Category: Blog

The Promising Future of AI Translation in CXM | Blog

Driven by new technological innovations, Artificial Intelligence (AI) translation holds the promise to reshape the customer experience by transforming conversation channels, increasing agent efficiency, and reducing the need for language specialist talent. Read on to learn about the potential for the CXM industry as well as the obstacles that need to be overcome before AI platforms can eventually replace human agents.

While machine translation (MT) has been used for more than five decades, recent developments in AI and neural machine translation models have sparked new interest in AI translation to improve customer experience.

Today’s AI engines are being trained to translate 1000-plus human languages in real time and develop the ability to understand large volumes of text data. These innovations are revolutionizing the CXM industry by increasing agent efficiency and accuracy.

While the advances have just started and developing the ability to translate instantaneous voice conversations will take some time, AI translation’s potential is generating a lot of excitement. Let’s explore its promise further.

What is AI translation?

AI translation is a machine translation process using complex algorithms to understand the source data in its original language and translate it into a wide range of other languages.

Advanced AI/ML technology has improved machine translation accuracy, enabling it to better mimic the human brain’s ability to process spoken and written words and comprehend phrases, voice tones, complex sentence structures, and human sentiments.

Impact of AI translation technology on the traditional customer experience management (CXM) industry

With its people-heavy operating model, the traditional CXM industry has always struggled to attract and retain talent, which is especially difficult when language skills also are required.

Many service providers have invested heavily in building multilingual hubs in a broad spectrum of locations and recruiting agents from around the world or in training to improve language proficiency.

However, meeting the vast language and dialect diversification needs across the globe is nearly impossible and puts huge financial pressure on service providers to provide language capabilities in every spoken language a client may require.

This is why AI translation is a real game changer in CXM. It is already transforming conversation channels, increasing agent efficiency, reducing the demand for human language talent, and saving huge operational expenses – and additional opportunities still exist for further development.

Pros and cons of AI translations

Customer satisfaction and agent efficiency are major deciding criteria for companies in selecting a CXM service provider. Research has shown that customers feel more appreciated when they interact with an agent in their native language, positively influencing their buying decisions and increasing customer brand loyalty.

Using AI translation to respond to customers’ queries can offer numerous advantages, including the ability to offer services in many diversified languages and dialects through omnichannel conversation platforms such as chat, email, voice, and social media in the local language.

Other benefits include:

  • Increased agent efficiency and speed for agents who may be slower working in a second or third language
  • Reduced need for a multilingual talent pool
  • Faster time to proficiency of agents
  • Decreased need for sites in local countries

Currently, AI translations primarily are used for text data translation. With expanding data libraries and AI engine training, text data translation accuracy is improving rapidly. But to have broader application success, AI translation must:

  • Expand beyond simple, repetitive queries
  • Gain insight into human emotions and sentiments
  • Reduce contextualization errors to improve accuracy
  • Acquire a full understanding of local nuances, tone, formality, vernacular, slang, and colloquialism
  • Eliminate human supervision

Current AI translation technology can be inefficient and require human assistance to differentiate between normal conversation and exchanges involving humor or sarcasm. The inability to detect humor or sarcasm is less important in a customer service environment, as customers primarily want to resolve their issue. But it can create problems in content moderation where improper translations and misunderstanding the context of dialogues can lead to reputational losses for brands.

Use of AI translation engines in the CXM industry

To overcome these obstacles and benefit from advanced AI translation technology, many service providers leverage human linguists and digital translator tools to optimize resources.

Digital translator tools bring speed and efficiency, while human experts add accuracy and a personal touch. Combined, these solutions boost agent efficiency and performance by using AI for simple and standardized customer inquiries while transferring inquiries in hard-to-serve, low-volume languages to experts, simultaneously solving the problem of speed and accuracy.

Many service providers have partnered with technology providers to develop AI translation tools to serve their clients globally. For example, Concentrix Lingualab and Webhelp Polyglot combine best-in-class translation engines and machine learning tools with highly skilled language experts in centralized hubs to serve as multilingual service delivery centers. Another BPO provider, Majorel, with their Lingua, too combines machine translation, AI, and crowd-based human quality control.

What does the future hold?

Many technology providers are investing in building advanced translation tools to reduce machine translation engines’ dependence on human linguists.

Translation tools’ limitations will get resolved as AI engines build their content library with diverse languages, predictive replies, industry vocabulary, common phrases, knowledge articles, and vernacular, as well as its understanding of human emotions. The automated self-learnability of AI technology makes it possible to eventually replace humans completely.

Many technology giants also are now focusing on advanced speech translation engines. Meta Universal Speech Translator and Google AI language model are building translation engines that can translate more than 1000 languages.

Technology will also need to solve multiple issues to replace robotic voice delivery with the perfect human voice with flawless command over speech delivery speed, dialect, speaking styles, tone, and slang. And before AI agents fully replace humans, they will also need to understand human sentiments to appropriately reply to customers.

As voice translation tools evolve, they can revolutionize the BPO industry by completely replacing human agents with artificial intelligence platforms. But industry leaders estimate fully operational affordable real-time speech translation tools are still five to 10 years away. These advanced tools offer great potential to change CXM service delivery and transform the customer experience.

If you have questions or would like to discuss developments in this space, reach out to [email protected].

Learn about our Customer Experience Excellence Membership for deep customer experience research and strategy assistance.

And don’t miss our upcoming webinars, LinkedIn sessions, and events for more insight into what AI will bring and customer experience possibilities.

Productization Emerges in Media Services – A Shift Driven by Technology | Blog

Leveraging the power of Artificial Intelligence (AI) and data and analytics tools, media and communications companies are redefining themselves from being service providers to product creators. Read on to learn how emerging technology is changing the game in media services. 

While technology has played a pivotal role in media services for some time, use cases have increased and grown in complexity in recent years. AI and data and analytics are now widely used across the media planning and buying value chain. Moreover, media agencies are emphasizing developing in-house tools, solutions, and products based on data and analytics, AI, and the Internet of Things (IoT) to gain a competitive edge and propose a distinguished value proposition to their clients. Let’s explore this shift further.

Rising momentum in adopting emerging technology in the media services value chain

Essentially, the media services value chain consists of four broad components – media strategy and planning, creative development, buying and execution, and analytics and measurement as depicted below:

Exhibit 1: Media planning and buying value chain

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In the early days, technology was mainly used for basic tasks such as segmenting audiences, measuring media campaign analytics, and automating simple processes that were focused on a single segment.

Next, the focus shifted to programmatic advertising, automating the media buying process. Further advancements in AI-enabled programmatic media buying have spurred media agencies to invest in media marketplaces.

For example, GroupM launched Premium Marketplace, a unified programmatic marketplace with increased media buying transparency and efficiency. Omnicom Media Group introduced a programmatic marketplace for point-of-purchase screens in the US. Moreover, Publicis Media launched a programmatic marketplace that allows brands to reach underrepresented communities.

The advancements in the ease of use of AI and IoT combined with the growing prowess of data and analytics has unleashed intricate new use cases across the entire media services value chain, opening new avenues for media agencies.

As the number of channels and consumer touchpoints continue to proliferate, the emphasis has shifted to analyzing complex audience segments; automating complex processes; developing accelerated, customized, and optimized media plans across channels; and analyzing and maintaining elaborate data sets of user journeys.

AI and a data-driven approach enables audience building at a granular level, creating a single customer view and delivering highly personalized customer experiences.

Exhibit 2: Use cases of technology in the media services domain

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Rise of productization in media services

Increasingly, media companies are investing in platforms, in-house solutions, and tools to expand their offerings and reposition themselves from being pure play professional service providers. Agencies under the parent brand also are leveraging these investments to drive greater synergies by maintaining large in-house data sets and collecting user journey data.

As margins become thinner in the core media services, the momentum toward productization has opened a new revenue stream for media agencies. Some notable examples of these investments include:

  • Wavemaker’s media planning tool Maximize, an AI-powered media planning platform, creates media plans to reach multiple audiences and optimize media investments
  • Omnicom Group’s Omni, a precision marketing and insights platform, is designed to identify and define personalized consumer experiences at scale
  • Performics’ suite includes tools for search optimization, customized user journeys, brand discovery, and Amazon advertising bid strategy
  • Tinuite’s Mobius suite includes proprietary apps consisting of MobiusOS, Mobius Apps, and MobiusX
  • Havas Media’s Converged, an identity-based planning and buying platform, aims to deliver stronger insights, tighter targeting, and a more consistent customer journey

Other investments and partnerships to elevate the power of these platforms by integrating additional data sources include Omnicom’s Omni partnerships with Walmart Connect and NBCU Audience Insights Hub; and Wavemaker working with Amazon Advertising’s Overlapping Audiences API to access Amazon’s audience insights into media plans and campaigns.

The launch of channel-specific solutions is another example of the growth in productization. This can be seen in GroupM Australia’s launch of a custom-built, data-driven Digital Out of Home (DOOH) planning and activation platform that enables advertisers to deliver audience-based DOOH campaigns across premium sites. Further, GroupM developed Sightline, a dedicated digital out-of-home solution, which combines programmatic technology and AI with GroupM’s buying scale.

In addition to media agencies, neutral ad-tech platforms such as The Trade Desk and Xandr have invested in developing in-house platforms. Solimar by The Trade Desk has cross-channel precision and measurement capabilities and unleashes the power of first-party data. LiveRamp’s Safe Haven enterprise platform enables data gathering from multiple sources, transforms it into a connected customer view, and then activates at scale.

Is metaverse the next big thing for media services?

Interestingly, as the industry still explores the potential of the metaverse, media agencies have started executing pilot projects in this area. Publicis Groupe now has over 1000 employees dedicated to metaverse projects. WPP has incubated a metaverse foundry, while Wavemaker recently executed a wedding in the metaverse.

The outlook

Driven by in-house data sets and aggregating data through APIs, technology has changed the focus of media agencies toward offering products. This has given them new opportunities to unlock additional revenue streams and deliver distinguished value propositions.

Looking ahead, AI, data and analytics, and enablers such as the metaverse will continue to impact the dynamics of the media services value chain, and we can expect to see more investments in the near term.

To discuss technology in media services, please reach out to Nisha Krishan or Aakash Verma.

Explore more about evolving technologies what we could expect from the metaverse, watch our webinar, What to Expect from the Metaverse in 2023: Moving Beyond Hype.

Low Code No Code (LCNC) Case Study: Working with a Low-code Platform Provider to Develop Product and Pricing Strategy | Blog

Everest Group recently helped a low code no code (LCNC) product company evolve its product and pricing strategy by assessing the market standing of its platform features and commercials. Read on to learn about the approach, assessment dimensions, and outcomes in this case study.

As part of the engagement, we provided the following services to the client:

  • Identified key strengths and development opportunities for the platform and provided short-term and long-term roadmap recommendations for prioritizing features
  • Assessed the leading LCNC commercial models in the industry, along with enterprise adoption patterns and preferences
  • Performed a price benchmarking exercise
  • Projected the pricing evolution over the next 24 months based on demand patterns and macroeconomic trends

Everest Group approach

Everest Group analyzed the platform from two broad perspectives: application development capabilities (declarative tooling to accelerate application development and delivery) and process orchestration capabilities (ability to design, execute, and monitor business processes). In this blog, we’ll focus on the application development capabilities.

Everest Group gathered insights about the platform capabilities from the provider using a comprehensive RFI that collected more than 190 data points across 17 categories, followed by a briefing and demo showcasing the platform’s capabilities. Inputs from these sources were used in conjunction with our existing low-code research and ongoing conversations with ecosystem players to inform the final review across the below assessment dimensions.

Assessment dimensions

Based on our research of low-code platforms published earlier this year, we identified the following five key areas where LCNC platforms can drive competitive differentiation through strategic investments:

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Source: Everest Group

Now let’s take a closer look at each of the assessment dimensions and the features/components evaluated in each of these areas.

  • Pre-built templates

One of the foundational elements of an enterprise-ready low-code platform, this dimension takes into account the availability of out-of-the-box templates for common user interface components, widgets, and functional libraries, as well as reusability of user-built templates, availability of industry-specific out-of-the-box solutions, and a robust marketplace supported by multiple partners.

  • Interoperability

Before incorporating any new technology tool into its ecosystem, enterprise IT teams prioritize its ease of integration with the existing tech stack during the evaluation process. This dimension assesses the availability of pre-built connectors to common tools in the enterprise technology stack, the low code option to include further integrations, and the ability for developers to use custom scripting to call external application programming interfaces (APIs) where required.

  • Artificial Intelligence (AI) capabilities for application development

As low-code platforms scale in importance from building departmental workflow applications to business-critical enterprise-grade applications, the extent of AI-powered abilities offered is proving to be a key win theme. Through in-house capabilities or integration with external AI providers, low-code platforms aspire to provide AI-powered development assistance, AI-based application management services, AI-based automated testing, AI-powered code quality alerts, and AI-augmented portfolio analysis.

  • Collaborative development

Business users play an increasingly important role in the application lifecycle, collaborating with professional developers to reduce the gap between their requirements and the final product’s functionalities. Therefore, a platform should offer capabilities that facilitate effective collaboration, such as role-based access, project management capabilities, document sharing capabilities, and notifications on app updates, among others.

  • User Interface (UI) and User Experience (UX) capabilities

This dimension considers the support provided to UI components like lists and tables, the ability to support different devices and operating systems, language options, integrations with design tools, reusable screen templates, customizable themes, and navigation ease. UI/UX capabilities are a key swaying factor in enterprise low code buying decisions, especially when building customer-facing applications.

Pricing insights

The subscription-based pricing model experienced higher adoption than perpetual licensing in 2021 because it results in lower upfront investments and greater flexibility to scale deployments. Of the eight different pricing models uncovered in our research, the user-based licensing model was the most widely adopted. On-premise deployment of low-code and no-code platforms was found to be 25-50% more costly than cloud-based deployment.

Sample outputs

Source: Everest Group

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Outcomes

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Gap identification – Everest Group helped the client identify key market differentiators, strengths, and limitations across dimensions, as well as the key features for each of these elements

Fine-tuning product vision and roadmap – The insights helped the client prioritize its feature pipeline and advance its messaging to have a greater impact

Product and pricing strategy – The trend analysis helped the client understand the pricing strategies adopted by their competitors and how these vary based on factors like hosting environment and buyer geography

For more information about this LCNC project or to discuss our research on low-code and no-code platforms, please reach out to Manukrishnan SR, Alisha Mittal, or Yugal Joshi.

Also, learn about the top five demand themes – data and AI, cloud, experience, platforms, and security – driving growth for IT service providers in our webinar, IT Service Provider 2023 Forecast: The Top 5 Themes for Growth and Wallet Share.

CXM Outsourcing Providers Can Thrive and Grow in the Upcoming Recession: Here’s How

The looming recession offers opportunities for forward-looking Customer Experience Management (CXM) outsourcing providers to emerge stronger. To learn five strategies that can help providers get ready for an economic downturn and win in the long term, read on.

With spiking interest rates across major economies, yield curve inversion in the US, and workforce layoffs by several tech giants, it is largely accepted that the next global recession is imminent (if not already here). A global slowdown may force enterprises to review new or large investments, expansions, or CXM sourcing decisions, directly impacting the CXM outsourcing industry.

While coping with the challenging environment is the immediate priority for third-party CXM providers, it also presents opportunities for proactive providers to emerge from these uncertain times stronger and chart a path for long-term success.

Here are some ways a recession could affect the industry: 

  • CXM outsourcing is expected to endure: Historical data suggests that the demand for Business Process Services (BPS) outsourcing remains resilient during an economic downturn as shown below:

Picture1 3

Source: Everest Group

In a global slowdown, enterprises look for short-term cost wins and quick and tangible benefits from their investments. The variability in cost structures outsourcing offers helps enterprises free their company’s resources, lowers fixed costs, and makes enterprises more flexible and eventually more competitive. This effect can be seen in quarterly releases where many leading CXM providers have raised their most recent like-for-like revenue growth guidance percentage 

  • Essential goods and service industries can act as a safe harbor: According to an Everest Group analysis of the historical correlation between an economic downturn and industry growth, the sectors of Fast-Growth Technology (FGT), travel and hospitality, manufacturing, and luxury retail typically have a higher risk of growth slowdown due to recessions. Healthcare, utilities, consumer packaged goods, and business and financial services (BFS) verticals are less risky and may offer a safety net 
  • Contract renewals may get tough: Enterprises, especially those impacted by the downturn, tend to focus on extracting maximum value at lower prices. To achieve cost efficiencies, enterprises may look for a no-frills approach to CXM outsourcing and remove non-essential components from deals, including value-added services and upsell/cross-sell services – resulting in a decline in the Total Contract Value (TCV)
  • An enhanced focus on digital CX can counteract the effects: During a global slowdown, focusing on superior CX and customer retention becomes imperative while also reducing or keeping operational expenditure stagnant. Third-party service providers with higher technical capabilities can sort customer queries and resolve simple queries with self-serve or other cost-effective channels, reducing voice volumes and operational overheads

Five strategies for CXM providers to navigate a potential recession

A recession can offer opportunities for well-prepared CXM providers to emerge stronger and triumphant. Service providers need to seize the moment and focus on developing strategies that will provide them with short- and long-term gains.

The following strategies can help providers mobilize for a recession:

  • Adopt a digital-first value proposition: Understand that cost reduction while maintaining CX quality is vital for enterprises during an economic downturn. Digital CXM solutions drive cost savings by reducing the cost of operations and service, and support through process optimization, automation, encouraging self-service, and enabling efficient workforce management. Service providers with the capability to manage simple queries leveraging digital technologies such as automation, agent-assist solutions, and conversational Artificial Intelligence (AI) can offer better pricing, helping their clients win new contracts, as well as more easily extend and renew existing ones
  • Demonstrate operational flexibility: In economic uncertainty, anticipating operational volumes over the coming months is extremely difficult for enterprises. Service providers should focus on adopting flexing staffing models to quickly ramp their operations up and down based on demand, helping enterprises reduce fixed costs and mitigate operational risk
  • Take a proactive customer approach: Capitalizing on every opportunity for additional revenue becomes even more important during unpredictable economic times. Enterprises should look to partner with third-party providers who actively monitor customer journeys, can identify customer pain points, and offer self-service solutions for addressing low-complexity queries, reducing inbound issues and support tickets. B2B enterprises should explore partnerships with service providers having defined roles, such as Customer Success Managers (CSMs) who are focused on identifying customer preferences and demand patterns to identify the best-fit opportunities to upsell or cross-sell to end-customers
  • Avoid being pressured into bad deals: As the economic cycle enters a downturn, competition over a potentially smaller pie will intensify and can lead to declining prices. Service providers must be financially prudent and avoid pursuing significantly margin dilutive deals. Further, they need to relook at their pricing models and optimize their strategy based on their risk appetite
  • Diversify into recession-proof industries: Service providers with a focus on high recession-prone sectors such as travel and hospitality, luxury retail, or debt-fueled start-ups should look to diversify their portfolio and target verticals where the demand for customer experience management is expected to pick up or at least have the lowest impact during the recession. For instance, payment collection in the utility vertical generally experiences increased demand during recessionary times. While entering new verticals is not an easy task, service providers should identify synergies between their current portfolio and targeted industries to develop their market-entry strategies accordingly

A recession in the next few months appears to be an inescapable reality. Regardless, service providers must be well prepared for continued economic uncertainty. While some providers may need to aggressively transform costs and offerings, others can diversify their portfolios and develop flexible offerings for the future. Providers who prepare now and take appropriate steps will not only navigate through difficult business conditions but also emerge stronger than the competition when conditions improve.

This is the second blog in our latest CXM blog series. To learn about CXM strategy, read the first blog, How a Robust CXM Outsourcing Strategy Can Help Enterprises Navigate the Economic Downturn.

To discuss CXM outsourcing opportunities, contact Shirley Hung, David RickardSharang Sharma, or Divya Baweja.

India’s Tier 2 and 3 Cities: The Next Hotbeds for Growth | Blog

While India’s tier 1 cities have dominated global services delivery for more than two decades, the country’s tier 2 and tier 3 cities are gaining traction to become the next hot spots. Read on to learn why these locations are grabbing the attention of investors and enterprises.   

India has operated as the largest behemoth for the global services industry since outsourcing’s start, driven by an almost unparalleled talent-cost advantage and conducive business environment. Tier 1 cities, such as Bangalore, Hyderabad, Delhi-NCR, Mumbai, and recently Pune and Chennai, have seen most of the growth and continue to attract firms seeking complex skillsets.

However, the triple whammy of high turnover, shrinking pipelines, and rising inflation kept the talent market in flux for most of 2021-2022. As these cities near saturation, tier 2 and 3 cities are emerging as the new growth hubs.

A spate of infrastructural developments has put these cities on the global map for attracting investment. Widespread adoption of hybrid working, satellite offices, co-working models, and plug and play workspaces increase the potential for hiring from tier 2 and 3 cities.

Enterprise preferences for diversifying workforces and leveraging gig models, and reverse migration from metropolitan cities to hometowns post-pandemic further fuels the growth of tier 2 and 3 cities.

While tier 1 cities occupy more than four-fifths of the global services industry, the collective market share for tier 2 and 3 cities has notably increased from 11% to 18% from 2019 to 2022, as shown below:

Picture1 2

Let’s explore the race of cities within each tier:

Tier 2 cities

Ahmedabad and Kochi lead the tier 2 city clusters offering a moderately large talent base (79,000-plus graduates) and medium market maturity for most functions. This area has the most established global services delivery ecosystem but the least cost arbitrage among tier 2 cities. GIFT city in Ahmedabad has particularly gained traction due to dedicated government initiatives to attract investment. Jaipur, Indore, Coimbatore, Chandigarh, and Thiruvananthapuram follow next with a healthy mix of IT and business process services (BPS) delivery leaders such as UST and Wipro scaling up to 2,000-plus full-time equivalent (FTE) employees in these locations. After that are Bhopal, Lucknow, Nagpur, and Vishakhapatnam, which are characterized by smaller pools (limiting the availability of mid-to-senior talent and scaled ramp-up) and a larger share of domestic delivery.

Tier 3 cities

Bhubaneshwar and Vadodara lead the tier 3 cities segment offering a moderately-sized talent base (35,000-plus graduates) and low to medium market maturity for IT-BPS functions. The government is investing in IT and digital initiatives in a bid to attract more major companies to Bhubaneshwar, Odisha’s capital city. An IT and IT-enabled Services (ITeS) park is being built in Vadodara through a collaboration between the Gujarat government and Larsen & Toubro (L&T) aimed at creating some 10,000 jobs by 2027. Other tier 3 cities, such as Mysore, Madurai, Mangalore, Nashik, Raipur, Tiruchirappalli, and Vijayawada, offer a smaller talent pool with a lower scalability potential of approximately 250 FTEs.

Overall, we are bullish on the long-term prospects of India retaining its position as the mecca for global services delivery. We expect tier 1 cities to continue to flourish and tier 2 and 3 cities to drive the next growth wave for the global services industry.

To learn more about the relative attractiveness of different cities in India, please read our latest report, India’s Services Delivery Overview – Tier-1 Hubs Continue to Grow, Tier-2/3 Speeding Up.

To discuss the global services industry, please reach out to Parul Jain ([email protected]) and Aarushi Rishi Raj ([email protected]).

To learn about global services delivery in LATAM, watch our LinkedIn Live session, Locations and Talent Strategy – Let’s Talk: Nearshoring to Costa Rica.

Is the Insurance Industry Seeing a SaaS Revolution or a SaaS Sprawl Challenge? | Blog

As leading insurance organizations seek to be more data-driven in their business decisions, they are looking for solutions that can seamlessly integrate with their existing insurance technology stack. Technology providers have responded by building capabilities to offer plug-and-play solutions that align with carriers’ immediate priorities to extract more value from investments. With the industry landscape exploding with multiple solution providers offering carrier customization and commercial flexibility, we are witnessing a flood of SaaS solutions across the insurance value chain. Read on to explore the issue of SaaS sprawl which is quickly becoming one of the industry’s leading pain points.

At the turn of this century, the SaaS revolution shifted the paradigm of how technology could be deployed. The triad of quick deployment, timely upgrades with little/no inconvenience, and cost-effective solutions made SaaS solutions a force to be reckoned with.

A massive influx of point solutions – tools that aim to address a single use case within a business – followed over the years. Today, an insurance technology stack has multiple point solutions assembled atop core systems to bridge gaps in existing capabilities as illustrated below:

Exhibit 1 – Technology stack in the insurance value chain

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We are now seeing a massive explosion of SaaS applications in the entire insurance value chain that likely will reach a point where businesses start to see diminishing returns. Estimates suggest that organizations (with more than 1,000 full-time equivalent employees) use more than 100 applications on average at any given time.

This rapid expansion without any/sufficient oversight has led to SaaS sprawl, the unchecked proliferation of third-party applications that can impact the entire organization. Let’s look at this challenge further.

What is causing SaaS sprawl?

The huge availability of new technology solutions tops the list of contributors to this issue. The willingness to adopt newer solutions has grown exponentially in recent years with the success of cloud-based applications and services. Shadow IT is another contributor.

While the freedom for employees to use applications without explicit approval from a centralized department can boost productivity and drive innovation, it also can have undesirable complications. The growing clout of low-code/no-code capabilities is pushing this trend further.

Infusing intelligence throughout the insurance value chain requires specific capabilities in the five core areas of product development, sales and distribution, underwriting, policy administration, and claims management (as shown in the exhibit above).

Specialized players that focus on one or a few areas are emerging, making choosing from the many solutions and managing multiple applications for end-to-end technology solutions extremely difficult.

As more and more insurance companies turn to SaaS solutions to streamline their operations, they can quickly find themselves in a tangled web of different tools and platforms.

Here are some other challenges that hinder organizations:

  1. Each platform may have its own set of features and capabilities, making it difficult for insurance companies to keep track of the applications and potentially duplicate them
  2. SaaS providers seeking to expand their presence in the value chain can potentially dictate the overall vision of an insurance technology stack through aggressive sales tactics pushing insurers to buy more tools (potentially causing more overlap). This can drive the total cost of ownership up and make getting the most out of the technology stack an aspirational goal
  3. 3. Issues integrating systems can cause data silos and inhibit the sharing of potentially crucial information, forcing carriers to incrementally spend on integration and custom builds to gather the single view of data and systems that is lacking
  4. Being locked into contracts with providers makes it hard to modernize or move to alternate providers because migration would be costly



Put succinctly, dealing with compatibility issues among applications and the data interplay, and managing contract and upgrade cycles becomes a precarious juggling act. As a result, the great bundling of the entire insurance technology stack is needed!

Alternatively, it does not make sense to put the brakes on the development altogether. Restricting employees’ ability to build and buy applications may do more harm than it can potentially help.

Organizations need to provide the foundation for their teams to think about software applications strategically. Below are recommendations for enterprises to seize the multitude of opportunities:

  • Define a target state vision and align SaaS providers to this vision through a mix of service-level agreements and continuous collaboration
  • Invest in cloud economics capabilities to manage the cost of cloud spend and conduct exercises to rationalize the SaaS environment every year
  • Educate business and technology executives on how to avoid SaaS sprawl

IT service providers have an important role to play as solution orchestrators. Working with a core insurance technology provider can offer tight integration to third-party SaaS solutions to manage integration, risk, data access, and cost challenges.

If you have questions or would like to discuss SaaS sprawl, please reach out to [email protected], [email protected], and [email protected].

Explore our upcoming webinar, IT Service Provider 2023 Forecast: The Top 5 Themes for Growth and Wallet Share, for emerging themes, challenges, and growth pockets in the technology services market.

Now is the Time to Protect Operational Technology Systems from Cyber Risks | Blog

With growing digitalization and interconnected devices, Operational Technology systems that monitor and control industrial processes in critical infrastructure are increasingly vulnerable to cyber attacks. Learn about the OT security concerns enterprises face and key considerations for selecting an OT security provider in this blog.   

Historically, IT and Operational Technology (OT) systems have been air-gapped, with little or no spending on Industrial Control Systems (ICS) security by enterprises. Further, most investments in industrial robots, SCADA, and PLC systems were made with a multi-decade horizon. This differs from IT investments, where the horizon is five years, and the technological refresh takes care of the security risk. Enterprises have been unwilling to touch OT systems because these big, monolithic systems ran well for many years, making security vulnerabilities and risks less of a priority to consider.

But OT systems – that power some of the nation’s most critical infrastructure – are at risk.

With the recent pandemic-driven digitization push and enterprises wanting to run resilient supply chains, these large monolithic untouched systems are now interconnected, making them highly prone to cyber attacks. These OT systems have also never been given basic security treatment of frequent patching, regular security updates, and periodic backups, which has further aggravated the issue.

Operational technology systems cyber attacks

Highly public cyber attacks on OT systems have raised awareness about the serious risks these security breaches can have on essential services, as seen in these industry-specific cases:

  • Manufacturing – This segment had the second-highest ransomware-associated data extortion attacks in 2021. Traditionally, plant machinery and equipment have been designed for performance and not security. But stalled assembly lines or production units directly impact end buyers and can be disastrous for manufacturers
  • Energy, utilities, and water – Threat actors have been targeting the most crucial elements in this critical infrastructure industry, mandating enhanced cybersecurity controls. Securing critical grid assets, substations, distribution pipelines, meters, etc., must be addressed
  • Oil and gas – Digitizing operations for improved efficiency has increased the attack surface and has made this area more vulnerable to threats. During the Russia-Ukraine war, states were reportedly involved in sponsoring attacks, leading governments across the world to alter or create industry regulations and guidelines

Operational technology systems key challenges

The increasing connectivity of operational technology with external networks has further exacerbated the many OT security challenges enterprises face. Major OT security concerns include asset identification, misaligned IT and OT functions, OT threat and asset intelligence, patching legacy infrastructures, OT vulnerability management, and network segmentation.

Based on market conversations with more than 100 market participants, Everest Group identified and prioritized the following key enterprise challenges.

Technology vendor snapshot for OT security

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Source: Everest Group

Specialist providers can help enterprises navigate security challenges related to OT and ICS. Enterprises should seek technology solutions that allow them to quickly identify vulnerabilities and prioritize actions to reduce and eliminate potential risks.

A provider of choice should offer a single platform for visibility and threat monitoring while ensuring seamless integration with existing enterprise technology investments. The below capabilities illustrate what enterprises should look for when selecting an OT security provider.

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By investing in tools that can provide vital intelligence and partnering with providers that offer compatible, industry-specific solutions and a skilled talent pool, enterprises can begin to thwart the growing risks to OT systems – before it is too late.

To discuss Operational Technology Systems and OT security, please reach out to [email protected] and [email protected].

Explore the top five demand themes in technology services – data and AI, cloud, experience, platforms, and security – driving growth for IT service providers in 2023 in our upcoming webinar, IT Service Provider 2023 Forecast: The Top 5 Themes for Growth and Wallet Share.

GBS Change Management Strategies: Lessons Learned from 60 Leading GBS Organizations | Blog

Change management is viewed as critical by 75% of GBS organizations, but only 16% manage change as an essential component of GBS initiatives, a new Everest Group study found. Read on to learn best practices and key findings from this first-of-its-kind change management research.

Insights can also be found in our webinar, Why GBS Change Management is the Key to Added Value and ROI, as Everest Group experts discuss effective change management practices gathered from the research.

Change management is essential for any Global Business Services (GBS) organization, yet it is also one of the more challenging feats to grasp and implement. Change for GBS is a constant occurrence, whether it’s new technology adoption, stakeholder gains and losses, or evolving roles within the enterprise.

Strategic and systematic change management gives GBS organizations more control over transformation projects of all sizes. It allows for adaptation and the opportunity to discover where more value and return on investment can be found.

In this first-of-its-kind research, Everest Group surveyed 60 leading GBS organizations across the globe and conducted in-depth interviews to better understand change management strategies within GBS organizations. The results of this study are in our report, State of Play in GBS Change Management, which provides an analysis on what GBS organizations across the globe are doing today and the steps to achieve an end-to-end change management model.

How do GBS organizations carry out change management strategies today?

From the study, we discovered that one-third of the respondents don’t have a change management model in place; however, 75% of GBS organizations see change management as critical. Watch our latest LinkedIn Live Conversations with Leaders series based on this research where GBS experts from various organizations joined our analysts to define effective change management.

Currently, change management is not part of the strategic GBS design. GBS organizations typically wait for a transition or change that needs to be communicated, and then react and invest in change management at some level rather than proactively setting up processes.

In many cases, change management is deployed within transformation projects, with roles often divvied up between a mix of sourced and in-house staff rather than being adopted from the top and then applied throughout the organization. Organizations need a thorough method to test change management from project to project, and then alter or build on it to make the model more efficient.

Where does change management show up the most?

The research showed that larger, older GBS organizations tend to invest more substantially and systematically in change management. Mature global organizations with greater scope and evolved delivery operations are more likely to prioritize change management, include it in planning stages, and have more dedicated responsibilities and capabilities.

The study revealed that most change management is embedded in projects that revolve around digital transformation efforts, such as transitioning to a new delivery model or moving to end-to-end processes. GBS organizations that embrace digitization at greater rates tend to realize the importance of change management. Seventy percent of organizations that are moving to digital are also advancing their change management approaches.

Geographically, 40% of GBS organizations in Europe view change management as having more of a strategic role in transformation, compared to 30% in North America. By segment, banking financial services (BFS) and life sciences GBS organizations incorporate change management in business transformation. However, consumer packaged goods (CPG) and 75% of manufacturing GBS organizations still consider it a communications function.

How can GBS organizations address change management?

Moving to a GBS platform creates substantial change and can impact processes, policies, technology, and even relationships. Based on our research, we recommend the following five best practices for GBS organizations to map and evolve their change management models:

Embed it from the start: One of the most significant takeaways for successful change management implementation is adding it into processes from the start and making it part of everything a GBS organization does. This helps to define roles, structure the roadmap, and determine how to measure project outcomes.

It doesn’t stop: Change management is not a one-time instance. For a strategy to garner real value and incorporate lessons learned, change management should be considered an ongoing journey for the organization and its employees. A change management framework must be consistent and tailored to the enterprise.

All hands on deck: When managed at or near the top of the organization, change management becomes a higher priority that is consistent across all change management projects. A top-down management strategy with buy-in from internal GBS teams helps to embed change management into the entire organization and negate any resistance from teams. Almost 50% of respondents said getting the internal team on board was a critical success factor.

Invest in roles and careers: GBS organizations must consider whether involving contractors or those in outsourcing roles will ultimately help or hurt the process. Cross-training and rotating team members through a change process is a very effective way to get the right team in place and break down internal resistance. To instill a regular change management model, GBS can set up a fixed set of roles that serve as pillars and variable roles for when the function has shifted. Further, to attract and retain these talent resources, establishing career paths so talent will see a future in the role and stay with the organization is essential.

Change is more than communication: GBS organizations also should understand that the buck doesn’t stop at communicating change to the enterprise. Communication is a necessary and important step, but it’s just a piece of a comprehensive change management strategy.

Where is your GBS organization on its change management journey?

To begin the change management journey, it’s important for organizations to know their starting point. From the interview responses, we identified the following four personas to set GBS organizations on the right path as they structure their change management strategy:

  • Headshakers are yet to establish any change management competency
  • Crawlers are slowly moving in the right direction
  • Game changers view change management as a necessity and are aggressively pursuing it
  • Institutionalists firmly believe in and have invested in a GBS change management program

What’s the impact of change management?

GBS organizations that don’t have a change management model, or are reactively deploying change management, could ultimately lose money and incur costs when projects are delayed or benefits are realized slower.

GBS organizations must go beyond merely communicating change to developing a managed program that considers stakeholders, capabilities, and the full impact from strategy to execution. Change management should be regarded as an investment with a clear ROI.

GBS organizations are successful based on how they respond to their stakeholders, and effective change management allows GBS to meet the enterprise at any turn.

To view our change management persona diagram and determine where you are on the change management journey, and learn the 12 steps to develop a dedicated program, download the full report: State of Play in GBS Change Management.

To discuss change management strategies further or ask questions, reach out to Rohitashwa Aggarwal at [email protected]. And don’t miss our upcoming webinar, Why GBS Change Management is the Key to Added Value and ROI, for direct insights from this study into change management strategies from GBS practitioners.

Differentiating BPO Deals Through a Business Outcome Model | Blog

As outsourcing engagements mature, enterprise relationships with providers have evolved from focusing on lowering labor costs to targeting business-metric outcomes. To learn about the benefits of a business outcome model for enterprises and service providers, the requirements to get started, and common pitfalls, read on.

Traditional capacity-based engagement models focused on service quality have evolved to managed services engagement models, giving service providers greater operational control and encouraging transformative outcomes.

While taking out full-time equivalent (FTE) costs to achieve productivity has historically been the most common approach to reducing overall outsourcing costs, this technique is fast becoming table stakes. Mature outsourcing enterprises expect more and often desire “the art of the possible!”

Let’s explore this new approach and some trends we see based on our advisory engagements. Below are two key shifts:

  1. Global service providers deploying a transformative approach (versus engaging in a rate war) propose productivity in a similar range. With that said, the real differentiator among such global players boils down to how well they fare in metrics such as transformation ROI and payback period. For example, in a recent deal, a global service provider waived about 25% of their transformation cost (digital intervention plus process excellence) to ensure the resulting transformation ROI and the payback period were unparalleled. Well, they were mistaken! In the best and final offer (BAFO), a competitor responded by nearly equalizing these transformation metrics through a counterpart waiver and topped it up through an Innovation Fund. Such instances are becoming far more frequent than service providers anticipate. We expect that bid differentiation through the transformational FTE takeout approach will soon diminish
  2. In tenured outsourcing engagements or second or third-generation outsourcing deals, digital transformation opportunities focusing only on in-scope FTE takeout are far lower. Enterprise outsourcing goals also mature with tenure. Hence, in such deals, cost reduction commitments may not yield the amount and type of innovation enterprises expect. From a service provider’s perspective, working collaboratively with the enterprise and committing to business-centric outcomes to meet their expectations is deemed effective in such cases

Call to action: leading through a business outcome model

The real differentiator lies in the service provider’s domain and industry expertise beyond digital play. Business metrics will be the driving theme in conversations in large outsourcing contracts (greater or equal to 300 FTEs).

Let’s look at an example of a business metric in BPO. The success of a marketing operations outsourcing engagement can be measured by the increase in website traffic (business outcome) resulting from search engine optimization and analytics.

Both enterprises and providers can benefit by taking this approach in the following ways:

Benefits for enterprises:

  • Enterprises can neutralize outsourcing services costs by generating greater business impact
  • Enterprises can hold service providers to outcomes beyond service quality and operational cost reduction
  • Sourcing and procurement teams can lead the charter on driving business innovation and transformation from the offset

Benefits for service providers:

  • Providers can become true business partners to the enterprise rather than being viewed solely as outsourcing partners
  • Providers have the opportunity to improve their profits through upside revenue via gain share mechanisms
  • Providers can stay ahead of competitors by demonstrating true differentiation and expertise

These deals require a high degree of trust in the service provider, and not all engagements are fit for business-metric outcome commitments. If the service provider is already overachieving expected service-level agreements (SLAs) and key performance indicators (KPIs), this is a good place to start.

Essentials to get started

Now let’s take a look at some of the prerequisites for a business metric outcome-oriented engagement. Enterprises should have the following:

  • Comfort in ceding control to the service provider
  • Available historical data and projections on the business metric
  • Relevant tools to monitor service provider performance on the committed business metric and resulting business impact
  • Willingness to invest in change management to account for control ceded to the service provider

Common pitfalls to avoid

Enterprises also may face common stumbling blocks when moving toward a business outcome model focused on metrics. Here are some things to be aware of:

  • A lack of accurate historical and future baseline data for the business metric could lead to improper and sometimes unrealistic targets
  • Debate and arguments over whether the realized business benefits should be fully credited to the service provider initiatives could result
  • Other business metrics could potentially be impacted by a tunnel-vision focus on the targeted contractual metric

We firmly believe that productivity benefits via FTE takeout will lose its charm in the coming years. Moving forward, service providers will differentiate themselves by how they ultimately partner with enterprises on their journey, and the business outcome model will continue to grow along with outsourcing relationship maturity.

Is your organization ready for contracts that target business outcomes instead of just cost takeout? Do your providers show the maturity to transition toward such a model? We would love to hear from you and support your organization in driving innovation through business-centric outcomes.

Also, to discuss your benchmarking needs related to transformation, overall deal solution and pricing, and commercial terms and conditions, please reach out to [email protected].

Learn more about outsourcing trends in 2023 in our webinar, Key Issues for 2023: Rise Above Economic Uncertainty and Succeed.

Customer Data Platform – The Torchbearer of the Personalization at Scale Movement | Blog

Customer Data Platforms (CDPs) enable brand marketing teams to build hyper-personalized campaigns and retain high-value loyal customers. Seizing opportunities in this growing market can set brands apart. Learn how to achieve personalization at scale in the second blog in our series.  

In our previous blog, The Rising Role of Customer Data Platforms in Data-driven Personalization, we explored the factors driving CDP’s fast growth of 25 percent in 2022. Let’s now look at how to choose a CDP to gain profitable business outcomes.

The dire need for personalization at scale

True personalization is when Spotify surprises listeners with discovery playlists, when Netflix delivers differentiated experiences to each family member, and when Amazon recommends the exact gift a shopper urgently needs. Personalization at scale happens when companies can perform activities like these for millions of customers, in real-time, and at every relevant time in the customer journey.

Making every customer feel valued and loyal to the brand is the power of personalization. This only can be accomplished by knowing what customers want without being told and delivering it on the right channel and at the precise time.

With the surge in customer touchpoints leading to a massive flood of data from disparate sources and increasingly stringent privacy regulations, delivering tailor-made content for tangible and sustainable business outcomes is direly needed. Marketers today must realize that consumers have an overabundance of options, and demonstrating that they know their consumers better than others is the only way to gain a competitive advantage.

The Customer Data Platform – packaged software that ingests data from multiple sources, draws consumer insights through unique 360-degree profiling, and activates channels – plays a pivotal role in achieving true personalization at scale.

Personalization technology – the role of the customer data platform

Building marketing teams to keep up with the growing customer base is the biggest hurdle enterprises face to personalization at scale. The latest technology can enable marketers to take the long leap from merely collecting demographic data to using Artificial Intelligence (AI) and Machine Learning (ML) to harness huge amounts of data from disconnected sources.

That’s where the Customer Data Platform comes in.

A CDP’s core function is to create unique customer profiles by collecting data from multiple sources, such as Customer Relationship Management (CRM) systems, websites, and email campaigns. To achieve personalization at scale, enterprises need best-in-breed platforms that not only collect data but also orchestrate personalized experiences at scale by using smart segmentation, behavioral scores, AI, and ML models that constantly optimize experiences based on real-time interactions.

Choosing the right CDP

Since one size does not fit all, enterprises need to dedicate time and resources to select the right CDP provider that offers expertise aligned with their personalization goals and the use case they prioritize.

Our research finds more than 160 providers offer expertise in these delivery areas and include both enterprise-grade CDPs (such as Salesforce and Adobe) and pure-play CDPs (such as mParticle and Treasure Data).

According to the CDP Institute, four main service categories exist based on capabilities in data, analytics, campaigns, and delivery, as illustrated below:

Exhibit 1:  Customer data platforms categories based on capabilities

Exhibit 1:  Customer data platforms categories based on capabilities

Enterprises need to consider many factors when shortlisting CDP vendors, including marketing technology capabilities, vendor maturity, business use case alignment with the vendor’s core strengths, and pricing flexibility.

Evaluating technology features is extremely critical. The CDP Institute defines “shared features” as essential elements for a platform to qualify as a CDP and “distinguished features” as enhancements to the basic platform:

Exhibit 2: Features of customer data platforms 

Shared Features Distinguished features
Persistent Data Data Management
Unified Profiles Identity Management
Ingest and Retain Data Website Management
Manage PII (Personally Identifiable Information) Mobile App Data SDK
External access B2B specific use cases
Analytics
  Engagement

People and process recommendations

Selecting the right CDP only solves one piece of the entire personalization puzzle. Enterprises also need to further optimize their internal operating models and align their teams with their overall business objectives to ensure success.

Below are the key elements needed to optimize people and processes to achieve personalization at scale:

  • Setting goals – Marketers need to make sure the entire team is aligned with customer end goals before implementing any personalization technology.
  • Removing silos – True personalization only can be achieved if customers have consistent experiences across touchpoints. As enterprises scale and these touchpoints increase, the number of teams that own them rises. This can lead to varied unconnected customer experiences across channels, provoking scenarios where the marketing team promotes a certain offer and the customer care executive denies it to the customer. Brands need open communication across teams to ensure alignment in tone and messaging.
  • Hiring the right talent – In the talent war, enterprises find it extremely difficult to hire and retain the right type of data engineering and data science talent to achieve personalization at scale. Organizations need a talent strategy for their personalization efforts.

Although achieving sustainable personalization at scale can seem daunting, brands that gain the first-mover advantage will benefit by retaining loyal customers and increasing their lifetime value, reducing time to market, and improving workflow efficiency.

Consumers today expect sophisticated experiences that can predict their unspoken demands, and marketers must acknowledge this mindset paradigm shift to remain relevant. Brands that can personalize the customer experience at scale will differentiate themselves in the cut-throat marketing landscape.

To discuss Customer Data Platforms, contact Vaani Sharma at [email protected].

Learn more in our blog, How a Robust CXM Outsourcing Strategy Can Help Enterprises Navigate the Economic Downturn.

Request a briefing with our experts to discuss the 2022 key issues presented in our 12 days of insights.

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