session, it was clear that the challenge of data was difficult as it involved not just the creation and journey through the organisation, management, and storage, but also the challenges around ownership and corporate culture to make data interesting and engaging to optimise its management and use to create insight.

The IDC CIO Advisory team would like to thank everyone who came to the call for their input. It is always inspiring to hear from those working with data challenges across the business. We hope this session was valuable and provided many takeaways for you.

Our next session will look in more detail at ICT governance — Does the new environment mean you need to make changes? We will be looking at new trends such as Agile and Pervasive governance.

If you already receive invitations to our sessions, I hope to see you there. If you would like to join this community, please email us at mdowd@idc.com.

 

https://www.idc.com/eu/digital-leadership-advisory

https://www.linkedin.com/groups/8992748/

What is Good Content Marketing?

Good content marketing engages your target audience and compels them to move along your buyer journey. It is not enough, however, to simply produce a lot of content. In fact, 80% of content that is created, is not consumed. A strong digital content marketing strategy needs to consider how to provide relevant and personalized content to the end user, with a goal of driving more leads and shortening your sales cycle.

To see success with digital content marketing efforts, it should have the following traits:

  1. Quality content that establishes your credibility as a brand
  2. Conveys thought leadership within your industry
  3. Appeals to your market at every stage in their journey: explore, evaluate, and purchase

The problem is, many B2B marketers are encountering common agitations with their digital content: not seeing enough traffic and not generating enough leads, it takes a long time to develop quality content and it’s a challenge to prove its effectiveness.

“Without orchestration, customer interaction is “noise”.”

Laurie Buczek, Research Vice President, CMO Advisory Practice, IDC

“80% of content that is created is NOT consumed.”

Jason Cunliffe, – Group VP, Content Marketing Services, IDC

How to Create Compelling Marketing Content That Converts

Your content must provide a unique perspective on your business, industry trends and challenges. Quality content that is steeped in research and offers a level of personalization, not only establishes your credibility as a brand, but delivers on your buyer’s needs and becomes a strong demand generator. Make sure that your content strategy addresses the specific concerns of your target personas, and is delivered in various, high-production digital formats. One way to ensure your content marketing plan provides the research your buyers are in search of, is to capitalize on the market intelligence and insights that IDC’s content marketing services can provide.

Download: A New Framework for B2B Marketers and Sellers

The Most Effective Content at Each Stage of the Buyer Journey

IDC’s 2022 B2B Tech Buyer survey studied buyer communication and content preferences and behaviors at each stage of their journey. It’s clear that today’s buyers are embracing interactive content but also expect a blend of physical and digital experiences.

Why IDC Content Marketing Services is the Right Fit for Tech Vendors

IDC’s marketing content is research-based and provides your target personas with the market intelligence they’re looking for online. We support your content marketing strategy and help you stand out with data-driven insights from the most influential tech analysts, worldwide. For greater flexibility and speed to market, our content can be licensed or, you can select customized content that focuses on the value that your business delivers to its end users and elevates your thought leadership.

IDC’s Campaign Content Bundles Engage, Nurture and Generate Leads

IDC research-based assets provide relevant information to engage and educate your target audiences in support of your initiatives through the stages of the buyers’ journey. We have created three bundles, that can fill your content calendars quickly and easily, with content your buyers are searching for online.

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IDC Fuels your Digital Marketing Campaigns with Content that Performs

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At IDC, we have been talking about the micro and macro-economic environment and classifying them as the winds of change. We talk about the headwinds associated with the pandemic, skills shortages and supply chain constraints coming at organizations. What we saw only one year ago, however, is that these headwinds were offset by tailwinds, which we saw as consumer demand, government stimulus and the drive to become a digital business. This is not what we see today.

When the winds of change become storms of disruption

Today, we are faced with record inflation, a tumbling stock market and an economy teetering on the brink of a global recession. These winds of change are coalescing into one big storm of disruption. Given this storm, it is critical for you to think about your planning in three periods, this year.

  1. Near term. Tech vendors need to help your customers slice through the storms of disruption, especially since their traditional IT cost cutting playbook is a lot different in as “as a service economy”.
  1. Mid-term. We believe companies will continue to invest in digital throughout the recession, but there will be a shift in what they invest in as they focus on scaling their digital business.
  2. Long term. We are seeing a fundamental change to the way the global economy is being shaped and the way technology is being used to support the digital economy. It is critical for tech vendors to understand this future and navigate your customers through it.

Near term planning: slicing through the storms of disruption

The big question on everyone’s mind is the economy. The US economy shrank in the first half of the year. However,  we are at a 50-year low for unemployment. But, purchasing power of those wages has decreased as inflation hits a 40-year high.

During this time, we have been tracking enterprise buyer sentiment globally, especially as it relates to IT spending. IDC’s latest global Future Enteprrise Resiliency Survey (FERS) shows 72% of tech buyers and decision makers believe there will be a recession in the coming year; the majority believe the recession is beginning now or will take place in the first half of 2023, with many tech leaders in North America believing we are in a recession right now.

It does not matter whether or not the National Bureau of Economic Research declares a recession, because  the perception of tech buyers becomes our reality. If tech buyers believe a recession is coming, they will act rationally to adjust their tech spending to align with an anticipated drop in revenue.

The extent to which tech buyers decrease their IT spending will depend on how severe they perceive the recession will be. According to IDC’s latest FERS data, 55% of enterprise tech buyers believe there will be a moderate recession that will last 6-9 months. But this sentiment varies by region:

  • North American buyers tend to be most optimistic with one third anticipating a mild recession
  • Asia Pacific buyers tend to be in the middle of road with 60% anticipating a moderate recession
  • Western Europe buyers are most pessimistic with 30% anticipating a severe recession

Based on this current outlook, we have run a downside scenario for Worldwide IT Spending in 2023. In this scenario, IT spending is expected to grow 4% in 2023, compared to our current forecast of 6.3%. Our research shows buyers are not planning to make wholesale cuts across all tech categories. Rather they will be selective about where they cut.

We believe previous recession playbooks will not be as effective as technology increasingly becomes sold and delivered “as a service” and used to drive digital business models.

In the past, the playbook consisted of 3 key maneuvers:

  1. Delay capital expenditures by extended PC and infrastructure upgrades
  2. Cut labor costs, especially contract staff
  3. Delay the launch of new IT projects by a year

Why won’t these maneuvers have the same impact in an “as a service” and digital economy?

  1. While enterprise will delay capital expenditures, it will not have as much of an impact as more of the IT budget is made up of operating expenses via “as a service” contracts. In fact, a recession could drive organizations towards more OPEX-based infrastructure expenditures sooner than they had planned, as they seek alternatives to potential CAPEX budget cuts.
  2. Organizations are less likely to cut labor as there continues to be a skills shortage, especially around security and digital skills. Our research shows 42% of organizations increased their use of contract labor to address shortages in labor.
  3. Delay the launch of new IT projects by a year. As technology is more closely tied to digital business goals like new revenue streams, organizations will only cut those projects with the lowest business impact. For example, a manufacturer may keep their connected products project because it is tied to 2023 revenue stream. But they may delay a project to experiment with the metaverse in their augmented maintenance program because the business impact is not clearly defined.

What tech suppliers can expect in 2023:

  • Enterprises will increasingly set up and utilize IT FinOps teams to optimize cloud spend. According to our Cloud Pulse survey, 2/3rds of organizations report they are overspending on cloud by 30% or more.
  • They will renegotiate XaaS contracts to embed price certainty. For example, they may negotiate a 4-year contract, as opposed to 3 years, to lock in the price or the price increase.
  • They will eliminate SaaS tools that provide redundant functionality. For example, if they have both Zoom and Teams, they may eliminate one.
  • They will reprioritize their open projects with the lens of short-term business impact.

Don’t miss similar blogs, where we discuss the recession on tech markets, planning and how to scale digital business.

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Related Reading:

  • Technology Strategy Research and Insights: Ms. Whalen’s international team of 1,100 analysts leverage research and advisory services to empower business transformation for the Global 2000, and counsel technology suppliers on creating effective offerings for the digital economy. Meredith Whalen (idc.com)

  • IDC’s Guide to market sizing in an overheated economy:  Download our free guide to help you build a resilient strategic plan that helps you respond faster to change.  

Meredith Whalen - Chief Research Officer - IDC

Analyst Profile
As IDC's Chief Product, Research & Delivery Officer, Meredith Whalen leads the company's global product, research and data, and delivery organizations. Under her leadership, IDC delivers cutting-edge intelligence to the world's leading technology vendors, enterprises, and investors as they navigate the evolving AI economy. Meredith sets the strategic direction for IDC's global analyst community, shaping research methodologies and agendas that generate industry-leading data and actionable insights to drive high-impact business decisions. With more than 20 years at IDC, Meredith has been a catalyst for some of the company's most transformative initiatives. She founded IDC's Industry Insights and Tech Buyer business units and pioneered the industry's first comprehensive business use case taxonomy. She also led the creation of IDC's DecisionScape methodology-a strategic framework that empowers organizations to better plan, implement, and optimize their technology investments. A recognized thought leader and sought-after speaker, Meredith regularly delivers keynotes at major global technology events and advises senior executives on the trends shaping the future of business and technology. Meredith holds a B.A. with honors from Wellesley College and an MBA with honors from Babson College's F.W. Olin Graduate School of Business.

The energy transition is gaining momentum as utility organizations aim toward net zero emission goals. The power sector has large influence on the energy transition as utilities and power companies continue to build out additional renewable and distributed energy resources energy resources and environmentally clean paths to electrification. Utilities and independent power producers are making significant investments to diversify their energy portfolios, and consequently these investments will force the energy industry as a whole to vastly improve its digital capabilities.

Related Reading: IDC Perspective: Utilities and Oil and Gas Sectors’ Initiatives and Strategies to Thrive in the Energy Transition

The utilities and power sector produce some of the highest CO2 emissions across the globe. The energy transition: the movement away from fossil fuels and the investment in renewable and cleaner forms of energy, has put utility and power companies under scrutiny, but it has also put these companies in a position to lead in efforts to reduce global CO2 emissions and establish a cleaner future for the energy sector.

Distributed energy resources will play a huge role in the efforts towards net zero emission for the utility sector. The proliferation of distributed energy resources (DERs) globally has spurred investment and research and development (R&D) efforts in creating innovative technologies that can enable utility distribution networks to manage dispersed and cleaner forms of energy in the most optimal and economical manner. Distributed energy resource management systems (DERMSs) are becoming essential software offerings to help manage the power grid.

Related Reading: IDC MarketScape: Worldwide Distributed Energy Resource Management Systems 2022 Vendor Assessment

In addition to the continued growth of utility connected renewable energy resources such as wind and solar farms, utility distribution operators are now being challenged with growing number of customer-owned DERs that can impact their utility footprint such as rooftop solar, battery storage, and electric vehicles. The expansion of DERs along with the environmentally conscious choices electric customers pursue in the ways they consume, produce and, in some cases, sell excess energy back to their utilities to participate in wholesale and distribution-level power markets is changing the traditional centralized utility system model to one that is more complex, customer driven, and decentralized.

Electricity end users and utility customers will be key in advancing the energy transition and further developing the DERMS market. Currently, one of the fastest-growing DERs is rooftop solar. Rooftop solar plus the ability to effectively manage energy storage will be a cornerstone for any DERMS.

Related Reading: IDC Survey Spotlight: Utility Industry Insights from the IDC Worldwide Energy Transition Survey, 2022

Electricity customers’ participation in the energy transition can be driven by being incentivized to own DERs and participate in clean energy utility programs which can increase the impact on demand response and the increased adoption of electric vehicles which in turn will drive growth and contribute to the inevitable need for DERMSs.

Keep in mind a DERMS is not a one-size-fits-all product. Every utility, distribution system operator, DER owner, operator, and market participant will have their own unique set of needs and circumstances as it relates to distributed energy resource management. Many utilities may be at vastly distinct stages of maturity from a technology and distributed energy resource market penetration standpoint. Utilities will need to understand immediate needs and also be able to forecast and have a vision for future obstacles and challenges in managing DERs. Most DERMS offerings are built to be flexible and can be bought in modules, providing buyers the option to purchase what is needed now and for the near future while having the opportunity to purchase additional modules that may become more important down the line. The trends and evolution of the energy transition, growth in DERs and DERMs will be interesting to track and analyze with the utility and power sector as focal point in the world’s progress toward a cleaner energy future.

For more content that dives into the technologies that are responsible for progressing the world toward a cleaner tomorrow, watch the video, “Energy Insights: Utilities”. Click the button below to watch the video.

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John Villali - Sr. Research Director - IDC

Analyst Profile
John Villali is a Senior Research Director for IDC Energy Insights, primarily responsible for thought leadership in the area of digital strategies for the energy and utilities sector. Villali has an impressive background in power, natural gas and oil markets. Villali's expansive experience within the energy industry allows him to provide superior market insights by having first-hand experience understanding the needs and ambitions of energy industry customers. Villali's areas of expertise and focus of his research include: power, natural gas and oil supply, demand, and fundamental drivers of price, commodity trading risk management, transmission congestion analysis, energy sector digital strategies, demand management and demand response, energy policy, generation, transmission, distribution, asset valuation, asset performance management, energy storage, renewable energy, distributed energy resources and the energy transition. BACKGROUND Villali's skillsets stem from a deep history in the North American power and natural gas markets. That experience has given him the ability to expertly evaluate and communicate the intricate challenges that face the energy industry today. Previous to working at IDC, Villali worked as a Principal Consultant, with a concentration on global wholesale and retail power markets at DNV-GL. Before his time at DNV-GL, he was Head of Americas Power at Thomson Reuters, supporting their Commodities and Energy division. Villali has additionally held senior energy industry roles at other prominent businesses such as: Cambridge Energy Research Associates (now part of S&P Global), RWE Trading Americas, Genscape (now part of Wood Mackenzie), and the Science Applications International Corporation. EDUCATION/INDUSTRY ACCOMPLISHMENTS Some of Villali's energy industry accomplishments include a vast practice and study of wholesale power market fundamentals, integrated electric resource planning, statistical analysis of electric utilities generation output, and the impact of renewable energy and demand-side management (DSM) on global electric power markets. Villali has extensive experience building energy market analytic products for commodity traders. In his time at Thomson Reuters Villali and his team were awarded the Energy Risk's Innovation of the Year for creating and launching a Brazilian wholesale power market trading tool. Villali's educational background includes a Bachelor's Degree in Economics and a minor in Sociology from the University of Massachusetts at Amherst.