If you are a CIO of an organization that has moved to agile, you may feel that you have lost some oversight over what is happening in the organization. As self-empowered teams work on the development of new functionality, product owners prioritize the work that needs to be done in upcoming sprints, turning the CIO role into more of a facilitator than a decision-making manager.

In theory there is nothing wrong with empowered team members. On the other hand, a certain degree of management is necessary to make sure all well intended initiatives are aligned to organizational goals, including the company mission and vision. IDC studies however show that 96% of CIOs perceive a lack of visibility in software development teams[1].

To stay relevant in an ever-changing environment, organizations need to deliver value to their customers. They need to provide value to attract new customers, to retain current customers and to stay profitable. Producing value is largely tasked to development teams in the organization.

Modern CIOs are struggling to find a balance between being a facilitator, trusting their people and being a manager.

It’s often crucial to periodically assess team performance that identifies the high-performing and the low-performing teams as a starting point to understand room for improvement: team performance optimization (TPO).

Team Performance

So, what is team performance? Teams need to provide as much value for the money as possible. The money is often fixed: X persons, working Y hours per week cost Z dollars. When we ask how much value is produced, it becomes more difficult to answer because measuring value is not quantifiable. Value is perceived differently by different individuals and can also vary over time.

It’s widely accepted that functionality, when well-prioritized, has a positive relation with value. Therefore, more functionality delivered should mean more value delivered. And functionality is objectively measurable. There are ISO standards available for functional size measurement, which means that it’s possible to measure the functionality that different teams produce in an objective, repeatable, verifiable way. The functional size units produced are measured by technology that also measures the product quality of the application the team is working on. This technology measures the code against all relevant standards, like ISO25010, ISO5055, CWE, OWASP, NIST, etc. The result is a score on several health factors: Robustness, Security, Efficiency, Changeability, Transferability, and Total Quality.

Optimizing Team Performance

IDC Agile Value Management measures the functional size produced per sprint, release or other time period and collects some basic data like effort via hours spent, cost of these hours and defects logged. This enables us to define 5 key Team Performance metrics:

  • Productivity[2]: Effort hours spent per functional size unit
  • Cost Efficiency: Cost of effort hours spent per functional size unit
  • Delivery Speed: Functional size units developed per calendar month
  • Process Quality: Defects per functional size unit
  • Value: Functional size units delivered per $1000 spent

These metrics are purely based on the functionality produced, regardless of the technology used or other non-functional requirements. Because these are objective metrics, we can benchmark these against our extensive database to compare the team metrics to carefully selected peers (based on for instance technology, size, complexity, industry, country, etc.). This results in indices that show the relative performance of teams against these peers. For instance, a Productivity Index of 15% means 15% better productivity than the peer group. In this way it becomes possible to both compare the performance of teams against the industry and against each other. Lastly, it becomes possible to identify the best performing teams and the teams that have room for improvement. The next figure shows this.

In this example, 12 teams are compared to each other showing their (trends in) productivity. The zero percent line indicates the industry average, and the dots represent the different measurements.

Visibility to Manage Value Creation Function

It’s important to understand that the management information does not necessarily need to be shared with the teams, as they may feel this can be used as a stick to punish low performance. This should never be used to punish, always to understand and to improve team performance.

These insights are the starting point for actual management based on facts. Start with questions like: why is one team performing better than others? Do they use better practices, do they have a better requirements analysis process, better developers that understand the application better, fewer defects, etc.? What is the quality and risk level of the applications the teams are working on? IDC consultants help the teams improve, using best practices that have a proven positive effect on team performance.

As stated before, IDC studies show that 96% of CIOs perceive a lack of visibility in their software development teams. Using Agile Value Management it becomes possible to get an integral view of team performance and the quality of and risks in an application, providing necessary visibility for leaders to move out of being a facilitator only, and to actually manage.

When agile is not properly managed the dollars spent per unit of value delivered can easily go through the roof while the time to value drops significantly.

Learn how IDC Metri helps our clients achieve 35 to 65% reduction in spending or reduced time to market in our eBook:

Sources

[1] IDC Perspective: CIO Guidance for Addressing the Lack of Visibility in Software Development Teams. Part of Future Enterprise Resiliency and Spending Survey (FERS Survey) wave 1, 798 respondents at CxO level.

[2] Productivity is universally defined as output divided by input. However, this results in very small number with many digits. Therefore, the inverse is used which is often referred to as Project Delivery Rate, and called Productivity because this is a term that’s easier to relate to.

Back in 2019, IDC’s security and trust team wrote about the potential of artificial intelligence (AI) in cybersecurity. At that time, the approach was to use AI to create analytics platforms that capture and replicate the tactics, techniques, and procedures of the finest security professionals and democratize the unstructured threat detection and remediation process. Using large volumes of structured and unstructured data, content analytics, information discovery, and analysis, as well as numerous other infrastructure technologies, AI-enabled security platforms use deep contextual data processing to answer questions, provide recommendations and direction, and hypothesize and formulate answers based on available evidence.

The goal at that time was – and still is – to augment the capabilities or enhance the efficiency of an organization’s most precious and scarce cybersecurity assets — cybersecurity professionals. The approach to development typically begins with the mundane and remedial and gradually graduates to increasingly complex use cases. Essentially, machine learning allows cybersecurity professionals to find the malicious “needle” in a haystack of data.

Use Cases for AI/ML Today

With the release of ChatGPT in November 2022, we are seeing increased excitement around all things AI and the application of AI technologies to enable secure outcomes. The greatest interest is in generative AI, but AI in security is hardly new. Machine learning, a form of AI that has been used in security for more than a decade, was used to generate malware signatures before algorithmic protections became the rage.

One long time use for machine learning has been behavioral analysis of users and entities (UEBA) to identify anomalous behaviors. This includes the configuration, applications, data flows, sign-ons, IP addresses accessed, and network flows of the devices in the environment. For example, does the device usually call out to another device? If not, an alert may be generated to have an analyst look into the unusual behavior.

Many vendors include UEBA as part of their security information and event management (SIEM) with alerting on the anomalies. For example, some SIEMs use ML models to detect domain-generated algorithms (DGA) that are used in DNS attacks.

Use Cases for Tomorrow

Vendors envision using AI for the thankless security tasks and saving humans from narrowly defined manually repetitive tasks, so they can pivot more quickly into investigating complex issues the machine does not understand. AI will not recognize what it has not been trained to see, so all new tactics and techniques will require human input.

Generative AI can easily translate from one language to another – spoken or machine language – which includes translating natural language queries into the vendor-specific languages needed to conduct the search in other tools. Today, SIEM vendors often use rules to correlate alerts into incidents that present more information to the analyst in one place.

AI will be trained to produce the context around an alert so analysts do not have to spend as much time on investigations, such as checking with an external service that can then label which domains are malicious. AI will handle investigations more efficiently, as well as prioritize which alerts should be handled first.

If trusted by the organization, AI may suggest or write playbooks based on regular actions taken by analysts. Eventually AI may be trusted to execute the playbooks, as well. Generative AI can recommend next steps using chatbots to provide responses about policies or best practices. One use may be a higher-level analyst confirming recommended actions for junior-level analysts. Eventually, organizations will use their own security data and threat pattern recognition capabilities to create predictive threat models.

Other uses for generative AI include:

• Generating reports from threat intelligence data

• Suggesting and writing detection rules, threat hunts, and queries for the SIEM

• Creating management, audit and compliance reports after an incident is resolved

• Reverse engineering malware

• Writing connectors that parse the ingested data correctly so it can be analyzed in log aggregation systems like a SIEM

• Helping software developers write code, search it for vulnerabilities, and offer suggested remediations

Moving Forward

The goal with AI has always been to improve the efficiency of the security analyst in their work of defending an organization against cyber adversaries. However, the cost of AI models and services may be too high for some organizations. Relying on AI to guide analysts and report on security events will only take off if the models are trustworthy.

The data used to train the model must be accurate or the AI-driven decisions will not have the desired effect. The terms confabulation or hallucination are being used to describe when a model is wrong because the models are trained to give some answer instead of saying I don’t know when it does not have an answer. The industry needs to avoid AI bias which occurs if the training set chosen is not diverse enough.

Customers and AI suppliers should understand the underlying data behind each decision so they may figure out if training went wrong and how models need to be retrained. And, vendors must protect the data used to train the models – if the data is breached the model could, for example, be trained to ignore malicious behavior instead of flagging it. Additionally, customers must have guardrails to ensure that they keep proprietary data out of public models.

Vendors will also need to check for drift with their models. AI models are not something that can be set up and forgotten. They must be tuned and updated with new information. Researchers and other cybersecurity vendors can turn to MITRE’s Adversarial Threat Landscape for Artificial-Intelligence Systems (ATLAS) for help in better understanding the threats to machine learning systems and for tactics and techniques – similar to those in the MITRE ATT&CK framework – to address and resolve issues.

Interested in learning more? Join us for a webinar on May 31st – Unlocking Business Success with Generative AI.

Michelle Abraham - Sr. Director, Research Cybersecurity - IDC

Michelle Abraham is a Senior Research Director in IDC's Security and Trust Group responsible for the Security Information and Event Management (SIEM), Exposure Management and Related Artificial Intelligence Technologies practice. Ms. Abraham's core research coverage includes SIEM platforms, exposure management platforms, attack surface management, breach and attack simulation, cybersecurity asset management, and device vulnerability management alongside AI-related security topics.

The retail industry is a dynamic and ever-changing landscape that is constantly adapting to the needs of consumers and technological advancements. With the rise of omnichannel business models, retailers must cater to the demands of increasingly discerning customers who seek personalized experiences and convenient shopping options.

In this blog post, we will explore how retail commerce platforms (RCPs) are evolving to become instrumental in the seamless integration of the omnichannel customer journey and the personalization of the customer experience (CX) — both crucial for competitiveness in today’s retail industry.

The Retail Commerce Platform

The RCP is the backbone of retail operations, providing all the core capabilities that enable customer experience differentiation and seamless commerce. From customer experience to commerce services, employee experience, order fulfillment, and content optimization services, the platform is the key to success in today’s retail landscape.

Why the Retail Commerce Platform is Key for Today’s Retail Competitiveness

Customer experience is a top priority for retailers worldwide, and many feel the pressure to adopt experience-based business models. Through the RCP, retailers can prioritize investments in areas such as hyper-micro personalization and real-time contextual and immersive interactions and transform into CX-focused organizations to reinvent how omnichannel and headless commerce works. By combining commerce with interactive customer engagement, retailers can create more trustful lifetime valued connections with customers and associates, ultimately boosting sales.

The RCP enables retailers to focus on strategic planning, processes, programs, and technology-enabled-use cases, which IDC Retail Insights summarizes with the concept of Reverse Experience for Customer-Led Retail, to support today’s personalized and omnichannel customer journeys.

The RCP provides retailers with the tools to work on the 4Ps, or pillars, of the Reverse Experience for Customer-Led Retail, that is People, Products, Processes, and Planet, to address customer expectations (People), speed up time to market (Products), manage value-chain interactions (Processes) and ensure sustainable operations (Planet), and integrate the 4Ps through strategic planning.Working with technology partners is key for retailers to advance their innovation journey aimed at the implementation of the essential capabilities, services, and innovative technologies of the RCP, to enable the Reverse Experience for Customer-Led Retail and take advantage of current and future market opportunities.

Unsurprisingly, retailers are moving rapidly toward RCP adoption. Over 60% of retailers globally have already implemented or are currently implementing the platform, while 33% plan to invest in it over the next 12 to 24 months, according to IDC’s 2022 Global Retail Operating Models Survey.

Key Trends in Today’s Retail Commerce Platform

But how is the RCP evolving? To answer this question, IDC Retail Insights assessed more than 20 RCP software and service providers. Here’s what we found out:

  • Modern RCP frameworks are becoming more flexible and modular, allowing retailers to become more agile and adopt plug-and-play capabilities.
  • Modern RCPs enable the seamless integration of front end (e.g., POS) with back-end operations (e.g., inventory management) for better omnichannel experience and operations management.
  • Artificial intelligence (AI) capabilities continue to expand in RCPs to deliver better customer experiences and strengthen operations efficiency.
  • There is continuous integration of RCP with systems including customer data platforms (CDPs) that help make the most of the extensive data pool available in today’s highly digitized retail operations.

Three Actions for Successful Commerce Platform Expansion

The RCP is essential for retailers to compete in today’s fast-paced environment and prepare for the future. By enabling piloting, implementing, and scaling innovation at speed, RCPs are the key to success in the retail industry. Retailers looking to adopt or expand their commerce platform’s capabilities should consider the following:

  • Define a clear digital road map and accelerate RCP investments to achieve your company’s strategic objectives.
  • Prioritize API and microservices-based architectures for the rapid expansion of the retail commerce platform’s capabilities and seamless integration with third-party services.
  • Strengthen AI capabilities for customer experience personalization and omnichannel commerce orchestration, which are vital for today’s retail operations.

 

If you want to know more about how the RCP is evolving and what are the core offerings, strengths and challenges of RCP technology software and service providers, check out IDC MarketScape: Worldwide Retail Commerce Platform Software Providers 2023 Vendor Assessment and IDC MarketScape: Worldwide Retail Commerce Platform Service Providers 2023 Vendor Assessment. They are insightful research pieces that can help you stay up-to-date and develop your RCP implementation and expansion strategy.

It’s a question that doesn’t get a lot of attention – but it should! I mean, when you really look at it, there are far too many brands that fail to develop deeper relationships with consumers, content to make the occasional transaction every two to three years. They believe that the best technology or the best product wins. But it often doesn’t. They fail to understand the many other factors at play, including the role of frictionless user experiences. Far too many are “one-trick ponies” with little relevance in consumers’ lives. They lack a clear understanding of how to build a brand – how to build from strength – and underestimate the impact of brand loyalty and brand advocacy have on the cost of customer acquisition.

The U.S. Consumer Device Market: A Picture is Worth a Thousand Words

The brand map below captures the factors behind each brand’s performance.

Although Samsung users trust the Samsung brand more than Apple users trust the Apple brand, Apple has successfully developed deep relationships in a much more profound way than Samsung, enabling it to outperform Samsung in revenue. Each brand’s position correlates strongly with its share of the U.S. consumer device market, which was worth more than $600 billion in 2022.

However, the news is not all bad for Samsung, which far outperforms all other brands in depth of relationship and revenue. The large group of low trust, low relevance brands is vulnerable; they must expand their relevance or suffer the consequences of their shallow, transactional relationships.

Trust is Essential for Successful Relationships with Consumers

The level of trust in your brand determines its ceiling – its potential. Trusted brands get bought, used, and recommended more. They eventually end up with a higher proportion of loyal customers and are more profitable.

As important as trust is, relevance is essential for developing deeper relationships with consumers. A high level of trust that does not translate into greater relevance is unfulfilled potential – the problem that plagues Samsung.

Deepening the Relationship – Building Increased Relevance

The process of deepening the relationship comes from empathetically asking questions like: What needs are we currently meeting? How well are we meeting them? What are their pain points? How could we solve them? What things would they like to do that they cannot do very well or at all today?

Contrast that with the selfish mindset of the inwardly focused company (e.g., how can we convince consumers our offering is still relevant?) Rather than starting with the needs of the consumer, this approach starts with the company’s need to find nails to hit with its hammer.

This does not apply only to device markets. It applies to subscriptions and services too. Take the example of the market for wireless service, broadband internet, and entertainment services like audio and video streaming services. The right questions include:

  • What is changing about the way consumers communicate and entertain themselves?
  • What would deliver a better experience?” 

The answers require an understanding of the user journey, identification of pain points, and solutions that users find truly intuitive and helpful. It does not necessarily mean offering a bundle. Based on the needs and expectations of consumers today, it may very well mean offering excellent services, with great support, without a contract at prices that consumers consider a fair value (not cheap, but not exorbitant, and without built-in prices increases).

Charging a premium for a no contract relationship or forcing consumers to take on a two-year contracts to get the best price cuts against the grain, making consumers predisposed to change at the first chance to get the treatment they really want. Capturing new customers is much more costly than servicing them well and keeping them.

Two Kinds of Relevance

Relevance is all about a brand’s ability to meet consumers’ needs. There are two main kinds of relevance – market relevance and personal relevance. The more needs a brand meets, the greater its relevance. The more consumer spend that you compete for, the greater your market reach, and the greater your company’s market relevance. Brands with high market reach have a larger audience and the greatest market potential.

At the same time, not every brand is designed to play in the entire marketplace. Brands like TikTok and Tesla target specific subsets of consumers and drive dynamic and healthy businesses as a result. The more relationships consumers have with you, and the deeper those relationships, the greater your personal relevance to them. The deeper a consumer’s relationship with your brand, the more time or money they spend with you.

Trust That Does Not Translate into Relevance is Unfulfilled Potential: A surprising number of brands have a high degree of trust but fail to develop greater relevance, limiting their growth potential. There are many reasons for this.

Too Many Companies Focus Too Narrowly on One Set of Consumer Needs: Consumers use multiple form factors, moving easily from one device type to another, as they create content, shop online, or game. Since consumers own multiple form factors, brands that offer the form factors they own or intend to buy have much greater relevance than those who do not.

Perhaps there’s a fear that younger consumers, who’ll define the future market, are different. After all, to ensure your brand thrives going forward, it’s important to align with the needs of Millennials and Gen Z. The data is clear. These generations are also multi-device, with Gen Z especially driving the trend towards smartphones and PCs.

Merely Marking a Presence Does Not Establish Relevance: It’s not enough to mark your brand’s presence in a segment. Consumers must see sufficient acceptance by other users to merit their consideration. They need to see people they know using a product or service. They need to be able to ask someone they trust about their experience. Word of mouth is important. Two to three percent market or segment shares are insufficient.

Samsung, Google, and Microsoft are among the many brands guilty of “marking a presence” in certain device segments without playing to win. They do not spend enough money on marketing to generate sufficient awareness, sales, and a big enough user base to snowball into something bigger. Take the example of Samsung in the PC market. They have small single-digit share, yet their tiny user base is extremely satisfied demonstrating its upside potential. They are the only brand other than Apple to offer smartphones, tablets, and PCs giving it the opportunity to make a compelling counter case to Apple. But few consumers are aware of this fact.

Too Many Companies have a “White Space” Mentality: The statement “we need to find white space” is more often a reflection of a company’s desire to find a place in the market where there is less competition and higher profit margins than it is a desire to truly meet consumer needs. True white space opportunities are extremely rare and cannot be the core focus of building a brand.

Companies that are successful at finding white spaces are more often those that have a strong presence in the market and see a convergence of consumer needs that produces a white space opportunity. In other words, white space opportunities are born from an understanding of current needs, pain points, and an understanding of how to address those needs in a uniquely new way. When that is missing, the white space can best be described as a black hole.

Take Microsoft Duo as an example – a device that’s too big and unwieldy to be a phone (despite the company’s positioning to the contrary) and too small to be an effective tablet. A device whose killer use case was never apparent. With the same resources, Microsoft could have invested in the marketing necessary to make Surface a household name with universal awareness. Or, if it were willing to commit to the development of another form factor, it could have developed a true smartphone, especially given LG’s exit from smartphones.

Past Failures Lead Brands to Refuse to Embrace Obvious Opportunities: The reason is clear. Microsoft obviously thought, “We’ve tried making ‘traditional’ smartphones before. We’ve tried and failed terribly. We can’t do that again.”  Certainly, there is no clamor to bring back Windows Phones. Now let me ask you… does Microsoft’s past smartphone failure preclude it from developing a compelling, even premium Android smartphone now or in the future? Consumers have a high level of trust in Microsoft. The smartphone is not going away any time soon. A move to Android would be a powerful message. Superior functionality that allowed for smoothly going from a Microsoft smartphone to a Windows PC and an Android tablet would be welcome.

Apple’s Consumer Dominance: Deep Relationships

Now, I’ll be the first one to tell you – there is no reason for Apple to dominate the worldwide consumer tech marketplace as much as it does. In 2022, Apple accounted for 41% of worldwide smartphone, PC, and tablet revenue. The explanation is twofold. Apple has developed deep relationships with consumers and the other brands are largely conceding the market to them, focusing primarily on the enterprise market and unwilling to do the slow, hard work of building a consumer brand and business over time.

By far the most interesting part of Apple’s recent earnings call was the company’s spontaneous mention of the enterprise market and the increasing role of BYOD devices. Apple’s Consumer momentum results in “pull” for its devices, as small business owners and ITDMs are also consumers who bring their experiences to work with them each day. One way or another, it’s time to pay more attention to the consumer market. It may be the best way to slow the potential impact on the small business and enterprise markets.

Interested in learning more about IDC’s Future Consumer research and how it can help your business?

At IDC’s UK & Ireland Security Summit 2023, on April 17, 2022, 60 security leaders from across the UK and Ireland discussed the key theme of the event — “Security Strategy 2023: Managing Risk to Enable Digital Business”.

The summit featured an impressive panel of speakers from our partners and the CISO community, complemented by insights from the IDC’s European Security and Privacy team. Based on the presentations, workshops, and roundtable discussions from over 20 sessions, our top five European cyber security trends are as follows:

  1. Threat Landscape

Security practitioners are aware that their attack surfaces are expanding due to digital transformation, remote work, IoT and mobile adoption, and an increasing reliance upon the Web for conducting all aspects of a business. Cyber threats facing organizations are diverse and fast-changing. The ability to understand and mitigate risk depends upon having a clear view on the complexity and dynamic nature of the threat landscape. Who might the threat actors be? How are they trading in terms of selling enterprises’ credentials and vulnerabilities? Employees and contractors at organizations continue to be a point of entry for successful cybercrime. This may be credential theft or more simply end users clicking on malicious links. Standards for security hygiene must be continually assessed and addressed; for example, avoidance of the use of guessable password formats, conducting regular back-ups on different mediums including immutable data back-up and limiting the use of unsanctioned IT or Bring Your Own Device (BYOD).

Businesses should challenge the security industry on how technology vendors and MSSPs can drive security behind the scenes; so that malicious URLs and emails do not appear in the inbox or browser in the first place. Thus, security should become more invisible and frictionless.

  1. The Evolving Security Leadership Role

IDC sees the CISO role as a communications conduit to the board and the C-Suite on strategic security topics. It has become important for security leaders to have expanded skills broader than the technicalities of security. The modern CISO needs the capability to understand the overall business strategy and direction: inevitably this will include digital transformation or digital business elements. The CISO must ensure that security outcomes delivered are consistent with business strategy and digital initiatives.

  1. The Importance of Cyber Crisis Readiness

A senior speaker from a European government national defence agency highlighted how demonstrations of crisis response during a major global sporting occasion was a valuable exercise, as it gave leaders first-hand experience of how the response to crisis is handled in a realistic scenario. In this example the crisis response group brought in senior government officials to witness crisis response activities. Major cyber-attacks on critical national infrastructure have become national security event, and predetermined crisis centres are essential to give the most effective response to serious incidents. The key takeaway is that security leaders should explore bringing the C-suite and Board into cyber crisis simulation “rooms” to imitate a major attack and use this to critically evaluate responses amongst the executive leadership, as well as build in muscle memory so that appropriate responses are more automatic.

  1. Generative AI

It’s agreed that generative AI will have a transformative effect across all aspects of the technology industry, including cyber security. Generative AI is already a major issue as far as cybersecurity is concerned, with generative AI, for example, making phishing attacks much harder to detect. Businesses and governments should be encouraged to move quickly in understanding and responding to these new threats. Unskilled would-be cyber criminals can potentially create malware code using OpenAI, and thus the barriers for entry are now lower than ever, which is driving up the number of potential threat actors and cyber-attack volumes. On the other hand, the application of generative AI can help security teams build up their defences, by applying generative AI to SOC automation and SIEM/SOAR triage.

  1. Security Skills Shortages and Lack of Diversity

There continues to be a major skills shortage in cybersecurity that’s been around for a decade. There are initiatives in place to address this, but organizations must do more to address the skills shortage and lack of diversity. MSSPs and security technology vendors should lead on up-skilling and diversity in the industry, by driving training programs, internal skills transfer programs, and efforts to encourage and motivate a more diverse workplace.

Customers are a critical component to the business.  Without them there is little reason to pursue the services or products that are developed, built, and sold by organizations. Customers bring in the revenue needed to maintain and refuel the business, as well as to help it grow and scale. 

So, why is it that only 12% of enterprises connect customer data between departments, using it to make the customer journey better?  In many cases organizations just don’t understand several factors which can enlighten the organization to improve the customer’s experience:

  • What data is available
  • Value of the data
  • Insights the data can bring

Data is everywhere and that includes customer data. In the digital world there are many channels the customer may use to purchase the goods and services that will be provided.  In fact, IDC finds over 30+ (and growing) different customer channels may be used to bring a seamless, dynamic, and personal customer journey, enabling the customer’s purchase capabilities.  

Each of these channels holds customer data or moments that matter.  Each moment that matters means the customer is at a decision point from research and investigation of product and services, to comparison, selection, purchase, delight of the purchase, and the experience throughout the process. This includes the customer service that is experienced throughout the journey, and after the purchase and aftermarket services. 

The data comes in many forms from structured to unstructured. In the Voice of the Customer (VOC) 3.0 it is inferred data. In our IDC article, Voice of the Customer Programs: Where are they today? More Importantly, where are they going?, we defined inferred data as information where the insights like customer intention, sentiment and emotion are inferred from observed customer data. In other words, it is looking at a customer’s actions and being able to understand their satisfaction from those actions, without needing to do anything like fill out a survey or post a review.

Inferred data can come from written or visual data where the analytical tools provide insights into the customer’s sentiment.  Sentiment is captured by looking at user behavior such as rage clicks. Rage clicks are the fast clicks on multiple selections of one part of a web page indicating a user is not getting a response when they think they should.  Analytics can quickly determine a rage click, and action can almost immediately be taken today, to engage the user. In addition, body language, verbal tone, facial changes, and eye motions, also try to determine sentiment.

VOC programs must be where the customers are, listening to direct, indirect and inferred customer feedback. These programs need to listen, analyze and act on the customer feedback available. Customers want to know that not only are brands listening, but also acting on their feedback. This builds customer trust and loyalty.

Listening to the data and then analyzing it allows the organization to act on the customer data.  Customer data platforms (CDPs), generative AI, and low code/no code options are quickly becoming part of the VOC programs as they help analyze the data.  As the data is analyzed, the organization uncovers insights that can be converted to a plan to act differently, bringing more delightful and positive customer experiences to the critical moments that matter. 

Ensure that support, customer success, sales and customer service agents learn how to understand VOC sentiment data and customer engagement history to use them to improve their engagements with customers.

The digital world is reshaping the way organizations build the customer’s journey, using technology to compete and gain competitive advantage, while conditioning the customer moments that matter positively.  Moving beyond the 88% of organizations that do NOT use customer data means a shift is required. Organizations must shift how they use customer data with innovative technology to listen, analyze, and act upon the information. 

It is clear, one cannot wait to embark into the customer’s digital world as the organization’s customers, revenue, growth, and scale depend upon this data.  IDC suggests organizations capture, listen, analyze, and act now to bring out better customer experiences. 

Mickey North Rizza - Group Vice President - IDC

Mickey North Rizza is Group Vice-President for IDC's Enterprise Software. She leads the Enterprise Applications & Strategies research service along with a team of analysts responsible for IDC's coverage of next generation of enterprise applications including digital commerce, employee experience, enterprise asset management and smart facilities, ERP, financial applications, HCM and payroll applications, procurement, professional services automation and related project-based solutions software, supply chain automation, and talent acquisition and strategies. In her role, Mickey and the team advises clients on these intelligent, modern, and modular enterprise applications for businesses of all sizes with an emphasis on the key trends, opportunities, innovation and the IT and Business Buyer concerns, requirements, and buyer behaviors.

Railways are becoming increasingly strategic. They are more energy efficient and pollute less than private vehicles, and they are 15 to 20 times safer than cars.

Compared with private vehicles, they do not entail any fixed cost for travellers. No wonder governments around the world are making huge investments in rail. For instance, 21 out of 27 EU member state national recovery plans have allocated billions to invest in electrification and modernisation of rail infrastructure. President Biden’s Bipartisan Infrastructure Law has nearly tripled funding for rail infrastructure — to $1 billion a year for the next five years.

Airlines struggled to survive when COVID reduced traffic to unprecedented levels. Fuel price increases and labour shortages compounded the effect of COVID by creating the urgency to profoundly rethink business and operating models, while regulators and passengers demand accelerated investment in environmental sustainability, such as more fuel-efficient traffic management, more sustainable fuels and, in the future, zero-emission aviation.

Both industries have reached an inflection point. Hiring more people and growing the size of fleets and number of routes will not be enough to increase capacity utilisation and offer more competitive and personalised services, while maintaining high safety standards and improving environmental sustainability. Achieving those strategic goals will require railway and airline executives to invest in technology innovation.

Bold Ambition for the Future Will Depend on Realising the Value of Technology Innovation

Railways and airlines have invested in technology for many years to deploy digital customer experience capabilities, such as loyalty programmes, self-service booking and mobile payments, intelligent asset and fleet management capabilities to enhance operational excellence, and scheduling of routes and dispatch to bring together high-capacity utilisation and safety.

However, our recent studies show that they are not standing still. They are now looking at the next generation of technologies, such as 5G, artificial intelligence and machine learning, IoT and edge computing, augmented and virtual reality, even quantum computing for traffic optimisation. They are not doing so for the sake of technology, but to achieve four interdependent strategic business goals:

  • Increase operational efficiency, while targeting net-zero impact​
  • Increase capacity utilisation by combining intelligent scheduling, dispatch and traffic control systems to increase frequency of travel and smart predictive operations to help prevent delays and disruptions 
  • Ensure that efficiency goes hand in hand with safety and security, even with higher utilisation rates thanks to digitally enabled physical security systems, regulatory compliance of operations and cybersecurity​
  • Increase revenue growth through innovative service offerings, often by making their services and hubs — stations and airports — the anchors of a mobility-as-a-service ecosystem

To empower railway and airline executives to make strategic choices about next-generation technology investments, implement new organisational competencies and capacities that accelerate technology investment benefit realisation, and select tech partners that understand the technical and business evolution of their industry, IDC has launched new research on railways and airlines and transportation hubs.

Stay tuned for upcoming research on topics such as ticketing and revenue management, digital twins for intelligent operations, 5G and cybersecurity.

Massimiliano Claps - Research Director - IDC

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.

In Europe, the primary driver for corporate sustainability initiatives is the EU’s Corporate Sustainability Reporting Directive (CSRD). It came into force in January 2023 at EU level and must be transposed into national law in all EU countries within 18 months (by mid-2024).

The EU CSRD aims to improve transparency and accountability around corporate sustainability performance. It also aims to accelerate the integration of environmental, social and governance (ESG) considerations into corporate business practices to support the transition to a more sustainable, inclusive economy.

From 2025, those companies already subject to the Non-Financial Reporting Directive (NFRD) — around 10,000 in Europe — will have to report on a variety of sustainability indicators for their FY24. In the following years, the CSRD will be widened to cover around 50,000 companies — all those listed on EU regulated markets with more than 250 employees, more than €40 million in revenues and/or more than €20 million in total assets. The directive also covers non-EU companies with operations in the EU.

 

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

 

The key differences to previous laws are:

  • The introduction of standardised, mandatory sustainability metrics on companies’ policies, risks, impacts and outcomes relating to ESG issues
  • The mandate to consider double materiality, i.e., identifying all potential negative and positive impacts on people and environment connected with a company’s own operations and its value chain
  • The requirement that reported information is audited
  • The requirement that reported information is digitally tagged to feed into a European single access point

Non-compliance can lead to sanctions and financial penalties, but also reputational damage.

Our recent surveys have revealed that most companies are in the very early stages of being able to meet these requirements. The measurement of value chain sustainability performance (including Scope 3 emissions and product life-cycle assessments) is very complex and requires the creation of new KPIs and respective data architectures that enable continuous data collection and analysis, real-time monitoring, automated performance reporting, and data assurance.

 

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

 

Will CSRD Legislation Lead to the Same Last-Minute Rush and Soar in Penalties as with GDPR?

Remember when the GDPR came into effect in May 2018? Shortly before, there was a great rush as organisations prepared for compliance. Why? Because of the threat of severe penalties. And penalties were imposed: since its launch, hundreds of millions of euros of fines have been handed out by data protection authorities around Europe. In 2019, those fines totalled €73 million, rising to €172 million in 2020 and €1.3 billion in 2021 (source: enforcementtracker.com).

As with GDPR, CSRD legislation replaces older laws with new, stricter and better enforced legislation. While they are EU directives, both GDPR and CSRD have “extraterritoriality” enforcement, meaning regulators can fine organisations anywhere in the world if they have operations in the EU and do not comply.

The risks of not being prepared for CSRD are significant. If member states implement similar penalties or sanctions as for financial reporting legislation, organisations could face legal sanctions (imprisonment or disqualification of company directors), public reprimands or penalties, depending on the country-specific enaction.

Non-compliance could also result in reputational damage, loss of stakeholder confidence, allegations of greenwashing and legal action from non-governmental entities such as climate activists.

And it’s not just the CSRD. The EU is also working on a Supply Chain Due Diligence Directive that aims to mitigate the adverse impact of governance, environmental and human rights risks in the value chain of companies selling products within the EU. Many national governing bodies are implementing or tightening mandatory carbon emission and other sustainability regulations.

Investing now in efforts to prepare data collection, analysis and reporting capabilities will keep an organisation ahead of the curve as CSRD and other new sustainability regulations are put in place.

Reporting compliance and impacts on risk management are one thing. Forward-looking companies are going further and are acting on the metrics. They are developing disruptive strategies and road maps for sustainable business transformation that redesigns end-to-end value chains and breaks up traditional industry models.

Circular (instead of linear) economy approaches are emerging, innovation is sustainability driven and products and services are becoming “sustainable by design”. Those approaches — not yet widely seen — are the basis for future-proof organisations that will have a much lower risk profile, greater resilience and long-term strategic growth potential. And they won’t have to fear sustainability regulations.

 

Related Research

2023 Key Sustainability Trends and Developments in EMEA

Sustainability and ESG Readiness Among European Organizations

Other Resources

IDC Survey Finds Organizations Turning Toward ESG Software Solutions and Independent ESG Program Management

The Need for Harmonised ESG Reporting for Financial Entities

Katharina Grimme - Associate VP, Research and Practice Lead, EMEA Sustainable Strategies and Technologies - IDC

Katharina Grimme has more than 20 years' experience as an industry analyst and strategy consultant in the tech industry and is leading is leading IDC's Sustainability research in EMEA. With her expertise and passion for sustainable concepts for business, society, and digitization, she drives thought leadership at the intersection of sustainability and digital transformation.

At IDC, we are seeing increased business focus on accelerating decision velocity – an interest that extends well beyond the traditional domain of IT executives. With greater frequency – and greater urgency – business leaders, including the C-suite, are now taking ownership of initiatives that address decision velocity.

In my recent presentation at IDC Directions 2023, I presented a video clip of a pit stop in a 2019 Formula race in Brazil to illustrate the impressive result of high-velocity decisions by highly trained professionals – four tires changed in under two seconds (yes, the Formula One driver – and his supporting Red Bull team – won that race). While most businesses must contend with less controlled, more volatile environments, Formula One offers an extreme, but nevertheless instructive example, demonstrating how these teams extract and analyze data from every race and apply those learnings to improve performance.

The Impact of C-Suite Turnover

In a recent IDC survey, when we asked organizations about impactful changes over the last few years, they cited a familiar set of challenges, including changing (remote and hybrid) work models, increased regulation, and higher than usual employee turnover. But, 30% of organizations also cited changes in the C-level executives.

Why is that important?

Well, turnover in the C-Suite is often a leading indicator of new, impactful projects and initiatives, as new executives ask questions, address problems, and propose solutions. New projects, particularly ones that involve data analytics and artificial intelligence, will typically kick off within six to 12 months of a major change in the C-Suite. And, as these projects are implemented, business leaders must contend with the three familiar Vs of data – velocity, variety, and volume.

There’s more data than ever before… it’s faster, and it’s more varied. Data is now increasingly distributed geographically, across hybrid and multicloud environments, creating additional complexity. The only way to thrive in these highly volatile and uncertain environments is to improve decision velocity. How organizations do that requires an understanding of what it means to make big decisions and what the decision-making process looks like.

In the 1970s, Colonel John Boyd, USAF, defined one of the best-known decision processes, the OODA loop, which was used by fighter pilots in its earliest iterations (Colonel Boyd later became a consultant to many of the largest organizations in the U.S.). While the OODA loop can become quite complex as additional feedback loops are added, the fundamental model relies on four steps – observe, orient, decide, and act. The goal is to move through the loop as quickly as possible, but there is still a need for control. In fact, that’s how we define decision velocity – the delicate balance between speed and control

Some organizations understand this delicate balance; many don’t and don’t invest accordingly. We found that digitally mature organizations assign importance to both speed and control with twice the frequency of less mature organizations.

We can see the impact on economic output over time, as data dense products grew to comprise two-thirds ($17.3 trillion) of U.S. GDP in 2022. In contrast, low data density products and services grew by only by one trillion since 2006, suggesting that data and decision velocity will be the key differentiating factors for achieving desired societal goals, such as addressing issues of aging populations, food supplies, and energy usage.

And, we have made progress. In 2002, $290 billion was spent on big data and analytics – that is, data warehouses, links, data integration and machine learning and other related tools and supporting infrastructure.

Are we seeing a strong return on that investment? I would argue that we’re not quite there, yet. Challenges persist, as many organizations still struggle with data silos, data quality, data analysis, and ultimately getting data to the right decision makers.

There are also technical challenges. Today 77% of organizations say that data intelligence is a challenge, which translates to a lack of data lineage and an inability to understand where data is and who has access to it. IDC analysts Stewart Bond and Phil Goodwin discussed these challenges, data logistics, and the need for a unified control plane in greater detail in their respective IDC Directions 2023 presentations.

Only 26% of streaming data is analyzed in real time before it makes its way to a repository, such as a data lake. In keeping with the Formula One theme, this is analogous to driving around a track at 200 mph only to make a pit stop that takes two hours – rather than two seconds – to change the tires.

We see this happen time and time again… and the real impact takes the form of data waste. 34% of surveyed executives have indicated that they often don’t get around to using the data they receive, obviating all the investment in data capture, analysis, cleansing and presentation. And, then there’s the issue of data decay. Half of 1,000 organizations surveyed globally indicated that their data loses value within hours; 75% of respondents said it loses value within days. If organizations don’t have the required decision velocity to act, they are simply wasting the data.

Decision Types

In addition to control, organizations must factor in three decision types – situational, scenario, and portfolio. IDC’s research shows that 13% of use cases require situational decisions to be made in seconds. Examples include financial services companies assessing and blocking potentially fraudulent credit card transactions. Just about two-thirds of use cases revolve around scenario decisions, which can be made within a few hours. For a financial services company, a scenario decision may involve the review and approval (or rejection) of a loan application. Portfolio decisions – 22% of use cases – require the most time. Examples include hiring a new chief risk officer or making an M&A decision.

While each decision type requires organizations to maximize decision velocity, the approaches across decision types can differ significantly. As Dr. Hannah Fry, Professor of Mathematics of Cities at the Centre for Advanced Spatial Analysis at University College London has discussed, sometimes organizations need to be data-driven; other times they need to be data-informed. It’s critical to understand the difference because many low-level situational decisions can be data-driven and fully automated. On the other hand, it’s highly unlikely that we’re going to see a ‘ChatCEO’ capability to automate executive-level portfolio decisions any time soon.

We don’t see enough of this nuanced view, yet, but organizations have been making progress toward improved decision velocity – 62% say that automation across the decision-making workflow has increased and 64% reported that metadata is growing faster than raw data, suggesting that data is being organized and structured in ways that make it available for consumption.

So… we’re moving in the right direction.

Just about 40% of organizations are prioritizing budgets for streaming data analysis as they invest in decision velocity. But, organizations need to do more to keep the flywheel of innovation in motion. They need to invest in new technologies and assess new categories of opportunities, including decision intelligence, a category of solutions that empower organizations with greater situational awareness while helping them recognize alternatives, assess risks, and perform simulations and to provide decision makers with better recommendations. And, despite calls for more self-service capabilities, what organizations really want is just the opposite – full service. They want data that they can use with their tools and applications when needed.

A third category is knowledge networks, a new generation of knowledge management tools that are becoming critical to improving decision velocity. As part of this focus on knowledge networks, organizations need to address the issue of humans learning from each other, especially in an environments characterized by high employee turnover. We’re seeing a lot of progress in this space, but a lot more needs to be done.

Finally, organizations must continue to invest in enterprise digital twin technology, bringing it from traditional design and product engineering, where it has been successfully deployed, to the business domain. Easier said than done, but this should be the goal, as organizations leverage decision velocity to improve overall enterprise intelligence.

Interested in learning more about IDC’s Future of Intelligence research? Download our eBook, Building Enterprise Intelligence: A Framework.

Dan Vesset - GVP/GM, Global Research Operations - IDC

Dan Vesset is Group Vice President of IDC's Analytics and Information Management market research and advisory practice, where he leads a group of analysts covering all aspects of structured data and unstructured content processing, integration, management, governance, analysis, and visualization. Mr. Vesset also leads IDC's global Big Data and Analytics research pillar. His research is focused on best practices in the application of business intelligence, analytics, and enterprise performance management software and processes on decision support and automation, and data monetization.

Sustainability was centre stage at the recent Hannover Messe, which was attended by more than 4,000 companies including the biggest and emerging technology vendors. This year, the focus was on technologies to support sustainable and climate neutral operations. Here are my main takeaways:

  • Energy and resource efficiency: you can’t improve what you don’t measure. Given the ongoing energy crisis, companies are scrambling to seek new approaches to optimise their energy use. We estimate that more than 40% of manufacturers worldwide consider high energy costs a top 3 driver for investing in sustainability initiatives.

Several executives I spoke with said that till a few years ago companies did not focus much on where energy is used, how it is used and how much of it is wasted, but things are very different now. Several energy management solutions that can capture and analyse usage from end to end, while being scalable, can provide manufacturers with this level of visibility.

We estimate that close to 9 in 10 manufacturers globally have already invested in a resource or energy management system or plan to do so in the next 12 to 18 months.

  • Tackling scope 3 emissions: collaboration is key. Regulatory and customer pressure are driving companies to look at their carbon footprint in a holistic way. On the regulation side, the EU Corporate Sustainability Reporting Directive (CSRD) recently came into force, requiring 50,000 companies to disclose sustainability-related information in their management reports.

Also, customers increasingly prefer to do business with suppliers with solid sustainability credentials. We estimate that 40% of companies worldwide consider more stringent requirements from customers (i.e., in RFQs) a key driver for investing in sustainability projects.

To manage and accurately report emissions data, cloud-based platforms that can contextualise, analyse and share sustainability-related data are becoming indispensable. In the same way, open and collaborative data ecosystems such as Catena X (in automotive value chains) enable the sharing of emissions-related data in a transparent and trustworthy way.

At Hannover, there were discussions on how this framework is being extended to the broader manufacturing sector (Manufacturing X) to create an interoperable ecosystem that supports resilient and sustainable manufacturing across all industries. Enabling manufacturers to track and manage their scope 3 emissions can have a real impact on achieving their net-zero targets.

  • Circularity is driving sustainable innovation in manufacturing. A shortage of raw materials such as rare earths, as well as dealing with waste (including electronic waste), are also accelerating the shift to more circular business models. At Hannover, there was a lot of focus on battery production with tech vendors showcasing their solutions for end-to-end manufacturing from design with circularity in mind, enabling cost-effective and high-yield production, and their eventual recovery and remanufacturing.

We are also one step closer to the EU battery passport, with the first publicly available content guidance unveiled at Hannover, providing indications on how to comply with the EU Battery Regulation, which advocates for more sustainable and circular battery production.

  • Thoughts for the future: what the industrial metaverse and generative AI mean for sustainability. Several companies showcased their value propositions in the industrial metaverse with initial use cases focused on worker augmentation and training and remote maintenance. It will be interesting to see more use cases for sustainability in future.

 

I also expect generative AI to gain more visibility at next year’s fair, having seen several examples of how it facilitates “interactions” with machines and increases worker productivity. In the near future, it will be great to see how it helps drive sustainability initiatives such as designing circular products or helping companies interpret complex ESG regulations.

IDC’s Manufacturing Insights team has prepared a list of 10 key trends from Hannover, including sustainability themes. Please get in touch, as the team will be happy to share our key takeaways with you.