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In today’s rapidly evolving digital landscape, businesses across industries are recognizing the significance of application modernization as a strategic priority. The ability to adapt, innovate, and leverage emerging technologies has become crucial for driving digital transformation.

Professional services firms play a vital role in supporting organizations on this journey, offering their expertise to navigate the complex landscape of modern applications and modern application infrastructure options.

This blog explores the impact of application modernization on the ability of professional services firms to drive digital transformation now and in the next five years using data from a recent IDC Canada survey of medium and large businesses. Business leaders are urged to consider the growing importance of:

  • Security expertise.
  • Potential of packaged applications.
  • Rising need for updating and modernizing SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and cloud-native applications.

Application Modernization as a Strategic Priority

According to a recent IDC Canada survey, over 50% of Canadian businesses currently rank application modernization as a top strategic priority for their organization. In the next 2 to 3 years, more than 75% of Canadian businesses surveyed expect application modernization to be a strategic priority for their organization.

Application Modernization Priority Ranking

The rapid advancement of technology, changing customer expectations, and the need for agility in a competitive market are driving organizations to overhaul their legacy systems, upgrade aging packaged applications, and update custom-built applications to embrace modern application solutions.

Professional services firms are well positioned to assist clients in this process by providing comprehensive strategies, implementation frameworks, and managed services methodologies that address the challenges associated with application modernization. The critical nature of application modernization services is so high that many ISVs are increasing their services capabilities through internal investments that enhance resources and service offerings. They are actively pursuing M&A opportunities, acquiring professional and managed services firms to extend the range and depth of their addressable market.

Security Expertise: A Vital Capability

As organizations embark on application modernization initiatives, survey results show that security expertise has emerged as the top-rated expertise requirement for professional services firms. With the increasing complexity of modern applications and the growing threat landscape, ensuring the integrity, confidentiality, and availability of data and systems has become paramount.

Professional services firms with robust security practices can guide businesses in adopting best practices, implementing robust security controls, and ensuring compliance with industry regulations. Their expertise enables organizations to navigate potential risks and safeguard their digital transformation journey. As with cost and value for money, security services are critical components to the buying decision of customers. This makes security services an essential feature for every sales pitch.

Packaged Applications: Seizing the Largest Opportunity

While application modernization encompasses a variety of software models, packaged applications present a significant opportunity for professional services firms in Canada. Using the same survey results, roughly ¼ of the average application portfolio is comprised of packaged applications such as enterprise resource planning (ERP) systems or customer relationship management (CRM) software. The survey also indicated that approximately 10% of the application portfolio is based on out-of-support packaged applications. A key application modernization strategy is the move away from traditional on-premises/client-server implementations using a variety of different options.

A key application modernization strategy is the move away from traditional on-premises/client-server implementations using a variety of different options.

The market opportunity for professional services firms can range from helping clients in the selection process, customizing packaged applications with custom coding or add-on modules, and packaged application implementation to ensure the product works seamlessly across the entire enterprise and its application portfolio. This collaborative effort enables businesses to optimize processes, improve productivity, and accelerate their digital transformation initiatives.

The Future Landscape: SaaS, PaaS, and Cloud-Native Application Modernization

Looking ahead, the next five years will witness surging demand for updating and modernizing enterprise application portfolios using SaaS, PaaS, cloud-native, web-native, and mobile-native applications. The growing share of cloud, web, and native mobile applications comes at the expense of mainframe, custom, and packaged applications.

As businesses increasingly use cloud-based solutions and the enterprise software platform to drive business agility and scalability, the need to modernize and enhance these applications will become paramount. Professional services firms will play a pivotal role in assisting organizations with the migration, integration, and optimization of SaaS, PaaS, and cloud-native applications. By leveraging their expertise, these firms can ensure seamless transitions and enable businesses to harness the full potential of these modern technologies.

Conclusion

In order to capitalize on application modernization as a strategic imperative, professional services firms will still have to follow the traditional business axiom: meet the customers ‘where they are.’

In an area as complex as application modernization, there are a variety of solutions that buyers need to consider. The options for application modernization services start with five key considerations: development strategies, application tools, infrastructure considerations, application types, and service delivery. Additional options branch off from this starting point. The above figure illustrates some of the options for application modernization from both a buy-side and supply-side perspective.

In the era of digital transformation, application modernization has emerged as a critical enabler for organizations striving to remain competitive and meet evolving customer expectations, a view supported by IDC Canada’s research. Professional services firms, with their deep knowledge and experience, have a significant role to play in driving this transformation.

By recognizing the strategic importance of application modernization, investing in security expertise, and capitalizing on the opportunities presented by packaged applications and cloud-native solutions, professional services firms can empower businesses to navigate the complex landscape of modern applications successfully. As we move forward, these firms will continue to be instrumental in helping organizations unlock innovation, optimize processes, and achieve their digital transformation goals.

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Jim Westcott - Research Manager, Application Solutions - IDC

Analyst Profile
Jim Westcott is a Research Manager for the Canadian Digital Transformation: Application and Professional Services program. In this role Jim manages IDC's research on enterprise applications and application services. Jim also contributes to the Services Contracts Database: Canada Region and the Services Tracker - Canada Region data products. Jim provides expert opinion, market research and analysis, competitive intelligence, and consulting to IT services and technology providers. Prior to joining the IDC Canada team, Jim Westcott earned a Bachelor degree from the University of Toronto. Jim also holds a post-graduate diploma in applied research design and methodology.

International Data Corporation (IDC) recently published its first IDC MarketScape for the worldwide quantum computing market, IDC MarketScape: Worldwide Quantum Computing Systems 2023 Vendor Assessment (IDC #US49607923, August 2023).

This study evaluated the seven circuit (gate-based) quantum computing hardware vendors that had developed circuit (gate-based) quantum computing systems. These vendors were offering access to these systems for a premium fee either through on-premises deployment, via the vendor’s quantum computing infrastructure-as-a-service (QCIaaS) offering, or a cloud service provider’s QCPaaS offering as of January 1, 2022. Eligibility was determined via information collected in a preliminary vendor survey and publicly available information. Quantum computing hardware vendors deemed eligible for inclusion in the study included: IBM, IonQ, IQM, PASQAL, Rigetti, Quantinuum, and Xanadu.

Interesting observations made over the course of the study include:

  • Quality trumps quantity: There has been a shift in the emphasis from the number of qubits making up a system to the quality of qubits that make up a system. Quantum hardware developers and vendors recognize that while being able to scale the number of qubits that make up a system is an accomplishment, it’s more important to deliver systems made up of qubits that perform with high rates of accuracy.
  • Hesitation in publishing detailed quantum computing developmental roadmaps: Many of the quantum hardware vendors are refraining from publishing detailed quantum computing developmental roadmaps. Learning from past experience, some quantum hardware vendors have found that publishing detailed roadmaps produces hype and a loss of confidence when deliverables and milestones are not met, even if the reason is related to unexpected technological challenges.
  • Customers prefer to work with quantum hardware vendors versus quantum cloud service providers: While quantum computing platform as-a-service offerings provide organizations an opportunity to experiment with different modalities of quantum, these providers often to know the systems as intimately as the quantum computing vendor.

Before expanding upon the methodology used for this study, it is important to note that quantum computing is still in the early stages of development. Because quantum computing technology differs considerably from classical computing infrastructure, both established technology vendors and quantum computing start-ups are designing and fabricating their quantum systems from the ground up. The complexity of the technology continues to challenge quantum hardware developers in their ability to deliver scaled systems that perform with the accuracy and speed that is needed to solve some of today’s most complex problems.

As a result, quantum hardware developers are taking different approaches as to how and when to market their technologies. Some quantum hardware developers are operating in stealth mode, making very little known about the developmental status of their quantum systems. Other quantum hardware vendors are re-evaluating and revising their quantum computing developmental strategy with the hopes of accelerating the production of their quantum systems. Finally, there is a group of quantum hardware vendors that began offering access to their systems after January 1, 2022. This study should be viewed as a snapshot of a dynamically changing quantum market. An announcement at any time by any vendor could drastically affect the way the market is currently viewed.

To gauge the current status of the quantum computing market, IDC’s MarketScape model was used to evaluate the quantum hardware vendors on their quantum computing strategies and capabilities. Evaluations and assessments of each vendor were made independent of each other. Based on these evaluations, a statistical methodology was used to determine the classification of each quantum hardware vendor as illustrated in the MarketScape graphic—leader, major players, contenders, or participants. The nine criteria were used to assess each quantum computing hardware vendor’s strategy. A different set of ten criteria were used to assess the quantum hardware vendor’s quantum computing capabilities.

While quantum computing is very much a nascent technology, strategic approaches are being implemented by quantum computing hardware developers with the expectation of being able to achieve a near-term quantum advantage using NISQ systems within the next five to seven years. During that time IDC expects that there will be many shifts with regards to the technology, as well as among the different players that make up the ecosystem itself.

The IDC report, IDC MarketScape: Worldwide Quantum Computing Systems 2023 Vendor Assessment (IDC #US49607923, August 2023), provides an assessment of worldwide quantum computing hardware vendors through the IDC MarketScape model.

Learn More About IDC’s Quantum Computing Trends and Strategies Research

Heather West - Research Manager - IDC

Analyst Profile
Heather West, PhD, is Research Manager within IDC's worldwide infrastructure research organization and part of the performance intensive computing (PIC) practice. She leads IDC's quantum, analog and neuromorphic computing research and plays a supporting role in IDC's research on artificial Intelligence (AI) and high-performance computing (HPC) infrastructure stacks and deployments. Dr. West is deeply engaged with her clients on their solutions and services, as well as on their business and technology strategies. Her domain knowledge of the quantum computing industry including proficiency in related workloads and use cases has made Dr. West a trusted advisor to several emerging quantum and analog computing vendors and positioned IDC as the go-to vendor for market research on Quantum Computing.

The internal combustion engine was one of the most disruptive technologies of the past 150 years. It had long-term ripple effects not only on how fast and conveniently people and goods move, but also on our shopping and leisure habits, urban planning, and individual health and well-being. Some of these impacts were arguably negative; such as time wasted in congestion, pollution, and traffic accidents. To address those externalities policymakers, government traffic and transportation departments, car OEMs, and mobility ecosystems are reinventing vehicles and business models to reduce those externalities and eventually deliver on the promise of convenient, affordable, accessible, safe, and environmentally sustainable mobility.

The transition to next-generation mobility will depend on a new generation of vehicles that are connected, autonomous, and electric on shared and public mobility, and on rethinking urban planning to make it convenient and safe for people to switch to less impactful ways of moving such as cycling and walking. These new mobility models can deliver the expected benefits only if the way roads are designed, built, operated, maintained, used, and upgraded is transformed to make them possible.

Growing Investments in Smart and Sustainable Roads

Investments in smart and sustainable roads are flourishing in Europe and beyond. Examples include:

  • The UK National Highway and Connected Places Catapult’s £1.7 million joint financing to fund innovative ideas and proofs of concept (POCs) for net-zero carbon road maintenance and construction materials and processes
  • The city of Gothenburg is working with Volvo and other partners to test dynamic low-emission zones
  • Italy’s highway and road authority Anas’ €1 billion plan to equip 3,000km of interurban roads with intelligent road systems and e-charging infrastructure
  • Cities around the globe nudging logistics service providers to use smart pick-up and drop-off zones for delivery trucks, such as Barcelona which plans to impose a yearly tax on transport companies fulfilling home deliveries for using public spaces, to eventually nudge consumers to venture out to collect their own parcels (companies with a turnover of more than €1 million would have to pay an annual income-based tax of 1.25%)

Smart, sustainable roads are not to be intended merely as the instrumentation of roads with sensors and actuators to enable intelligent traffic management use cases, but it should be considered from a wider perspective. We define smart, sustainable roads as the intelligent use of technology across road design, construction, operation, maintenance, usage, and upgrade and recycle of materials to:

  • Reduce cost of ownership and increase environmental sustainability across the design, construction, operation, and maintenance life cycle of physical road elements
  • Enhance convenience, affordability, accessibility, safety, and environmental sustainability for the movement of people and goods
  • Increase prosperity by enabling businesses to profit from new and existing economic activities related to designing, building, operating, maintaining, using, and decommissioning roads.

Next-Generation Use Cases Emerging at the Intersection of Multiple Industries

Smart roads are systems of systems. The value of technology innovation, such as IoT, AI, satellite imaging, lidar and electric mobility, is realized at the intersection of a network of stakeholders, the outcomes they aim to achieve, and the capabilities they need to implement to deliver those outcomes.

The Smart and Sustainable Roads Stakeholder Ecosystem

For example, to realize the benefits of:

  • Electric mobility. Utilities, engineering and construction contractors, and road authorities need to work together to establish an accessible and affordable charging infrastructure; vehicle OEMs need to expand the number and battery range of electric and hybrid vehicles that they offer; payment providers must enable seamless settlement across different electric charging service providers; technology suppliers need to work with OEMs to embed connected vehicle capabilities for vehicle-driver interaction (e.g., trip planning, charging locations, pricing options) and vehicle-grid interaction (e.g., for smart charging and V2G applications).
  • Low-emission or low-speed zones. Road authorities must work with technology suppliers to embed sensors in the infrastructure to count and monitor the number and type of vehicles, and they must share data with traffic departments to ensure enforcement of low-emission and low-speed regulations. Vehicle OEMs must embed connected and autonomous driving capabilities in their cars and trucks to make it easier for drivers to comply with regulations.
  • Multimodal mobility as a service. Public transit operators must work with micromobility and shared mobility operators to enable integrated journey planning and payments, while road and traffic authorities must set up incentives, such as dynamic road pricing, to nudge people to explore options, beyond driving their own cars, while insurance providers need to offer plans that cover multimodal trips, rather than vehicle ownership.

To accelerate the convergence towards smart and sustainable roads ecosystem:

  • Governments should evolve regulations and standards and monitor the impact of safety, accessibility, environmental sustainability and road service pricing policies.
  • Transport operators, utilities and OEMs should connect their products and services to road infrastructure, such as traffic systems and e-charging systems to expand service offerings.
  • Financial services should invest in smart road payment and insurance offerings.
  • Retailers should scale on-the-move targeted advertising and shopping.
  • AEC companies should invest in digital twin to increase the effectiveness and efficiency of designing, building, maintaining, and upgrading smart roads.

 

If you want to know more, please reach out to Massimiliano Claps

 

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.

Account-based marketing (“ABM”) is a strategic B2B marketing approach that targets a single company, division, or individual within a company. As such, it deploys far more targeted tactics than general marketing, designing campaigns around names and emails, individualized value propositions, and highly specific personas.

“Share of wallet” is one of the most important measures for developing an account and cultivating a lasting relationship. But it too often gets short-shifted as an element of ABM. Our experience has been that sales and marketing teams promoting IT often group existing accounts by vertical or size to allow for the creation of base content that can be refurbished or quickly personalized for specific customers. The focus tends to be on ranking customers by up- or cross-sell potential. Once complete, content creation kicks into gear.

But share of wallet can be taken further. IT suppliers can, of course, use share of wallet to better assess the potential for up-sells and cross-sells. But it can – and should – also be used to identify which clients deserve five-star service and which clients may need to be cut loose to free resources for others.

Show Me the Money

This is where market data comes into play.  

For instance, let’s say you work at an IT supplier with a suite of applications for data management. Let’s say you are assessing your customers in the United Kingdom. According to IDC data, in 2022, the retail space, Cazoo, Oasis Fashions, and Papa John’s International all spent around $1 million on data management software. In the transportation space, XPO Logistics and A.P. Moller-Maersk spent a bit less in the U.K.

Armed with that data, you can then find out how much they spent with you. It is a straightforward exercise to compare the total CRM spending of clients with the total you received. Simply create a table to compare the two and check your share of wallet.

Figure 1: Using Share of Wallet to Categorize Accounts

Source: IDC, 2023

This allows you to do three critical things to improve your relationship and potential long-term revenue.

  1. Recognize “Golden accounts”. These are accounts where you have a high share of wallet. It is important to keep the level in context. The threshold for what defines a golden account will differ by country, sector, and technology.  Once that threshold has been reached, it is unlikely to expand. Growth from the account will occur mainly through incremental service or product add-ons and expected price increases. In so doing, it is crucial to not “nickel and dime” these accounts. Rather, they should be targeted for extra attention, “reinforcement” or validation marketing, freemium advisory sessions, thank-you gifts (allowed by law and company policy), and your company swag. Basically, give them all the extra service and attention you can afford.

  2. Identify growth accounts. The range on this can be quite broad and will differ based on the market, technology, and supplier. There is a good chance you have already named a fair number of these if your revenue and up-and-cross-sell activity has been growing either quarter by quarter or year by year. Market data helps validate those accounts to analyze why clients buy your tech or services, how tech is used, and the perceived value, which tells you whether to pursue account-specific outreach and content or leverage off-the-shelf assets.

  3. Accounts to let go. It can be tough to admit a relationship isn’t working. It can be even tougher for a salesperson or their supervisor to let go of a stream of revenue. Share of wallet can help. As above, the share at which you choose to let an account go will vary. The key is to compare the share to what you are getting from other clients. If your share of wallet is averaging 30-40% and you have gone down around 5% and have barely budged in the past couple of years, it is probably time to evaluate whether the effort of maintaining them could be better spent on growth clients or acquiring new ones.

One final thought: If share of wallet is consistently low, there may be systemic issues at play that ramped-up ABM will not solve. The product itself could be cumbersome or the value proposition no longer unique. The sales and renewals processes could be overly complicated. Marketing and sales need to be more closely aligned. Or the competition has adopted a new approach that is proving successful.

In this respect, share of wallet can be multifunctional. All it takes is the right market data.

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Did you know that Sustainability is the top business risk for CEOs in Europe, even above cybersecurity? (IDC EMEA, CEO Survey, January 2023, n=108). This is the first time sustainability has been at the top of the board’s agenda, and it is likely to stay for some time. But why is it a risk and not an opportunity? Why saving the planet is seen as a threat to business?

For many, climate change and the new sustainability regulations are a disruption to their operations. After all, today’s economy was built on the premise that Nature had given us a cheque in blank, with a limitless use of resources. How wrong it was.

Therefore, having Mother Nature behaving in the most unpredictable ways (e.g., heatwaves, floods, droughts) and government policies shaping business operations (e.g., taxes, quotas, disclosures) can be painful.  

These are some examples: if you’re a semiconductor company with factories in South Asia, severe droughts can be material to your manufacturing processes as governments can prioritize water for local people. Or, if you’re a mobile phone manufacturer, the use of plastic packaging can be material to your business because of taxes or a complete ban by governments.

Sustainability is a moral, regulatory, and ultimately business mandate. There’s no opt-out: stakeholders are watching closely, e.g., customers, investors, business partners, regulators. As the executive of one of the world’s largest insurers shared in an interview recently “We don’t work anymore with customers that are not improving their sustainability. They are uninsurable for us“.    

Therefore, if sustainability is indeed a risk, can companies turn it into a business opportunity? The answer is “yes”, according to most European companies (IDC EMEA, Future Enterprise Resilience, May 2023, n = 220).

 

Download eBook: Sustainability in EMEA: Opportunities for Tech Vendors, Challenges for Tech Buyers

 

Sustainability: Evolving from Risk to Opportunity

Sustainability can be a business opportunity if there’s a clear vision and commitment from leadership. Only then, “doing good” is embedded in every facet of work, across all business units, from procurement and production to logistics and customer service.

To make this happen, sustainability targets need to be fully aligned with the agenda and goals of each executive in the C-Suite. This is an illustrative example:

Benefits of Sustainability for Business

By addressing the agenda of the C-Suite, we can identify 7 reasons why sustainability is good for business:

  1. Chief Operations Officer (COO): Sustainability can drive operational efficiencies (IDC Global Sustainability Readiness Index, IDC, August 2023) across all business functions (e.g., supply chain, logistics, facilities). A sustainable firm is a fit and lean organization where “less is more”, e.g., frugality in resourcing water and energy.
  2. Chief Financial Officer (CFO): Investing in sustainable practices might not always deliver short term returns but can pay off in the form of resiliency and business longevity. CFOs have realized that the cost of “not acting” is greater than the cost of acting – for example, in their ability to access capital or insurance.
  3. Chief Marketing Officer (CMO): Sustainability is addressing the needs of a growing customer base. Buyers are looking for more transparency, honesty, and trust from suppliers. As such, brands with strong green credentials, integrity and social responsibility bring competitive differentiation.
  4. Chief Human Resources Officer (CHRO): Sustainability is a magnet in an organization, attracting and retaining talent. People are looking for purpose in their job and their companies (IDC EMEA Employee Future of Work Survey, March 2023). When work has direction is powerful and energizing: employees can work hard for goals they understand and feel connected to.
  5. Chief Information Officer (CIO): Sustainability, in an aim to reduce carbon emissions, can accelerate cloud migration, automation and optimization of IT processes (IDC Global Sustainability Readiness Index, IDC, August 2023). Moreover, based on the principle of frugality, IT assets can be rationalized based on usage and their lifecycle expanded as appropriate.
  6. Chief Compliance Officer (CCO): Sustainability can outshine a company against competitors in matters of corporate reputation and governance. The CCO can put in place strong stakeholder protections and build market trust.   
  7. Chief Executive Officer (CEO): Sustainability can be a bold strategy for long-term business value. Leading with purpose can be inspiring, ignite passion amongst employees and create a culture of high-performance. B-Corps (e.g., Allbirds, Patagonia, Teapigs and Aesop) are testimony of it.  

 

Register for the webcast: Sustainability in EMEA: The Challenge of Moving from Ambition to Action

 

Sustainability can be a force for good business and meet the C-Suite goals, but it needs execution for business impact (Global Sustainability Readiness Index, IDC, August 2023): it has to be internalized across the enterprise and become the “modus operandi” of getting work done, and for everyone, from the top to the bottom of the organization. But this is easier said than done. IDC research shows this is a roadblock for many enterprises: how to move from strategy to execution? Here is where the role of the Chief Sustainability Officer (CSO) comes into the picture.

Successful CSOs are executives with strong business acumen and digital skills, on the top of their sustainability expertise. Their role is not limited to appeasing the needs of different stakeholders, chiefly regulators and investors, but also a catalyst for business value creation through sustainability. Their reporting line should be direct to their CEO to give them stature in their organization.  

CSOs are tech-savvy because technology is fundamentally the enabler to turn sustainability strategy into action and derive business value. For example, IoT and automation can optimize resource consumption in buildings and bring costs down; blockchain and AI can support resiliency in the supply chain.

In summary, sustainability can be an opportunity for business value when it meets the C-Suite goals. It needs a strategy that everyone in the organization understands and is passionate about – nothing is more fulfilling than knowing at the end of the working day you did something good for the planet and society. But, remember, it needs a CSO-led action plan and great technology to turn it into business value.

 

If you want to know more, please reach out to Angela Salmeron

 

Since the launch of ChatGPT in November 2022, the media has been abuzz with all things Artificial Intelligence (AI), specifically with the concept of Generative AI. Even though these terms are decades old, at this point, it is safe to say that AI has come a long way. More recent advances in machine learning and deep learning have enabled computers to perform tasks that were once thought only to be wholly within the domain of human reasoning.  

According to IDC’s most recently published Worldwide Artificial Intelligence Spending Guide – which tracks the artificial intelligence (AI) spending for software, hardware, and services across industries and use cases – Canadian enterprises are expected to invest about C$ 5.2 billion on AI solutions in 2023. From 2022, this amount is expected to grow almost three-fold by 2027 at a compounded annual growth rate (CAGR) of 23.03%. 

Further, IDC expects the AI platforms, which includes technologies such as Conversational AI tools – the set of technologies behind automated messaging (text) and speech-enabled (audio) applications that offer human-like interactions between computers and humans – to cross more than C$2.2 billion, growing at a CAGR of 32.05% by 2027. 

Chatbot 2.0 Wars – Fueled by AI

Media buzz aside, one of the most exciting areas of AI research is Generative AI, which uses algorithms to generate new and unique content based on patterns and relationships learned from vast amounts of data. At its core, GenAI involves teaching a machine learning model to generate new content by training it on a dataset of existing content. 

ChatGPT stands for Chat Generative Pre-Trained Transformer, which is a chatbot developed by OpenAI. Both GPT 4 and GPT 3.5 belong to a family of large language models (LLMs) and are fine-tuned with supervised and reinforcement learning techniques, which are used by ChatGPT. Since GPT-4 is the newer of the two models, it comes with enhanced upgrades and improvements compared to its predecessor, GPT-3.5. 

The ‘large’ in LLM refers to the number of values or parameters used; to put things in perspective, OpenAI’s GPT-3.5 used approximately 175 billion parameters and was limited to information prior to June 2021 whereas GPT-4 is based on a lot more training data of over 1 trillion parameters and its data cut is up to September 2021. This gives the latter greater ability to handle much more nuanced instructions than its predecessor. Another stark difference between the aforementioned versions of ChatGPT is that GPT-4 is a multimodal model, which means it can process both text and image data, whereas GPT-3.5 is a text-to-text model.  

Microsoft, for its part, has also introduced ‘Bing Chat AI,’ uses GPT-4, an iteration of ChatGPT’s language models, combining web search, browsing and chat into one unified experience, producing more reliable and precise data compared to ChatGPT versions. 

Following suit, Google released its generative AI chatbot, BARD, earlier this year. BARD was initially based on company’s own LaMDA (Language Model for Dialogue Application System), but now uses the language model called PaLM or Pathways Language Model, which is more advanced and uses about 540 billion parameters. More recently, Google announced it is nearly ready to release its next-generation AI foundation model – Gemini – which is anticipated to outplay many of its competitors. 

Other big players such as Amazon and IBM are not far behind in this space and have made some notable announcements. Amazon’s proprietary LLM foundation models are known collectively as Amazon Titan and would be available through Amazon Bedrock service and other third-party companies. IBM, on the other hand, announced recently announced new GenAI foundation models and enhancements coming to WatsonX – the company’s AI and data platform. 

Canadian AI Market Opportunities

Given the recent innovation around the Generative AI space, IDC Canada expects that the next five years will be crucial in the adoption of AI-enabled software; businesses and enterprises of different sizes, as well as Federal and Provincial Governments, are expected to be obvious adopters. They are likely to adopt such technologies to stay AI relevant, but more importantly to create efficiencies, bolster automation, and remain agile.  

As per IDC’s Artificial Intelligence Spending Guide, Canada’s top three fastest-growing sectors in the Artificial Intelligence Platform space are Financial, Infrastructure and Manufacturing & Resources. 

Generative AI Limitations

While GenAI has shown incredible potential in a wide range of applications, several limitations must be considered when using this technology. Some of the most significant limitations of GenAI include:

  • Lack of control over output: Since the AI algorithms can produce original content, it isn’t easy to control the specific output.
  • Overfitting: too focused on specific data.
  • Limited dataset for learning: “You only know what you know.”
  • Bias loop: unfair or inaccurate output if the training data is biased.
  • Ethical concerns: deepfakes, copyrights, etc.

While these limitations are significant, they do not negate the potential of GenAI. In fact, these conversations about GenAI will help further increase AI awareness and an AI uptick in general.

Conclusion

As with any technology, challenges and ethical considerations must be addressed as the field of GenAI continues to evolve. And with GenAI’s benefits becoming ever more apparent, its impact on our lives and businesses will only continue to grow – making the conversations about its ”correct and fair” use of utmost importance. Overall, the versatility and potential of GenAI make it a very fascinating area of research, with many exciting developments and applications yet to be realized. Stay tuned. 

Learn More

For more information on navigating the Canadian and global AI markets, refer to the following links or contact us today to learn more about IDC’s AI and GenAI data and analytics research.

Kritika Ghildiyal - Research Analyst, Market Analytics & Insights - IDC

Analyst Profile
Kritika is a Research Analyst with the Data & Analytics Team at IDC Canada. She is responsible for market models, IDC spending guides, consulting projects, and other worldwide data products. Kritika joins IDC with more than three years of experience in data analysis, reporting, market research methodologies, report writing, project negotiation, and stakeholder management. Kritika previously worked in Paris and New Delhi. Kritika holds an M.Sc. in Business from the IESEG School of Management, France. And she additionally holds a Bachelor of Arts with majors in Economics and Mathematics from the University of Delhi, India.

In today’s rapidly evolving digital landscape, where technological advancements are reshaping industries at an unprecedented pace, the cloud has emerged as a beacon of innovation and efficiency. European businesses and governments have keenly embraced cloud technologies, harnessing their transformative potential to optimize operations, drive collaboration, and stay ahead of a dynamic digital market.

At the forefront of this cloud revolution is the concept of Industry Clouds – specialized platforms, applications, and services that offer industry-specific capabilities and operational prowess, revolutionizing how businesses across diverse sectors operate and excel.

A Shift in Cloud Dynamics: The Rise of Industry Clouds in Europe

The maturity of the cloud market in Europe has been steadily progressing, and forward-thinking organizations are strategically leveraging the unique advantages offered by different cloud platforms, applications, and services. The region’s robust infrastructure, bolstered by data protection regulations like the General Data Protection Regulation (GDPR), combined with the presence of established local cloud service providers, has expedited the adoption of cloud solutions across various industries.

Innovation, collaboration, and operational efficiency have become the driving forces behind European businesses’ embrace of cloud technology. Notably, the emergence of multi-cloud and hybrid cloud strategies has allowed organizations to tailor their cloud environments to their specific industry needs, adhere to local regulations, and fuel complex digital businesses that thrive on flexible infrastructure.

This holistic approach goes beyond mere migration, and moving out of legacy environments, looking for cost-efficiency, but marks a pivotal shift toward industry-specific solutions.

Empowering the Leadership: CTOs and CIOs in the Cloud Era

As cloud maturity advances, the roles of Chief Technology Officers (CTOs) and Chief Information Officers (CIOs) are undergoing a transformation. These decision-makers are no longer concerned solely with operational efficiency and scalability; they are now focused on strategic cloud implementation that drives tangible business outcomes.

The modern CTO and CIO are in search of solutions that not only streamline operations but also cater to the unique demands of their industries, thereby enhancing value for money and competitive advantage.

This shift in focus has paved the way for Industry Clouds to take center stage. As cloud providers, enterprise software vendors, and industry organizations fine-tune their offerings to align with specific sectors, CTOs and CIOs are empowered to harness cloud technologies that are tailor-made for their industries, sub-sectors and even use cases.

Deciphering Industry Clouds: Defining the Landscape

Industry Clouds, as distinguished from their conventional counterparts, are cloud-based platforms, applications, or services designed to offer industry-specific insights, technology, and operational capabilities. The hallmark of Industry Clouds lies in their vertical integration, modularity, collaboration features, and the potential to foster network effects. These specialized clouds encompass a range of services, including SaaS, IaaS, PaaS, DaaS, and various business operations-as-a-service.

What sets Industry Clouds apart are their unique characteristics. These clouds provide a suite of tools that agnostic cloud platforms and enterprise SaaS solutions simply cannot replicate. The focal technology capabilities encompass:

  1. Industry-specific data models
  2. Industry-tailored business process capabilities
  3. Pre-built blueprints and configuration templates
  4. Governance capabilities, including compliance and regulatory alignment
  5. Cross-industry collaboration options for seamless data sharing
  6. Specialized AI and analytics capabilities, including Gen AI
  7. Marketplace functionalities for optimized sourcing
  8. A PaaS platform for customized extensions and add-ons

These capabilities underpin the value proposition of Industry Clouds, allowing organizations to tap into solutions that are purpose-built for their sectors.

Navigating the Landscape: European Industry Clouds Research

The European Industry Clouds Research is a comprehensive exploration of industry-specific solutions. This research delves into the offerings of Cloud Service Providers (CSPs), competitive landscapes, adoption best practices across industries, and other critical aspects of these specialized platforms, applications, and services.

While the focus is primarily on CSP offerings, it also encompasses insights from industry players such as Siemens and Dassault, albeit in a more limited scope. Notably, the research excludes non-business solutions ecosystems, like government shared/community cloud platforms or collective standard-promoting platforms.

The research also extends into the realm of Cross-Industry approach, comparing and contrasting adoption rates across different sectors, evaluating offerings per industry, and dissecting the strategies of Cloud Service Providers, consulting organizations, and enterprise software vendors. This comprehensive exploration ensures a holistic understanding of Industry Clouds’ impact on various industries.

Industry Clouds vs. Industry Ecosystems: Navigating Complexity

Industry Clouds and Industry Ecosystems, while interconnected, are distinct concepts that play unique roles in driving innovation and business efficiency. An Industry Cloud Platform is a specialized, industry-tailored digital service offering data, blueprints, and industry knowledge to optimize operations within a specific sector.

In contrast, Industry Ecosystems encompass a broader network of businesses, partners, and stakeholders, promoting collaboration, innovation, and value creation on a larger scale. While Industry Clouds offer targeted solutions, Industry Ecosystems foster a collaborative environment that transcends organizational boundaries, nurturing multi-way value generation flows.

Embracing the Future: Leveraging Industry Clouds for European Business Acceleration and Resiliency

As European businesses continue to navigate the ever-changing digital landscape, Industry Clouds have emerged as a powerful tool to drive operational excellence, innovation, and competitive advantage. By tailoring cloud solutions to meet industry-specific needs, organizations are harnessing the full potential of cloud technology to create a transformative impact.

As we move forward, it is imperative for businesses to recognize and leverage the unparalleled benefits of Industry Clouds and Industry Ecosystems, ensuring sustainable growth and staying at the forefront of digital evolution.

To know more, please reach out to Anielle Guedes.

September through December are busy months for IDC analysts. Industry and tech vendor conferences and events are happening every week. Only over the next couple of weeks, I’ll be traveling first to Rome and then to Portugal and, every time I travel, I try to think of my carbon footprint.

Going to Rome is a no brainer, I’ll drive my hybrid car to the train station, then ride a commuter train to Milan, then a high-speed train to Rome, and eventually the subway to the hotel; I’ll ride electric end-to-end. Going to Lisbon, there’s no choice, I need to fly, unless I fancy spending two days on a bus. So, my carbon footprint will be much higher. True, Lisbon is much farther away than Rome, but still the average carbon emissions of a flight are much higher than those of a train.

Air travel executives know that policymakers, investors and passengers are expecting them to be more ambitious in terms of their environmental sustainability targets and are taking actions.

 

Download eBook: Sustainability in EMEA: Opportunities for Tech Vendors, Challenges for Tech Buyers

 

The Three Horizons of Sustainable Air Travel

In the immediate aftermath of COVID, somebody thought that doing more work, learning, getting entertained remotely would replace a lot of air travel, hence reduce emissions. But air travel came back with a vengeance.

Therefore, air travel executives need to rely on other levers to increase sustainability. One of the most critical is technology innovation. Technology innovation will play a strategic role to make air travel more sustainable through three waves.

  • In the long-term, electric and hybrid electric propulsion aircraft will drastically reduce both carbon emission and noise pollution. But although air taxis are already technically possible, long-haul electric flight is at the research stage.
  • In the medium-term, alternative fuels will reduce, but not eliminate emissions, and by 2030, they will not represent only about 10% of all consumption, according to the International Energy Agency.

Information and communication technologies (ICT) will help – for instance, AI is being applied to accelerate the discovery of alternative fuels, digital twins are used to design and develop electric engines for aircrafts – but they won’t be the critical enablers. These medium-to-long term changes will be dependent on biochemical, mechanical, and electrical engineering developments.

  • In the short-term, it will be a whole different story. ICT will be strategic to make air travel more sustainable. From designing and operating more fuel-efficient routes, by integrating traffic control systems, such as the Single European Sky, which is expected to cut carbon emissions by around 10% per year, to applying AI and machine learning to reduce taxi time – American airlines intelligent gating program is providing the capability to save more than a minute of taxi time per flight. From implementing more sophisticated data collection and analytics to report scope one, two and three emissions more accurately and then offset them, to reducing airports’ energy consumption. From sharing data among airlines, global distribution systems, online travel agencies and brick-and-more travel agencies to nudge passengers to buy environmental sustainability products and packages, to partnering with railways to replace short-haul flights or better connect airports.

 

Register for the webcast: Sustainability in EMEA: The Challenge of Moving from Ambition to Action

 

I consider myself a quite environmentally conscious person, but then when I look back at my twenty plus years career in the ICT industry, I took so many flights that make my environmental conscience feel guilty. I hope that I’ll be able to travel on an electric powered airplane, someday.

In the meantime, there are plenty of opportunities to embrace ICT innovations to make air travel more sustainable. To learn more about airlines’ sustainability and other strategic and operational innovations enabled technology, take a look at IDC’s global research on the industry.

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.

The satellite world is changing fast. Elon Musk has shown that he can make Low Earth Orbit (LEO) satellite broadband a serious operational success to consumers and his Starlink venture has more than one and half million users and says it is on its way to operational breakeven.

With more than 5,000 spacecraft in orbit as of August 2023 across 100 launches, its success is broadening the attraction of satellite broadband from the niche it was before and is such that it looks likely that Starlink will dominate the satellite broadband arena to the same degree that SpaceX dominates the commercial launcher business.

At the same time work of the 3GPP technical standards group is integrating satellite communications within 5G as LEO satellite systems bring down satellite signal latency to almost the same level as that of terrestrial cellular.

In the earlier satellite world dominated by geostationary operators, European telcos and CSPs could choose to work with regional players such as Eutelsat which were owned mainly neutral local entities.

With Starlink they need to decide whether they want to work with a colourful and unpredictable entrepreneur who is yin to the yang of infrastructure cooperatives on which telcos liked to base their networks before.

Starlink is showing it will move into all the satellite markets its LEO system can provide for – from consumer broadband and serving people in mobile homes and remotely located businesses it is already into maritime service and airliner WiFi with, just as crucially, direct to device {D2D) service looming up soon, where smartphones can communicate directly with LEO satellites. And that’s not to mention military use in Ukraine.

The principal LEO option to Starlink is unlikely to be European. While Europe has one LEO operator, OneWeb, it has much less capacity than Starlink, a higher cost base, and will focus on wholesaling capacity for government and some business applications. A similar approach can be expected from the EU-backed IRIS2 LEO system, still on the drawing board.

Instead, the main LEO competitor will also be one owned by an American billionaire, Jeff Bezos, through his Kuiper system, which is beginning to gear up for service next year. While way behind Starlink, and appearing to target a narrower range of services, Bezos has committed to billions in launches and looks set to challenge Starlink in some services. Its prototype receivers are small enough to be easily portable.

Apple is investing hundreds of millions of dollars in its tie up with Globalstar to offer emergency satellite messaging. This service is already available across much of Europe. Its phone manufacturer rivals are in the process of responding, and this will set in train the move to full voice and data direct smartphone to satellite service (D2D).

The two current potential options in D2D to Starlink are two US-based startups, AST SpaceMobile and Lynk, both fairly long shot ventures which intend to configure their specialised satellites to work with smartphones. The potential revenue from D2D is being hyped in many quarters, but cellular operators still need to offer it, or their rivals will leave them behind.

It will take a few years before full D2D becomes a widespread service, but fixed – or portable – LEO access is already becoming a sizeable business in several countries around the world. In Alaska for instance Starlink is having a major impact on the provision of broadband service as it brings a better satellite service at reasonably affordable prices to outlying places than they ever had on offer before. In Australia, where there are reported to be 120,000 Starlink subscribers, Telstra has incorporated the service into its cellular pay plans.

Starlink already has regulatory approval in 33 European countries, so regional telcos and cellular operators have to decide how they will work with it. Should they play If you can’t beat them, join them, as Telefonica has recently done, deciding to work with Starlink in Spain and its coverage areas in Latin America.

With three cellular operators in most major European markets, those that sign up with Starlink first in each countries are likely to gain an advantage. In the past Musk has not shown himself keen to work with foreign partners, but with Starlink, where he needs to bring foreign markets onstream fast to produce income from otherwise unused satellite capacity, his approach looks different.

More broadly, European telcos need to resolve how they want to be involved themselves in several satellite areas over the new few years, as some other big technological possibilities loom, key among them satellite connectivity for smart driving in vehicles. Do they want satellite to just complement their own networks, or do they want to integrate it within them, for instance incorporating low latency LEO into cellular backhaul. Which use cases do they want to address? They have a lot of local marketing heft, and those with cellular networks retail outlets to sell reception hardware.

The tie-ups telcos decide on now may have a big influence on who they work with later when the business becomes substantial.

Time for all European telcos and CSPs to have a policy in place of what they want to do in including satellite into their service plans for the next few years.

B2B marketing is a dynamic landscape, ever evolving to embrace new trends and technologies. In this era of rapid change, some tools that were once staples are now being questioned for their relevance. One such tool that often finds itself in the spotlight is the whitepaper. Is the whitepaper, which has been a longstanding champion of B2B marketing, losing its efficacy?

The Evolution of B2B Marketing Tools

As the B2B marketing terrain changes, there’s a natural inclination to wonder whether certain tools have outlived their usefulness. The whitepaper, often associated with in-depth technical content, has been a trusted resource for businesses seeking to educate their audiences. However, with the rise of new content formats and the ever-decreasing attention span of audiences, there’s a growing concern about the viability of the whitepaper in capturing and retaining attention.

The Role of Whitepapers in Modern B2B Content Marketing

While it’s true that attention spans are shorter and content formats have diversified, the whitepaper still holds a significant place in B2B marketing. Its value lies in its ability to provide comprehensive, authoritative information on complex topics. Whitepapers serve as a bridge between technical knowledge and business insights, catering to decision-makers who seek a deeper understanding before committing to a solution. In other words, the information in a whitepaper can’t be easily accessed in a search engine search, making it an invaluable resource for informed decision-making in the intricate landscape of B2B transactions.

Harnessing the Power of Whitepapers

To make whitepapers effective in the modern B2B landscape, a strategic approach is essential. First and foremost, it’s crucial to identify your target audience and tailor your content to their needs. In an era where personalization reigns supreme, crafting whitepapers that speak directly to your audience’s pain points and aspirations can set you apart. Additionally, leveraging engaging visuals, infographics, and interactive elements can transform a traditional whitepaper into an immersive experience that resonates.

Interesting Read: Anti-Trend Guide – Proven Strategies for B2B Tech Marketers Amidst Trend Overload

The Relevance of Performance Marketing Calculators

Amid discussions about the future of whitepapers, the role of data-driven insights cannot be underestimated. Enter IDC’s complimentary performance marketing calculator, a tool that offers clarity and quantifiable results in the marketing realm. This calculator, based on historical data and average channel results, provides a practical approach to measure the effectiveness of various marketing channels. By utilizing this complimentary tool, B2B marketers can gauge the impact of their whitepaper campaigns alongside other strategies.

Imagine having a content marketing tool that takes you through the effectiveness of key marketing channels, offering insights based on real data. The performance marketing calculator does just that. It guides marketers through the results of an asset, achieved from email campaigns, social media efforts, content distribution, and more. This data-driven approach empowers B2B marketers to make informed decisions and optimize their strategies for maximum impact.

Test Drive IDC’s Complimentary Performance Marketing Calculator

Balancing Tradition and Innovation

In the world of B2B marketing, there’s a delicate balance between embracing innovation and respecting tradition. While the whitepaper may have faced questions about its relevance, it remains a potent tool when wielded strategically. To ensure its effectiveness, align your whitepaper with your target audience’s needs and preferences, and infuse it with modern elements that captivate attention.

Explore IDC Content Marketing Services

As you navigate the ever-changing landscape of B2B marketing, tools like the performance marketing calculator offer a compass. By assessing the effectiveness of your strategies, including the whitepaper, you can refine your approach and achieve quantifiable results. The whitepaper, when approached with creativity and backed by data insights, continues to be a valuable asset in your marketing arsenal. In a world of shifting trends, the whitepaper’s longevity lies in its ability to adapt, educate, and inspire action in the modern B2B audience.

Take the First Step Towards Maximizing Your Marketing Impact:

Explore IDC’s Effective Content Marketing Solutions