Borrowers can be an impatient bunch when it comes to initiating and waiting on loan applications. Time and user interface are key factors when seeking much-needed funds. Many financial institutions (FIs) have lagged their fintech competitors in the digitization of key banking business lines such as lending. Now FIs have a range of technology solutions as they play catch-up in the lending market to both consumers and businesses alike. Loan origination software is a key enablement for FIs to step up their digitization game not only to improve their lending operations, but also to enhance their customers’ experience.

Loan Origination Software Enhances Banking Modernization

As the pandemic subsides, digital lending modernization will become the new normal for FIs. They must adapt and develop their digital platforms accordingly to respond to customers who increasingly avoid in-person or phone contact and prefer to use mobile and online channels for loan services. Digital lending platforms align extremely well with IDC’s 3^rd Platform model for business strategy and investment. Within this model, core technologies of cloud, big data/analytics, mobility, and social media enable FIs to manage relationships and conduct business transactions more successfully.

For example, cloud computing brings manageable costs, minimal set-up, and scalable growth for lending platforms. Big data and analytics use machine learning algorithms for credit decisioning as well as fraud management measure. Mobile device usage has grown into a ubiquitous way of doing business for both B2C and B2B segments. Finally, social media now serves as platforms for content marketing and digital advertising, which play key roles in attracting and onboarding new customers. In sum, 3^rd platform technologies become table stakes for FIs that wish to compete in the digital lending market across global regions.

According to IDC’s Worldwide Banking IT Spending Guide, tech spending on loan origination was $7.3 billion, or 44%, of overall loan IT spending in 2021, growing to $9.7 billion in 2025. The IDC Industry Spending Guide also found that 3^rd Platform technologies will be the largest area of technology investment by the banking industry in 2022. Cloud and mobility will account for at least 30% of spend intent. FIs will devote significant technology spending around digital lending in areas including credit decisioning, fraud management, process automation, and customer experience. FIs will find more revenue opportunities and expand customer engagement as they invest in technology solutions to modernize their loan origination process.

Consumer and Small Business Borrowers Expect Convenience and Immediacy

The ease of digital transactions for online commerce is now ingrained into the expectations that consumers and small businesses have when interfacing with lenders. While some loans are more complex, others such as personal and auto for consumers, and working capital for small business can be processed with technology solutions. Lenders can enhance the customer experience with a frictionless application process and fast-decision response time for borrowers. Streamlined lending processes drive customer loyalty and long-term relationships between banks and their customers.

Mobile apps are often channels of choice for consumers whose smartphones have become lifestyle commerce. FIs will gain more sustainable customer engagement as they invest in technology that enables borrowers to use their mobile devices for loan applications. Embedded lending within mobile apps is a growth opportunity for both tech developers and their tech buying clients.

The use of big data and analytics in handling loan applications also gives lenders the ability to personalize the borrower experience. Customers enjoy a more individualized experience with their FIs, and in return, will seek future banking services. Using loan application data and customer information, predictive analytics can indicate what services a customer may want or require next. For example, consumers that use BNPL installment lending for home furnishings, may also be interested in a home equity loan.

Financial Institutions Find a Lot to Like with LOS Options

Many steps in the loan origination process are highly labor intensive for financial institutions, as well as time consuming for loan applicants. These include data collection, borrower authentication and verification, credit decisioning, and regulatory compliance. FIs will find many benefits and gain competitive advantages when digitizing their loan origination process as outlined below:

Operational Cost Efficiencies

• Cost savings given that loan processing is labor intensive and contains several manual steps
• Enhanced quality and process improvement with more accurate data collection resulting in less errors that must later be corrected
• More informed credit decisions leading to lower delinquent payments and reduced collections activity
• Improved fraud detection and risk management through machine learning algorithms

Revenue Optimization

• Increased loan throughput as production capacity is increased by digitizing repetitive tasks through robotic process automation
• More concise loan pricing with better data collection on individual borrower profiles
• Cross-selling opportunities for other financial services

Enhanced Customer Experience

• Multi-channel interface so customers can choose online or mobile interface
• Reduced application friction for consumers with less need for phone or email interaction
• Faster loan decisions and funding that increase customer satisfaction and leads to longer-term relationships

Recommended Actions for Tech Buyers of Loan Origination Software

Understand the customer journey and the borrower’s path in seeking and obtaining a loan from beginning to end. Consumers are accustomed to streamlined processes for digital transactions and the user interface for lending applications is usually a differentiating factor.

Prioritize customer experience and sustainable engagement over transaction processing. Lending may be a borrower’s first experience with an FI and can open a range of cross selling opportunities that contribute to lifetime customer value.

Utilize technology applications such as: 1) cloud computing that brings agility, cost effectiveness, scalability, and optimal systems integration to a lender’s infrastructure; 2) big data and analytics that provide speed to decisioning and personalization to the customer; 3) mobility platforms that align well with how consumers prefer to conduct digital commerce.

Assess different technology procurement choices: build, buy, or partner. Size, resources, budget, existing tech systems, and required time-to-market for the lender organization will lead to the appropriate decision.

To learn more about the loan origination journey and the technology needed to modernize this process, Join us for the webinar, “Digitizing The Loan Origination Process With Technology“, live on March 9th at 11 AM/ET.

Does external stress accelerate organizational innovation? Ask three colleagues and you might get five different answers. Ultimately, no matter how strongly held your individual opinions are, you will probably fall back on the conclusion that individual outcomes are situationally dependent; in other words, your mileage will vary.

When seeking to better model complex human outcomes like innovation, many of us have turned to biological analogs; that is, we might compare organizational innovation to biological evolution. As far as organizational innovation goes, the general consensus is that human innovation proceeds at a more or less even pace but that the adoption of innovative solutions has been uneven and driven by a variety of external factors. According to The Nobel Prize in Physiology or Medicine 1969, within the field of biological evolution, the debate has been even more intense with Salvador Luria and Max Delbrück being awarded a Nobel Prize in 1969, for work published in 1943, that found “organisms under stress have a higher mutation rate, even though they are not dividing.”

More recently, as mentioned in Does Stress Speed Up Evolution?, in 2018, after “more than two decades of experiments with the bacteria E. coli and most recently human cancer cells, Susan M. Rosenberg, a molecular biologist at Baylor College of Medicine, is challenging that central tenet of evolutionary theory. According to Rosenberg, and colleagues like Robert H. Austin, a physicist at Princeton University, organisms have evolved mechanisms that enable them to drive their own evolution in times of stress. Environmental pressure can boost mutation rates rapidly, even in cells that are not dividing, enabling them to adapt more quickly to new conditions. “Stop insisting that all mutations are random and evolution is slow is the entire story,” Austin says.’

So, in April 2020, Satya Nadella, the CEO of Microsoft, explains in his article, 2 years of digital transformation in 2 months, “We’ve seen two years’ worth of digital transformation in two months,” was that real or puffery? Well, some two years later, the stark value that digitization of organizational processes has brought is legion. Be it retail, medical, manufacturing, government, supply chain optimization, or customer service, many examples can be cited of how digital transformation has accelerated innovation and enabled organizational continuity in the face of the most significant disruptions witnessed, worldwide, in decades.

Increasingly, the conversation around digital transformation is expanding to embrace the concept of “digital first,” in which businesses assume digitization as the basis for any new opportunity or solution to a problem, and analog counterparts take a back seat, if they even exist at all.   

Against this backdrop, information technology, IT, is no longer a tool we use to “enable” employees; it is how we transact our daily activities with virtually everyone within an organization interacting with suppliers, customers, marketing, operations, etc. At IDC, we describe this phenomenon across a constellation of nine Future Enterprise practices detailing the C-Suite agenda for the major disciplines within an organization, from Operations to Trust to Digital Infrastructure.

And, as organizations worldwide strive to cope with the strains and opportunities our digital-first future presents, it’s evident these Future Enterprises require a digital competent, Future IT, organization.

For CIOs and IT leaders striving to deliver an enterprise-wide technology platform, one of the critical imperatives is to systematically deliver an objective and relevant suite of metrics and KPI performance dashboards, tuned not to operational IT department outcomes but tailored to the diverse constituencies across the organization because information technology is now the channel we use across the enterprise. After all, if we cannot measure what has happened across the enterprise we will struggle to agree on what happened across the enterprise!

Digital performance metrics and KPI dashboards are critical requirements powering our organizations as we are challenged to adapt more quickly to shifting circumstances. They are a necessary feature of our organization’s innovation and evolution – not an afterthought. By 2023, we will look back on those digitally enabled organizations that have thrived, and those Future CIOs heralded as instrumental in that success, and a common denominator will be that they instantiated a suite of metrics and KPI dashboards, tailored to different functions and roles, with the common purpose of providing tailored, practical, outcomes-oriented data to guide the day-to-day decisions that facilitated superior organizational outcomes. We dive deeper into the business-impact KPIs that drive digital transformation in IDC’s new eBook, “Forging Business-Impact KPIs for the Digital-First Enterprise”. Click the button below to download the eBook and discover how to set realistic milestones that are measured and successfully achieved is the foundation to build the next set of capabilities in a digital-first enterprise.

I think The Clash said it best: “Should I stay or should I go?” That was the question heard round the retail world leading up to NRF 2022, as the Omicron variant of Covid-19 spiked in New York City, home to the Javits Center and the NRF Big Show, leaving hospitals overwhelmed and potential attendees and exhibitors fearful of getting sick and stuck in quarantine in a city not their own. In the end, some selected the former and some the latter, which made for lower attendance and some wide-open vistas on the exhibit floor, but also created the opportunity for a less frenetic pace, with longer, more in-depth conversations and a place to sit down to have them. Surprisingly, Omicron did not keep all international visitors away. Many small groups traveled the show speaking Spanish, Portuguese, German, French. 

The show had a unique energy, and it was good. The past two years have been challenging for retailers but have also sharpened their focus, accelerating decision making around strategies and technologies to address specific problems that some might otherwise have let languish. As we saw starting in 2020, the pandemic was the final nail in the coffin for some retailers, but it also likely saved many others from the same fate. Retailers have become more vigilant when it comes to how they run their businesses — and even why ― and this blog will address just few of the most prominent themes and technologies that retailers are focusing on to address those issues, with more NRF takeaways coming soon from me and my IDC Retail Insights colleagues Leslie Hand, Dorothy Creamer, and Margot Juros.

Sustainability/ESG takes center stage. Ralph Lauren CEO Patrice Louvet may have tapped into the essence of sustainability best when he tied it to the Ralph Lauren ethos of timelessness. Just as the company’s garments are designed to be worn not for two years, but for two decades, so should companies take the long view in general, recognizing their responsibility to be good stewards of their organizations and the larger ecosystems in which they operate.

If you feared that rising focus on sustainability/ESG issues might have been a casualty of the pandemic, you thought wrong. The focus on sustainability was perhaps more prevalent than any other at NRF, which says a lot, given the steady drumbeat of conversation around topical concerns such as Covid, inflation, and labor shortages, as well as technology-driven goals including supply chain visibility and automation, customer engagement, digital store operations, omnichannel fulfillment, and data security and privacy. The thread of sustainability wound through each of these topics, and is clearly top of mind from the retail C-suite to all points beyond.

Driven by consumer as well as employee demands, by the investor community, and by clear and pressing need for change, companies want to know, “How do I create a more sustainable organization?” and “How do I ensure that those actions lead to meaningful outcomes?” There are many answers to these questions. Some come through direct efforts to mitigate carbon pollution and water use, to design and create product with the end in mind, to treat workers with respect, and to hire from a wide pool of people with diverse perspectives and backgrounds. Ralph Lauren, for example, recently partnered with Dow to develop a sustainable method of dyeing cotton on demand that dramatically reduces water use and eliminates waste. The company also has invested in sustainable material science startup Natural Fiber Welding, which treats cotton waste in such a way that it can be leveraged as a performance fabric — a feature not offered by cotton in its natural state.

Looking broadly at sustainability, as organizations must do, another solution is found in digital transformation, which, through the connectivity, visibility, agility and optimization it enables, contributes to sustainable operations around entire business ecosystems. This includes product planning and design, development and production, facility and asset management, and the end-to-end retail operations including transportation, cold chain, returns, and reverse logistics.

Digitalization, enabled and enhanced by cloud, AI, computer vision, IoT/RFID, AR/VR, and edge computing, also provides a means to see, measure, record, benchmark, and report environmental and social efforts, setting the stage for companies to understand what they are doing more holistically and improve upon it.

Welcome to the Metaverse. You’re already there. Today, the metaverse is an extension of our lives, enhanced by technology, that currently exists as a series of virtual worlds. Your teenage son buying skins for his avatar in Minecraft? Metaverse. In the future, the metaverse will be an interconnected, endless world where digital and physical lives fully converge. Imagine waiting for an appointment at a real booth on the NRF show floor while your avatar roams a fully fleshed-out digital NRF, meeting other attendees (who may or may not be there in person), stopping for coffee at the digital Starbucks, and paying for a coffee that an in-the-flesh Starbucks employee brings from the mezzanine of the Javits Center. Digital and physical selves merge seamlessly in the metaverse, as the worlds draw closer together.

What does the metaverse mean for retail? In the metaverse, brands have a digital presence, too. There are virtual possessions. And consumers. Nike filed seven trademarks late last year, including those for “Nike,” “Just Do It,” and its swoosh logo, and posted openings for virtual designer roles, indicating its intent to make and sell virtual branded sneakers and apparel. It subsequently purchased RTFKT Studios, a company that already makes and sells NFTS and digital sneakers. (In one collaboration with teenage artist FEWOCiOUS, the company sold 600 pair/NFTs of sneakers in just six minutes to the tune of more than $3.1 million.)

Further, outside of its role as a sales channel, the metaverse opens possibilities for gathering data about consumers and product demand. Imagine a sneaker drop in the virtual world, where certain styles of new kicks sell like gangbusters, giving the brand insight into what might sell IRL, thereby offering intelligence that leads to trend-right production and not a lot of inventory headed for markdown or landfills. In other words, the metaverse can be a vehicle for more sustainable operations.  

Either/Or Is Out. Hybrid Experiences Are In. It’s the era of ‘both/and.’Not only does the metaverse open up a huge world of selling opportunities for retailers, it further bridges the narrowing gap between digital and physical worlds. While most consumers may not be outfitting an avatar in the universe, they are nonetheless moving between online and offline at whim and expect retailers to accommodate those hybrid omnichannel journeys seamlessly. Today, those demands have accelerated around last mile, and include experiences such as shopping online and picking up in-store or curbside, or shopping in-store and returning merchandise online; they include endless journey varieties such as adding items to your BOPIS purchase when you arrive at the store, or communicating with the third-party delivery service that’s picking and delivering your groceries to approve a substitution.

Hybrid experiences open opportunities to please the consumer in new ways, but they also add expense and complexity, including the need for upgraded connectivity to enable secure experiences. The need to meet the demands of hybrid while also enabling profitability was a major theme behind many of the technologies discussed at NRF, including AI for recommending right product, return logistics software for defining and guiding product-specific reverse logistics workflows, order orchestration and fulfillment applications for omnichannel shopping, last-mile delivery visibility for optimizing customer experience and even autonomous, driverless cars for handling those deliveries quickly, efficiently and labor free. Task management applications help to improve and optimize in-store employee engagement, while touch-free applications allow for faster payments and customer self-service checkout. RFID is enabling improved inventory accuracy and inventory locating, on the shelf, throughout the store, and into the supply chain.

Across it all, retailers are seeking unified platforms that interoperate across omnichannel, microservices that enable them to easily swap modules in or out, visibility of data across the enterprise or ecosystem, the ability to integrate systems quickly, with all applications working together well regardless of cloud provider, and security and fraud protection across data and all systems and infrastructure.

It’s a tall order. Retailers and their technology partners are on it. While my IDC’s Retail Insights colleagues, Margot Juros, Dorothy Creamer and I were at NRF, we vlogged our experiences. In these videos we share our personal experiences and feedback in real-time, offer important findings and insights and hold interesting interviews. Click the button below to watch the vlog.

“Digital” is everywhere. Where once there was digital transformation, now there’s the “digital enterprise,” “digital first,” “chief digital officers” and “digital innovation.” It’s even used as a noun, as in “an enterprise’s spend on digital.”

What’s the distinction? I won’t attempt to describe all of the “digital” terms currently relevant to enterprises, but I will, based on my discussions with enterprises and research over the past year or so, touch on topics that have emerged as important factors that define digital innovation.

Digital innovation is a subset of many of the other “digital” topics. An organization may add a new digital channel, like an e-commerce site, or modernize a back-office process, such as through digital document management. While impactful, those examples aren’t necessarily innovative. An innovative digital product or service is disruptive, differentiating, or unique. It’s also difficult to deliver, especially for the many enterprises that have traditionally bought software but have not developed software in any significant fashion.

Disruptive, differentiating, and unique are lofty terms that aren’t defined easily. As we’ve dug deeper into the topic of digital innovation, we’ve teased out some questions that help determine whether a digital deliverable is innovative:

Is it a value engine? One commonality we’ve discovered across many innovative digital products and services is that they often create more value beyond the initial intention. We think of this type of digital product or service as a software value engine.

Here’s an example: Damen, a shipbuilder, offers a service that collects and analyses data about a ship’s operations, providing insight to owners and operators that can improve maintenance and ship performance. Once Damen rolled out its service, it began receiving requests for data analytics from companies in sectors it had never served before, such as financial services and insurance. The original digital offering became a value engine on which Damen can now build new products and services that create new revenue streams.

While it may sound like chance that allowed Damen to spin off additional products, it wasn’t. An innovative digital product or service can be iterated on. And, a company capable of digital innovation is open to feedback from third parties and willing and able to put in motion an effort to deliver an additional product or service.

Does it have a significant impact on profit? A digital product or service that isn’t innovative can, in many cases, generate significant revenue. But if a unique digital product or service doesn’t have a significant positive impact on the bottom line it’s hard to consider it innovative in the context of the enterprise.   

Increasingly, we’re hearing enterprises quantify revenue or expected revenue generated from digital deliverables. For instance, digital sales at Kroger are growing in triple-digit percentages, reaching more than $10 billion in 2020 (the company’s last full year report). GM has set a goal of growing software-enabled services revenue to $20 billion to $25 billion annually by 2030. In its Q3 2021 earnings report, McDonald’s reported that 20% of sales – about $13 billion – came through digital channels. While in some cases these companies are using digital products and services to play catch up to competitors, their abilities to deliver innovation will determine whether they can deliver important business outcomes over the long term.

Does a company’s innovative digital product or service have a notable impact on its sector? For instance, does delivering the digital product or service allow the company to steal customers from the competition? Does it set off a round of M&A activity? Is the sector being redefined? Here, there are many well-known examples: think of Lyft and Uber’s impact on the taxi industry, AirBnB’s effect on hospitality, and Nextflix’s impact on cable television. In each of those examples, a digital product or service sent entrenched players scrambling to follow the lead of the disruptor and redefined the types of companies competing in the sector.

While the above may help describe digital innovation, it doesn’t begin to touch on the topic of how to deliver and drive digital innovation. Herein lies the challenge because there’s no “top 10” practices that will work for every organization. That said, there is one thing that’s certain: doing nothing won’t produce innovation.

Last year, our Future of Digital Innovation survey helped us discover how digital natives approach digital innovation differently from enterprises. We found a dramatic difference in terms of the digital innovation practices employed by enterprises and digital natives. Nearly 41% of enterprises said they hadn’t implemented any of the innovation initiatives or programs, compared to 1% of their digital native counterparts.

The exact set of initiatives that will successfully spur innovation in your organization will be different from those used in other companies. But learning about what some companies are doing should help you think about the types of practices that are likely to be successful for your organization.

My colleague, Phil Carter, recently detailed a number of processes adopted by Toyota Financial Services, an organization that makes an excellent example of thinking of an innovative digital service as a value engine and adopting intentional practices. McDonald’s offers other good examples: its CIO told Villanova University professor Noah Barsky (in his Forbes article) about running hackathons and inviting startups to pitch new ideas.

My recommendation to enterprises that recognize the imperative of delivering innovative digital products and services is to be intentional. Look to leading enterprises for mechanisms that you can put in place that will enable digital innovation. And, recognize that doing nothing won’t pave the way to innovation.

Interested in learning more about driving digital innovation in your organization. Download our guide, Best Enterprise Practices: Developing Digital Offerings.

Many enterprises were on a cloud transformation journey long before COVID-19 interrupted, fast-tracked, and altered the way they would consume IT services. While the focus did shift for some companies to ‘keeping the lights on’ during the height of the pandemic, it appears many organizations are now getting pre-pandemic cloud initiatives back on track, albeit with some very different requirements of vendors, technologies, and architectures.

Q3 has set the scene for post-pandemic recovery initiatives that, for the first time since the pandemic began, take on a much more strategic, longer-term focus. This is highlighted in IDC’s Q3 Cloud Pulse BuyerView survey, released this quarter. Almost 70% of more than 1,300 respondents in Q3 said they expect to return to pre-pandemic levels, in terms of business operations and functions, within a year. There is, however, a twist. Over the last two years many of these companies have not only been impacted by COVID-19, but they have been influenced by discussions around climate change, diversity and data protection and sovereignty.

So now, as workforces move back into the office and companies look for new ways to approach their own diversified and changing business markets, vendors are starting to see huge shifts in cloud provider selection criteria. There are clear technology directives – from availability of a choice of applications and best-in-breed vendors, to more flexible delivery models, contracts and solutions. There are also more ‘softer’, but equally important, attributes such as ‘trust’ that are influencing cloud buyer decisions, removing some of the emphasis on qualities such as ‘market leadership’ and ‘management vision’ that cloud vendors once tag-lined and measured excellence upon.

Industry Opportunities

The trends identified in IDC’s Q3 BuyerView Cloud Pulse survey are equally relevant to technology developers as they are to cloud vendors. IDC predicts that by 2025, the cloud industry will be valued at around $1.3 trillion with growth across the PaaS, SaaS and IaaS segments. Increasingly, much of this value chain will be driven by a channel of partners and suppliers offering best-in-breed products and services for end users. Instead of focusing on a single vendor’s cloud application stack and delivery models, vendor perception is increasingly being linked to the whole ecosystem of providers that bring value to the customer.

IDC’s Cloud Pulse survey respondents in Q3 told us that the leading attribute for any single cloud platform (containing this ecosystem) is ‘trust’. Trust has historically been linked to service satisfaction levels, but in 2021 it also includes elements such as reputational risk, environmental, social, and corporate governance (ESCG) profiles. This does not come as a huge surprise when you consider the shift in emphasis on cloud services in the organization. In IDC’s FutureScape: Worldwide IT Industry review, it was stated that over the next three years the primary role of the IT organization will be to govern the effective use of cloud resources by their companies. As cloud continues to dominate companies’ IT mix (today only 16% of the total IT mix of our respondents is non-cloud) its whole service supply chain will gain attention for environmental footprint and other factors including risk.

Products: Easy to manage, highly secure and easy to migrate

Customers in Q3 are focusing on vendor choice and are showing a preference towards cloud solutions that offer access to best-in-breed applications and services that can be delivered through the channel and through partnerships. Customers want flexibility in the way these applications are deployed and consumed, with access to public and private clouds as well as on-premises and hosted private cloud. In terms of new applications, AI is increasingly in demand as part of the cloud solution set, with more than 60% of data analytics being used for real-time processing and response to business challenges. IDC’s Futurescape research highlights this trend, predicting that by 2023, 40% of the G2000 will focus their cloud selection process on business outcomes rather than IT requirements, placing even more emphasis on the ecosystem of best-in-breed solutions providers. To put a slightly different take on this, one of the main reasons cloud consumers in our Q3 Cloud Pulse chose to leave a vendor was due to a limited mix of products and services.

Data sovereignty

A lack of data sovereignty options was another reason cloud consumers chose to leave cloud providers. From GDPR in Europe to a raft of new in-country requirements globally that direct that data reside in country, data sovereignty is an increasing concern. This is especially the case where companies are expanding global operations and technology reach.  IDC predicts that by 2025, regional divergences in data privacy, security and government mandates will force 80% of enterprises to restructure their data governance processes.

An issue of trust

Trust was the ‘number one’ attribute customers valued, more so than any other vendor requirement, when choosing a cloud provider in Q3. Trust encompasses the above areas, from data governance and protection to contractual arrangements and service delivery and choice. The issue of ‘trust’ is addressed across other IDC research disciplines such as the IDC Market Glance Q3, 2021, where the explosion of vertical industry clouds is approached. These are clouds molded to industry-specific regulations and requirements. The cloud market saw 30 new industry clouds launched in the last year.

Trust is also seen in the growing interest in predictable pricing, security solutions and performance/ resiliency, as well as the ability to be clear and open about business and service shifts and compliance with ESCG goals. Trust is even more closely linked with ‘satisfaction’ and will vary depending upon the customer. At the close of 2021, being a ‘trusted partner’ is looking to also be a leading attribute cloud customers are going in search of when selecting preferred supplier/s of cloud services (above the ability to provide technical expertise, experience and innovation even – though these are still important characteristics).

The biggest challenge is, in IDC’s Cloud Pulse cloud buyer scores, many cloud vendors performed below customer expectations when it came to trust. IDC’s Cloud Pulse provides much more insight into these shifting trends, from customer experience to vendor perception. To find out more, visit the IDC BuyerView website. BuyerView also covers areas such as Edge, AI and Service Providers with a series of quarterly or annual surveys.

Over the course of the COVID-19 pandemic, we have seen a “digital divide” emerge, where companies that invested in digital before 2020 were able to progress through the stages of disruption (business continuity, cost containment, etc.) to the next phase of growth. Digital transformation was accelerated by the need for remote work and collaboration with internal and external constituents, and those companies that had previously implemented DX initiatives prior to the pandemic were, and continue to be, able to respond more flexibly.

Another component of digital transformation that evolved rapidly during the pandemic is the evolution of industry ecosystems from a static list of partners to a diverse, flexible, and scalable mix of technology vendors, industry organizations, industry consortia, supply chains, service providers, service and expert networks, and end customers.

Organizations from every industry, including manufacturing, healthcare, retail, financial services, government, and construction, continue to expand and evolve the way that they work with industry ecosystem partners. Traditional value chains are now open, iterative closed loops between a varied set of partners from inside and outside these organizations — and within and outside their industry.

As our 2021 Global Future of Industry Ecosystems Survey shows, working more closely with industry ecosystem partners is necessary to spark innovation; augment skills, capacity, and knowledge; and enable resiliency. Examples exist today of companies – friend and foe – working in tandem to share data and insights, share applications, and share operations and expertise, and deliver products, services, and experiences in a blended physical and digital way to end patients, citizens, customers, or consumers.

There are multiple use cases supporting each of these initiatives that we think will only grow and expand. Industry ecosystems will play a critical role in the months and years ahead, for companies that realize they need to have a supporting cast of ecosystem participants that function as a scalable extension of organizations, as well as a source of data and insight, codeveloper of applications, and/or provider of shared operations. CEOs, board of directors, and business line leadership realize that a flexible industry ecosystem is necessary to move quickly to meet the end customer’s changing needs, assure product and service safety and quality, adapt to any disruption, and evolve like a biological ecosystem.

Recent IDC research on the future of industry ecosystems explores this digital divide. We expect that organizations that focus on industry ecosystems will begin to derive a large percentage of their revenue from these new business models. A big part of this transformation will be achieved by taking an open approach with industry ecosystems and utilizing tools such as digital twins, blockchain, and innovation communities to accelerate, monetize, and derive value from data, application, and operation initiatives and opportunities.

Capital and foundational support of assets, operations, and finances will come from funding (ecosystem “venture capital”) within industry ecosystems, as well as from governments. Organizations in every industry will continue to mandate that their industry ecosystem partners follow an aligned environmental social governance approach so that their industry ecosystem mission remains consistent, and they can meet patient, citizen, customer, or consumer expectations.

Manufacturers leverage this approach for innovation and manufacturing capacity; healthcare organizations share data and knowledge to improve patient outcomes; energy companies team up and share applications to ensure quality and high performance; and retailers work with their ecosystem partners to deliver goods and services to consumers in a blended physical and digital way. Often these are not only traditional partners but also competitors and organizations from other industries — in fact, IDC’s Future of Industry Ecosystems Global Survey shows that within 12 months most new partners for organizations will come from outside their core industry.

Suffice it to say, the future of industry ecosystems — an expansion of ecosystem participants that organizations must work with in support of any situation, whether innovation, product or service change, dynamic demand, or unexpected disruption — is rapidly progressing as the new way of working to ensure innovation, flexibility, and resiliency.

Please join me on February 8, when I will host a complimentary webinar, Industry Ecosystems Reorient for Purpose, Profit, and Digital Transformation, that looks at how a greater proportion of an organization’s ability to generate value will be tied to its participation in a new economy and new ecosystems.

IT organizations are under tremendous pressure to deliver on the promise of the digital business model. As organizations become increasingly digital, guaranteeing a reliable digital connection for both internal and external parties is now critical to business continuity. Any connectivity disruption can have a dramatic impact on revenues, partner engagement and customer experience and satisfaction.

Forced to pivot and adapt in 2020, organizations quickly learned that they must now deliver and execute on a resilient connectivity strategy that provides uninterrupted bandwidth to keep business operations running smoothly. Organizations must be able to respond, adapt and evolve based on real-time and future connectivity demands – and this adaptation should extend beyond the network.

In IDC’s recent report, IDC Future Scape: Worldwide Future of Connectedness 2022 Predictions, we predict that more than 30% of organizations will prioritize connectivity resiliency to ensure business continuity, resulting in uninterrupted digital engagement for customers, employees and partners in 2022. Based on recent survey data from IDC’s Future of Connectedness survey, connectivity resiliency is aligned to state of connectedness across the enterprise. Currently, almost half of enterprises are still mid-stage or younger in their overall maturity strategy.

Even as we hopefully watch the world return to some newer state of normal this year, this prediction percentage should be higher. It should in fact be a wake-up call to any enterprise that looks to effectively manage its distributed workforce effectively as they further adopt digital-first principles. The business outcomes will be the faster ability to adapt to business and market conditions, adopt new technologies to improve business agility, and adapt to market changes.

Connectivity resiliency isn’t a one-time transformation. It requires the continuous alignment of people, processes, and technology around a common goal of guaranteed uptime. It also requires investment and integration of complementary connectivity technologies that empower users and customers to remain connected to key applications and services regardless of location or issue. The business outcomes will be the faster ability to adapt to changing business and market conditions and the adoption of new technologies to improve agility. 

The Roadmap to Connectivity Resiliency

Enterprises must first assess their current network, IT, cloud and application footprint to get a full understanding of how people, processes, systems, and “things” interact, and the actions needed to address potential technology related issues. Here, enterprises should perform an internal gap analysis to assess existing connectivity capabilities, strengths, weaknesses, and priorities for the entire organization. This should include:

• Network access capabilities and needs
• Usage patterns of on-premises and hosted applications
•  Determining acceptable service level assurances associated with the disruption of business operations.

Second, organizations should prioritize investment and integration of complementary connectivity technologies that allow users and customers to remain connected to key applications and services regardless of location or issue. This could be via a complementary network, or through cloud solution adoption that allow access/usage anywhere and that eliminate risk of siloed data.

Thirdly, organizations should focus on building automation and analytics into all critical connectivity processes. As organizations use complementary technologies like 5G and WiFi 6 to ensure seamless connectivity, it will be just as critical to leverage data intelligence and performance metrics to track customer engagement, provide notification of issues, remove manual intervention of any hand off, and automate migration requirements between networks or systems.

As organizations evaluate both short and longer term business goals, addressing the resiliency challenge today will help drive opportunities to become more innovative, efficient and creative tomorrow. The end result will be increased agility for the Future Enterprise, with a connectedness outcome that improves network and IT efficiency, keeps employees, customers and partners engaged, helps ensure business continuity, and accelerates time to revenue.

Interested in learning more about IDC’s Future of Connectedness research practice? Download our latest eBook, Value Chain Agility: Connecting Partner Ecosystems to Shared Data and Intelligence

When was the last time you participated in a live conversation with a group of your peers? Virtual roundtables offer the opportunity for valuable face time with your buyers, fostering peer-to-peer networking. These sessions curate dynamic and exclusive conversations in a digital, yet live, setting. The inherent flexibility, allowing connection from any location to engage in real-time discussions, often leads to increased participation rates, especially among senior IT buyers.

When a virtual roundtable is set around the right timely topic, it affords you the ability to explore the challenges, opportunities, and threats as they are told by your ultimate customer. Without distraction from other sources, you get face time with the most engaged audience of decision makers. By joining your peers from across your industry, virtual roundtables give you a platform to discuss best practices, and lessons learned, to help guide your decision making around a particular focus area of your business. More importantly, your customers are looking for this style of interaction to help with their purchase decisions.

Benefits of hosting a virtual roundtable include:

Captive audience of Senior IT decision makers
Exclusive in-depth live conversations with customers and prospects
A platform to identify customer’s key business challenges and peer-to-peer networking
Full contact information for all registrants and attendees

Virtual networking events and online product demos are the top two resources that will be more important as tech buyers research technology products and make purchase decisions over the next 12 months.*

How to Conduct an Effective Virtual Roundtable

Pick a topic:  The topic is very important because it is the driver of engaged conversation versus quick short answers. Make sure your topic has breadth to it; It should not be centered around your business but reflect industry changes and opportunities as well.

Shortlist a speaker:  The right moderator makes all the difference in stimulating and maintaining an engaged discussion amongst all of your participants. Hosting a third-party speaker, such as an industry analyst, also supports your credibility in the topic area you wish to dive into, because they are an impartial expert. They also bring a level of thought leadership to the discussion. IDC analysts, for example, are recognized worldwide for their industry expertise, with over 1100 analysts specializing in technologies and industries in 110 countries. So, as a moderator, IDC analysts present key findings, engage in the discussion and work with you to develop a powerful topic fueled with our research, creating a more engaged audience.

Event Logistics:  Once you have a topic, so you know which expert moderator is the right fit for your discussion, it’s time to choose a date that works well with your teams. Create your digital invitations and plan for follow up messaging to non-responders. Design an inviting landing page to point your invitations to, and gather attendance. An effective landing page will provide your invitees more information about your virtual roundtable event, and, through carefully crafted urgency, encourage their participation. Lastly, follow up and create reminders of your event, before your event date. This will create excitement and ensure your participants attend on the day of your virtual roundtable. It’s an opportunity to create a relationship and show that their attendance matters. If you are working with a third-party research firm, such as IDC, they will take on this planning and development for you and guarantee you a minimum attendance of qualified leads for your business.

Content development:  It’s important to draft marketing-focused content that considers industry data points that can, not only, get conversation started, but keep it flowing. Your content plan is the driver of insights into what your customers are thinking, but it must be crafted in a way that creates a meaningful peer-to-peer discussion, one where everyone gets something of value. Your chosen moderator will work with you and craft the perfect content, layered with research, that will guide the conversation and leave everyone with best practices and lessons learned after the event.

Guaranteed Leads to Drive Your Business Forward

We are experts at organizing and facilitating virtual roundtables. Created and researched by IDC and produced in partnership with IDG Communications, the producers of the world’s largest technology media brands like InfoWorld, CIO, and Network World, you will receive targeted leads, a chance to give and receive constructive feedback from senior level tech buyers, a platform to identify your customer’s key business challenges and actionable pipeline for your sales teams.

Let’s plan a virtual roundtable

Host a Turn-Key Virtual Roundtable

The topic covered is crucial to the success of a virtual roundtable. The right topic and moderator will generate a two-way dialogue between you and your peers; one that provides you with enough insights to move your strategies forward. IDC’s Future Enterprise practice covers nine key areas that will be driving CEO agendas. We can help you host one of these critical conversations today:

Future of Digital Infrastructure:  responsive, scalable, and resilient infrastructure technologies
Future of Intelligence:  enterprise intelligence
Future of Trust:  risk, compliance, security, privacy, and ethics/governance
Future of Work:  workforce transformation
Future of Customers and Consumers:  data-driven customer experiences
Future of Industry Ecosystems:  open, agile, and scalable ecosystems that encourage innovation
Future of Digital Innovation:  trends in software development and distribution
Future of Operations:  resilient market driven operations
Future of Connectedness:  seamless connected experiences

Interested in hosting a Future Enterprise virtual roundtable with your key buyers and peers?

Let’s get started.

_{*Sources: IDG Role & Influence of the Technology Decision-Maker Survey, 2020; * Innovate MR –COVID-19 B2B Study, June 2020}

The start of the new year brings many people closer to realizing ways they can improve, perhaps its eating better, or fitting in more time with family and friends. There might be professional resolutions such as meeting more regularly with your boss, connecting with colleagues outside of your department. For IT, cutting back on wasted cloud spending is often high on the list but tends to eventually fall through the cracks, with no resolution to this pattern. 

According to Forbes, while executives estimate that 30% of their cloud spending is wasted, at the same time enterprises intend to spend even more on cloud services. Clearly wasteful cloud spending is a recognized yet growing problem that for many continues to go unresolved. As this blog will show, where IT leaders fall short on is not identifying areas of spending that can be improved but implementing a plan of action for cost savings and maintaining it. 

To elaborate on cloud costs, there are many tools available from cloud providers and third parties that provide reports and dashboards, and even recommendations about which instances can remove or reduce/enlarge (rightsizing). Tools that provide intelligence can also determine how to use discount options (reserved instances, savings plans, reserved capacity, etc.), how to handle licenses smartly and what to do in application architecture to save costs. And, instances can be disabled when not in use. 

In summary these resources provide insight, but knowledge into your spending is only as useful as what you do with it to turn around your spending. And how you act will determine how effective you are at plugging the holes of your spending.  

Because of the effort that’s needed its common for IT to plug their holes with patches. Take, for example, disabling instances outside working hours. In theory this is an excellent saving, but instances are part of applications, which in turn are part of chains. And then it may just be the case that data exchange takes place in a chain outside working hours. But also, test teams that are approaching a deadline may sometimes need their environment outside the pre-planned working hours. And if environments are used in the management chain, they must also be available after hours in case of an emergency. Overall savings is easier said than done, mainly because it takes work to get there. 

Rightsizing is also more difficult than it seems. Users and administrators are often hesitant about removing capacity; users see their performance decrease, and administrators see the risk that more failures will occur because there is less overcapacity to absorb issues. In the latter case, you must carefully analyze where these issues come from; a mediocre application can benefit from more capacity, but that is not a long-term solution. Remember, if the roof leaks, you can replace the bucket that collects the water with a larger tub, but that too will become full at some point. You’ll eventually need to repair the roof. 

Ultimately, you’ll have to move towards an entirely new approach in which you not only have insight into the costs, but also involve users and administrators, so that you can make the right decisions about saving on your cloud costs. This isn’t as daunting or unattainable as it sounds. In our next blog we’ll reveal how some IDC Metri Cloud Economics clients have transformed their cloud spending, so you can see how to get there too.  

Can’t wait until the next blog is published to learn more about cutting cloud costs? Contact us to schedule a conversation. 

Recently published IDC’s global Future of Digital Infrastructure survey research shows that among enterprises with 1,000 or more employees:

• 76% want their strategic vendors to take more day to day administrative and operational responsibility for infrastructure so internal IT staff can focus more on the business.
• 75% indicate that the vendor’s ecosystem of ISVs and managed services partners is one of their most important digital infrastructure and cloud services selection criteria.
• 73% plan to use flexible, pay as you go OpEx consumption models for the majority of their digital infrastructure and cloud purchasing by the end of 2022.

The changing nature of digital infrastructure is having significant impact on the ways that enterprises evaluate and do business with major infrastructure hardware and software vendors, as well as public cloud service providers and channel partners. Specifically, the increasing sophistication of data-intensive, cloud native workloads, coupled with adoption of hybrid, interconnected digital infrastructure across public clouds, data centers, and edge platforms, requires enterprises to implement highly autonomous, intelligent approaches to management, design, security, compliance and multicloud control. 

Most organizations are struggling to recruit and retain the required operational skills.  Simultaneously, developers find their time consumed with configuring, updating and securing infrastructure and data resources rather than on coding for innovation. The continuous introduction of purpose-built silicon and specialized public cloud services exacerbates an already challenging situation as more options provide the potential for powerful innovation, but require internal teams to master yet another set of technologies.

Vendors Respond with Many Digital Infrastructure Options

Enterprises are concluding that there has to be a better way to make digital infrastructure operations more reliable and economical using automation and proven best practices.  Vendors are stepping up to offer enterprise technology decision makers a wide range of emerging digital infrastructure offerings, to address these challenges, including:

• Consumption-based infrastructure subscriptions for dedicated platforms, such as Dell APEX, Cisco Plus, and HPE Greenlake
• Extended public cloud infrastructure and services deployed on premises, such as AWS Outposts, Google Anthos, IBM Distributed Cloud and Oracle Cloud@Customer
• Portable cloud-native platforms optimized for hybrid and multicloud deployments, such as Red Hat OpenShift, Rancher, and VMware Tanzu
• Hybrid and multi-cloud management software and services, such as Azure Arc and VMware Cross-Cloud Services
• Cloud and data center interconnect and data streaming as-a-service solutions from providers, such as Equinix and Cloudera

It’s clear that most major digital infrastructure providers understand enterprise customers want a simplified, secure, and cost-effective way to ensure that mission critical applications and developer services are available as needed, anywhere and anytime, regardless of the end user’s physical location. In most cases, the major vendors are working closely with strategic channel partners to help them expand competencies and step up to help promote and support these new offerings.

Traditional infrastructure hardware and software vendors are also deepening partnerships with the major public cloud services providers to include more complex and sophisticated services via public cloud marketplaces.

Lessons Learned from Success Digital Transformation Efforts

Fundamentally, each of these new types of vendor offerings provide enterprises with an option for shifting some aspects of day-to-day digital infrastructure operations, and lifecycle management, to third-party vendors and service providers, including channel partners. 

At first glance, some decision makers might think that this type of transition undercuts the value of IT operations teams within their enterprise.  IDC’s research shows such worries are unfounded.  Rather than weaken IT’s connection to the business, the ability to better optimize performance, cost and security via vendor managed platforms and services actually frees up internal resources to focus more on improving business outcomes.

The experiences of IDC’s recently announced Future Enterprise Best in Future of Digital Infrastructure North American Award winners and finalists are instructive, underscoring how successful IT leaders can make a difference by using modern hybrid architecture and as-a-service options to break down brittle internal data and application silos and enable the rapid launch of vital new capabilities.  For example:

• A major luxury retail brand house undertook a multiyear digital core transformation to support aggressive worldwide growth targets for global digital sales that included migrating over 100 servers to a public cloud, to quickly reduce costly technical debt. The new digital core platform allowed the organization to enrich the end user experience and take advantage of advanced analytics and RPA, AI, and ML technologies, to drive sales based on consumer behavior.
• A global automotive financial services organization, that served different brands with separate dedicated legacy infrastructure stacks, transformed itself into a 100% public cloud-based multi-brand, multi-tenant platform, to provide customized brand-specific online engagement and support, with full data segregation and protection. Adopting a cloud-native platform approach to digital infrastructure allowed the company to rapidly grow new lines of business and to introduce more agile and data intensive services in a fraction of the time it would have taken using their traditional approach to infrastructure planning and modernization.
• As US-based regional credit union implemented a major overhaul of its entire data center focused on improving business and cyber resilience.  It focused on the goal of resuming full business operations within an hour after a ransomware incident. As a high-volume transaction-based business, the credit union implemented a highly integrated, cloud-friendly digital infrastructure environment that relied on automated analytics to detect issues and protect and restore data securely.
• A global medical systems and software company transitioned existing silos of legacy data center and cloud services into a unified cloud-first platform to support more efficient and cost-effective centralized compute, analytics and data storage services across the business.  The resulting digital work platform allowed the company to accelerate R&D cycles, digitize manufacturing and increase the ability to support mobile work.

Successful organizations emphasize how the success of their digital infrastructure transformation efforts are tied to their willingness to disrupt the status quo, by dramatically accelerating the speed of deployments, proactively breaking down operational silos and focusing on business centric key performance indicators (KPIs). In many cases, this approach required IT teams to rapidly migrate workloads out of traditional data centers, engage with new types of IT and cloud service partners, automate many traditional aspects of IT operations, create new governance programs, and tie the business case to fundamental digital business imperatives and business goals.

In 2022, IDC expects many more enterprises to step out of their comfort zones and find more effective and flexible ways to enable mission critical digital business priorities.  Vendor relationships will evolve in tandem with more emphasis on outcomes, consumption-based sourcing, software-driven automation and remote lifecycle support.

Join me at IDC Directions, in Boston or Santa Clara in March to hear more about how enterprises are changing the ways they work with strategic digital infrastructure vendors, cloud service providers and channel partners.

Learn more about IDC’s Future of Digital Infrastructure research practice and its coverage of the changing nature of digital infrastructure.