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In three years, I anticipate that around 40% of global engineering-oriented manufacturing companies will leverage digital twins within the industrial metaverse to enhance collaboration and accelerate time to value.

What leads me to this prediction? Let’s start with IDC’s definition of the industrial metaverse as a highly immersive environment that seamlessly integrates the physical and digital worlds, fostering shared presence, interaction, and continuity across engineering, operations, supply chains, and business functions.

In engineering domain, the industrial metaverse functions as a cloud-native, multi-domain platform for 3D visualization and collaboration, bringing products to life through integrated, physically accurate simulations. It acts as a “digital twin of digital twins,” utilizing real-time data from multiple domains such as mechanical, electrical, and software interactions.

Building this environment requires collaboration among key players, including hyperscalers and providers of simulation platforms, 3D visualization, and digital business tools. New partnerships are constantly emerging, involving major companies in digital infrastructure, cloud computing, engineering platforms, visualization technologies, and artificial intelligence — all working together to push the industrial metaverse beyond the traditional digital twin model.

What Do the Numbers Tell?

Product innovation remains a key business priority for engineering-focused manufacturing organizations, as highlighted in IDC’s 2024 Global Manufacturing Industry Core Survey (Figure 1).

Figure 1: Question: What are your company’s top business priorities over the next 2 years?

According to IDC’s 2023 Global Product and Service Innovation Survey, 25% of manufacturing respondents considered industrial metaverse technology to be “very important” for product and service innovation. This number was even higher among engineering respondents, with 34% rating it as very important.

Furthermore, 38% of respondents from companies with over 1,000 employees in IDC’s 2024 Global Manufacturing Industry Core Survey stated that Industrial Metaverse technology plays a “moderate to very high” role in supporting their company’s achievement of key operational KPIs.

 As a result, the adoption of the industrial metaverse in engineering-focused manufacturing organizations is anticipated to grow steadily over the next three years.

In Conclusion

My advice for early adopters is to keep a close eye on hyperscalers, leading technology vendors, and the startup ecosystem — to stay up-to-date with the rapidly evolving landscape of industrial metaverse development. Additionally, remember that integrating real-world data with IT data to create advanced simulation and collaboration tools requires time and careful planning.

Building and nurturing digital communities and ecosystems is essential, as they will be key to future success in the industrial metaverse. Lastly, recognize that the value of the industrial metaverse extends beyond product design and engineering, reaching areas like operations, maintenance, quality, procurement, and the supply chain, among others.

As the January 2025 deadline for the EU Digital Operational Resilience Act (DORA) approaches, financial institutions and ICT providers across the European Economic Area (EEA) must urgently assess their readiness, address regulatory gaps, and implement the necessary tools and processes to ensure compliance and safeguard digital resilience.

On January 17, 2025, the EU Digital Operational Resilience Act will take effect across all European Economic Area countries. It will impact financial institutions and their ICT service providers even beyond these borders in certain circumstances.

With only three months remaining, more than 20,000 financial entities must comply with DORA’s regulatory requirements. However, in IDC’s European Security Technologies and Strategies Survey 2024 (May 2024), 49% of respondents stated, “We are aware of DORA but have not yet undertaken exploratory work,” and 14% admitted, “We are not aware of DORA.”

Since then, progress has hopefully been made, driven by active market debates and numerous educational initiatives aimed at increasing awareness. Still, with just a few weeks before the deadline, financial entities and ICT providers must assess their current standing and identify the efforts required to bridge the gaps. Now is the time to prioritize, plan, and comply:

  • PRIORITIZE the gaps that need addressing
  • PLAN for tools and process improvements (extending beyond January 2025)
  • COMPLY with the deadline

Let’s take a step back to recap the scope and objectives of this EU regulation.

Scope: Harmonization and Augmentation

DORA introduces two key innovations:

  • Harmonization: DORA harmonizes regulatory requirements across different financial industries, covering banking, insurance, capital markets players, and adjacent players such as credit rating agencies. This harmonization eliminates fragmentation across jurisdictions by implementing a regulation (not a directive), ensuring common requirements across all member countries.
  • Augmentation: DORA marks a paradigm shift, bringing ICT third-party providers under the direct scrutiny of the European Financial Supervisory Authorities. As previously discussed in our blog, EU regulators have acknowledged the growing dependency of financial organizations on ICT and cloud service providers. Given that digitalization and operational resilience are two sides of the same coin, implementing a robust digital operational resilience framework significantly enhances security for banking operations. By placing critical third-party ICT service providers under direct supervision, regulators have reshaped the dynamics between financial entities and their ICT partners.

For financial entities, DORA provides the framework for tighter collaboration with ICT partners to ensure end-to-end operational robustness. For ICT partners, DORA is not just a new regulatory burden, but an opportunity to deepen relationships with clients and explore new business avenues, as financial entities are required to conduct market research and define alternate solutions for each critical function.

Objectives: Mitigating Systemic Risk

The primary objective of DORA is to address the systemic risk posed by critical ICT service providers in the financial industry. By involving European supervisory authorities (e.g., EBA, ESMA, EIOPA) directly, regulators aim to mitigate this risk and enhance the overall digital resilience of the financial sector.

DORA’s requirements fall under five pillars:

  • Risk management
  • ICT third-party risk management
  • Digital operational resilience testing
  • Mandatory incident reporting
  • Voluntary information and intelligence sharing

Additionally, financial entities must define clear exit strategies to mitigate systemic risk in the event of operational issues with an existing ICT partner. Each entity must identify and choose alternative solutions and service providers to ensure the smooth transfer of critical services, if necessary.

For ICT vendors, DORA is a double-edged sword: While it opens up new opportunities and makes the market more fluid, it also imposes additional compliance obligations.

It is important to note that many DORA requirements are not new to large institutions, particularly significant banks subject to the ECB’s Single Supervisory Mechanism. The principle of proportionality still applies under DORA. Nonetheless, its impact is extensive, as evidenced by the IDC survey, wherein 38% of respondents cited digital operational resilience testing as their biggest challenge, while 33% identified ICT third-party risk management as a major hurdle.

Final Steps: Self-Assessment and Planning

With the deadline approaching, each institution must conduct a self-assessment to identify gaps. Where significant gaps remain, organizations must prioritize efforts to meet compliance requirements. Meanwhile, financial entities should plan for the adoption of new tools and processes, such as integrated procurement solutions, to enhance third-party governance and address DORA holistically as part of their ongoing journey toward digital operational resilience.

 

Are you ready for DORA? Discover the 10 critical steps financial entities must take before the regulation comes into effect in January 2025: IDC PlanScape: Last-Call DORA Compliance Checklist to Achieve Digital Operational Resilience

Maria Adele Di Comite - Research Director, IDC Financial Insights Corporate and Retail Banking - IDC

Analyst Profile
Maria Adele is Research Director for IDC Financial Insights European research team and is responsible for the IDC Financial Insights Corporate Banking Digital Transformation Strategies program. She has strong competencies in financial services strategy, cybersecurity, and regulatory evolution. She has been living and working in three different countries (Germany, Belgium, and Italy) and she speaks 5 languages. She is an expert in B2B business strategy, with significant experience in Financial Services, System Integration, and Consulting.

On October 3, I had the privilege of participating in a thought-provoking panel at DTX London 2024. The discussion revolved around one of the most pressing questions in the telecommunications industry: 5G versus Wi-Fi: Which technology will drive the future of connectivity?

As a 5G/mobility analyst at IDC in Europe, I was invited to join Paul Ridge, Director Consultant at 4C Strategies, and Dan Jones, Technologist at Hamina Wireless, to explore the opportunities, challenges, and future landscape of these two critical technologies.

The European Telecom Market: Facing Stagnation and Seeking New Growth

Before diving into the core debate, it’s essential to acknowledge the broader telecom market dynamics. The European telecom sector faces an array of challenges, including stagnating revenues, intensified competition from both traditional telcos and OTT players, and strict regulatory pressures.

Working closely with our telco colleagues around the world, IDC covers these issues across a range of research programs. As shown in IDC’s European 5G program (European 5G and Internet of Things Monetization and Adoption Strategies), price wars have squeezed margins, leaving telcos struggling to raise prices while shouldering the costs of 5G and fiber rollouts.

Telecom operators are pivoting toward service diversification, investing heavily in digital services, and shifting their strategies to seek new revenue streams beyond connectivity. This is where the conversation around 5G and Wi-Fi becomes especially significant.

5G: A Game-Changer for Telecoms

5G, particularly standalone (SA) networks, offers a lifeline for operators seeking to overcome revenue stagnation and expand into new business models. During the panel, I emphasized five key aspects of 5G SA that make it a cornerstone of future connectivity.

  1. Clean-Slate Architecture: 5G SA doesn’t rely on legacy technologies. This enables optimized network design, enhanced innovation, and greater flexibility.
  2. Cloud-Native Core: With a cloud-native foundation, operators can scale services dynamically, implement tailored network slices, and respond in real time to evolving user needs.
  3. Mobile Private Networks (MPNs): These enable businesses to deploy their own secure, private 5G networks that offer enhanced security, control, and reliability. MPNs also enable enterprises to run mission-critical applications independently from public networks.
  4. Network Slicing: This enables the creation of virtual, customized networks that cater to specific application requirements, such as ultra-reliable connectivity for autonomous vehicles or low-latency service for Smart Cities.
  5. Support for Key Traffic Types: The flexibility of 5G SA accommodates enhanced mobile broadband (eMBB), massive machine-type communications (mMTC), and ultra-reliable low-latency communication (URLLC), optimizing the network for a wide variety of use cases.

5G’s potential is immense — but its deployment in Europe has been slower than anticipated. To date, just 18 operators have launched 5G SA networks in Western Europe, and only a handful have commercialized network slicing capabilities.

Wi-Fi: The Complementary Force

5G offers compelling advantages, but Wi-Fi continues to be a dominant force, especially in residential and enterprise environments. The ubiquity of Wi-Fi, its ease of deployment, and lower cost make it an attractive option for fixed-location connectivity. However, Wi-Fi has limitations in mobility, security, and reliability — which is where 5G shines.

During the panel, we discussed how Wi-Fi remains ideal for specific customer requirements, such as indoor environments or smaller businesses with less demanding connectivity requirements. However, when mobility, low latency, and security are paramount, 5G emerges as the superior choice.

When 5G Outshines Wi-Fi

The results of IDC’s European 5G/IoT Survey 2024 highlighted that organizations are increasingly demanding mobile connectivity that extends beyond fixed locations. Nearly 70% of respondents said yes when asked, “Does your organization need mobile connectivity that extends beyond a fixed campus or location for anything other than personal devices?”

Businesses are looking for mobile solutions that enable them to monitor supply chains, manage remote operations, and ensure connectivity in dynamic environments.

Security remains a top concern, with 33% of survey respondents identifying enhanced security for data transmission and communication as their primary challenge. This has led to an increasing preference for keeping data in-house: Almost 49% of businesses cited trust and security concerns as a key reason for this choice.

This is where 5G MPNs come into play, offering businesses the security and control they need to manage sensitive data while generating new revenue streams through advanced digital services. According to IDC’s forecasts, the European MPN managed services market is expected to expand to a value of $818 million in 2028, with the MPN professional services market (including integration and consulting) projected to reach $615 million the same year.

In industries where deploying MPNs may not be feasible — such as public transportation or emergency services — 5G SA network slicing offers a flexible, secure alternative. With 5G network slicing, operators can create customized virtual networks, guaranteeing service-level agreements (SLAs) and ensuring reliable service for applications like connected ambulances or public transport vehicles. More than one-third (36%) of respondents in IDC’s European Telco Survey 2024 identified network slicing as a key driver of implementing 5G SA.

The reasons why businesses might choose 5G over Wi-Fi in certain campus or short-range scenarios include:

  • Security and End-to-End Control: 5G operates on licensed spectrum, offering higher levels of security compared to Wi-Fi, which uses unlicensed spectrum and is more vulnerable to interference and attacks. 5G networks enable operators to control and secure every part of the network from end to end, making it ideal for industries in which data protection is crucial.
  • Mobility: When mobility is important — such as in scenarios involving moving machines or vehicles — 5G excels due to its ability to maintain seamless connections during handovers between cells. Wi-Fi struggles with handover scenarios, leading to potential service drops when devices move across different access points. This makes 5G the better option for uninterrupted service in mobile environments.
  • Reliability in Aggressive Radio Environments: In radio-aggressive environments like factories, with machines and boxes creating interference, 5G’s micro-diversity and advanced signal handling capabilities make it more reliable than Wi-Fi. 5G’s ability to handle dark zones (areas with poor signal coverage) through reconfiguration also ensures consistent performance. Wi-Fi, however, may struggle in these areas.
  • Ability to Offer SLAs: 5G allows network operators to guarantee SLAs, providing commitments on performance, uptime, and latency. Wi-Fi cannot consistently offer these assurances. This is especially important in industrial applications requiring high reliability and low latency. 5G can provide predictable and measurable outcomes.
  • Control Over Different Parts of the Network: In 5G networks, operators have full control over network slices, traffic, and reconfigurations. This is essential in environments like manufacturing, where specific areas may need different levels of service or control. Customization at this level is difficult to achieve with Wi-Fi.

Blending 5G and Wi-Fi: The Future of Connectivity

Ultimately, the future of networking lies in the integration of 5G and Wi-Fi technologies. Each serves a distinct role in addressing the varying demands of consumers and businesses. Smartphones, for example, effortlessly switch between Wi-Fi and 5G depending on network quality, and this hybrid approach will likely become the norm across multiple industries.

Looking ahead, the combination of 5G’s robustness and Wi-Fi’s accessibility will enable a more flexible, efficient, and connected future. Telecom operators will continue leveraging both technologies to build the next generation of networks that deliver high-speed, secure, and reliable connectivity for all.

 

For more info on addressing growth in the telco space, please register for the following webcast: Addressing the telco growth imperative in EMEA

Masarra Mohamad - Senior Research Analyst, European 5G Enterprise Strategies - IDC

Analyst Profile
Masarra Mohamed is a senior research analyst specializing in analysing the connectivity and communications services markets, focusing on the changing networking requirements, trends, and competitive dynamics that support enterprises in their digital transformation. She explores how enterprise network strategies evolve to enable cloud, AI, and security.

Telcos in Europe, The Middle East, and Africa (EMEA) are coming under increasing investor pressure to deliver stronger growth. The average year-on-year (YoY) revenue growth rate among the “big 5” European telcos — BT, Deutsche Telekom, Orange, Telefonica, and Vodafone — in 2023 and the first half of 2024 was 0% and 1%, respectively.

The group of four leading Middle East and Africa telcos, namely Etisalat, MTN, Mobily and STC, are doing better, with a collective year-on-year revenue growth rate of 5% in H1 2024, but investors are noting that this is slower than their collective 9% year-on-year revenue growth in 2023.

What is going on here? First, the core telco business of providing network connectivity and communications services to consumers and business — which accounts for over four fifths of the revenues of most telcos — is challenged by a new breed of competitors. Users increasingly rely on the more convenient MS Teams and Zoom apps for their business calls, and WhatsApp or Viber apps for their personal calls and messages, which is hurting telco revenues.

And a whole host of disruptive players are challenging telcos’ broadband and enterprise networking business, from new entrant fibercos offering full fiber at attractive prices to consumers and small businesses to systems integrators pitching SD WAN and private 5G solutions to large enterprises.

Second — and more important — is the fact that EMEA telcos’ efforts to expand into “beyond connectivity” solutions have not had a major impact on the growth needle so far. Telcos have a bewildering range of market positioning, customer, and technology choices to make in this area, as we show in this diagram:

 

From a customer perspective, telcos need to not only find ways to serve existing consumer and business customers better, but they also need to consider targeting new customer segments in the broader ICT ecosystem. But the real maze of choices is in the top part of this growth diagram, where telcos need to decide if and how they play effectively in technology areas such as security, CPaaS, cloud/datacenter, and sustainability.

The complexity is compounded by the myriad of sub-segment (i.e., IoT software and services versus IoT connectivity), vertical (manufacturing versus healthcare), and geographic considerations.

As it stands, telcos need to address dozens of “where to play,” “how to win,” and “how to execute” jobs to be done — and do these extremely well — as they seek to address the growth imperative, illustrated on the left-hand side of the diagram below:

And yet, there are three big jobs that telcos need to do particularly well:

  • Prioritize Growth Opportunities: No telco will have the capacity to address every segment in every solution box outlined in the growth matrix above, so either/or choices will have to be made.
  • Identify and Incorporate Global Best Practices: Telcos do not need to reinvent the wheel in each of the adjacent growth opportunities, innovative solutions by both telcos and non-telcos across the world offer valuable lessons for those willing to look.
  • Define Winning Value Propositions: Telcos often have good value propositions in a range of “beyond connectivity” areas, but crucial ingredients that would make them great and irresistible to clients are often lacking.

IDC can help telcos address these critical growth jobs to be done with three well-established custom solutions:

  • IDC’s Opportunity Thermometer helps CSPs identify, select and prioritize the best and most attractive growth opportunities within or outside current product and geographic markets — that are within client’s capabilities to exploit.
  • IDC’s Innovation Radar helps CSPs identify and integrate inventive best practices and/or value propositions — and leverage the insights from these to accelerate revenue growth and boost customer loyalty.
  • IDC’s Value Prop Accelerator solution helps CSPs build or validate winning value propositions in target growth areas that often sit outside the connectivity and communication perimeter (e.g., cloud, security, APIs).

 

Should you wish to learn more about these and other IDC Custom Solutions, please get in touch.

For more info on addressing growth in the telco space, please register for the following webcast: Addressing the telco growth imperative in EMEA

Angel Dobardziev - Senior Consulting Director, European Consulting - IDC

Analyst Profile
Angel Dobardziev is a senior director, consulting, for IDC’s European Telecoms, IoT, and Infrastructure Groups. Based in London, Dobardziev works with IDC’s clients to define and deliver custom advisory solutions to their critical business and technology problems. Angel has consulted for global technology vendors and service providers on a range of areas including recent work on 5G, IoT, and cloud services. Recent engagements include extensive work for a global mobile operator trade body on developing its 5G program, helping to develop its in-depth (300 page) 5G Operator Guide, and more recently, its 5G Cost Optimisation study. He also led an engagement assisting a global mobile operator with its IoT go-to-market strategy, as well as numerous projects for a tier one software vendor supporting its on-premise-to-cloud migration strategy.

The deployment of 5G networks has reached a crucial point: We now have spectrum assigned, rollouts are nearly complete, devices are 5G compatible, and 5G Standalone (SA) is gaining ground.

Uncertainty remains, however, regarding monetization. The telecommunications sector is still searching for innovative use cases that can justify the massive investment. Finding that definitive “killer” use case has not been easy.

We need to understand, however, that 5G isn’t about a single blockbuster application. Instead, it’s about enabling multiple opportunities in a dynamic ecosystem where technologies like OpenAPIs will play a key role in success.

Show Me the Use Case — Where’s the Killer App?

Historically, each new generation of networks has been driven by a killer app that fueled its adoption. 2G was driven by voice, while 3G and 4G saw data and mobile browsing become the catalysts.

But with 5G, the industry is learning there won’t be a single, all-encompassing app to justify the investment. Such a mindset no longer applies.

With 5G, we aren’t looking for an application that will endure for decades. Instead, we need a network that enables a flexible range of services that can evolve over time.

The Real 5G Use Case: Flexibility and OpenAPIs

The true value of 5G lies in its flexibility. What’s pivotal isn’t a killer app but an infrastructure that can capitalize on a continuous flow of opportunities.

This is where innovation driven by network OpenAPIs comes into play. These open interfaces allow operators to provide a technological foundation on which third parties can build and monetize their services, creating a far more dynamic and diversified ecosystem.

Recently, Ericsson, in collaboration with 12 leading global operators, launched a joint initiative to enable the commercialization of network OpenAPIs, further solidifying their role in shaping a dynamic 5G ecosystem. This collaboration aims to redefine the industry by creating open interfaces that allow third parties to develop, deploy, and monetize their services on 5G infrastructure.

By fostering interoperability and innovation, this initiative positions OpenAPIs as a critical enabler for unlocking the full potential of 5G, allowing businesses across industries to tailor solutions that maximize their 5G investments.

Network OpenAPIs enable businesses to develop specialized, customizable solutions tailored to specific needs across industries such as manufacturing, healthcare, smart ports, and logistics. The key is that this ecosystem of services can be monetized collectively, allowing 5G networks to capture value from multiple sources simultaneously.

5G: A Technology for the Enterprise World

5G is primarily designed for the enterprise world, in which each company has unique requirements and seeks differentiation in the market. This creates the scenario in which a single use case may not justify the investment.

Companies must therefore leverage 5G and OpenAPIs to deploy tailored solutions that meet their specific needs. A hospital, for example, will have entirely different latency and reliability requirements than a factory or a smart port.

It’s 5G’s ability to meet these demands that brings real value. The possibility of real innovation lies in the ability of 5G networks to adapt to the specific challenges of each business sector and to do so in a scalable, flexible manner.

This agility is central to monetization, as it allows for the creation of custom solutions in an ecosystem that’s constantly evolving.

Enabling Technology: The Challenge and the Opportunity

We need to keep in mind that 5G is an enabling technology. This sets it apart from previous network generations. Instead of being the direct star, its success depends on services and solutions that can take advantage of its capabilities.

Here, OpenAPIs play a fundamental role: They allow businesses to integrate with the network and create their own applications using the operator’s infrastructure as a platform. The success of enabling technologies will be directly proportional to how easy they are to implement and how well they connect with customer needs.

5G monetization will not rely on finding a killer app but rather on enabling an ecosystem in which multiple services can thrive simultaneously. Collaboration between operators and developers is critical to unlocking the value of 5G.

OpenAPIs enable precisely this. They open access to the infrastructure, allowing each industry to design and deploy its own solutions.

The Key to Monetization: A Shift in Mindset

Successfully monetizing 5G requires a shift in mindset on how networks are operated and monetized. It’s no longer about searching for a central application to justify the investment, but about creating a flexible architecture, supported by OpenAPIs, that enables companies to innovate and fully leverage 5G’s capabilities.

This change is already happening. Complementary technologies such as GenAI and edge computing are accelerating the transformation.

As organizations adapt to this mindset, they will identify and capitalize on real-time opportunities. At that point, the flexibility and service ecosystem enabled by OpenAPIs will unlock the true monetization potential of 5G.

 

For more info on addressing growth in the telco space, please register for the following webcast: Addressing the telco growth imperative in EMEA

Alejandro Cadenas - Associate Vice President - IDC

Analyst Profile
Alejandro Cadenas leads the European Telco Mobility unit, comprising the CISs European 5G Monetization and Adoption Strategies, European Consumer Telecoms Strategies, and European Internet of Things Ecosystem and Trends. The focus of these three programs is to address the Monetization strategies, best practises, challenges and recommendations for all players across the telecom sector. The key areas addressed include, but are not limited to, OpenAPis monetization, 5G monetization in the Enterprise (Mobile Private Networks, Slicing) and Consumer (digital products categories) segments, Partnerships, Commercial stratregies, key customers and pain points, LEO satellite connectivity, Mission Critical systems, as well as all strategies to take these to the market.

Regulations Are Reshaping the Way Companies Transact with Each Other

In the first blog of our e-invoicing series, we explored the pivotal role of e-invoicing in pioneering the transformation of business-to-business (B2B) transactions. This foundational piece highlighted how e-invoicing is reshaping the landscape of business interactions by streamlining processes, enhancing accuracy, and driving efficiency. In the current post, we delve deeper into the regulatory frameworks influencing these digital transformations, examining the opportunities and challenges that arise as businesses adapt to evolving compliance requirements.

The Emergence of a New Transaction Ecosystem

After decades of paper-based dominance, business-to-business transactions are digitalizing and digitally transforming. e-Invoices and digital networks are streamlining accounts payable and receivable processes, enhancing efficiency and accuracy. Transactions are also becoming enriched with data, especially to display sustainability-related information.

Prompted by new regulation, digital-first thinking, and good corporate governance, businesses are changing how they collaborate and transact. This presents an opportunity for vendors to develop innovative solutions that meet the needs of today’s B2B landscape.

Regulators face the constant challenge of implementing measures that ensure market integrity, consumer protection, and alignment with public interests, while simultaneously fostering innovation and economic growth.

Regulations and the Burden of Responsibility

Reducing costs and improving efficiency are constant concerns for businesses. Companies explore every avenue to achieve these goals, from leveraging technology to optimizing workflows.

However, businesses must also contend with numerous external factors that can influence their operational effectiveness. Regulations are one of these external factors. Enterprises and their leadership are entrusted with the responsibility of ensuring compliance, which requires investments in personnel, technology, and training — oftentimes, all three.

Personnel

To stay compliant with evolving laws and regulations, companies must proactively recruit, train, and retain specialized personnel. These experts ensure adherence to current legal frameworks and monitor upcoming changes, like the introduction of new regulations or amendments to existing ones.

For example, the General Data Protection Regulation (GDPR) mandates that companies handling large volumes of personal data appoint a Data Protection Officer (DPO).  Highly regulated industries like banking and healthcare often require multiple layers of compliance personnel throughout their organizations, in addition to industry-specific regulations and overarching ones.

As digital businesses increasingly rely on complex technologies, leadership must ensure their workforce possesses the necessary skills to navigate both current and future regulatory landscapes. This involves establishing management structures that can anticipate staffing needs and strategically invest in technology and training to maintain compliance. Public and private companies have distinct compliance needs and requirements. While technology can assist in meeting these needs, it cannot replace dedicated teams responsible for ensuring operational compliance. That is why technology and training is so important.

Technology

Technology and regulations are intertwined, existing in a state of interdependency with stronger linkages than often recognized. Regulators face the constant challenge of fostering innovation and economic growth, simultaneously safeguarding consumers and the public interest. This requires ongoing assessment of the benefits and drawbacks that new technologies bring to society.

In the European Union (EU), policymakers understand the importance of this dynamic and actively foster dialogue and collaboration between regulators, industry leaders, enterprises, technology experts, and vendors. To facilitate change management within organizations when it comes to regulation and technology, the EU provides support and self-service tools.

This collaborative approach is crucial, because while regulatory changes drive transformations in business-to-business transactions, technology provides the tools and solutions for effective compliance.

By understanding and proactively adapting to this interplay, businesses can leverage technological advancements to navigate the evolving landscape of B2B transactions and gain a competitive advantage. Vendors will play their part by supporting their clients in ensuring that they bring the right systems online at the right time.

Training

Sustainable compliance requires more than just training; it demands a culture of open communication and employee empowerment. Management must proactively inform employees about evolving regulations and the rationale behind them, providing the necessary resources and support to adapt without disrupting workflows.

Ensuring that the training covers both the law and technologies that are either being regulated or used to ensure regulation is key. This transparent approach fosters trust, reduces resistance to change, and enables employees to confidently contribute to a compliant organization.

Regulators must ensure a level playing field for businesses of all sizes, as multinational corporations have greater resources to invest in compliance compared to smaller enterprises. While not always perfect, European regulators have been leaders in promoting inclusive dialogue and collaboration among stakeholders to address these challenges.

Regulation as an Innovation Driver in B2B

At first glance, new invoice-related regulatory changes may easily be perceived as an added burden, however, within these changes there exists a significant area of opportunity if organizations successfully broaden the scope to include finance process improvements.

e-Invoicing could serve organizations as a catalyst for organizations to spearhead the introduction of more efficient practices for finance departments, facilitated through process automation.

Additional protocols in B2B document exchanges, particularly invoices, increase data accuracy while reducing manual intervention, which then enhances operational efficiency.

Fraud prevention

e-Invoicing unlocks new potential for tax authorities to combat value added tax (VAT)- related fraud, addressing the blind spots for VAT evasion and avoidance. The starting point for EU tax authorities begins with invoking greater controls in monitoring the integrity of VAT data being reported by organizations. For this tax enforcement modernization effort to serve its true purpose, several European tax authorities are establishing their own document exchange screening and approval processes, commonly referred to as continuous transaction control (CTC).

This is an important step in the future of the transaction that veers towards creating transparency and mitigating fraud at the point of the transaction. This involves new technical elements requiring organizations to submit invoices to designated regulatory platforms for approval prior to delivery to the end recipients.

Audit readiness

An advantage for both organizations and tax administrations that arises through e-invoicing is advanced audit readiness.  European governments are tasked with, among other things, implementing two of the common transaction control models: the post-audit and clearance models.

Each having their own benefits, tax authorities will have more control in performing audits at will. Previously performed solely after the event, tax authorities that have adopted clearance models are able to carry out audits in real-time and/or upon request for each transaction. This removes the need to request and wait for information from taxpayers. Some European tax authorities are using this as an opportunity to explore new ways of incentivizing organizations.

For example, the Italian government initially introduced e-invoicing for B2G transactions in 2014; now it has gone on to introduce remote audit checks that will lower government interference with tax remittances for B2B exchanges.

Organizations looking to deploy e-invoicing will need to overcome significant hurdles such as breaking down data silos, improving data quality and consistency, and, in some instances managing high volumes of complex data, to avoid non-compliance penalties

Conclusion

As the landscape of B2B transactions evolves under the influence of new regulations, businesses must embrace the opportunities presented by e-invoicing and digital transformation.

This transition not only meets compliance needs, but also drives efficiency and innovation within organizations. Businesses must actively leverage the interconnectedness of technology, personnel training, and regulations to shape the future of transactions and drive growth.

 

Ready to elevate your solutions and empower your teams? Contact us for a deeper dive on how IDC can help.

Building strong detection and response capabilities is vital for organizations seeking to improve their cybersecurity posture and business resilience.

Many organizations do not have the in-house skills or resources to make the required improvements in detection and response. For example, just 15% of large organizations in Europe have sufficient security operations center (SOC) analyst skills in house, and churn and burnout among these analysts are often high. These challenges can have a strong negative impact on a company’s cybersecurity posture.

Consequently, many organizations are turning to service providers to fill specific gaps in their detection and response capabilities or are outsourcing their requirements in full.

The high level of interest in managed detection and response (MDR) has led to many service providers entering the market, which has now become highly competitive, providing customers with a greater range of services. This is not always the case for IT services markets, some of which are dominated by a handful of players.

The choices for detection and response include telecom and network players, IT services companies, systems integrators, cybersecurity specialists, professional services companies, and vendors with services offerings. Each has something different to offer enterprises.

Many of the service providers in this market have a global presence, others have a more regional focus. Service providers have different types and levels of skills and knowledge, and so there are differences in the ways they can support the unique needs of European organizations.

Europe is a complex patchwork of numerous factors, including cultural, language, economic, and regulatory  factors (among others)meaning that in-region (and sometimes in-country) capabilities are vital to meet customers’ objectives.

The IDC MarketScape: European Managed Detection and Response Services 2024 Vendor Assessment examines the strengths and weaknesses of leading providers of European MDR services. We have identified eight leaders and nine major players in this market, providing a detailed analysis of the services offered by each; this is aimed at providing European organizations with clear guidance to assist them in their purchasing decisions.

There are marked differences between providers in terms of target customers, technical capabilities, and detailed expertise in addressing the needs of European organizations. Organizations should evaluate all these aspects carefully to ensure they choose a service provider that delivers on their business and technology objectives. This will include making optimal decisions that relate to technical capabilities, services and skillsets, target markets, and strategic roadmaps.

One critical area to consider is onboarding and time-to-value. Customers should ensure they are clear on delivery capabilities and the desired operating model. They should be fully informed by their provider in advance how they will be onboarded and the timing of key steps.

As the threat landscape is becoming ever more complex, with a growing ecosystem of actors, the need for proactive detection and response capabilities is becoming essential for all organizations across the region. According to IDC’s EMEA Security Services Survey, MDR is now a priority for 65% of organizations, with the market in Europe forecast to record a compound annual growth rate of 29.2% from 2022 to 2027.

The way businesses transact with one another is transforming. This presents an opportunity for vendors to develop innovative solutions that meet the needs of the modern B2B landscape.

The Emergence of a New Transaction Ecosystem

After decades of paper-based dominance, business-to-business (B2B) transactions are digitalizing and digitally transforming. e-Invoices and digital networks are streamlining accounts payable and receivable processes, enhancing efficiency and accuracy. Transactions are becoming enriched with data, especially to display sustainability-related information.

Spurred by new regulation, digital-first thinking, and good corporate governance, these developments are changing how businesses collaborate and transact with one another. Vendors have the opportunity to seize the moment and develop innovative solutions that meet the needs and requirements of today’s B2B landscape.

Transformation Drivers

What’s driving the transformation of business transactions? What is the future of the transaction?

Some 70% of businesses regard e-invoicing as an opportunity that goes beyond compliance and can unlock benefits like greater efficiency and faster payments.

According to IDC, regulations, digitalization, and sustainability are the three primary drivers of B2B transformation.

  • Regulation: The introduction of e-invoicing regulations is accelerating the shift toward digital processes in B2B interactions. European and global businesses will need to adopt new technologies and workflows to ensure compliance with current and future regulations. The EU is already mandating the use of e-invoicing in business-to-government (B2G) transactions through Directive 2014/55/EU. The directive aims to streamline public procurement processes, reduce administrative loads, and improve transparency. Countries like Italy and Hungary already require e-invoicing for B2B transactions. Other member states like Germany are steadily advancing their frameworks for eventual legislation. 
  • Digitalization: Digitalization is the process of converting analogue data into digital formats. Automation and AI tools are helping organizations digitalize and transform the way they handle external transactions, increasing the accuracy, speed, and real-time visibility of transactions.
  • Sustainability: The environmental impact of delivering products and services accumulates along the value chain. For most European organizations, much of the environmental impact of their products occurs upstream in their supply chains. European organizations are now beginning to record ESG (environmental, social, and governance) data associated with their purchases. Invoices will start to feature financial and ESG data, with ESG metrics specific to individual products.

 

“New transaction ecosystems will make B2B transactions faster, more secure, and efficient while enhancing transparency and compliance.”

Tom Seal, Senior Research Manager, IDC

 

IDC’s Recommendations

The digital transformation journey, while indeed complex, unlocks a future of frictionless information sharing between businesses. The transition to business networks presents a prime opportunity for vendors.

The Future of B2B Transactions is Digital

  • Organizations that share an increasing amount of data with their customers will require a new array of data from vendors to track sustainability performance.
  • Much of the new data that will be shared among organizations will follow the existing transaction pathway. However, this pathway must be updated to meet new demands.

Transactions Will be Data-Rich

  • e-Invoicing and other pressures will compel organizations to move beyond “paper thinking” during the 2020s.
  • A new transaction ecosystem will evolve, enabling organizations to build a transaction workflow that meets the needs of their industries, operations, and legislative requirements.

Network-Enabled

  • Future transactions will rarely be point to point. Rather, they will typically occur over a platform or network.
  • The future will be a network of networks, rather than an array of competing networks.

What It Means for Vendors

  1. Beyond complying with legislation, application vendors must develop strategies that help them thrive within the new transaction ecosystem.
  2. Application vendors have an opportunity to win the race to be the conduit for new data flows, capitalizing on the growth opportunities they represent.
  3. Every application vendor must think about their networks or network connectivity. Network access will be critical but equally commoditized. 

Conclusion

The new transaction ecosystem offers significant benefits, and organizations will increasingly rely on vendors to provide the necessary expertise and solutions to unlock these advantages. For tech vendors, the future of e-invoicing and B2B transactions is not just about compliance — it’s about leading digital transformation and setting new standards of efficiency and sustainability in the industry.

Watch out for Part 2 of our Blog Series on e-Invoicing in the coming weeks.

 

Ready to elevate your solutions and empower your teams? Contact us for a deeper dive on how IDC can help.