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Digital technology is reshaping business models, revenue streams and operations management. At the same time, the rising number of start-ups, scale-ups and unicorns in Europe — the digital-native businesses — is helping to boost digital transformation (DX) initiatives in traditional organisations.

What Is a Digital-Native Business?

Digital-native businesses (DNBs) are highly dependent on a digital infrastructure and are built from the start around modern technologies, from cloud-native applications to artificial intelligence, with data across all aspects, from operations to business models and customer engagement. By adopting new and emerging technologies, and using platform services and marketplaces, DNBs can quickly grow and scale up their business, creating new markets and disrupting traditional business models across industries.

DNBs are also defined by their market valuation — start-ups are valued at less than $250 million, scale-ups are valued from $250 million to $999 million and mature digital natives are valued at $1 billion or more. They can also be either technology-orientated companies (e.g., innovative ISVs/SaaS providers, selling technology products, software or IT services to other businesses) or technology-driven B2B or B2C companies (offering tech-enabled products or services respectively to business or consumers).

What Impact do DNBs have on Traditional Enterprises?

DNBs are disrupting some industries more than others. Fintech companies such as Revolut in the UK and digital banks such as N26 in Germany have pushed digital innovation in the past few years into a very traditional sector, whereas Sweden-based Spotify has completely reshaped the music industry at a global level.

DNBs’ influence also extends to the way traditional companies adopt and use technology. DNBs’ tech operations are often cloud native and data driven, with a customer-centric focus, employing tech-savvy developers and data scientist teams in agile environments to grow and scale the business quickly.

Market disruption and the growing interaction with DNBs are driving traditional European organisations to adopt some of the DNBs’ distinguishing digital features, such as shifting towards a digital-first organisational approach across the enterprise. According to IDC’s What Is the Impact of Digital-Native Businesses on Traditional Enterprises? — based on IDC’s 2022 European Industry Acceleration Survey — these impacts include:

  • Increased innovation: 35% of businesses with more than 1,000 employees cited this. Healthcare (37%), government/education (34%) and transport (34%) are the most impacted industries. Healthtech, edtech and the shared economy are the fastest-growing segments in the DNB arena.
  • Adoption of new working models: The implementation of agile, remote and hybrid ways of working pushed by the interaction with DNBs is most common in very large enterprises, government, education, and retail and wholesale industries. These extensively adopted remote working during the pandemic, and are now taking inspiration from DNBs to permanently adopt new and flexible working models.
  • Higher proportion of digital personnel: Finance respondents have increased the share of employees with digital skills (38%), and have a greater focus on customers and CX (31%), a trend influenced by the interrelationship with the fintech ecosystem. On a broader level, medium, large and very large organisations also say DNBs have had a major impact on organisational changes at the C-suite level.

Why Is it Important to Monitor the Relationship Between Digital Natives and Traditional Businesses?

IDC’s European Industry Acceleration Survey highlights growing coopetition between DNBs and traditional organisations. This is leading to a more innovative and digital-first organisational approach for the latter, such as a tighter focus on digital revenues, across all size categories, and greater competitive pressure in their respective markets, which may enable them to enter M&As or investment activities with DNBs.

This last trend is more prominent for utilities and oil/gas respondents, an industry where customer-orientated digital natives have pushed traditional companies towards improving their CX, also by acquiring entirely digital organisations in the process and with new market segments (such as renewables) being led by digital-native businesses.

Tech providers should target European DNBs, as this is a competitive, fast-growing segment populated by lean, agile and tech-enabled organisations. DNBs are built around modern technologies and digital infrastructure, and need to enter strategic partnerships with external stakeholders to meet their need for innovation. Tech providers are the first option for European DNBs, according to preliminary results from IDC’s Global Digital-Native Business Study.

Tech providers should also look to DNBs as precursors of the changes and trends that will affect traditional industries. Changes range from greater adoption of cloud services (cited especially by telecommunications and media, finance, and professional services respondents) to the adoption of a data-driven approach to business outcomes (cited by 19% of very large enterprises and 25% of retail/wholesale respondents). What DNBs need today will be what traditional businesses need tomorrow.

The relationship between DNBs and traditional organisations could span from tech supplier to potential acquisition target. This could change based on their business model, giving birth to interconnected ecosystems. For these reasons, in cultivating a long-term relationship with digital natives, tech vendors can also improve their positioning in traditional enterprises as trusted partners in their DX journeys.

To find out more about digital-native businesses in Europe, please contact Martina Longo.

Martina Longo - Research Manager, Digital Business - IDC

Analyst Profile
Martina Longo is a research manager in the IDC Digital Business Research Group. In her role she advises ICT players on how European organizations create business value using digital technologies. She also leads IDC European Digital Native Business research, focused on those enterprises born in a modern technological world in a mix of start-ups, scaleups, and more mature digital natives. Within the European Digital Business Research, the European Digital Native Business, Start-ups and Scale-ups theme advises technology suppliers on the market dynamics and segmentation, business priorities, tech buying patterns and go to market approaches (sell to/sell with) needed to engage digital native organizations in Europe.

A common challenge for many organizations is to accumulate and maintain valuable knowledge gained by employees as a function of their jobs. The problem is that most organizational knowledge is not effectively captured, shared, and utilized.  This means you are leaving a valuable resource untapped and, more importantly, don’t have the ability to transform knowledge into insights for better decision-making.    

So…a formalized system — to capture, create, share, use, and access knowledge — is important for today’s workplace.  The huge volume of knowledge gained by employees should be converted into something usable for the current and future organization and available on-demand for others to leverage.  This is where knowledge management technology comes into play. 

What is Knowledge Management?

Knowledge management sounds simple enough to have some sense of what it is.  IDC formally defines knowledge management as “technologies and processes designed to enable organizational insights and meet business objectives by capturing, creating, sharing, using, and accessing knowledge.  Additionally, knowledge can be derived from tacit, structured, unstructured, learned, analyzed, or processed information.” 

Knowledge management offers a path for better decision-making, which leads to real, measurable bottom-line benefits like greater efficiency, more innovation, data driven decision-making, and higher customer satisfaction. You can act and react to quickly changing market dynamics by making existing knowledge easy to find and usable in an established data repository.

Why Knowledge Management?

OK…we know what it is – now what?  The good news is that IDC research has uncovered several reasons why organizations implement knowledge management system.  What’s interesting is that the identified motivators come from many unique perspectives – collaboration, protection, training, etc. – to create different types of positive impact.  Most respondents picked between 1-3 key motivators as rationale to deploy or plan to deploy a knowledge management system. The most common responses included:

  • Improving the overall collaborative work experience.  Knowledge management can drive efficient collaboration by improving the employee/customer/partner experience of sharing knowledge.  It also enables more employee self-service processes to quickly find and retrieve knowledge that enhances productivity and helps to reduce support requirements. 
  • Protecting and maintaining knowledge.  A knowledge management system establishes protection and maintenance of legacy knowledge that could be lost due to employee attrition.  
  • Training/onboarding new employees.  A central repository of organizational knowledge allows new team members to quickly come up to speed on company operations and job responsibilities.  The time and effort to train and onboard new employees can be vastly improved by making knowledge easily accessible. 

Knowledge management isn’t new. It’s been around for several years, so why is now the right time to take a closer look at this technology? Frankly, it’s because the technology infrastructure is better now.  The market landscape continues to transition toward a digital-first mentality and knowledge management is part of that evolution. Consider knowledge management as part of your overall IT evolution in how organizations use, access, and manage their business content. 

A recent IDC survey shows that the numerous named benefits from knowledge management systems tie in with the previously mentioned motivators (see Figure 1).  The top four benefits highlight improvements in business execution, customer support, satisfaction, and employee performance that address operational gains in the business overall.  Ultimately, these benefits lead to a positive bottom-line financial impact and plainly make the case for knowledge management as an essential business operations tool. 

Perhaps one of the most compelling points identified in the data is that virtually no respondent (<1%) indicated no benefit from implementing knowledge management.  These benefits drive an awareness that knowledge management offers a solid return on its investment. 

Knowledge Management Use is Expanding, But…

It isn’t fully saturated.  IDC research revealed that only 45% of employees of large-sized companies (500+ employees) that have implemented knowledge management in their organizations are, in fact, using it.  Obviously, this is less than half of the employee base on average.  In two years, this percentage rises to 55%, so the use of knowledge management is expanding at a steady, gradual pace.  While the increase is encouraging, it also indicates that there is considerable room in the longer term to increase employee usage to a level that more aligns with what would be common everyday use across most, if not all, employees.  We’re not close to that today, but certainly there is potential to move in this direction. 

Figure 2 notes that knowledge management systems address a wide range of organizational information.  Given that the top use identified in the survey is in the compliance/records management and IT departments, the highest percentage of data stored in knowledge management is IT or customer service ticketing data at 56%.  This data type corresponds with the compliance/records management and IT departments where knowledge management usage is highest.  However, we also find a large variety of information assets residing in these systems as well, including customer data, business documents, process metadata, rich media, forecasted knowledge, learning modules, social streams/conversations and content blocks/fragments for dynamic document generation and others.  It demonstrates knowledge management’s ability to manage all sorts of content and data types.

Some Challenges to Overcome

Of course, knowledge management systems are still evolving and there are considerable process and technology challenges to address (see Figure 3).  The IDC survey identified the top process challenge as the “external use of knowledge is limited, manual and/or time consuming to update and maintain”.  Other significant process challenges highlight that:

  • Numerous unconnected silos of data make collaboration difficult
  • Employee behavior such as hoarding knowledge, not being incented to use knowledge management or not knowing where to find/look for knowledge isn’t yet where it needs to be to optimize knowledge management

All these process challenges highlight an inadequate level of organizational commitment to managing knowledge.  In such cases, the organization does not take the necessary time and effort to commit to managing knowledge or the organization does not instill an urgency for its employees to use knowledge management. 

The range of technology challenges are clustered closely together and speak to considerable usability issues that remain in play and limit adoption.  Several organizations also complain of the inability to determine any true benefit from its use, even though almost all organizations using knowledge management indicate beneficial gain. 

We anticipate that knowledge management providers will recognize these challenges and work diligently to address them in the near term.  This will foster greater adoption of knowledge management systems as a standard requirement in business operations.

Conclusion

Managing organizational knowledge is no longer a nice-to-have benefit.  It is a critically important tool for efficiently maintaining organizational information and to remain competitive in a rapidly evolving technology ecosystem.  Knowledge management creates a formalized process for the organization to leverage and capitalize on the employee insights gained for current and future use.  The array of benefits identified in the IDC survey clearly notes knowledge management’s positive impact on internal employees as well as external constituents that interact with the firm.  Challenges do exist, but we believe that many of these identified challenges will be addressed with evolving future generations of knowledge management as its presence becomes standard for the enterprise. 

Our advice is to be ahead of the curve.  For those who have already adopted the technology, the opportunity is now to increase usage between your employees and with appropriate parties outside of the organization to fully achieve maximum benefit.  For those thinking about adding knowledge management as part of the organization’s IT infrastructure, it’s not too late, but the time to act is now.  Knowledge management is an avenue to keep pace with the increasingly contested competitive landscape.  In the not-too-distant future, we anticipate a notable competitive advantage available to those firms that adopt knowledge management versus those who continue to hold out.

Learn More

Keith Kmetz - Program VP - IDC

Analyst Profile
Keith Kmetz is the Program Vice President of IDC's Imaging, Printing & Document Solutions programs. He is responsible for all written research in these areas, including analysis on the printer, multifunction peripheral (MFP) and 3D printing markets as well as related transformational hardcopy software/services developments. Based on his 20+ year experience at IDC, Keith's research coverage has spanned a wide variety of significant print industry topics with an emphasis on both forecast and survey analysis; vertical market opportunities; and client go-to-market strategies.

It has been said before that “proper planning prevents poor performance” and this is particularly important for IT buyers in these uncertain economic times.

The IMF has warned that “Half of the European Union and one-third of the world face recession in 2023”. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024.

Every business needs to understand the impact of inflation and recession from both a demand and supply perspective. This is a very broad topic, so let’s focus this discussion using the persona of the IT managed service buyer.

The IT managed service buyer has (amongst others) the following pain points:

  1. Understanding current market labor rates – for time & materials projects it’s critical that IT services buyers understand current market labor rates to ensure they are getting value for money from IT service providers.
  2. Validating IT budgets – for longer term multiyear budgets it’s important for IT service buyers to understand market pricing trends for both labor rates and full scope IT services.
  3. Forecasting – arguably the most difficult task and a product of the first two is forecasting IT spending over the typical 3- to 5-year horizon, so this is the area that we’ll explore in this blog.

Forecasting

The one true fact about forecasts is that they are always wrong. The more data you have, however, the better the accuracy and it can be compelling for technology buyers when coupled with deep market insights from IDC’s team of subject matter experts, analysts and researchers.

IDC’s benchmarking and sourcing advisory services has market price data from recently signed IT Outsourcing deals in the last 12 to 18 months, which show that inflation has directly impacted the market price for Outsourced IT Services and labor rates.

Annual price reductions in the region of 5% to 10% were commonplace for outsourced IT infrastructure services such as server, storage and network device management, as end clients benefited from economies of scale and automation that service providers offered from offshore delivery locations.

Over the last couple of years, IDC has observed that traditional year on year price reductions have reduced substantially and even reversed for IT services with high direct labor content, such as service desk and deskside support.

IDC research (IDC# EUR149042322, May 2022) has shown that the underlying digital transformation (DX) trend in Europe continues to be strong. Initiatives within digital service development and back-end application and process modernization have increased in priority and size in 2021. The COVID-19 pandemic has resulted in reprioritizing security, workplace transformation and related skills development.

The research emphasized the need for up-to date, evolving skill sets to ensure the resilience and agility needed in rapidly changing environments. Changes in the workplace, due to the pandemic, further increased the demand for cybersecurity and data analysis and uncovered a need to improve skills development and training.

Source: European IT Employment Forecast, 2020–2025, IDC Doc # EUR149042322

European technology employment grew 2.7% in 2021 with continued demand for DX skills, even though the COVID-19 pandemic put strong constraints on larger implementation projects. 2020 had an essentially flat growth of 0.4%, but growth in employment in 2022 will reach 3.6% as demand continues to grow.

Labor rate inflation

It may be stating the obvious that labor is a key element of any IT managed service deal, however it’s not the only component and other elements like tools and automation are also key as they enable service providers to provide a more cost-efficient solution, using standardized offerings coupled with sheer economies of scale. The benefits of server virtualization and offshoring have plateaued for the majority of existing outsourced infrastructure deals and further cost savings are marginal for many clients.

First-time outsourcing deals can still offer significant savings to clients as offshore labor rates are still significantly lower (up to 30%) than Western Europe rates. This is a relative statement, however, and labor rate inflation is a global reality.

In a related IDC blog Brian Clark explains that 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 start 2023.

IDC market research has shown that AWS recently raised consulting day rates by 7-8% and Adobe increased pro-serve rates by 20%. Many more examples exist as the cost to deliver professional services continues to rise, due to high demand for this service and a corresponding critical IT skills shortage.

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.

Inflation in the Euro Area

Data from Eurostat (the statistical office of the European Union) shows that Euro area annual inflation is expected to be 9.2% in December 2022, down from 10.1% in November 2022.

Energy is expected to have the highest annual rate in December (25.7%, compared with 34.9% in November), followed by food, alcohol and tobacco (13.8%, compared with 13.6% in November), non-energy industrial goods (6.4%, compared with 6.1% in November).

Services inflation is estimated to be 4.4% in December, and this aligns with IDC’s experience on IT Services Price Inflation, even though the underlying wage inflation is significantly higher.

Conclusion
Technology buyers should expect the price of professional services to continue to rise in the coming 18 to 24 months, as a direct impact of global inflation. The impact on multi-year IT outsourcing agreements will be less pronounced, however, as service providers leverage the benefits of offshoring, automation and efficiencies from standard offerings. That said, end user clients should expect existing service providers to enact their economic price adjustment clauses; the bottom-line impact, however, can be offset with productivity gains and strategic investment to reduce labor intensive business processes and associated services.

For additional guidance on IT spending, IDC’s Sourcing Advisory Services provides clients with the world’s leading price benchmarking service. IDC’s experts help IT buyers drive new savings across any of their technology purchases, spanning all categories across IT hardware, software, services, and labor rates.

European organizations expressed their concerns and the impact the believe they will face from Regulations in the coming years of 2023 and 2024, when asked about it in the European Enterprise Acceleration Survey (n=1500). The survey was conducted in late 2022 and we found that the top three priorities for European organizations are in the domains of Cybersecurity, Data Governance and Sustainability.

However, the perception or Regulatory impact varies within European regions, as the political and economic differences reflect in organizations’ regulatory focus for the coming years.

For instance, Western Europe and Central Eastern Europe bear significant differences as the organizations from Western Europe are more concerned about Sustainability Regulations and Safety of products (quality). Meanwhile, organizations from Central Eastern Europe see a higher impact coming from Cybersecurity and Privacy regulations.

Central Eastern Europe

Given the geopolitical context with the war on Ukraine, countries like Czech Republic, Poland and Romania have the highest concern about Cybersecurity Regulations. Those countries have already felt the geo-economic impacts of the conflict in Ukraine, and organizations can find themselves in a situation of lack of compliance with both EU and local regulations.

Particularly in the Czech Republic, there has been a push for Cybersecurity regulations by the National Cyber and Information Security Agency (NUBIK) in the last 5 years, as well as a dependency reduction from foreign parties since the war started in Ukraine. Lukáš Kintr, Director of NÚKIB, commented on the progress of the new draft legislation on high-risk suppliers assessment of technology: “The Czech Republic can have a comprehensive system for reducing the state’s dependence on untrustworthy foreign suppliers within two years. In the field of information technology, we hope to avoid the situation we are currently observing, for example, in connection with oil and gas supplies from the Russian Federation.“

Moreover, with the upcoming application of the NIS2 Directive, several industries included in the Critical Infrastructure category will be touched by the new security requirements. As the tighter Cybersecurity Regulations in the EU comes to place in the next 18 months, EU countries will need to transpose it into national laws and organizations will need to understand how to implement those.

Western Europe

Western Europe organizations hold the same pattern without great discrepancies and have a balanced Regulatory impact assessment profile. Some specificities can be found in France, Netherlands and the UK.

France

France has the highest concern with Ethical-AI Regulations in Europe. France has started to roll-out their policies about the topic from 2018 on, following the publication of the National AI strategy, and the creation of the French National Committee for Digital Ethics.

The country has been historically a leader in the Ethics of technology and AI policymaking, not only from a restriction and liability standpoint but also from a talent and skills investment perspective.

Netherlands

Netherlands is the country with the highest perceived impact of Privacy Regulations, given the high degree of awareness of their citizens and therefore the concern of Dutch organizations. Even if Germany is the leading country on the Privacy subject, Netherlands leads the Privacy Impact Assessments (an instrument for determining privacy risks of data processing in advance).

United Kingdom

The UK is the Western European country with the greatest focus on Data ownership and control regulations, hence the Digital Regulatory misalignment caused by Brexit and the harmonization needed for UK organizations to keep operating in European countries.

Nordics

On another sub-European region, the Nordics, we see yet another response to the contextual geopolitical challenges. The highest regulatory impact perceived by Nordics organizations is around Digital Sovereignty Regulations.

This is explained by the perceived risk of the geographic proximity to Russia, and the increase of the state-sponsored attacks to Nordic countries, especially after the beginning of the war on Ukraine. As the region has the highest digital maturity of European, the direct cyber response is in place (updated infrastructure, high cyber skills, security systems in place, etc.) and new concerns about business implications of the geopolitical context arise.

The Nordics has nonetheless the highest perception of impact coming from Sustainability Regulations in Europe. Historically, the sub-region has had the most relevant political push for green and environmental regulations.

Norway has a number of local regulations around the ESG dimension, such as the Transparency Act, which will required amendments to be compliant with the new Corporate Sustainability Reporting Directive from the EU. Organizations in the Nordics, even if very advanced in terms of compliance with ESG-related Regulations, have to juggle with tighter requirements and uncertainty of the compatibility of the national and EU regulations.

Recommendations for Tech Providers

  • Geo-based sales enablement: Base your go-to-market strategy, sales message and product offerings on the regulatory priorities of organizations for the next two years, taking into consideration not only industry but specific geography (sub-region and country).
  • Target the top regulatory concerns across the continent: European organizations will be required to comply with many new or update regulations at the EU and local level. Target the three top areas first: Cybersecurity, Data Governance and Sustainability.
  • Focus on technology to help automate compliance procedures: Technology should be a facilitator of the compliance process. Provide your customers with Digital Regulatory Intelligence Solutions, the technologies for monitoring, data processing and reporting.

 

If you want to know more about this Research, access the report or contact Anielle Guedes.

Pandemic-accelerated change is combining with the unique habits of Gen Z and Millennials to drive massive changes in the consumer technology marketplace.  Those who anticipate and understand these changes will find opportunity and growth; those who fail to do so will be blindsided and left for dead.  There is no middle ground.

Now that the COVID Pandemic is Behind Us, Not All Boats are Rising

With the high level of consumer spending provoked by the pandemic, firms across the board were able to show revenue and profit growth – even those that lost share.  Not anymore.  Now is the time to make sure you understand where the market is headed and how you will drive growth for the future.  If you are in a legacy business with a customer base largely made up of Gen X and Boomers, buckle up!  Even companies who already resonate with Older Millennials must understand the unique attitudes and behaviors of Gen Z and Younger Millennials.  IDC’s Consumer Pulse uses quarterly surveys in seven countries to identify the ways technology intersects with the life of the Future Consumer.

The Home: The Versatile Center for Everything

Forced to stay at home, consumers came to have a new view of their homes and lives.  Their homes became the center where they do everything: work, play, learn, exercise, and more.  6 in 10 said they were ready for the tech demands of working and learning from home, with predictable differences by income.  Connectivity was the area consumers reported the highest degree of readiness. Devices and accessories were areas of felt need.

Consumers had LOTS of time on their hands and were forced to use technology, engaging more deeply.  Time spent on entertainment increased by 30% from pre- to peak pandemic.  With little to do or nowhere to go during their free time, they upped their engagement with social media and online entertainment.  They gamed and posted more frequently, putting out TikTok videos for all the world to see.  Some even found they could make money at these new endeavors – doing what they wanted to do.

Re-thinking Work & Life More Broadly

An increasing percentage of workers found themselves aware of the choices they had.  With newfound control over their time, broader market acceptance of work from home, and alternative income sources at their disposal, a growing share of workers redefined what was best for themselves and their view of success. 

No longer would it be necessary to think of a corporate job in an office and a promotion as the means to success.  In this new world, they reasoned, “I can work as much or as little as I want, when I want, doing what I like.”  Energized by their opportunity to be their own bosses, workers resigned in droves, pursuing their own gigs or gravitating to employers willing to work under a new, different work framework.  Others simply cut back on their work hours.

Content Creation:  The Race to Empower and Enable Creators

Content creation and gaming, once considered niche activities, are now mainstream, fueled by the energy and ambition of Millennials and Gen Z.  More and more, “everyone” is a content creator.  In fact, 78% of consumers create and post content at least monthly, led by videos (62%).  1 in 6 report earning at least some amount of money with their content. 

Those who earn money use 3 to 4 devices including real cameras and have a much more sophisticated content creation process requiring a seamless experience across form factors.  Amateurs use only 1.3 devices on average, with most relying almost exclusively on their smartphones.  The opportunity is ripe for companies across the marketplace to provide devices, software, and platforms which offer a seamless experience and empower content creators to do what they most want to do – build a following and make money.  This means helping them to move along the continuum from amateur, to prosumer, and beyond.   It also means understanding the dynamic, ever-changing environment. What role will generative AI play? Will short-form video continue to be the rage?  What about long-form? Stills?

Tech-enabled Income-generating Activities Drive a Larger Tech-enabled Lifestyle

It’s not just content creation. Tech-enabled side hustles are on the rise. Half of households report engaging in at least one source of tech-enabled income-generation. Besides content creation, peer-to-peer commerce and rideshare driving top the list. Over 60% of households headed by Gen Z or Millennials report such online income. This trend, seen worldwide, was corroborated by a recent U.S. study by Lending Tree. 

Importantly, engagement in online income-generating activities is a powerful catalyst to broader adoption of a tech-enabled lifestyle – a tipping point in individuals’ lives. The opportunity to earn income drives initial openness to the usage of tech-enabled apps and services.  Successfully earning income then produces confidence to adopt tech-enabled approaches in other areas of their lives.  This is true across all demographics.  Online income-earners more intensely use digital payments platforms, spend more on devices, and subscribe to a wider breadth of tech-enabled services.  Consumer-facing companies with tech-driven solutions would do well to target them.

An Online First Mentality is Predominant

When it comes to shopping, consumers have clearly embraced an “online first” mentality, leading online purchases (50%) to overtake in-person purchases (43%) for the first time; phone purchases remain at 7%.  Usage of online grocery shopping has broadened dramatically – 72% now report they buy at least some of their groceries online, even if just occasionally.  Home delivery is driving the biggest part of this growth – expanding its share from 25% of purchases (pre-COVID) to 35% of purchases (now).  Gen Z and Younger Millennials drove this growth – along with Boomers, demonstrating how the habits of these younger cohorts are impacting the broader marketplace. 

Interesting “Crossover” Activities are Emerging

There is an interesting mash-up happening between social media, gaming, and e-commerce.  Enabled by technology, consumers are connecting areas of their lives previously seen as separate.  Gamers are posting videos of their gameplay on Twitch and Instagram.  Shoppers are using TikTok to discover where to eat or which supplements to take.  Business opportunity exists wherever consumers want to connect previously disconnected areas of their lives.  A future Metaverse is a potential place for that. 

Two-thirds of consumers have heard the term Metaverse, but familiarity and knowledge with the concept behind the term is very low.  Roughly 1 in 4 consumers are highly interested in the concept of the Metaverse.  They prefer immersive experiences and are more willing to spend on tech, including smartwatches and AR/VR headsets.

Re-shaping Meals and Dining

When it comes to meals and dining, the attitudes of Gen Z and Millennials increasingly point to a very different lifestyle from previous generations.  They have a much more positive view of the quality of delivered food and a much less negative opinion of its value for money.  Their habits are re-shaping the marketplace, giving rise to a flurry of drive-through only restaurants and ghost kitchens.  As Gen Z and Younger Millennials age and reach the family stage, the implications will be even more dramatic, as their “practical and convenient” orientation gives rise to the opportunity for alternative business models, including combined meals and groceries subscriptions.

Travel Rewards Opportunity with Gen Z and Millennials

Travel suffered significantly during the first year of the pandemic.  Over the past 6 to 9 months, travel exploded!  But travel is the ultimate discretionary expense and inflation pressures are now weighing on consumers’ disposition to travel, particularly among those with lower and middle incomes.  Consumers have already widely adopted the internet for planning and booking travel and these habits have been stable for the past 3 years.  Still there is opportunity for disruption here.  While 29% of Gen Z and Millennials have dining-related rewards programs, only about 15% are active in an airlines or hotel rewards program.  This clearly signals an opportunity to gain a footing early with these consumers, with a long lifetime ahead of them. 

Multi-mode Personal Mobility & Gen Z

71% of consumers use at least two modes of mobility for a significant portion (10% or more) of their monthly mobility time.  With their proclivity for urban living, more than any other generation, Gen Z use public transport, bikes, scooters, rideshare, and mobility services. The Future Consumer will have a broader, multi-mode mobility strategy using multiple modes alongside the continued use of personal cars which remain consumers’ strong preference.  Battery electric vehicles continue to face barriers; but new more affordable entries are coming to market.  This will reduce Tesla’s first mover advantage. 

Lifelong Learning is Nearly Universal in Reach; Opportunity Remains

Online Learning is increasingly ubiquitous, used by 6 in 10 consumers overall, 70%+ of Millennials, and 80% of Gen Z. Online learning is a perfect fit for Gen Z and Millennials who are digitally self-sufficient and motivated to achieve.  Online Learning continues to offer strong growth opportunity; the breadth of possible learning topics is tremendous, with many consumers pursuing topic after topic.  While consumers see paid content as more trustworthy than free content, YouTube remains a dominant, free source and Gen Z has become more skeptical of the value for money of paid online learning offerings.

Wellbeing is Ripe with Opportunity

With COVID, at home’s share of consumer workout time grew from 36% to 56%.  With the end of the pandemic, this has fallen but remains well above the pre-COVID benchmark at 44%.  The pandemic had a big impact on mental health. The younger the consumer the worse the impact.  Due to its perceived mental health benefits, more people are exercising now than before the pandemic.  Millennials have shifted most strongly to working out at home due to their busy lives and their purchase of home workout equipment.  At home, self-developed routines are most prominent as consumers leverage online workouts (free and paid) and companion apps.  A segment of consumers is open to using AR/VR for their workouts.  All these factors make wellbeing ripe for activity and change.

On top of that, consumers are nearly universally dissatisfied with the bureaucratic, manual nature of healthcare systems and providers in their country. Healthcare operations and logistics are ripe for disruption and can be a point of provider differentiation. Consumers are widely receptive to tech-driven change in all aspects from scheduling, to prescriptions, and related price research, medical records, and alternative tech-focused insurers and providers. 

Near-term Consumer Digital Transformation Opportunity Momentum

Consumer-facing Brands that Fail to Prepare for the Future Consumer are Dead

Gen Z and Millennials embrace technology across a wide swath of their lives. Their unique habits offer opportunity, their attitudes signal their future interest.  Firms which truly understand and meet their needs and expectations will cultivate their trust and build increasing relevance.  Those that do not will find themselves increasingly ignored as stagnant or irrelevant.  Business as usual is not an option.

We tried to assess the potential uses that a manufacturing organisation could make of chat-enabled generative AI technology and assessed the potential impacts of this technology for the industry by analysing the very answers an open tool has given us.

We questioned none other than ChatGPT, which stands for Chat Generative Pre-trained Transformer. ChatGPT is based on OpenAI’s GPT-3.5 series, which can perform a variety of natural language processes*.

With the professional version available, assuming that outage and availability problems are now past, does it make sense for a manufacturing organisation to fork out the few dollars of monthly subscription? Let’s find it out.

When we asked ChatGPT how it can be useful in manufacturing processes, the response listed the following areas:

“Quality control: ChatGPT can be used to analyse written reports and data from quality control inspections, identifying patterns and trends in product defects.

Predictive maintenance: ChatGPT can be used to analyse sensor data and logs from manufacturing equipment, identifying patterns and trends that indicate when maintenance is needed.

Document summarisation: ChatGPT can be used to automatically summarise large amounts of technical documents, such as manuals and procedures, making it easier for employees to find the information they need.

Natural Language Processing: ChatGPT can be used to process natural language input from users, such as voice commands, and translate them into actionable instructions for manufacturing robots or machines.

Chatbot: ChatGPT can be used to create a chatbot for customer service, handling customer inquiries and complaints.

Language Translation: ChatGPT can be used for language translation for multi-lingual communication with customers and suppliers.

These are just a few examples of how ChatGPT can be used in manufacturing. The specific application will depend on the needs of the manufacturing company and how they want to utilise the technology.“

We then proceeded in investigating some more details for each of the answers. The follow up question was “How can ChatGPT be used in quality management in manufacturing?”

We are now providing the actual answers, with a brief comment and our verdict.

“ChatGPT can be used in quality management in manufacturing in several ways. One way is by analysing data from quality control inspections to identify patterns and potential issues. The model can be trained on historical data to predict when quality issues are likely to occur, and can also be used to generate reports and alerts to notify quality control personnel.”

Any modern Quality Management System (QMS) application can already be augmented with an embedded AI analytics module to achieve this. This is very useful to help companies figure out complex root cause structures, and in general, investigate their “known” and “unknown” unknowns. In our case, it is unclear on which data Chat GPT is going to rely. So, at the present time, we think that ChatGPT is overselling a little bit here.

“Additionally, ChatGPT can be used to generate automated test plans and reports to increase the efficiency of quality control inspections. ChatGPT can also be used to generate automated documentation for compliance with regulations and industry standards. This can include generating standard operating procedures, work instructions, and other documents to ensure that quality management processes are followed consistently.”

This is quite interesting. This can help a lot with the simplification of clerical work and create multiple reports for different audiences very easily and at scale. But for the real business impacts to materialise, a company should first do some preparatory work and carefully define business rules, templates, formats, and audience requirements.

“Another way ChatGPT can be used in quality management is by analysing customer feedback and complaints, and identifying patterns and common issues. This information can be used to improve the quality of products, and to prevent similar issues from occurring in the future.”

The good old “feedback loop” story: understanding user habits and recurrent issues to feed back to the quality department with relevant information. But in the manufacturing industry, the problem for most companies is how to bypass distributors and access timely and good quality market information directly to feed the analysis. If ChatGPT only relies on publicly available information and does not tap-in any market intelligence database, everything it would talk about is things a company should already know about. So, as an add-on to a market intelligence subscription, it could become an intelligent way to consume the data, otherwise, mostly of little use.

“Overall, ChatGPT can be used to improve the efficiency and effectiveness of quality management processes in manufacturing, and help to identify and prevent quality issues before they occur.”

Here it seems a definitive oversell.

Then we followed up with the next use case: predictive maintenance and this is the answer.

“Analysing large amounts of data from manufacturing processes and equipment to predict when maintenance will be needed. This can include data from sensors on equipment, as well as data on past maintenance and repair history.

The model can also be trained on historical data to identify patterns and make predictions about when equipment is likely to fail.

Additionally, ChatGPT can be used to generate reports and alerts to notify maintenance personnel when maintenance is required, and can also be used to optimize maintenance schedules to minimize downtime and improve overall equipment efficiency.”

We are not doing a point-by-point analysis here, but in general, we are seeing the same pattern as the use case before. Overall, ChatGPT can be used to improve the efficiency and effectiveness of document management processes in manufacturing and help to identify and extract important information from documents quickly and accurately.

Good for clerical work simplification, redundant for other functionalities, but definitely overselling itself sometimes.

Now, let’s analyse the other points that ChatGPT has brough forward: Document summarisation, Natural Language Processing, Chatbot, Language Translation.

A quick glance at the detailed answers highlighted that here ChatGPT was not providing additional business use cases, but rather outlining some basic principles of how it works. A little bit like if we asked an intelligent washer-dryer machine what it does, and the reply was: “Washing clothes, drying clothes, having a spinning drum inside, being heavy, consuming electricity, etc.”

Any Missing Areas?

Now we also thought about some obvious “missing areas” in its self-assessment: for example, idea generation. Using the generative text functionalities as a way to explore concepts, visions, user needs, like a “crowdsourcing” tool that prompts ideas that may just not come to mind to a decision maker considering several options.

Another obvious miss was code programming. Our research has constantly highlighted a critical need for digital skills in factories and the importance of low/no-code applications to address this (we have been talking about the notion of “buyilders” — a hybrid between “build” or “buy” software users), enabling workers on the shop floor in general act as/programmed as interactive tool/personal assistant, digital work instructions, etc…

As personnel with some knowledge of coding become more of a frequent sight in plants, having a conversational tool for programming can easily lower the threshold for digital skills in disciplines such as data analysis, machine connectivity, and operational improvement.

What Are the Risks that a Manufacturing Company May Incur While Using this Type of Solution in Their Business Practices?

First, the risk of losing the grip on information quality. Over time, managers can lose grip on the practical aspects of information they have to evaluate (where it comes from, how it has been created, are there inherent biases in it? etc.), with an increased risk of “garbage in/out” effect (a side note: with examples of answers such as “gnothi seauton”, or “42!” we can think of plenty of “oracles” providing unintelligible answers to poorly structured questions).

It is true that sloppy interns will get wrong information as well, but the system has no way to check the quality of information, at least not yet. Eventually, there is a risk of having supervisors that have never done the job in the first place because the step is not done anymore.

Also, these tools automate a lot of “entry-level”, clerical, repetitive transactional tasks (filling repetitive reports, data entry, data check, etc.). This is not bad per se, but it could be an issue in organisations where the “learning by doing” career growth is heavily based on those menial activities.

The risk is that there could be no available route for juniors to learn and grow in these organisations.

Hampering radical innovation reduces the questioning of the status quo. The widespread use of generative tools will also force companies to reinvent excellence.

In its answers, ChatGPT tends to converge to a median level, the “common knowledge”. So not only can this lead to a risk of preventing “disruptive discovery” if not used properly, it can also amplify and reinforce organisational biases, favouring routine and procedural consistency over innovation. Removing the transactional costs of procedures (i.e., clerical work is boring and expensive) can make organisational streamlining less of a need.

Making the fulfilment of useless steps automated and cheap may lead to the accumulation of inefficiencies. When nobody has the ownership and burden to execute these tasks, nobody questions the procedure, and the risk of procedural errors or bottlenecks arising from convoluted processes is never addressed.

The advice is to take this technology with a grain of salt. Companies have to look at it with an eye for process transformation. Automating something manual is not a benefit by itself, it is a benefit when it simplifies the organisational structure, saves time, and increases the focus of key decision makers to more relevant tasks that create real business value.

Purpose is a word that is often talked about. But what does it mean and how does it impact your business?

Purpose is not just about what you sell, but the value you bring. Not just about the products and services you produce, but your company ethos. The impact of what you sell, how you make it and the effect your company has on the wider community.

Purpose impacts everything from buying decisions to employee productivity. Purpose, therefore, drives not only what you do but how you do it.

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A purpose gets to the why of the company. Why do your products or services exist? What value does your company bring? Beyond making a profit, what are you providing?

But why does this matter?

Customers are not just concerned with the performance of the products they buy, but who is providing them. Interest in things like a company’s carbon footprint, the working conditions of employees, even the charities a company donates to influence a customer’s decision to buy.

What you stand for is impacting if people buy from you. So you need to ensure you can demonstrate the value you bring. What your “purpose” is.

Your brand purpose is also important for your employees.

It helps build strategy and focus goals. Helps with decision making. It needs to be more than a PR statement — an ethos that can help drive the company. Something that an employee can look to and ask, does the work I am doing contribute to our purpose?

It promotes an aligned and connected organisation that delivers value. Purpose enhances performance and creates value.

Brand purpose is an important keystone for any business. Brand purpose should influence everything from your strategy to messaging to recruitment.

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Your company may already have a brand purpose. If you do, it’s good to revisit it and see if it still reflects the ethos and goals of your business.

There are key questions that you should be asking when thinking about your business that your purpose should answer.

Questions to ask when looking at brand purpose:

  • What does our business help people achieve?
  • How does our business impact the societies we operate in?
  • What value(s) do we have while building our products and services?

Customers are becoming more concerned about what a brand stands for. More likely to check whether your business is doing what you say it does. Performative actions without substance (such as greenwashing) will not go down well with potential customers. Purpose can be aspirational, but it must be honest.

Examples from major companies:

  • Coca-Cola. Our purpose: Refresh the world. Make a difference.
  • HP. We are a technology company born of the belief that companies should do more than just make a profit. They should make the world a better place. Our efforts in climate action, human rights and digital equity prove that we are doing everything in our power to make it so.
  • Nike. Our mission: Bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)

Purpose goes beyond a slogan.

Purpose should tell whoever encounters it what your company stands for and what it provides.

Purpose is a factor in a business’ reach and awareness within a market. It can determine whether a customer buys from you, or not. A driver for success.

Act with purpose.

 

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If speed of adoption and scale of use were top considerations in the last “cloud first” decade, this decade it is about adding control with cloud economics, efficiency and sustainability.

These value pillars are driving IT investment decisions for the C-Suite across industry sectors and countries today. In fact, based on a recently conducted IDC survey, “value for money” was the highest rated attribute for selecting a cloud technology vendor partner.  

The proactive focus on cloud costs over the last 18-24 months is so dramatic that in some cases, it is superseding cloud security focus. At a broad cloud-themed roundtable of an exclusive group of C-suite executives hosted by IDC in February, the tech and business leaders spent the majority of the time discussing cloud cost optimization tips and challenges. “Security is paramount for the cloud, but so is cost control and efficiency for us,” said a CIO of a multinational communications company at the roundtable.

According to a recent IDC CIO Quick poll, 6 in every 10 organizations I surveyed admitted to spending more on the cloud than initially budgeted. There is consensus among the C-Suite leaders that cloud is an imperative for innovation and the foundation of digital business platform.

While cloud adoption accelerated, cloud governance and control mechanisms haven’t kept pace. As a result, up to 30% of cloud spend is categorized as “waste” spend that can be optimized.

This perception of cloud waste combined with tighter budgets and efficiency pressures (from the finance and ESG teams) and macroeconomic factors such as inflation and a potential recession are making cloud costs a top-of-mind consideration for organizations.

With cloud (IaaS, PaaS, SaaS, data clouds) accounting for a dominant portion of IT spend, efficient and optimized use of cloud resources is a key priority. But cloud democratises resources and decentralises the purchase decisions. The combination of consumption-based pricing, dynamism of resources and decentralisation of decisions makes cloud cost control harder. Traditional budgeting, planning, forecasting of IT spend don’t lend themselves to this dynamic cloud world.

Rising cloud costs won’t be as much a concern if tech leaders can monitor the spend, manage it, and see the return on investments. This is the premise used by many organizations to adopt FinOps – as a means to optimize cloud spend rather than altogether cut or avoid cloud usage.  

FinOps is a framework, culture and mindset that enables organizations to maximize the value of their cloud investments. At the heart of it, FinOps is about accountability, transparency and a culture of optimization.

FinOps is not yet another dashboard but a powerful methodology focused on people and processes—creating a culture change in many companies. Organizations adopting FinOps principles are able to:

  • Be more informed and in control of their cloud environment
  • Have confidence and insights to better plan and forecast cloud budgets
  • Make cloud economics their strength in negotiations internally and externally
  • Identifying areas of optimization (decommissioning orphaned resources, rightsizing environment, matching cloud resources to workload needs etc.) resulting in quick savings
  • Empowering developers and cloud users with information to take right decisions
  • Put cross-functional collaboration at the heart of cloud project
  • Encourage discipline and ownership of cloud spending
  • Foster a blameless culture through a single source of truth
  • Make IT a business enabler, rather than being a cost center by starting with visibility and, over time building mechanisms to dynamically chargeback business units.

Shift left of cost element – rise of DevSecFinOps

Digital mandates brought synergies between business, IT, security, and developers and we are now rapidly entering the era of FinOps resulting in finance dimension included in this synergy leading to a DevSecFinOps methodology.

 

The new CIO approach is that if security is a Day 0 job, FinOps is a Day 0.5 job and it is time to shift FinOps left

Business value of FinOps:

In the short term, it helps with visibility and easy savings to bring discipline in cloud use. It also makes users more aware of economic aspect of cloud.

In the medium term, FinOps strengthens organizations’ cloud governance capabilities and improve cloud planning, forecasting, and negotiating. It helps teams consider application right-scaling, resource matching and better tagging of cloud resources.

In the long term, it fosters a culture of collaboration and makes all users take responsibility for cloud costs. It also helps IT have metrics and KPIs to contribute positively to the broader sustainability and carbon footprint reduction goals. FinOps maturity includes Unit Economic concepts. It represents a business approach where a P&L containing the cloud-driven revenue compares it to the cloud costs incurred, so the complete picture of return on investment is evident.

Recession Tech Playbook Guidance: How to Excel with FinOps

Focus on the “and”, not the “or” or “but”. FinOps is not an excuse to cut cloud use. Quality, security, speed and costs are all business value pillars and a balance is key for sustainable and consistent IT transformation. Cost is one dimension. Organizations should be aware of trade-offs when making cost optimization decisions, as this is only one objective (albeit one that is an increasingly high priority).

Start small but start soon. Regardless of where organizations are in their cloud journeys, FinOps as a strategy is critical for the cloud success. Businesses can bring cloud cost visibility as close as possible to engineering teams, so these teams can understand how their decisions impact cloud costs and take appropriate measures at the design point. With regards to teams, organizations can start with 1-2 IT members with a passion for optimization or the CCoE embracing FinOps tasks. The company can then look to slowly build FinOps certification and a full-fledged team.

Explore FinOps enabling tech. A triad of automation, observability and optimization tools can help organizations take their cost governance strategies to scale. FinOps is firstly a strategy and a discipline. Once organizations have clear objectives and KPIs, they can evaluate platforms to implement it.

Adhere to industry standards to benchmark and track progress. Exploring the FinOps Foundation maturity model and adopting the three phases of FinOps – Inform-Optimize-Operate will help organizations clearly benchmark themselves in comparison to their peers and track progress. It will also help in identifying the weaknesses and using the same language of the industry.

Don’t lose momentum. Cloud cost governance is not a one-time exercise and overtime as consumption gets granular and innovation continues at breakneck speed, keeping up is key.

Understand that FinOps is a shared responsibility. Explore the cloud partnership to ensure cost optimization of the cloud and cost optimization in the cloud.

Don’t forget to explore the tips and best practices shared by my IDC colleague Rick Villars, Group Vice President, IDC, in this blog: Adopt a FinOps and Cloud Economics Strategy to Minimize the Risks of Cloud.

We at IDC have made FinOps a key part of our cloud research agenda, so watch out for more research insights from us this year to help you put your best, optimized and collaborative foot forward in the cloud this decade!

Luisa Pannozzi - Sr. Manager, Marketing - IDC

Customer-empathic marketer who excels at integrated marketing strategy. 15+ years in branding, integrated campaigns, content, and GTM programs. Known for uniting teams, building momentum, and turning insight into impact.

Are we in a recession? Or is it a downturn? Or would it be more apt to call today’s business landscape “economically challenging”?  The answer is that there is no single answer —especially when it comes to highly exposed small and medium-sized businesses. Economic conditions and their impact vary dramatically for SMBs based on factors such as their vertical, target market, region, and company size, to name just a few.

However, new IDC survey data makes point one abundantly clear: The recession fear is here for SMBs.

73% of SMBs believe there will be a recession in the coming year

Source: IDC’s January Future Enterprise Resiliency & Spending Survey

Of those that forecast a recession, nearly 46% answered that they are experiencing a recession right now, 35% estimate one to hit in the first half of 2023 and 20% in the second half of this year. 20% of those SMBs that predict a recession think it will be mild, 60% moderate and another 20% are planning for a severe recession.

A Game Plan to Weather Economic Challenges

In times of uncertainty, it’s essential for SMBs to take emotion out of the equation. One way to do this, and to feel better prepared and organized as a company, is to develop a clear and specific game plan—such as a list of actionable items that will (relatively) quickly deliver measurable results. If executed thoughtfully, this exercise can help SMBs weather today’s economic challenges and put in place strategies to help them operate more efficiently for years to come.

Below are 3 concrete steps SMBs can take now to survive an economic downturn—and thrive once it passes.

Invest in In-House IT Expertise

SMBs need to lean further into digital capabilities during economic downturns to reduce manual work and errors, be more efficient with slimmer staff, and combat rising costs of skilled labor. As a result, SMBs need to hire strong technology leaders who can help them as they invest in digital transformation.

IDC finds that 40% of global SMBs do not employ even one full-time IT staffer, and of those that do have at least one, around 70% only have between 2 and 4. These new in-house IT leaders can get to know an SMB’s inefficiencies more intimately than an outside vendor or consultant and can be technology advocates for the SMB.

High-level IT leaders should be tasked with researching, vetting vendors and technologies, and making technology purchase decisions. When beginning the recruiting process, SMBs should be sure to vet any new IT leaders carefully before hiring. Ensure that they understand a range of IT programs that your business is considering using and that they have experience with similar companies in similar verticals to yours.

These experts should have the capabilities and expertise to ask potential technology suppliers tough questions surrounding details and costs of implementation, integrations, maintenance, and time to ROI.

And finally, these technology executives should be able to carefully evaluate whether it is better to build a technology in-house or use a vendor for it, and also determine if a new technology is necessary and if it will deliver timely cost savings.

Amplify Automation

Inflation is leading to rising costs of skills, and tough economic circumstances are forcing companies to reassess and trim their workforces. This one-two labor punch makes today’s SMB landscape a prime environment for automation. This broad technology comes in many flavors.

Automation technologies can, for example, use ML to learn and improve on their own over time without human intervention. These automation programs could hone marketing and advertising campaigns as they learn what factors lead to a sale or conversion or detect fraudulent transactions by learning typical characteristics of such transactions over time. AI chatbots can take the pressure off customer service staff by solving basic inquiries without human intervention. Robotics in warehouses can save on labor for picking and packing in warehouses while doing these tasks more quickly than humans could. And digital apps and kiosks at restaurants can reduce the number of order takers necessary at quick service restaurants.

Shop Smarter

SMBs should quickly reinstate cost-saving measures that may have fallen by the wayside during healthier economic times. SMBs should seek to become master negotiators. Don’t be afraid to ask for more flexible contract terms and explore any cost savings a vendor might offer, such as volume discounts or bundled savings for when a business buys several offerings from a provider.

Beyond cost savings, this approach also offers the added benefit of reducing integration headaches that can surface when an SMB uses several different point solutions from multiple technology suppliers. This is important as, noted above, SMBs don’t’ typically have large IT staffs. Even if a contract is not yet up for renewal, ask suppliers if there is any room for contract negotiations or to revise fee structures in a way that works better for your business. Use your network of community resources such as a local small business association or chamber of commerce for advice and guidance on the best suppliers for your industry and business size.

Now is also a wise time to diversify your supply chain and sourcing, if possible, to account for global currency fluctuations that can impact energy, component, material, hardware, and outsourced skilled labor prices. And lastly, be vigilant about tracking the ROI of each and every technology in your tech stack. CFOs should also require businesses and IT to perform ROI calculations before approving the budget for new technologies. One person should be held accountable for each project and deliver on those previously forecasted results.

Find more information related to macroeconomic impacts on SMBs, in these related reports that are part of IDC’s Worldwide Small and Medium Business Research practice.

Katie Evans - Sr. Director, Research - IDC

Analyst Profile
Katie Evans, Senior Director, Worldwide Small Medium Business (SMB) Research Program within the Digital Transformation space. Katie's core research coverage includes identifying and supporting the unique, evolving needs of the Very Small, Small and Medium Business technology buyer. Katie has a strong, SMB-focused research and writing background, having covered SMBs in the retail and ecommerce space for over 12 years. Most recently, her primary coverage area was researching the technology needs of SMB retailers and analyzing the vendor offerings on the market to meet those evolving needs. Katie has also conducted extensive writing and research on mobile and international ecommerce and has authored several custom reports for vendors serving SMBs.

Neurodivergent people have many talents that can add value to the IT industry. Autistic people can be strong logical thinkers, highly focused, detailed orientated, reliable and loyal. ADHD people tend to have high energy and strong imagination. Dyslexic people can bring out-of-the-box thinking and pattern recognition. Dyspraxic people tend to be really good at strategic thinking and problem solving, and highly motivated.

There is no question that neurodivergent talent can add value in a variety of technical and business roles in the IT industry. So, we don’t need to ask, “What can neurodivergent people do for the IT industry?” The answer, unequivocally, is a lot.

We need to change the perspective. We need to ask ourselves what we can do better to attract and retain these talents in IT buyer and supplier organisations.

In a previous blog, I talked about how cities should think of how to become autism friendly, including through the intelligent application of technology. In this piece, I’m reflecting on how the technology industry itself can make the workplace more autism friendly.

Making the IT Industry Autism Friendly

According to Digital Scotland, 10% of Scottish people are neurodivergent, but many of them are unemployed. In fact, the UK Office of National Statistics’ research shows that just 22% of autistic people are in any kind of employment, but many more are eager to work. That’s a lot of wasted talent for the IT industry at a time when there’s a dire shortage of talent.

According to our surveys, around 74% of European organisations find it difficult or very difficult to hire technology roles in either line of business or IT. Most importantly, that’s a lot of unaccomplished self-fulfilment and happiness for autistic people.

The good news is that the IT industry has started to pay attention. On the technology buyer side, the Israeli army recruited autistic soldiers for a highly specialised visual intelligence unit. On the supplier side, IBM established the ND@IBM BRG (Business Resource Group), which includes neurodivergent employees and allies in IBM offices across the globe.

SAP, Microsoft, DXC and EY have invested to raise awareness both among their employees through internal webinars and training, and for the overall industry by sponsoring Autism at Work Summits. There are even companies that make neurodivergent talent their core asset, such as Auticon, which provides quality assurance, testing, data science and cybersecurity services with a delivery workforce that includes around 400 autistic consultants in its 20 offices.

There’s a long way to go, but these examples show that a different perspective on autism at work is possible for the IT industry. Companies embracing this new perspective need to consider that matching the skillset of neurodivergent people with the right projects and activities, and raising awareness, are only the first steps in the process.

Success comes from changing recruiting and hiring processes by finding alternatives to one-to-one interviews, which can be a barrier for people with gaps in their social skills. For example, they could combine cognitive written tests with week-long workshops, where psychologists bring candidates together for group work and meals to evaluate their individual soft skills.

Workspaces need to be adapted. Just as an employee in a wheelchair may need a ramp, an autistic person may find a low-light, low-noise environment more conducive to concentrating. Psychologists need to be retained as job coaches to help prevent situations that cause anxiety, based on each individual’s profile, and to facilitate interaction with clients.

Dress codes need to be relaxed for autistic people that may be hyper-sensitive to touch and therefore can’t wear certain fibres. Neurotypical employees must be immersed in teams with neurodivergent people to learn how to interact.

A simple change of language from “I need this deliverable to be completed ASAP” to “I need this deliverable to be completed by tomorrow at 5pm” makes an immense difference for an autistic person. The former quite simply does not make sense, and just creates anxiety. The latter provides a clear deadline that an autistic person can meet.

Neurodivergent talent can bring a different perspective to help IT buyers and suppliers avoid bias when tackling business and technical problems in our fast-paced industry. All we need is a change in mindset to make the IT industry a good place to work for neurodivergent talent.

Massimiliano Claps - Research Director - IDC

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