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Resource Regions: Western Europe

We recently had our Advisory Board meeting, comprised of senior executives from European manufacturing organisations, with an objective to understand the latest topics or challenges they are dealing with. The two main challenges that were on their lists were energy prices and cybersecurity, how these two converge, and the role that technology can play to overcome the obstacles created by these threats.

Exploding Energy Prices

Unsurprisingly, the first challenge is exploding energy prices and how most manufacturers are struggling to cope with the ongoing situation here in Europe. They are in firefighting mode and find it extremely challenging to make profits from their operations.

Many companies have had to completely stop production for a few weeks, and this will continue even more in the coming months as prices rise exponentially. Some European manufacturers that have recently announced shutdowns are Arcelor Mittal (Germany), Aperam (Belgium), and CF Industries (United Kingdom).

Manufacturers tend to get energy price visibility only a week ahead and are therefore unable to plan for longer. Unless these costs can be passed on to customers, they have an impact on everything else and are pushing manufacturers beyond limits.

The cost uncertainty significantly complicates the S&OP process. For instance, frozen food requires storage in cold conditions and soaring energy prices lead to planning constraints. The bigger challenge is that this doesn’t seem to be going to stabilise anytime soon.

Are such high prices now the new normal? It is getting complex, since absorbing the costs or keeping high safety stock is making it difficult for manufacturers to even stay afloat.

Cybersecurity

There has been a shift from traditional closed systems to interconnected and open ones as part of digital transformation in manufacturing. This has made the industrial internet environment extremely complex, leaving the internet with many weaknesses and attracting more and more criminal attacks.

These cyberattacks have risen massively in the past six months. The manufacturing industry is only now waking up to the need for and importance of cyber security.

Most manufacturing organisations are increasing their investments in cybersecurity, but this is also leading to limitations in their operational technology (OT). They have mentioned how some of these cybersecurity measures had to be disabled because they impacted the performance of their equipment.

The desired output wasn’t being achieved, which required decision-making between a secure environment and the performance of the equipment.

When cyberattacks are successfully made on the systems or equipment that produce gas, it leads to a production shutdown causing an energy war. Unfortunately, this is the current reality that manufacturers are dealing with.

Producers acknowledge supply chain struggles caused by the pandemic, but these attacks on energy-producing equipment are hitting them at their core. The situation is making them rethink their IT capabilities — what to continue to do in-house vs. what to outsource/partner with and with whom.

The most important thing in such times is to be resilient, but the question is how? How to have safe energy, smarter supply chains, optimised and secure systems, visibility into what is happening and what needs to be done?

This is where technology can play a key role and manufacturers are looking for technology partners, not just to help them solve these challenges but also to build long-term resilience, especially around energy and materials. These challenges also provide an opportunity to think differently, innovate, and explore different business models, and only those manufacturers that can sail through this challenging phase will stay relevant in the market.

IDC the European Manufacturing Summit

Join us on November 15 at IDC’s European Manufacturing Digital Summit as it will be a perfect opportunity for manufacturing executives to discuss further on these challenges, share lessons learned, and network with the peer group.

Our advisory board members are keen to hear from technology providers during our summit about how they are helping solve these challenges. A summary of previous discussions with our Advisory Board can be found here. The summit also provides an opportunity for manufacturing organisations and technology providers to discuss how they can thrive in an increasingly digital and sustainable but also uncertain, volatile, and complex economy.

IT executives and senior decision makers can register here for the summit.

For more information about the summit, please contact Stefanie Naujoks or Gunjan Bassi, or head over to https://www.idc.com/eu

Gunjan Bassi - Research Manager - IDC

Analyst Profile
Gunjan Bassi has more than 14 years' experience working in the logistics and transportation sector. Before joining IDC, she worked with Transport Intelligence (Ti), a transportation and logistics research firm based in Bath, England, where she was responsible for vertical sector research covering qualitative and quantitative reports. She was also actively involved in the development of new research capabilities and product features of Ti's flagship market intelligence portal. Previously, based in India, she was leading the global logistics research team at Evalueserve where she was responsible for running custom research projects commissioned by leading logistics service providers (LSPs) and focussed on strategy/GTM, sales enablement, and market and competitive intelligence. Bassi holds a bachelor's degree from Shri Ram College of Commerce (SRCC), Delhi University, and post-grad studies in management.

Connectivity is a defining feature of the modern digital economy. The increasing ubiquity of mobile and fixed connectivity has enabled new digital economic models and these had already become part of people’s daily lives before the COVID-19 pandemic made digital interactions unavoidable.

Ubiquity and regular use have turned connectivity into a vital commodity which, paradoxically, telcos find difficult to grow revenues from. This commoditisation has steadily shrunk the value of telco shares over the past five years.

This is driving an industrywide imperative to change as Europe’s multibillion-dollar telecoms market seeks to embrace new technologies (cloud, AI, 5G), new ways of working (agile and DevOps) and new revenue opportunities (B2B and B2B2C). These trends play out against a backdrop of war in Ukraine, high inflation, a race for talent and an increasing need to show a strong commitment to climate change and social issues.

Technology, Services and Customers

Telcos are eager to reinvent themselves as technology companies that can continue to play a vital role in business and consumer communications. This transformation will need to be deep and will need to be made across dimensions such as technology, services and customers.

Technology

  • Between 2021 and 2026 the amount of data created, captured, replicated or consumed in Europe will increase by over 126%, according to IDC’s latest Global Datasphere forecast. Coupled with regulatory obligations, this piles the pressure on European telcos to continue investing heavily in network capacity upgrades throughout the decade to maintain the performance of their core products.
  • This includes the rollout of 5G access networks and increasing their fibre broadband footprints.
  • Investing in capacity alone will only enable telcos to stand still. To improve the management, creation and experience of their services they must also invest in their core network architecture and supporting IT systems.
  • In IDC’s 2022 digital transformation survey of European telcos, 58% cited BSS investment as the most impactful transformation investment to grow revenues. Other investments include modernising systems to be cloud native, converging core networks to support fixed and mobile services, and developing OSS/BSS platforms that support deeper network monetisation and better customer outcomes.

Services

  • We expect FTTP to account for the majority of broadband lines by 2024 and to represent 58% of total lines by the end of 2025. On the mobile side, European operators are currently rolling out coverage of 5G, which will also require heavy investment.
  • We expect 5G to account for the majority of mobile network connections by 2025, reaching 57% of all mobile connections by the end of that year.
  • As telcos’ core networks and IT systems evolve, operators are also keen to explore new business models that expand their role in consumer and business value chains beyond connectivity. Many of these new business models, from private networks to 5G gaming bundles to network as a service, will require partner-driven ecosystems to supercharge and build extensive value multipliers.
  • As such, 40% of large European operators identified integrating partner services into their ecosystem as a crucial impact of an API-driven strategy in IDC’s European Telco Digital Transformation Survey 2022. For these investments to pay off, telcos need to ensure that the APIs they provide are simple enough for developer partners to use and are supported across heterogenous network infrastructures.

Customers

  • While the bulk of telco revenues has traditionally come from consumer services, the commoditisation of connectivity has made it harder to grow revenues by just selling minutes, texts and data volumes. In 5G, operators are looking to grow their place in the enterprise value chain.
  • This means chasing opportunities such as the 83% of European enterprises that use or plan to use IoT technologies in their operations within the next two years. This shift in customer target cannot be successful without fundamental shifts in how telcos operate and strong insights from trusted partners that understand the B2B and B2B2C customer bases operators intend to create value for.
  • As operators look to acquire new segments, they are also fighting across the board to retain the customers they do have. Over 95% of European telcos are investing in AI/ML, and their main use case is improving customer insight.
  • Building deeper customer insights has a dual purpose — keeping customers happier for longer and helping telcos to identify, develop and productise the new value they offer. Those telcos with the deepest insights will be the most successful in the long term.

What’s Next for European Telcos

Success across all aspects of technology, services and customers requires careful balancing of many transformation initiatives. The competition for the financial and talent investment to succeed across the breadth of initiatives is further complicated by the macroeconomic and geopolitical headwinds blowing through Europe.

The underlying message is that Europe’s telcos can no longer afford to stand still. They must invest and improve across all aspects of their network, operations and organisation if they are to revitalise their space in the broader technology landscape.

IDC’s Telco Digital Summit, on November 22, will look at these themes in more detail. The summit will feature Europe’s leading telco analysts and senior telco executives, and will include keynotes from industry leaders to help attendees chart a path through the storms in the European telco market.

Chris Silberberg - Research Manager, Communication Service Provider Operations and Monetization - IDC

Analyst Profile
Chris Silberberg is Research Manager for IDC's global Communication Service Provider Operations and Monetization research. Chris' core research coverage includes the evolution of telco monetization, customer experience, orchestration, and assurance capabilities. Telcos are at a crossroads, double down as utility providers or become digital service power houses. Both strategies demand communication service providers fundamentally transform their IT capabilities to enable customer first experiences, autonomous operations, and the capacity to innovate monetization models at scale.

Enterprise medical imaging (EMI) is not just a technology. It’s a set of strategies, initiatives, workflows and solutions implemented enterprisewide to consistently and optimally capture, index, manage, store, distribute, view, exchange, analyse and govern all medical imaging data and content across different settings. It’s there to eliminate traditional imaging silos by aligning imaging technology and infrastructure essentials with universal image availability (without silos).

According to an IDC Health Insights survey in February 2022, 38% of European healthcare providers will invest in a new EMI solution in the next two years and 57% will enhance their current solution. These solutions are likely to be:

  • Cloud based. To support enterprise imaging, healthcare systems are opting for secure, always-on cloud storage to improve the continuum of care and respond to patients’ needs:
    • Easier integration with large hospital electronic healthcare records (EHRs)
    • Faster access to images, reports, results and other vital patient information; a cloud-native image management system can be accessible via a web browser or zero footprint viewer, enabling a single source of patient information; clinicians can also follow patient progress regardless of their location
    • Disaster recovery, with cloud solutions automatically replicating data and enabling complete redundancy and access to information 24 x 7
    • High level of security with data encrypted end-to-end to address patient privacy concerns and limit access to personally identifiable information
  • Supported by intelligent automation technologies. Leaders in the EMI space are focusing on scaling and deepening the use of advanced analytics and AI to support new diagnostic imaging techniques, workflow orchestration, pathway management, rule-based automation of repetitive tasks, reporting, etc., to cater to the specific needs of different clinical use cases, driving evidence-based and precision medicine.
  • Paired with fully managed services. Vendors that provide strategic advice, implementation and support services, tailored to customers and to their business and clinical strategic objectives, are more successful and have better customer retention and customer share. EMI platforms provide a unified environment for data and diagnostic capabilities, but to effectively deploy it, healthcare organisations need to partner with vendors that understand how their medical imaging capabilities are maturing within the organisation’s broader digital strategy. Healthcare providers are also looking for vendors to provide predictive support services to ensure business continuity and dynamically optimise systems.

What’s Driving the EMI Market?

Simply put, it’s the need to navigate away from siloed care and move towards a more integrated care delivery model. In the past few years, healthcare organisations have increasingly relied on their ability to gather, store and analyse massive amounts of data to provide better quality care and operational efficiency. The pandemic has increased the need for imaging and, more importantly, shown that managing complex on-premises infrastructures drastically reduces the agility of already strained IT departments.

As value-based care becomes the norm, healthcare providers are focusing on a data integration strategy to take full advantage of their data. However, this happens only when data, including images, follows the patient throughout the care journey and is easily consumed at the point of care. As healthcare imaging data continues to expand, organisations need technologies that connect data silos and support the entire enterprise.

The Way Forward

To maximise the value of their investments in enterprise imaging, healthcare providers should:

  • Develop an imaging strategy that fits with a “care anywhere” model to ensure the continuum of care to patients
  • Involve healthcare professionals early on and continue to keep them engaged in the implementation and governance of the platform
  • Select an imaging IT vendor that works as a partner to align its value proposition to customers’ goals, as well as constraints, with products and services that offer value for money

To learn more about the EMI market in Europe, please read IDC MarketScape: European Enterprise Medical Imaging 2022 Vendor Assessment or contact Adriana Allocato and Silvia Piai at IDC Health Insights.

This year, the UNHCR announced that the number of people forcibly displaced exceeded 100 million globally for the first time on record. This means 1 in every 78 people has been forced to flee their homes. The number of people displaced, internally or externally, from weather-related disasters, famine and unemployment is also rising. The Institute for Economics and Peace (IEP) estimates that there could be 1.2 billion climate refugees by 2050.

A proactive approach is needed to help manage this perennial challenge and to improve the lives of refugees. Or, in the words of the Mayor of Warsaw, Poland, “it is time we phased out improvisation and instead created a strategy for coping and appropriate systems for helping refugees.”

To create more effective and empathetic systems for refugees, governments and their partners should consider taking a life-event approach. The life-event approach to digital service delivery includes bringing a range of services together to coincide with a particular event, such as a birth, marriage, and death. Rather than people having to reach out to a variety of agencies to access different services, governments can integrate information and resources to provide these services in a more seamless way.

More mature approaches also include service coordination and data exchange across agencies as well as with private sector and civil society organisations.

Some governments, including the US Federal Government, have started to take a life event approach to disaster response, from floods to wildfires. These sudden and unplanned life events require citizens and residents to access services from several agencies and require a more empathetic and personalised approach.

The same can be applied to the arrival of a refugee. When refugees arrive in a new country, they generally need to register for residency and digital identity, whether through the government or an NGO, and need immediate access to food, cash programs, and shelter. These short-term needs then morph into longer terms needs, including accessing healthcare services, education, and the labour market.

Taking a life event approach and bundling these services together can help to make often bureaucratic systems and services easier to navigate. This is even more important for vulnerable populations in a time of need and uncertainty. It can also improve efficiency, save time, and reduce costs for government agencies.

For example, in New Zealand, the government created SmartStart, a cross-agency online service to help parents navigate government services around the birth of a child. In its first year, the service resulted in 6,000 fewer visits to the Ministry of Social Development and has been well received by parents, midwives, and NGOs.

However, this should not be seen as a replacement for face-face support when needed. Some groups of refugees, such as unaccompanied minors or people with cognitive or physical disabilities, may require additional specialised and hands-on support from governments and NGOs

Source: IDC 2022

The Government of Portugal is leading the way in providing joined-up services for refugees. The Borders and Immigration Service has set up the Temporary Protection Regime for Ukrainian refugees. When Ukrainian refugees register through the online portal or in person, they receive identity numbers from key agencies including a tax identification number, social security identification number, and a national health service user number so that they can access key services.

Providing integrated services organised around planned or sudden lifetime events comes with its own challenges. It requires governments to set up the right governance mechanisms to collaborate across departments, share data in a secure and trusted way, and share budgets to enable integrated service delivery.

This is no small feat and requires a strategic approach and strong leadership, but there are examples of governments successfully overcoming these barriers.
National and local governments and international institutions looking to improve the lives and livelihoods of refugees should embrace this approach.

Leveraging technology for humanitarian purposes — HumTech — will require the right political motivation and leadership to turn refugee management from an ad hoc response to a crisis to a more systematic response to a perennial challenge.

For more information about technology and it’s impact on refugees:

To explore more of our coverage, please visit our Government Insights page.

Get in touch:

In this session of the Digital Leaders Community, we had experts from Nutanix and IDC Metri on hand to share their experience with the community.

The interactive session started as usual with a roundup of the reasons attendees from the community had joined. There was a variety of interests among the digital leaders from around Europe including one company that has made the decision to move to the cloud, some that have plans based on the maturity of different workloads, and others that wanted to hear about peers that have already moved to cloud.

One public organisation told how it had become completely cloud based. Did it save money? The attendee commented on the need to make sure the CFO and finance team understood that opex would increase. There is a need to make sure finance sees the savings as well. They talked about the datacentre no longer being needed, so that space can be used as offices. It was concluded that FinOps is tricky, but especially important as it is hard to forecast costs as more people move to cloud.

Nutanix has many customers moving to cloud, and sees how cloud costs have evolved for clients. The expert from Nutanix, Steen Dalgas, in particular has been helping companies figure out the TCO of cloud and other environments. Cloud is great for companies in innovation/growth mode — to rent capacity when you don’t know what parts will work. It is better to keep mature areas on-premises, as it is much more cost effective.

You can compare with on-premises with infrastructure as a service (IaaS). Platform as a service (PaaS) is quite different, and is hard to compare with on-premises. It is also extremely hard to repatriate from PaaS. The majority of cloud use now is IaaS, but PaaS will start to become more dominant.

A word of caution — the attendees mostly agreed that “By moving to the cloud, you don’t get rid of problems, you just move them somewhere else.“

There followed a discussion on cloud-related skills. One attendee noted that they are outsourcing the skills they need to core suppliers. Some people feel more secure in the cloud than on-premises. However, cloud provides an opportunity for people to be lazy — sloppy code with data leaks was the example — that is a problem on-premises that in the cloud can become very expensive very quickly.

There is major demand for FinOps — managing the different environments, figuring which workloads to use in which environment. And this is a key skill along with the software skill of internal cloud governance; what users buy from the cloud on company credit cards can be significant if they don’t understand the issues in terms of variable costs and security.

The meeting discussed whether you could prohibit people from using the cloud, or do you educate people about costs and let them get on with their work? You need to monitor cloud bills very closely, to educate people, and you need people with knowledge of cloud biz models. There is always a need to ask many questions about the cloud invoice and figure out what’s happening internally.

One suggestion was that line of business people need to be aware that what they do costs money. Ideally, make sure costs come straight back to users. This can be done by tagging cloud resources with an app name, environment name, or resource tag so you know who is using what and how much it costs. One comment was that unfortunately sometimes even IT doesn’t know how the cloud business model works. ­­

 

Two years ago, one global bank said it would move out of datacentres. Now it says it will keep DCs in major global centres but make them a cloud-like experience. One attendee related how their company tried a shared private cloud, but consider it as on-premises. They can control a lot, but don’t need to pay for the whole thing when capacity is not used.

The IDC CIO Advisory team would like to thank everyone who came to the call for their input. It is always inspiring to hear from those making changes in their business and taking the tough calls with their management colleagues. We hope this session was valuable and provided many takeaways for you.

If you already receive invitations to our sessions, I hope to see you there. If you would like to join this community, please email Marc Dowd mdowd@idc.com.

 

IDC Digital Leadership Community: Topics 3Q22

Brainstorming Out of the Box

Thursday, August 25, 2022, 17:00 CET

Sometimes doing something unexpected can really pay off. This is true of being a digital leader, just as it is for disruptive innovation.

In this light-hearted but serious session we will look at the “hacks” and experiences that we collectively can share. We will be dealing with subjects in all areas from leadership “masterstrokes we have witnessed” to unusual policies that work:

In this session you can expect:

  • Amusing anecdotes with a deeper meaning
  • Car crash policies and how to avoid them
  • The heroes of digital leadership, and why we think they are great

Data and Analytics/Data Culture/Data Management Technology

Thursday, September 29, 2022, 17:00 CET

I for one thought it would never happen: IDC research shows that organisations are looking to move to being data-driven. I see movements among my clients to gather all the data in the organisation that is relevant and make it available.

Is the dream coming true? Are we moving to a world where data will at last come into its own and become the “new oil”?

In this session, we will discuss how to move towards a better use of data. Topics will include:

  • Developing trust in data — is that the key?
  • Governance of data
  • Managing the complexity of data initiative
  • The security and sovereignty issues around the use of data

We hope you will join us. Please feel free to suggest digital leaders who might benefit from these discussions.

https://www.idc.com/eu/digital-leadership-advisory

Marc Dowd - Principal, Client Advisory - Research and Consulting - IDC

Analyst Profile
Marc Dowd is the principal for IDC’s European client advisory practice. Dowd has over 25 years of experience working with the leaders of corporate IT across a wide range of industries. This includes 9 years as principal for EMEA advising CIOs of large international companies and government bodies for Forrester Research. Recently he has been focusing on Digital Transformation (DX) and the use of emerging technology such as AI, IoT and blockchain to develop new business models and business capabilities. His experience enables him to provide CIOs and strategic business planners within organisations who use technology, with market and customer insight, analysis, tactical advice, forecasting and technology trend intelligence to senior management teams at local, regional and worldwide levels.