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The ongoing general crisis due to geopolitical events such as the Russia-Ukraine war, skills shortages, and recession has increased prices and, consequently, inflation in Europe.

Improving energy efficiency (47%), reducing energy demand (41%), electrifying energy loads (34%), or investing in renewable sources and production (32%), are, among others, the main actions European organizations are taking to limit the impact of rising energy prices, according to IDC EMEA, FERS Survey Europe, Wave 11: December 1 — December 10, 2022 (N=363).

There is hardly any sign of a slowdown in the accelerated cloud adoption seen during the 2020 crisis. However, organizations are now realizing that cloud costs and assessing IT’s role in meeting an organization’s sustainability-related targets are rising in priority.

Only 8% of European organizations stated that they are not wasting money in the public cloud, according to the IDC European Multicloud Survey, 2022 (N=1,077). With ever-increased cloud costs and waste and greater concern about sustainability credentials, organizations are keen to embrace FinOps and GreenOps. Both solutions are connected to reducing cloud costs and IT’s carbon footprint.

What Are FinOps and GreenOps?

FinOps

We define FinOps as a cloud discipline that enables users to maximize business value and achieve financial excellence while aiming at improving teams’ collaboration, transparency of cloud costs as well as optimizing cloud resources. Optimizing cloud use can contribute to reducing a company’s carbon footprint and help cut cloud “waste”.

GreenOps

GreenOps is defined as an operating model that integrates the technologies, techniques, and business practices designed to maximize efficiency in the cloud while reducing environmental impact. It optimizes resource usage with better cooling, greener building materials, and smarter control systems, which are fundamental in datacenters.

A common GreenOps and FinOps capability is the optimization of cloud resources through right-sizing. GreenOps practices include switching off resources during idle hours, choosing a region that utilizes renewable energy (e.g., the Nordics), developing energy efficient architecture for workloads, or using cloud-native solutions (e.g., event-driven, serverless technologies), but also implementing heat and water re-use as well as improving waste management.

Why Are FinOps and GreenOps Important?

Both FinOps and GreenOps will become increasingly important as companies look for concrete ways to control cloud costs, deliver innovation, and contribute to ambitious sustainability-related goals. Indeed, reducing operational costs is one benefit of GreenOps, as well as the capability to attract both consumers and businesses that are increasingly interested in purchasing green brands with strong environmental, social, and governance (ESG) credentials.

FinOps and GreenOps strategies will also enable cloud vendors to build and empower their digital trust with customers. In conclusion, costs and carbon footprint reductions are the challenges that European organizations are facing in this current macroeconomic environment. Only through a deep collaboration with cloud vendors can they embrace FinOps and GreenOps and then compete and keep their business running.

Join us on Wednesday, January 25, 2023, at 11am GMT, when IDC will discuss the new European cloud trends in 2023 and beyond, including trends and opportunities around FinOps and GreenOps.

Consumer electronics, as illustrated at the recent International Consumer Electronics Show (CES), is increasingly about experiences rather than just devices. This mirrors IDC’s new approach to consumer market research where coverage is aligned with lifestyle or experience categories rather than with device silos.

IDC still covers gaming, wearables, phones, tablets, PCs, AR/VR and the smart home as deep dive subject matters, but IDC’s new Future Consumer research practice uses a framework in which consumer experiences (comprising devices, services, business models, and more) are broken down into eight categories. These categories are Entertainment, The Home, Travel and Dining, Personal Mobility, Money, Shopping, Lifelong Learning, and Wellbeing. These categories were reflected, to different degrees, in the floor plan organization of CES, which took place in Las Vegas during the first week of 2023. The LVCC North Hall, for example, featured exhibits categorized as Digital Health, Advanced Mobility and Fintech (although Fintech was poorly represented).

Entertainment, The Home, Personal Mobility, and Wellbeing were dominant facets of CES vendor exhibits. On the other hand, consumer experiences enabled more purely through services such as Travel and Dining, Money, Shopping, and Lifelong Learning were not well represented on the show floor.

Entertainment

Entertainment experiences at CES included the obligatory large flat panel television screens featuring the latest display technologies and highest resolutions. However, whereas televisions dominated the central hall booths of leading consumer electronics vendors in years past, in 2023, television was part of a much broader story of connected devices and experiences. Most of the large consumer electronics vendors pushed various smart home solutions as hard, or harder, than they pushed the next generation of large-screen TVs. So the Entertainment category featured a diverse range of consumer devices and services. Perhaps featured most prominently were gaming and the Metaverse.

Unfortunately, the designated Metaverse area of the show floor featured relatively lackluster demos that likely did little to convince CES attendees that the fully touted potential Metaverse experiences are anywhere close to coming to market. But various VR headsets and VR gaming experiences (notably a key focus for Sony), offered a more near-term incremental step toward a more robust and all-encompassing “Metaverse” experience. Microsoft featured gaming, along with its Surface tablet, but, along with other large exhibitors, failed to put forward a story that tapped into the growth of consumers as content creators.

Sony was a notable exception and specifically called out creators as a key customer segment with a selection of Sony tools, solutions, and devices ranging from entry-level for the beginning content creators to high-end for the advanced and professional creators. Sony articulated the notion of a technology roadmap of products that creators could use as they gain experience and demand more sophisticated content creation results. IDC believes it is a missed opportunity that other vendors did not mirror Sony’s focus as independent content creation continues to grow as a key facet of the consumer entertainment market.

IDC’s Consumer Market Model (CMM) forecasts demand for independent content subscriptions will grow to over 3.7 billion users worldwide in 2026.

The Home

Whereas in past years, entertainment devices seemed to dominate CES, in 2023 the torch was arguably passed to the smart home. Smart home experiences were highlighted throughout the LVCC Central Hall in the large booths of major CE vendors and the Venetian Expo show floor. While large vendors demonstrated whole-home connected experiences, smaller vendors tended to focus on specific products designed to integrate into the smart home.

Robot lawnmowers, pool cleaners, vacuums, and security guards were nothing new and were overshadowed by experiences such as smart baby nurseries, air quality management, and the connected kitchen. A key facet of these experiences is that the value proposition for consumers transcends just a single device and a single piece of smart home functionality.

IDC believes that such value propositions can help propel the smart home forward, but success depends on the proper go-to-market strategies by vendors to educate consumers and sell solutions rather than individual products. The volume of smart home solutions on display at CES illustrated industry belief in a robust smart home future, but the supply side of solutions needs to be coupled with effective consumer education to drive demand.

Other items highlighted on the show floor also bear watching. Wireless power solutions, for example, to keep smart home devices charged, were well represented on the show floor. And CES showed us that Matter has arrived; Matter feeds into the importance of interoperability in delivering on the promised experiences of tomorrow’s connected home, experiences that are personalized, proactive, predictive, and contextualized.

Wellbeing

In terms of the volume of floor space allocated to a FC category at CES, Wellbeing may have trailed only The Home. Wellbeing devices, applications, and services encompassed sleep tech, health monitoring, fitness, and other market segments. Similar to the continued development of robust multifunction smart home solutions, Wellbeing solutions have moved well beyond fitness trackers and increasingly into health monitoring. And the range of solutions available to consumers in this category is vast, ranging from urine test applications to detect a host of health attributes to technologies designed to provide therapeutic activities for brain health.

All of these empower consumers at home with convenient access to the means to track, detect, and diagnose health and wellness issues, offering consumers more independence from costly in-person medical care. For insurance companies, one can see how many of the tools could be leveraged to decrease the need for in-person office visits and thereby reduce costs. Notable at CES was the AARP (American Association for Retired People) booth in which vendors were aggregated to demonstrate how tech can be employed to address aging, with a particular focus on items such as social engagement and brain function health.

The demand-side outlook for Wellbeing solutions is strong as IDC’s Consumer Market Model projects 1.5 billion users of sleep tech and 2.7 billion users of online fitness services worldwide in 2026.

Personal Mobility

Motorized bikes and scooters were on display from many vendors throughout booths at both the LVCC and Venetian. Perhaps ironically, many motorized bikes and scooters were featured just steps away from the designated areas for sports tech and wellbeing solutions in the LVCC North Hall.

One of the most notable announcements during the show was the unveiling of branding for a combined effort between Sony and Honda to bring a next-generation electric vehicle to market. The car looked promising, but the name, Afeela, left us scratching our heads. Broadly speaking, however, the trend towards electric transport has moved downstream from cars and other large vehicles to personal mobility items such as scooters and bikes. They indicate the degree to which small electric vehicles can transform consumer experiences within the Personal Mobility segment.

Key Future Consumer Themes to Watch

  • A key theme we’re monitoring is the impact of younger Millennials and Generation Z on the tech landscape. These consumers are typically digitally self-sufficient, having grown up with smartphones and connected experiences. They often behave far differently than older generational cohorts and vendors across the B2C landscape (tech and non-tech alike) must understand the needs and wants of these consumers before it’s too late to react. IDC’s Consumer Pulse offers extensive analysis of how these consumers drive demand for new experiences and how their share of tech spending will grow in the decades to come.
  • Consumers as creators and as consumers of independently created content is a trend that will disrupt major media, advertising strategies and spending, traditional content distribution, streaming services, and the social media landscape. The growth of services drives demand for enabling platforms, software solutions, connectivity, and monetization technologies. Moreover, it drives demand for creation tools ranging from phones to cameras to PCs and more. Understanding the demand growth sheds light on the vast scale of this opportunity, and understanding the needs of creators informs device and software strategies of vendors across the consumer tech ecosystem. And, the growing power of AI is poised to radically redraw what it means to create content.
  • Hyper-personalization at scale brings the personalized experiences consumers have been promised. Personalization will impact all eight of IDC’s Future Consumer framework categories. Personalization changes the dynamic between consumers and vendors, creating challenges and opportunities. The creation of new types of data collection and processing will necessitate a willingness on the part of vendors to find a balance between trusting the data and the knowledge and intuitions of the human team. For consumers, it has the potential to drive greater trust in and affinity for brands or damage previously earned trust. AI will be a major force in personalization.
  • Everything-as-a-service is a theme that is increasingly coming to the consumer market as a shift to “as a service” models can benefit both consumers and vendors. Consumer benefits include lower up-front costs, more knowable long-term costs, an improved user experience that evolves and gets better over time, and one-on-one relationships with trusted and admired vendors. Vendor benefits include more predictable refresh rates, opportunities to upsell services that improve experiences, recurring revenue streams that can fund long-term product development, and high-touch interactions with consumers which shift the sales model from transactions to trusted relationships.

The impact of the Future Consumer will be felt everywhere. It’s not just how consumers engage, for example, with social media, but also how non-tech consumer brands must leverage specific social media applications to reach consumer segments. The impact transcends the consumer market. Consumers are also buyers of B2B services and corporate devices in their professional capacities. The behaviors of consumers, therefore, particularly among younger generation cohorts, will also permeate business environments. And the growth of new consumer services will drive demand for infrastructure, tools, software solutions, connectivity, and more as businesses evolve and transform.

As IDC articulated in its breakfast briefing presentations at CES, we are seeing the rise of the Future Consumer. Are you ready for the seismic shift?  Learn more about with IDC’s Future Consumer research and services and how you and your organization can prepare.

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Gregory Ireland - Sr. Director, Research - IDC

Analyst Profile
Greg Ireland is a Senior Director for the Consumer Markets programs at IDC. In this role, he manages IDC's Consumer Market Trends, Consumer Market Model, and GenAI for Content Creators and Consumers research programs. He focuses on consumer adoption of and engagement with digital technologies, services, and applications that transform consumer experiences, business models, and market opportunities. Greg leads IDC's coverage of consumer GenAI, and he also has expertise in and provides in-depth analysis on the ways in which digital video content is distributed, consumed and monetized across traditional pay TV, over-the-top (OTT), and social media services and platforms.

This is the second blog in IDC’s series focusing on the implications of the EU’s updated Security of Network and Information Systems directive, NIS2. The directive comes into force in January 2023, after which Member States have 21 months to transpose it into their national law – by October 2024.

The broad aim of NIS2 is to engender a high common level of cybersecurity in the EU, across all Member States, in the long term.

The first blog looked at the regional and national entities that are tasked with transposing and implementing the new directive, as well as some of the mechanisms that are being put into place to effect improved cybersecurity across the bloc.

This second instalment looks at which organizations NIS2 will apply to and what will be required of them.

Expanding the Reach

The first NIS directive introduced a clear focus on improving cybersecurity and risk management at critical infrastructure in Europe: energy (electricity, oil, and gas), transportation, drinking water supply and distribution, healthcare, banking and finance, and digital infrastructure (Internet Exchange Points, DNS service providers, and Top-Level Domain (TLD) name registries). These were defined as operators of essential services (OES’s).

The volume and frequency of cyberattacks since the first directive came into force has driven home the message that cybersecurity safeguards and improvements need to be more far-reaching. Industry sectors that may not be viewed as critical may supply components or services to critical infrastructure, from electrical equipment to medical devices. Disruption of food production and distribution or waste management can have a major impact on the function of society. Digital providers such as search engines and online marketplaces are recognized for their universal value.

Consequently, the NIS2 directive extends coverage into all these segments and more. A full list of sectors defined as high criticality or critical is below:

High Criticality Sectors

  • Energy.
  • Transport.
  • Banking.
  • Financial market infrastructures.
  • Health.
  • Drinking water.
  • Waste water.
  • Digital infrastructure.
  • ICT service management (B2B).
  • Public administration.
  • Space.

Other Critical Sectors

  • Postal and courier services.
  • Waste management.
  • Manufacture, production and distribution of chemicals.
  • Food production, processing and distribution.
  • Manufacturing (medical devices, computer, electronic and optical products, electrical equipment, motor vehicles, transport equipment).
  • Digital providers (online marketplaces, search engines and social networks).
  • Research organisations.

Furthermore, it is recognized that it is not only large enterprises that represent a target for cybercriminals or are fundamental to critical services. Consequently, the NIS2 directive also extends the scope to cover midmarket organizations with 250 or more employees and turnover of €10 million or more.

The To-Do List

So, if your organization falls within the sectors covered by NIS2, what requirements are coming your way in the next two years? There are two major aspects to this, detailed in Chapter 4 of the directive, Cybersecurity risk management measures and reporting obligations.

Article 21 of the directive covers the cybersecurity risk management measures and lists the following 10 areas as the minimum recommendation:

  • Policies on risk analysis and information system security
  • Incident handling
  • Business continuity and crisis management
  • Supply chain security
  • Security in network and information systems acquisition, development and maintenance
  • Policies and procedures to assess the effectiveness of cybersecurity risk-management measures
  • Basic cyber hygiene practices and cybersecurity training
  • Policies and procedures regarding the use of cryptography and, where appropriate, encryption
  • HR security, access control policies and asset management
  • MFA, continuous authentication, and secure communications where appropriate

It is likely that most entities within critical infrastructure sectors will already have many of these technologies and measures in place, to some degree. The question will be in the level of detail or prescriptiveness that member states go to when transposing this article into their national legislation.

The directive emphasizes that the implementation of these measures should take into account the state-of-the-art, relevant European and international standards, the cost of implementation, the degree of the entity’s exposure to risks, the entity’s size and the likelihood of occurrence of incidents and their severity, including their societal and economic impact. These considerations should be used to determine appropriate or proportional measures.

Article 23 of the directive covers reporting obligations and requires that in the case of any incident that has a significant impact on the provision of their services, essential and important entities notify their CSIRT or competent authority. An early warning should be submitted within 24 hours of the organizations becoming aware of a significant incident, and a more comprehensive incident notification should be submitted within 72 hours.

Further reporting obligations are detailed within the directive and it will be necessary for all organizations covered by NIS2 to familiarize themselves with these obligations once they have been transposed into their national law.

Conclusion

It is early days still for NIS2 and much will depend on the work done over the next 21 months. Nevertheless, the cyberthreats driving this directive will not wait and the benefits from improved cybersecurity measures will outweigh the risks.

Regardless of the final wording of the local versions of the directive, organizations can benefit from getting up to speed with NIS2 and engaging with the existing cybersecurity authorities within their countries to develop their strategies.

Mark Child - Associate Research Director, European Security - IDC

Analyst Profile
Associate Research Director Mark Child of IDC’s European Security Group leads the group's Endpoint Security and Identity & Digital Trust (IDT) research for both Western Europe and Central & Eastern Europe. He monitors developments in security technologies and strategies as organizations address the challenges of evolving business models, IT infrastructure, and cyberthreats. Mark's coverage includes in-depth security market studies, end-user research, white papers, and custom consulting.

November 2022 was a busy month for the European Commission, with two major pieces of legislation passed that aim to bolster the cybersecurity and cyber resilience of Member States and at organisations across the bloc.

The first was the Digital Operational Resilience Act (DORA), which covers the finance sector and companies that provide ICT services and infrastructure to financial sector entities. The second was the long-awaited update of the Security of Network and Information Systems (NIS) directive, known as NIS 2.

The broad aim of NIS 2 is to engender a high common level of cybersecurity in the EU, across all Member States, in the long term.

This is the first in a two-part IDC blog series that will focus on the implications of NIS 2.

The Clock is Ticking

The full text of the NIS 2 directive was published in the official journal of the European Union on December 27, 2022, and enters into force 20 days after that (January 16, 2023). Thereafter, Member States will have 21 months to transpose the directive into their national law (by October 17, 2024). What happens between now and then?

Building the Frame(work)

The next 21 months will be critical for the success of NIS 2 as regional and national bodies get to work on transposing the articles of the directive into their national legislation. Who will be responsible for this part of the process?

The prime mover in this respect will be the NIS Cooperation Group, which was established in 2017 to support the first NIS directive. The Cooperation Group comprises representatives of all the EU Member States, the European Commission and the EU Agency for Cybersecurity (ENISA).

The group will provide guidance to the national authorities of the Member States on transposing and implementing the directive. It will also provide guidance, advice and cooperation on numerous related areas including cybersecurity policy initiatives, capacity building, training and awareness, exchange of information and best practices, and vulnerability disclosure. It will also be responsible for defining standards and technical specifications, as well as maintaining a central register of essential and important entities in each country.

A second key group will be a network of computer security incident response teams (CSIRTs) across all the Member States. At least one CSIRT in each country will be designated as a competent authority for various roles including international cooperation and coordination, threat monitoring and analysis, and the provision of incident response and assistance to essential entities.

The third key entity is the European Cyber Crisis Liaison Organisation Network (EU-CyCLONe). Its task is to support coordinated management of large-scale cybersecurity incidents and crises at an operational level. It will also ensure regular exchange of information among Member States and relevant entities within the union. EU-CyCLONe’s role will really crank up once the directive is in place.

Key responsibilities will include:

  • Developing shared situational awareness for large-scale cybersecurity incidents
  • Assessing the impact of large-scale cybersecurity incidents and proposing potential mitigation measures
  • Coordinating the management of large-scale cybersecurity incidents and supporting decision making at the political level

Between them, these organisations, along with the Member States themselves, will be tasked with ensuring that when NIS 2 comes into force at the national level, it is appropriately transposed into national law and the countries are able to put in place the necessary structures and resources.

Kicking the Tyres

One criticism of the first NIS directive was that it lacked teeth. The EC is striving to establish NIS 2 more firmly throughout the bloc and one measure through which it seeks to do this is peer reviews. These are aimed at assessing at a national level the conformity, progress and readiness of the directive. For example, peer reviews will assess:

  • The level of implementation of cybersecurity risk management measures and reporting obligations
  • The level of capabilities, including available financial, technical and human resources
  • The operational capabilities of the country’s CSIRTs
  • The level of implementation of cybersecurity information-sharing arrangements

Peer reviews are to be carried out by designated cybersecurity experts from at least two Member States, at a maximum of once every two years. The experts conducting the reviews are expected to provide reports including recommended improvement on any of the reviewed aspects. Those reports will be submitted to the Cooperation Group and the CSIRTs network where relevant.

Conclusion

These entities and processes should ensure that at a regional and national level the EU and its Member States can develop a higher level of cybersecurity and resilience by adhering to the NIS 2 directive.

The second instalment of this blog series will look at which organisations NIS 2 will apply to and what will be required of them.

Mark Child - Associate Research Director, European Security - IDC

Analyst Profile
Associate Research Director Mark Child of IDC’s European Security Group leads the group's Endpoint Security and Identity & Digital Trust (IDT) research for both Western Europe and Central & Eastern Europe. He monitors developments in security technologies and strategies as organizations address the challenges of evolving business models, IT infrastructure, and cyberthreats. Mark's coverage includes in-depth security market studies, end-user research, white papers, and custom consulting.

Throughout 2022, I talked a great deal about how digital sovereignty was evolving, and we now have the evidence to prove it.

Ongoing geopolitical uncertainties, along with macroeconomic trends such as the ongoing threat of a new pandemic and inflationary fears, mean digital sovereignty is shifting gears and emphasis from self-determination to self-sufficiency and survivability.

As a result, digital sovereignty encompasses several layers which we present as part the “Sovereignty Stack”:Organisations that are ready to embrace this broader view of digital sovereignty should consider the following attributes when designing, procuring, implementing and managing sovereign solutions.

Self-Determination

  • Data sovereignty: While you may be familiar with data (and cloud) sovereignty, these are just subsets of digital sovereignty (as explained in my video A Few Words on Digital Sovereignty).

Data sovereignty is the starting point that enables organisations to achieve the full stack of digital sovereignty outcomes.

As data regulations emerge and evolve, they should look for technology solutions that provide a holistic view of how data is collected, classified, processed and stored to ensure that data legislation and rules are being met.

  • Technical sovereignty: Organisations cannot lock themselves into custom-built solutions that become legacy systems in their own right.

They must aim to work with platform players that can deliver plug-and-play capabilities. Here, open source solutions will lend themselves well to interoperability, as well as data portability and transferability.

  • Operational sovereignty: IT executives will seek technology suppliers that offer cloud capabilities that enable transparency in controlling operations, from provisioning and performance management, to monitoring of physical and digital access to the infrastructure.

Transparency equals trust — a fundamental tenet of digital sovereignty.

  • Assurance sovereignty: Data availability is essentially all about resilience.

For example, in Europe, this is mandated by rules such as the EU Cybersecurity Strategy, Network and Information Systems Directive, and the Digital Operational Resilience Act (DORA).

The latter defines the principles to ensure that digital infrastructure across the continent’s financial sector is always available to provide critical services.

Self-Sufficiency

  • Supply chain sovereignty: As well as reinforcing digital supply chain resilience, the aim here is to strengthen the digital economy’s competitiveness, its capacity to innovate, and ability to create jobs.

Skills sovereignty is also a part of this layer. Here, organisations should expect service providers to invest in knowledge transfer as this can support and foster local talent and empower companies to develop their own digital innovations.

Without this transfer, the much-talked-about IT talent shortage will continue to perpetuate.

Survivability

  • Geopolitical sovereignty: IT and digital technologies are now at the heart of a nation’s critical infrastructure.

This takes the idea of digital sovereignty level to a broader, macro level.

As a result, governments as well as business leaders want to use cloud solutions to help deal with the strategic weaknesses, vulnerabilities and high-risk dependencies of an increasingly volatile geopolitical environment.

Note that the attributes you see in the IDC Sovereignty Stack are mutually dependent on one another.

For instance, the easier and more affordable it is to integrate solutions and switch among vendors, the easier the opportunity to promote co-innovation with local companies that create local jobs.

The “Stack” in Action

Since the start of the Russia-Ukraine War in February 2022, a combined 75% of organisations in Europe now consider digital sovereignty to be more important (source: IDC EMEA, FERS Survey Europe, Wave 4, May 10–25, 2022).

As a result, they are either adjusting their operations or changing their IT strategies.

When asked what actions their business and IT leaders were taking due to their increased digital sovereignty concerns, many of the top results seen in the graph below are evidence of the Sovereignty Stack in action.While improving privacy measures is the foundation of data sovereignty, supply chain management and enhancing resilience in the face of geopolitical volatilities are examples of the “self-sufficiency” and “survivability” layers as depicted in the stack.

Supply chain issues were already highlighted during the COVID-19 pandemic.

Organisations now want to get on top of this and also know the sources of their IT services and goods to ensure business continuity because digital sovereignty is ultimately about operational resilience.

Find out more:

Why Does Digital Sovereignty Matter in Cloud Buying Decisions?

European Digital Sovereignty

Are you one of those IT leaders who is facing the challenge of making change happen at their organization with only a limited budget? Here are IDC’s suggestions for considerably improving the software development lifecycle with a small spend. These small investments can create enough leverage to make real changes happen. 

Shift from run to change by creating better predictability. A healthy organization should spend most of its effort on creating new business value. We regularly speak to IT leaders who are struggling to bring the run-cost of their software maintenance to below 50%. By comparing the maintenance productivity to comparable portfolios in the market you can determine whether there’s room for improvement.  

By analyzing the types of tasks your teams are spending their time on, you can identify improvement areas. These improvements create additional capacity and/or budgetary room to develop and deploy more changes that bring value to your organization. 

On the change side of the software development lifecycle, predictability is critical. By comparing yourself against comparable teams in the market, it’ll be clear what aspects you can improve on and what aspects you are already above market average. These insights will increase the predictability of software development initiatives and make better use of your resources. 

When NCOI, one of the leading life-long learning providers in Europe, analyzed the maintenance productivity of the nearshore team that was maintaining the core administrative system with IDC Metri’s help, the results were astounding. Within seven months that team could do the same output with only a third of the number of people. In this way, NCOI was able to redirect about € 250,000 per month from maintenance to development of new business value. 

Introduce better prioritization of value by giving your product owners better insight into which features bring value to your organization, both in the long run and in the short term. In most agile application development organizations, product owners are (implicitly) responsible for the software value creation of the organization, without a solid basis to work from. You can help your product owners create better insight in the value of features over multiple dimensions, so that your business gets the features it needs to better serve your clients, but your IT portfolio remains future-proof.  
 

It’s possible to train your product owners to work with the Software Value Map approach. Organizations who’ve partnered with IDC Metri have approached each requirement from 2-4 value perspectives. In this way, all value perspectives are balanced, so that not only new business features are released, but there is also sufficient attention to the prevention/reduction of technical debt, usage of (cloud) infra resources and product innovation. This leads to proud and effective product owners and teams that are satisfied with the features they deliver and the architectural runway they can work with. 

Create better insight in your portfolio by getting a grip on the dependencies within your portfolio so that you can prevent rework and unnecessary reshuffling of priorities. Within weeks you can have your software portfolio analyzed. That will give you and your teams insight into the dependencies and possible risks to business benefits. This insight will help you and your teams make guided decisions in prioritization of resources and results in a fact-based starting point to improve the robustness of your portfolio. 

When our client’s software portfolios were analyzed by our Software Intelligence provider partner, CAST, this not only gave them insight into the security, robustness and quality of their portfolio, but also gave them valuable information where they could make (more) use of standard building blocks from their cloud providers. By using standard building blocks, they could really shift left in their software development lifecycle. These organizations had to do less investment in capabilities that are already available and could reduce the amount of resources that had to be allocated to testing. On average these clients saved 5-10% on their software development lifecycle. 

Induce a shift from re-invent to repeat by facilitating your teams so they can benefit from each other’s work. When you have insight into your portfolio, you can identify common building blocks in the portfolio that can benefit multiple teams. When you have identified a lot of these types of building blocks, you could even dedicate a team to the common part of your architecture. When you and your team start to look at which building blocks or microservices your enterprise architecture contains, you will see that the mentality of your teams will shift from re-inventing their own solutions to a common issue to repeated use of a common solution created by one of the teams. This way of thinking will not only boost your productivity, but also create a common ownership of all the teams for the whole portfolio. 

Another driver for the centralization and standardization of building blocks is that IT is moving into the overall business-side of organizations more and more. Different business units can build their own applications on an enterprise architecture that provides them with standard building blocks they can work from. This decreases their security vulnerabilities and requires less test effort. 

Can’t wait to get started, or see what the impact can be of these four initiatives on your specific situation? We’re available to help you to discover how small investments can make a huge impact on your organization, quality and budget. And, with the right balance between them. All of these improvements require limited investments but will optimize your value chains so that you can bring more value as quickly as possible to your organization.

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I always like to leave some time before writing about the World Smart City Congress in Barcelona to give myself a reality check. The main reason is that while you are with around 20,000 other engaged and excited people from around the globe, it is difficult not to suffer from group think.

It’s always instructive to see who has “gone big” each year and who has cut back, as it reflects how the market is developing. This is equally true of the countries involved and the major themes behind the solutions presented.

Enormous single stands from the likes of IBM and Schneider have come and gone, and new entrants like Mastercard have taken their place, but there is a definite move towards the power of partnership. Global players such as AWS and Red Hat are happy to have a small presence on the Fiware booth. Companies the size of Accenture and Siemens ply their wares from the Microsoft booth and Nvidia and Dell promoted the synergies between their solutions at a combined stand.

This move can also be seen with natural solution curators such as professional service providers. Deloitte ran one of the busiest and most popular stands as a platform for partners to display the depth and breadth of their market reach.

There was a wide spectrum of technology being promoted from smart city 101 type parking and lighting solutions to futuristic visions of the benefits of the Metaverse. What became clear though was that better and more efficient use of data was the force majeure behind many of the solutions being presented.

This was matched by a focus on the security, privacy, governance and ethics of data collection and use. It was heartening to hear tech vendors highlighting trust, democratisation, diversity and sustainability alongside how many new widgets their solution had.

The big difference this year was the emergence of cross-industry partnerships. At IDC, we have been researching the new industry partner ecosystems that will drive the market.

In essence, to achieve the outcomes required from government clients there will need to be a coordinated approach across architectural, engineering and construction companies (AEC), commercial real estate (CRE) and tech vendors. Some AEC companies such as AECOM were at the event and we predict more will be there next year.

The technology solution that was ubiquitous throughout was digital twins. Digital twins evolved from BIM solutions used by AEC and CRE companies and are critical to both visualising data and for scenario planning. Government clients want to see a “golden thread of information” from data collection, through data synthesis into information made accessible by digital twins.

One consequence of the above is that the purview of “smart” has expanded. The original locus was captured by IBM’s Smarter Planet marketing back in 2008 and a recognition that new technologies had fundamentally changed the world.

The tech industry then spent the next decade looking for a customer focusing on cities as the best level of subsidiarity. Arguably, this has been less than successful as cities have never developed a customer with concomitant budget, responsibility and authority to engage in holistic solutions across all the functions of a city. This inability is exacerbated by an election cycle that reduces the ability for long-term planning. Ergo, we are still stuck selling point solutions.

The nascent cross-industry partner ecosystems outlined above provide a much needed expansion beyond City Hall to a return to the smarter planet idea just as we are beginning to recognise that we have a planet-sized problem. Carbon, energy, water and food are the new riders of the apocalypse.

See the Barcelona interview with Jennifer Schooling, director, Cambridge Centre for Smart Infrastructure and Construction, and me here University of Cambridge & IDC | Construction that Maximize Urban Potential (tomorrow.city).

Today’s tech buyer is but one person in a larger committee. Sales and marketing teams are talking to a larger tech buying committee that consists of multiple personas with varying jobs to be done and business challenges. However, sales reps are unable to articulate the value of their organization’s solutions as it directly applies to their customer’s business.

A recent IDC survey found that 61% of sales reps are not skilled at selling to C-level buyers and 49% are having issues finding qualified buyers.

Source: 2022 Outcome Selling Advisory IDC Survey on Value Selling Excellence

Sales Enablement is the Key to Empowered Sales Conversations

Digital marketing activities begin a conversation about outcomes and promises of value that a sales team must be able to continue to articulate. But how do you engage with different tech stakeholders at the same organization as well as C-level executives? A strong understanding of the digital journey and key personas and their priorities is essential for driving sales discussions with this diverse group. That is what sales enablement centers on. At IDC specifically, it’s a practice that focuses on delivering sales and education programs that provide the right information, to the right person, at the right time and place.

Download: Best Practices: How to Communicate Customer Value

Evolve Your Sales Model

Especially under the weight of the current economy, it’s critical today to move away from product and feature selling. This model makes the technology you are selling the focus and the value. That’s not what buyers need today. Buyers are looking for a clear understanding of how your solution will solve their business challenges and provide real value.

As marketers and sellers started realizing this, it gave way for the consultative selling approach. This model, as it compares to product and feature selling, aimed to provide problem solving as value and this results in larger, more transformative deals. Once the transaction is over, however, consultative selling isn’t an approach that integrates with the buyer’s business strategy. Enter value selling–focused on on-going value generation, co-created with the customer.

Download: B2B Marketing and Sales Guide to Outcome-Focused Conversations

Value selling is the creation and extraction of value in a continuous and virtuous circle. It is deeply integrated with the customer’s business strategy and, because of that, creates an ongoing, agile and iterative partnership between you as a vendor and your customer and partners. It doesn’t just focus on the sale, but on pre- and post-sale alignment.

The Tech Buyer Journey

Continuity between marketing and sales is critical for a seamless buyer journey. Engagement activities conducted by marketing should set up a conversation that sales should be able to intelligently carry forward. Ultimately, to engage more effectively with your audience, your value proposition must be aligned. In another IDC blog post, we take a deeper dive into understanding how to align digital and interpersonal strategies. Simply put, as marketers nurture this value dialogue digitally, they are moving the buyer closer to sales who must understand the marketing dialogue and progress to demonstrating that value.

Marketing and sales must now work together using a persona-based, journey-nurturing approach, because buyers expect an ongoing relationship with you; one that does not end after the purchase is made.

Download: A New Framework for B2B Marketers and Sellers

Creating a Sales Enablement Strategy and Supporting Tools

A strategically crafted sales enablement strategy will help you map your customer journey so that you are prepared and on-message through pre-sales, sales and post-sales. It will familiarize your team with new markets, changing demand and equip everyone with quantitative and qualitative research and metrics to create an ROI validation and response to buyers.

A sales enablement strategy addresses key situations with a clear plan to respond to today’s challenges. If built leveraging the right research, it will allow you to:

  1. Tailor messages to key industries
  2. Better understand the C-level and LoB buyers in the buying committee
  3. Learn who best to position your technology to and how to address key use cases with a messaging around the problems your new technology solves
  4. Familiarization with the new market and specific dynamics
  5. Quantitative and qualitative metrics to respond to ROI questions

IDC’s Sales Enablement practice provides tailored solutions from target market education, to sales call aids and sales engagement. Our research offers a wealth of insight across technology markets, with industry-specific insights that you can leverage in your strategy.

Learn more about IDC’s industry research, high impact business value solutions and interactive selling tools.

Watch our latest webinar where we introduce a new model for marketers and sellers to work within, for lead generation, customer creation, and value management efforts.
Watch on-Demand Webinar

The 3 Dimensions of Retail Immersive Customer Experience

“The opportunity with the Metaverse is it creates infinite possibilities for us to connect, create and belong. […] In essence, how can we help our current members, get educated, informed and show them the way?” Tareq Nazlawy – Senior Director Digital, adidas

Despite the internal and external challenges that retailers must face, real-time contextual customer experience is a key factor for retailers and brands that aims to engage, retain and enhance shoppers’ experiences during different and multiple interactions and interfaces.

According to our Global Retail Operating Models 2022 Survey, brick-and-mortar remains retailers’ main channel source of revenue generation over the next two years. At the same time, eCommerce and marketplaces as well as retail media networks, conversational and social commerce are expected to become new and increasing channels of new revenue streams.

This would allow retailers’ operating models to become fully omni-channel while completely integrate online and physical operations, in real-time.

However, the traditional convergence between online and offline is now nowadays characterized by a third dimension that aims to augment the overall shopping experience, including the metaverse continuum. This ranges from AR-enable visual and image search to 3D product visualization, to more sophisticated and immersive virtual realities for visual commerce, such as Web3 and Metaverse platforms and related NFT capabilities.At the center of this 3D integration – between online, physical stores, and metaverse continuum – there are three core elements that are foundational of the immersive retail customer experience. The core elements are:

  • Customers. Shoppers’ need, behaviour and preference as well as the customer-centric approach that permeates B2C, B2B2C and D2C business models.
  • Data. Collecting and managing first-, second- and/or third-party, retailers and brands become key players of partners ecosystems for leveraging customer data platforms (CDPs) and customer data sharing hubs to guarantee data accuracy, security and identity management.
  • Technology. AR, VR, digital twin, and Metaverse are (re)emerging technologies that fueled by data and powered by AI and ML analytics, enable retailers to enhance personalization of the customer journey model.

As we have recently published in the IDC FutureScape on Worldwide Retail 2023 Preditions, “By 2024, 65% of Retailers Will Invest in Visual Commerce to Enable Personalization Through 3D Product Configuration and Virtual Try-On and Reduce Complexity Through Image-Based Interfaces”.

There are also concrete examples of retailers that launched metaverse initiatives, such as Nike launching on Roblox; Walmart adopting an AR-powered virtual try-on option for in-app virtual fitting from home; recently, LaCoste opened its Web3 community for Le Club loyalty program members or the Swedish retailer H&M is currently piloting a new tech-enabled collection of style (COS) store — including smart mirrors — with the intention to expand this format soon across all its stores.

These are all examples of retailers already investing on visual commerce-enabling technologies enhancing personalization and customer engagement at the highest level of immersion. To achieve this goal, there are some IT implications to consider:

Frame visual search applications with the overall retail commerce platform infrastructure to enrich a solid customer data base (such as customer data platform) for CX personalization.

Integrate AR/VR to the current in-store technologies (e.g., RFID, sensors, and smart mirrors) to achieve a fully omni-channel experience.

Set the basis for metaverse requires overcoming any complexities deriving from existing customer-facing disconnected interfaces.

Key Actions for Retailers

So, what retailers should do then? Here there are three immediate key actions:

  • Include augmented commerce as part of business model innovation, and long-term strategic digital road map use case definition.
  • Go or become fully and truly omni-channel implementing those capabilities and technologies that bridge personalization to augmented customer experience.
  • Co-innovate along retail metaverse continuum with the right partners to generate customer lifetime value across multiple interfaces and – again! – reducing complexities.

IDC Retail Insights analysts Ornella Urso and Filippo Battaini will be onsite in New York for NRF 2023: Retail’s Big Show. They look forward to meeting you and share their research themes and upcoming IDC initiatives for 2023!

The digital airwaves and social media feeds have recently gone wild with examples of how the AI-driven chatbot ChatGPT has solved riddles, generated high school essays and explained why the Croatian football team has outperformed similar sized nations at recent World Cup Tournaments. Understandably, it has again raised important questions about the impact of AI on our lives, enterprises, and broader society.

First and foremost, let’s start with definitions. What is Generative AI and where does OpenAI/ChatGPT fit within all of this? Generative AI is a branch of computer science that involves unsupervised and semi-supervised algorithms that enable computers to create new content using previously created content, such as text, audio, video, images and code.

ChatGPT (which stands for Chat Generative Pre-Trained Transformer) is a chatbot developed by OpenAI. ChatGPT is built on top of OpenAI’s GPT-3.5 family of large language models (LLMs) and is fine-tuned with both supervised and reinforcement learning techniques. It is being hailed as the smartest chatbot ever developed. OpenAI was founded in 2015 (initially as a non-profit organization) and early investors included Elon Musk & Peter Thiel. In 2019, it became a for-profit organization and inked a $1bn deal from Microsoft. This deal allowed it to use Microsoft’s Azure Cloud Platform for its research and development; and in return, Microsoft was given the first opportunity to commercially leverage early results from OpenAI’s research. OpenAI has a stated goal of promoting and developing friendly AI in a way that benefits humanity as a whole and is viewed as the leading competitor to DeepMind (acquired by Google in 2014 for $500M).

It is important to understand that while ChatGPT is a good example of generative AI technology, the market segment is much broader.  LLMs began at Google Brain in 2017, where they were initially used for translation of words, while preserving context. Since then, large language and text to image models have proliferated at leading tech firms like Google (BERT and LaMDA), Facebook(OPT-175B and BlenderBot) and OpenAI (GPT-3 for text, DallE-2 for images and Whisper for speech). Online communities (e.g. MidJourney), open-source providers (e.g. HuggingFace) and startups such as Stability AI have also created generative models. In Q4 this year, a spate of text-to-video models from Google, Meta and others have emerged. Generative models have largely been confined to larger tech companies because training them requires massive amounts of data and computing power. But once a generative model is trained, it can be “fine-tuned” for a particular content domain with much less data.  Today, Generative AI applications largely exist as plugins within software ecosystems.

The questions that technology and business leaders should be asking in terms of what Generative AI means for the enterprise are outlined below:

How will it be incorporated in existing enterprise technology environments?

  • Code Generation – GPT-3 has proven to be an effective generator of computer program code. GPT-3’s Codex program is specifically trained for code generation and works well when given a small function. Microsoft’s Github has a version of GPT-3 for code generation and is called CoPilot. The latest versions of Codex can identify bugs and fix mistakes in its code and can explain what it does occasionally. The goal for these tools is to not eliminate programmers but to make tools like Codex and CoPilot “pair digital assistant” with humans to improve their speed and effectiveness.
  • Enterprise Content Management – Vendors in the Headless content management space are incorporating these types of generative AI tools for both content generation and recommendations. This is to deal with the increased content velocity as additional forms of content are based on a single source generated by AI with human oversight.  It is not being used to write whole copy, but rather an outline for the content author to use as a draft.  In addition, there it is likely to impact GUI design in the form of “generative design” with the likes of Figma or Stackbit potentially including generative AI capabilities in as part of collaborative interface design engines.  
  • Marketing and CX Applications – Outside of the use of content generation for advertising and marketing along with the automation of marketing campaigns, the primary application for early versions of generative AI is in AI driven chatbots and agents for contact centers and customer self-service such as employed by Salesforce and Genesys, and these have initially delivered mixed results. However, this next generation of capabilities will mean a broader range of interactions, more accurate answers, and lower levels of required human interactions which will result in higher adoption and eventually more training data for the models. In the near future, generative AI will become more prevalent in the creation of personalized product recommendations through insight analytics, better and deeper customer segmentation as a steppingstone to true personalization and contextualization of experiences, and better understanding customer satisfaction and performance.  
  • Product Design & Engineering – It will also affect technologies in the product lifecycle management (PLM) and innovation space with the likes of Autodesk, Dassault Systemes, Siemens, PTC and Ansys continuing to build capabilities to enable design engineers & R&D teams to automate and expand the ideation and optioning process during early-stage product design, simulation, & development.  Generative AI design would allow options for engineering and R&D teams to consider in terms of structure, materials, and optimal manufacturing/production tooling.  For example, it would potentially suggest a part design that optimizes against factors like cost, load bearing, and weight. Generative design can also enable reimagining of product look and feel, often resulting in unique aesthetics and form that is not only more compelling to end users, but more practical and environmentally sustainable. Many of these vendors have attached their generative design offerings to additive manufacturing capabilities that are needed to realize these unique products.  Opportunities exist across multiple industries for generative design.  Automotive, aerospace, and machinery organizations can improve product quality, sustainability, and success, while life sciences, healthcare, and consumer products companies can improve patient outcomes and customer experiences.   

What are the pitfalls?

Generative AI, while providing lower-cost, higher-value solutions, has significant ethical and perhaps legal implications. There are significant questions over issues like copyright, trust and safety. Organizations must consider issues such as privacy and consent around data, reproduction of biases and toxicity, generation of harmful content, sufficient security against third-party manipulation, and accountability and transparency of processes. Neglect of AI ethics isn’t just a moral quandary – it is a significant business risk that means less trust, less control, and less ability to advance the models in an optimal way. Businesses must take a multi-pronged approach to AI from developer to end-user, first and foremost guided by a framework including principles that appropriately consider all ramifications of AI. Businesses should also choose models where techniques such as adversarial input (training against bad or manipulated data), benchmark dataset training (checking for biases via label tests), and XAI (explainable AI) are used. Finally, concerns with AI ethics are intrinsically linked to how accountability measures are enacted. Businesses should ensure they take a Human-in-the-Loop (HITL) approach to ensure minimal model drift, rigorous monitoring of output, and continuous improvement. AI must not be viewed as an independent, black box entity, but should rather be seen as human-computer interaction where optimal usage comes from deep understanding, meticulous monitoring, and striving for accuracy of the model.

How will it affect jobs?

At the end of 2020, the World Economic Forum (WEF) predicted that AI would displace 85 million jobs by 2025. The main jobs it identified under threat would be the likes of data entry clerks, administrative assistants, accounting and auditing professional amongst others. By the same timeframe, it predicted that 97 million new jobs would be created as AI becomes more mainstream in the enterprise. Growing job demand would focus on data scientists, process automation specialists, digital marketing and strategy experts as well as many other more roles. Generative AI means that we can add a new role to that list – prompt engineers. Basically, this role focuses on working out what to type into AI chatbots to get the best out of them. Some would expect these individuals to also deal with so-called ‘hallucinations’ – where Generative AI gets it completely wrong. These types of entirely new job descriptions highlight how an emerging technology not only displaces activities, but also creates new ones. The classic creative destruction principle initially outlined by Schumpeter. However, for business and technology leaders – it does require a dynamic and ongoing assessment of required digital skills including continuous gap analysis and roadmaps to ensure that the necessary capabilities are available to support the digital business of the future.

Moving forward, the best place to watch new and interesting generative AI use cases is in the start-up and scale-up space. The likes of Jasper (Copywriting), Stability AI (Visual art), DoNotPay (Legal Services), Omnekey (Creative Content), Paige.ai (Cancer diagnostics) and Mostly.ai (Synthetic data) showcase how quickly this space is fueling a range of game changing innovations across the industry – and potentially what’s around the corner for so many industries. It is incumbent on all of us to ensure that we approach this fascinating space with the right balance of curiosity and skepticism.

Philip Carter - Group Vice President, General Manager, Research AI - IDC

Analyst Profile
Philip Carter is General Manager and Group Vice President for AI, Data, and Automation research at IDC. In this role, he leads a global team of analysts focused on delivering IDC's research and insights at the intersection of AI, data platforms, and intelligent automation - three foundational areas shaping the future of technology and business. His work is centered on helping C-Suite executives make sense of the rapid innovation in the AI space, and drive meaningful transformation through data- and intelligence-led strategies. BACKGROUND Carter has held multiple senior roles at IDC across regions. Prior to his current position, he served as GVP and GM of IDC TechMatch, where he led a global team tasked to build and commercialize IDC's first AI-powered digital platform - focused on helping CIOs and procurement executives evaluate and source technology vendors leveraging IDC trusted intelligence. Earlier in his IDC career, Carter was the lead for IDC's Global Thought Leadership research function and was also Chief Analyst for IDC Europe, where he drove innovation in research related to digital transformation, emerging business models, and technology strategy at the C-suite level. Before that, he worked in IDC's Asia/Pacific region, covering software, services, and sustainability. Prior to joining IDC, he held various leadership roles at SAS Institute across EMEA and APAC in marketing strategy, product management, and business development. He is a recognized industry voice, regularly featured on platforms such as CNBC and Bloomberg, and quoted in leading publications including the New York Times. EDUCATION/INDUSTRY ACCOMPLISHMENTS: - Honors degree in Business Science, majoring in Economics and Law, University of Cape Town, South Africa.