Category: Blog

Why Choice of Tech Service Providers Becomes More Strategic with Operations Platforms | Blog

December 11, 2023

Digital technologies brought the promise of an operational platform that enables companies to run their business differently and compete better in the marketplace. It is more automated, more self-service, more efficient, and more effective. And it is designed to continually evolve as business needs change. Looking at companies with mature operational platforms shows us what becomes essential to continually creating value through operational platforms. This essential understanding is explained in this blog.

Read more in my blog on Forbes

A Bright Start at COP28: Progress and Pledges for a Sustainable Future with Technology as a Key Enabler | Blog

December 11, 2023

Our Everest Group team is pleased to share their analysis of positive developments from the first two days of COP28, with a specific focus on the global technology and tech services industries, in this blog. With positive momentum building, the outlook in the collective journey toward a more sustainable future is looking brighter.

Day 1: A historic leap forward

Creation of the loss and damage fund for the global south

The first day of COP28 was nothing short of historic. The formal creation of the Loss and Damage Fund for the Global South was a key highlight. This initiative marks a crucial step in addressing the disproportionate impact of climate change on vulnerable nations. The commitment of US$400 million in pledges is a testament to the global community’s dedication to creating a more equitable and resilient world.

Contributions from multiple nations to support climate adaptation in vulnerable regions

Notable contributors to the fund include the COP28 hosts, the UAE, with a generous pledge of US$100 million. Germany and the US also stepped up, pledging US$100 million and US$17 million, respectively. The UK, demonstrating its commitment to climate action, pledged £60 million. These pledges will undoubtedly play a pivotal role in supporting climate adaptation and mitigation efforts in the most vulnerable regions.

What does this mean for the sustainability enablement services market?

The funding can act as a political push for these nations to adopt technology to enable sustainable businesses and mitigate climate risks. Currently, Everest Group has observed a surge in sustainability technology adoption in developing countries. Environmental, Social, and Governance (ESG) data reporting, Artificial Intelligence (AI)-driven crop management, and Internet of Things (IoT)-led water management solutions are gaining traction. Evolving reporting standards and the imperative for climate-resilient business practices will drive the scalability of sustainability-enabling technologies in these regions.

Day 2: The United States takes center stage by addressing methane management as a crucial step for reaching net zero emissions

Environmental Protection Agency (EPA) announces regulations on methane leaks

The second day of COP28 brought a wave of positive news, particularly from the United States. Michael S. Regan, Administrator of the EPA, announced groundbreaking regulations aimed at addressing leaks of greenhouse gases (GHGs) like methane. Methane, the second most abundant greenhouse gas, contributes significantly to global warming.

Methane management requires predictive technologies and strict reporting frameworks

Efficient methane management requires precise methane measurement and prioritizing reporting. While the EPA has taken an important step towards regulating methane leaks, methane-emitting industries (like oil and gas) need to move towards a ‘predict and prevent’ model of methane management. These industries should leverage AI and IoT-based methane management platforms that track and measure methane emissions and prevent methane leaks using predictive analytics.

Duke Energy, for example, has collaborated with Accenture and Microsoft to build a first-of-its-kind, end-to-end Azure-based cloud platform that monitors baseline methane emissions from natural gas distribution assets (e.g., pipelines, gas meters), using satellite monitoring, analytics, and AI.

Industry coalitions underpin methane management, as players recognize the value of collaboration in reaching net zero emissions

The Global Decarbonization Accelerator, a coalition of 50 oil and gas companies representing over 40% of global production, made a resounding commitment to reduce methane emissions by 80-90% by 2030. This ambitious pledge demonstrates a growing industry recognition of the urgent need to transition towards cleaner and more sustainable practices.

In addition to industry commitments and public sector regulation, philanthropic efforts also took the spotlight. Bloomberg Philanthropies unveiled a $40 million program focused on transparency and accountability in methane reduction initiatives. This program is a crucial step towards ensuring that efforts to curb methane emissions are not only ambitious but also measurable and accountable. We see the potential for scaled partnerships with the private sector. A model of shared responsibility and accountability, with collaboration as a central vision, is necessary for methane mitigation.

What does this mean for the sustainability enablement services market?

The players in the sustainability enablement services landscape can expect higher demand for net zero services, along with solutions like emission management platforms and tools. Technology players and service providers should focus on forming collaborations with their client groups to advance research and pilot more solutions in this space.

Moving forward with optimism

As we reflect on the first two days of COP28, it is clear that we are witnessing a historic turning point in the global fight against climate change. The establishment of the Loss and Damage Fund, coupled with significant pledges, coalitions, and regulatory advancements, sends a powerful message that the world is ready to take bold action.

Everest Group constituents in the global technology and technology services industries have an important role to play in these efforts. We remain committed to helping providers navigate the sustainability enablement opportunity to help guide their clients toward a more resilient and environmentally conscious future.

As we continue our journey through COP28, let’s remain optimistic and committed to the shared goal of a sustainable and resilient future. Together, we can turn these pledges into impactful actions that will benefit not only our current generation but also those to come. Reach out to Rita Soni, [email protected], Arpita Dwivedi, [email protected], Meenakshi Narayanan, [email protected], or Ambika Kini, [email protected] for further discussion.

To learn more about key takeaways from the COP28 conference, watch our LinkedIn Live session, Building a Sustainable Future: Reflections on COP28 and Insights for 2024.

AWS re:Invent: The Story Beyond Generative AI | Blog

December 8, 2023

While Generative Artificial Intelligence was a major focus at the recent Amazon Web Services (AWS) annual user conference in Las Vegas, other important themes stood out to our analyst team. These include an increased focus on partnerships, cost optimization, and new growth channels. Read on for our analysis of the trends to pay attention to from AWS re:Invent 2023.

Since attending AWS re:Invent from Nov. 27 to Dec. 1, we have been digesting the newer offerings, alliances, and strategic focus areas for AWS. This blog explores the top three themes we believe make their mark in the sea of announcements, initiatives, and even unspoken priorities.

Increased focus on the partner ecosystem

Much like prior years, a significant focus was put on the partner network, including service providers (global system integrators, niche system integrators, etc.), technology partners (large and small vendors), and others (e.g., resellers).

The AWS Marketplace witnessed significant changes to help partners that are already well supported. Many service providers demonstrated high-value client transformation case studies during keynote sessions, round tables, and in expo booths.

With the massive spectrum of service partners and their diverse wish lists, we firmly believe a key focus area for AWS should be improving the profitability of its AWS business. AWS needs to make it simple to use its many offerings, scale personnel training, and help build tools and intellectual property (IP).

AWS continuously assesses its partner program and the results shared were encouraging. However, with the market transitioning to Generative AI, the earlier approach of building partnerships based on core infrastructure will need to evolve.

We observed that clients want service partners to proactively have strong views on specific cloud vendors they should work with rather than be indecisive. To remain the preferred choice, AWS needs to continue engaging its service partners, especially with the newer demand for cloud services.

Nonetheless, AWS will need to work with service partners to strike a balance between being the primary cloud partner, which AWS wants, while maintaining the partner’s professed cloud agnosticism to ensure they both deliver client value.

Service providers’ industry expertise is another critical engagement area. This can explain why the event did not heavily emphasize the “industry cloud” because a large part of industry-centric development will be done in collaboration with service partners.

We believe the earlier witnessed “client ownership” friction between service partners and AWS is now resolved. However, as some service partners still raise this concern with us, AWS should address this issue through partner communication and stronger action.

Cost optimization at the center of all conversations

One notable feature of AWS re:Invent 2023 was the presence of a large number of financial operations (FinOps)-focused providers in the booths. While FinOps is not new and cost optimization has always been a CIO agenda, the sudden surge in their relevance can be attributed to the current macroeconomic situation and the frantic, unplanned post-COVID cloud adoption. As a result, most enterprises ended up having complex, hybrid cloud estates and a lack of visibility, leading to spiraling costs.

According to an Everest Group survey of 450 enterprises, 63% dedicate more than 7% of their cloud spend to FinOps as they are becoming more aware of the potential cost-saving available through investments in FinOps.

The FinOps space has become quite crowded with several specialists, global and regional system integrators, and technology providers, including AWS, offering these solutions. Enterprises currently have too many choices and identifying the right partner is difficult.

The provider type also varies by their offering within FinOps and typically can be categorized by: reseller, Reserved Instances (RI)/Savings plan (SP) management provider, consulting and managed services provider, visibility and recommendations provider, and end-to-end FinOps capability and offering provider.

Some of the specialist providers that caught our attention at the event include Alteryx, Archera, Aviatrix, CAST, Chronosphere, Cloudability, CloudFix, Cloudflare, CloudKeeper, CloudZero, Coralogix, DoiT, Finout, Flexera, Harness, Kubecost, LogicMonitor, Ollion, ProsperOps, Splunk, Stacklet, Ternary, Vantage, Vega, Virtasant, Xosphere, and Zesty.

Each enterprise should identify the right solution to meet its requirements. A few considerations to keep in mind when choosing a FinOps solution or service include the ability to manage environment complexity, the metrics and key performance indicators (KPIs) used to track progress, cross-team collaboration features, availability of skilled FinOps personnel, and the visibility and dashboarding quality.

Newer channels for growth acceleration

In the third quarter of 2023, AWS reported US$23.1 billion in revenue, up 12% year-on-year, but the growth rate was below the company’s typical historical increases in the mid-20 to low-30% range. The same trend is visible across its partner ecosystem, except for a few specialist players.

The growth rate of most global cloud system integrators has diminished by more than half compared to 2021 and 2022. Amid this slowdown, we sense an emphasis on identifying channels for growth acceleration within AWS and across its entire ecosystem partners.

Generative AI was the biggest growth bet and talking point for all attendees at the event. Almost every major announcement by AWS was around Generative AI. However, it’s worth noting that Generative AI has had little influence on the top line of hyperscalers, technology vendors, or system integrators.

Most Generative AI implementations are still in the proof of concept stage, with more than 90% of deal sizes being under US$1 million. AWS expects that many Large Language Models (LLMs) will require public cloud computing capacity and is pushing all its partners to drive enterprise adoption.

However, the founder of a leading Generative AI company at the event mentioned that while the potential is enormous, the shape and form of future adoption are completely uncertain. Interestingly, he suggested with the rapid rate AI models are evolving, LLMs might get replaced by something completely new in two years. While AWS and the entire ecosystem need to continue investing and exploring Generative AI use cases, placing big bets on it could be a risky short-term proposition.

Other Focus Areas at AWS re:Invent

If not for the emergence of Generative AI, industry cloud and complex workload migration to AWS would have dominated the event. These AWS industry cloud solutions had dedicated booths right at the center of the expo hall.

However, its impact was muted by limited announcements by AWS and the lack of a serious investment intent displayed. As suggested earlier, this could be due to AWS focusing the industry cloud narrative with service provider partners who have a better understanding of industries. The impression created by AWS at re:Invent in this area was low, making it appear the hyperscaler is taking a wait-and-see approach.

Another growth area AWS is expected to pursue is the migration of complex workloads, like mainframes, to its platform. It announced partnerships with a few system integrator partners and showcased its intent to help enterprises migrate.

With a significant portion of simple workloads already migrated to the cloud, complex workload migration could be the most stable growth potential for AWS in the next few years. AWS and its partners should double down on investments in this area.

Undeniably, AWS re:Invent 2023 turned out to be a delicate balancing act of strengthening the partnership network, investing in emerging innovation areas, maximizing client value, and ensuring cost optimization in the current macroeconomic environment. We would love to hear your observations from AWS re:Invent. To share your views or to discuss other details, please reach out to [email protected] or [email protected].

Learn more about the AWS services market, including trends, demand drivers, and key considerations for enterprises.

How to Navigate the Huge Price Uplift of Microsoft 365 Copilot: Software Contract Negotiation Tips for Enterprises | Blog

December 7, 2023

Microsoft’s recent rollout of its Artificial Intelligence (AI)-enabled productivity tool Microsoft 365 Copilot for enterprise customers has generated a lot of buzz. Its steep US$30 monthly charge per user has ignited debate about how its cost will impact IT spend, the Return on Investment (ROI), and the expected benefits for employees. Continue reading for recommendations on successful software contract negotiation for Microsoft 365 Copilot. The webinar, Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists, also explores how enterprises can drive more savings from their outsourcing contracts.

Microsoft 365 Copilot is a productivity enhancement tool backed by generative AI and integrates with the Office 365 Suite (Word, PowerPoint, Excel, Outlook, Teams, etc.). It aims to transform employees’ daily tasks by unlocking creativity, boosting productivity, and enhancing skills.

By leveraging Large Language Models (LLMs) content in Microsoft Graph (emails, chats, attachments, documents, etc.) to generate contextualized human-like responses, and touted by Microsoft as the “most powerful productivity tool on the planet,” the tool boasts numerous applications and use cases.

How can enterprises buy Copilot?

Copilot is available for Microsoft 365 E3, E5, Business Standard, and Business Premium customers. It is an add-on license on top of these M365 editions and isn’t available as part of any bundle.

Price Surge for Copilot Adoption

Microsoft 365 Copilot comes with a hefty price tag of US$30 per user per month. The following table summarizes the additional costs that enterprises are looking at when considering buying Microsoft 365 Copilot licenses. (Based on list prices.)

M365 Bundle M365 List price (per user per month) Cost uplift
M365 E3 US$36 83%
M365 E5 US$57 52%
M365 Business Standard US$12.50 240%
M365 Business Premium US$22 136%

This does not paint a very attractive picture for IT and procurement departments as the cost increase can be greater than a company’s current spend on the M365 suite.

Adding to the complexity, Microsoft has yet to reveal how they will apply the contracted volume discount on the Copilot licenses an enterprise purchases.

Software contract negotiation tips

Everest Group helps clients across geographies and industries with software contract negotiation techniques to optimize their software spend. Almost all our enterprise customers have large deals with Microsoft. We help them navigate price increases at contract renewal, negotiate best-in-class discounts, and optimize key contractual terms like price protection clauses, etc.

Below are some measures enterprises can take to mitigate this significant cost increase and assure a robust ROI when adopting Microsoft 365 Copilot in their organizations:

  • Optimize spend for the overall Microsoft portfolio of an enterprise: Microsoft’s move to limit the eligibility to purchase Copilot solely to customers with M365 E3 and E5 subscriptions subtly pushes other enterprise customers to upgrade to these options, thus increasing their spend with Microsoft.

Even for existing M365 E3 customers (many of whom settled for this lower-cost option compared to E5 licenses), the total cost of M365 E3 plus Copilot ($66/user/month) is more than the M365 E5 license ($57/user/month). As a result, justifying investing in this new tool is financially difficult. Enterprises looking to buy Copilot licenses should ask Microsoft to improve their overall cost to make it easier to seek budget approvals and drive Copilot adoption

  • Optimize Copilot licenses: While Copilot benefits look promising, the actual impact is yet to be assessed. Given the different nature of work of employees across an organization, the tool might be more effective for some user groups. Therefore, enterprises should conduct a thorough persona profiling to determine the correct number of users who should be given access to this tool to maximize ROI. This step will help ensure enterprises get the most out of the M365 Copilot licenses required
  • Seek training investment: Given its wide range of applications and methods of use, Copilot will require training and support for employees to uncover the true potential of this tool. Enterprises should ask Microsoft to provide complementary training and workshops to increase M365 Copilot adoption

Microsoft Copilot is undoubtedly a futuristic tool aimed at streamlining daily operations and helping employees focus on tasks that add real value. Nonetheless, understanding its licensing, pricing strategy, and the value it can generate for an enterprise is imperative.

To discuss software contract negotiation and for a detailed analysis of your software contracts, please reach out to [email protected]. Explore more about Everest Group’s contract benchmarking offerings.

To learn current pricing trends and how enterprises can find greater value and lower costs in their outsourcing, cloud, and SaaS contracts in the new year, Adapting to Change: Boost Value in Outsourcing and Software Contracts When Uncertainty Persists.

Promoting Advanced Technologies at COP28 Can Propel Immediate Energy Optimization Action | Blog

December 7, 2023

As nations gather at COP28, prioritizing technology-driven optimization can pave the way for sustainable energy progression. Explore how advanced energy monitoring and optimization technologies can help enterprises transition from fossil fuels to renewables.

Note, this blog is part of Everest Group’s continued coverage of COP28. For our analysis of the first two days of the United Nations Climate Change conference, see our prior posting.

COP28 marks a crucial moment for discussions on moving from fossil fuels to renewables. This year’s meeting is especially important as nations reveal their plans for tackling climate change. The urgency is clear, highlighted by the Global Stocktake revealing the world is falling short of the Paris Agreement goals. COP28 is a key moment for the energy sector, offering an opportunity for governments to make bold commitments and speed up the transition.

In this context, enterprises worldwide are increasingly recognizing the imperative to transition towards renewable energy sources, driven by both environmental concerns and a growing commitment to sustainable practices. The appeal of renewables, such as solar and wind power, lies in their potential to mitigate climate change and reduce dependence on finite fossil fuels. However, despite this burgeoning enthusiasm, enterprises encounter a myriad of constraints in their quest for increased renewable energy adoption. Let’s explore this further.

Enterprises face these major obstacles in realizing their ambitious energy transition agenda:

  • High initial investment costs: The transition to renewable energy often involves significant upfront capital expenditures for the installation of solar panels, wind turbines, or other clean energy infrastructure. Many enterprises, particularly smaller businesses, find it challenging to justify these initial costs despite the long-term benefits
  • Intermittency and reliability concerns: Some renewable energy sources, such as solar and wind, are intermittent and dependent on weather conditions. This unpredictability can lead to concerns about the reliability of energy supply, especially for businesses that require a continuous and stable power source
  • Regulatory hurdles and policy uncertainty: Enterprises operating in different regions face varying regulatory frameworks and policies related to renewable energy. Inconsistent or unclear regulations can create uncertainty and hinder long-term planning for energy transition strategies
  • Limited availability of suitable infrastructure: The implementation of renewable energy projects often requires ample space and specific geographical conditions. Finding suitable land or locations for solar farms, wind turbines, or other renewable facilities can be a logistical challenge, particularly in densely populated areas where land is scarce or expensive

Amidst these challenges, the shift from fossil fuels to renewables finds a bridge in the optimization and monitoring of existing energy usage through advanced technologies. Leading enterprises have started joining forces with tech players and service providers to track and enhance energy efficiency in operations, paving the way for a sustainable energy transition.

Despite a booming market in sustainability enablement services offering advanced energy-efficient solutions, enterprises hesitate due to cost concerns. Yet, key players are actively investing in cutting-edge technologies to drive energy efficiency for their clients.

Three standout solutions have emerged at the forefront of major players’ sustainability services portfolios:

  • Artificial Intelligence (AI) and Internet of Things (IoT)-based energy monitoring: Revolutionizing energy optimization, IoT and AI-based systems offer real-time insights into consumption patterns. Smart sensors and meters seamlessly integrate into a connected network, continuously collecting detailed data. AI algorithms analyze this information, unveiling inefficiencies, anomalies, and optimization opportunities. The power of predictive analytics forecasts future energy demands, enabling proactive measures to mitigate inefficiencies and cut overall consumption. Infosys Energy Management Solution and TCS Clever Energy are examples of energy monitoring and tracking systems
  • AI-driven predictive maintenance: With artificial intelligence, predictive maintenance transforms energy optimization by foreseeing and addressing equipment issues before performance impact. Historical and real-time data analysis allows AI algorithms to predict faults, facilitating timely interventions that prevent unexpected downtime and associated energy inefficiencies. This data-driven, proactive approach reshapes traditional maintenance paradigms, significantly contributing to enhanced energy efficiency and operational excellence. Capgemini’s predictive asset maintenance services and Accenture’s intelligent asset management services are examples of AI-driven predictive maintenance solutions for enterprises
  • Occupancy and building management with AI: AI-driven systems for occupancy and building management contribute to energy efficiency by intelligently regulating lighting, heating, and cooling based on real-time occupancy data. Smart sensors and AI algorithms learn patterns of occupancy, preferences, and environmental conditions to optimize energy usage in commercial buildings. Infosys’ Smart Spaces offering focuses on energy efficiency for commercial buildings, data centers, and workspaces. Hitachi’s Intelligent Building Management System also focuses on making buildings more energy efficient

Service providers have started crafting umbrella brands for sustainability services, with energy monitoring taking center stage in their portfolios. While energy monitoring and reporting systems are branded as niche sustainability solutions, the environmental impact of solutions like predictive maintenance and smart building management systems are significant. As enterprises intensify net-zero commitments, we foresee a surge in demand for these solutions, with a special focus on sustainability. We are optimistic about the market, with a tinge of prudence.

While sophisticated energy monitoring and optimization solutions are plentiful, enterprises hesitate to invest in sustainability technologies due to perceived high costs and short-term return concerns. However, service providers are strategically bundling sustainability benefits with operational optimization engagements, along with providing niche energy-related solutions to enterprises.

Everest Group anticipates a surge in the energy-efficiency solutions market within the next two to three years. The forthcoming focus on energy efficiency at COP28 could serve as the catalyst needed to propel this market into flourishing growth.

To discuss further, reach out to Rita Soni, [email protected], Arpita Dwivedi, [email protected], Meenakshi Narayanan, [email protected], or Ambika Kini, [email protected].

To learn more about the progress made in 2023 to build a more sustainable future and key takeaways from the COP28 conference, watch our LinkedIn Live session, Building a Sustainable Future: Reflections on COP28 and Insights for 2024.

Key Issues Affecting the Effectiveness of Generative AI | Blog

December 5, 2023

Generative AI seems so compelling. However, it carries significant issues that will likely cause initiatives to fail or substantially underperform against their potential. This blog presents information about several issues. We will look first at a key issue causing a lot of resistance to generative AI adoption: the technology presents a probabilistic answer as though it is a deterministic answer. This blog will help your company better understand where and how to apply generative AI.

Read more in my blog on Forbes

A Comprehensive Approach to Meeting the Talent Demands of Sustainability Services | Blog

December 5, 2023

As the sustainability sector rapidly expands, the demand for skilled professionals is soaring. Read on to learn about the skill requirements needed in the sustainability service market and how to bridge the talent gap.

In recent years, the world has witnessed a remarkable surge in awareness regarding environmental responsibility and sustainability. This shift in mindset has fueled the growth of the sustainability services market as organizations increasingly recognize the need to adopt eco-friendly practices.

Yet, as the sustainability sector continues to evolve, service providers confront a formidable challenge in the form of a critical shortage of skilled talent. In this blog, we will delve into the pressing talent-related issues faced by sustainability service providers and explore the innovative ways they are addressing these deficiencies through avenues like strategic hiring, acqui-hiring, and upskilling.

The diverse skill set required

The field of sustainability services presents a multifaceted landscape of skills and expertise that are in high demand. For instance, service providers in this sector require professionals who can proficiently handle advanced data analytics to assess environmental impacts. A comprehensive understanding of sustainability reporting frameworks is also imperative, as is the ability to conduct climate scenario analysis and risk assessment.

In essence, the diversity of skill sets required encompasses environmental science, economics, engineering, and a commitment to sustainability that transcends traditional disciplinary boundaries.

Challenges in finding talent

As service providers look to recruit skilled sustainability experts, they are finding themselves up against significant roadblocks, including:

  • A limited pool of professionals: Sustainability services is a relatively new field, and professionals with the required experience and expertise are scarce
  • An evolving landscape: The sustainability sector is continuously evolving, with new technologies and frameworks emerging regularly. This makes it challenging to find candidates who can keep up with the rapidly changing landscape
  • Cross-disciplinary requirements: The interdisciplinary nature of sustainability work makes it difficult to find candidates with expertise in all the required areas

Addressing the talent gap

Bridging the talent gap for sustainability services requires a multifaceted approach that encompasses strategic recruitment and upskilling.

  1. Strategic hiring

Sustainability service providers are looking for candidates who may not have a perfect match of skills but possess a strong foundation and are open to learning and adapting. Most of the sustainability professionals being hired hold a master’s degree, with almost 78% coming from a STEM background.

Everest Group’s GREEN framework provides a comprehensive approach to talent development in sustainability services, addressing geographic considerations, regulatory expertise, educational diversity, practical experience, and technological innovation to meet the increasing demand in this field.

Everest Group’s GREEN framework

Service providers like Accenture, which have an aggressive inorganic growth philosophy, focus more on acqui-hiring, the practice of acquiring smaller companies primarily to gain access to their talent. It allows providers to quickly expand their workforce and access niche expertise.

However, prioritizing upskilling as a long-term strategy emerges as a more effective approach for tackling the talent gap.

  1. Upskilling the workforce

Service providers have a multitude of options to support their employees in their upskilling endeavors. These include motivating employees to pursue external certifications, offering internally designed courses, and tying up with learning and development providers.

    • Industry-accredited certifications – Sustainability certifications are a testament to a thorough grasp of pertinent industry benchmarks, elevating professionals’ standing within their respective domains. The selection of a certification largely depends on the particular domain of sustainability and the career aspirations of the individual. These certifications could be general sustainability and climate professional certifications, sustainability reporting courses, energy-related certifications, green building certifications, etc.
    • Internal courses – Service providers often develop an internal catalog of courses to educate their workforce on sustainability and related aspects. These courses can be aimed at executive leadership, normal workforce, or both. Deloitte offers a curriculum of sustainability training courses available to all its employees virtually and through the network of Deloitte Universities
    • Collaboration with educational institutions – By working closely with universities and colleges, they can shape curricula to align with industry requirements, ensuring that graduates are better prepared for the workforce. These partnerships also offer internships and co-op programs that provide students with hands-on experience and job opportunities upon graduation. Capgemini Invent, for example, has leveraged the ESSEC Business School for various courses, including one on the foundations of sustainable transformation

After creating the talent pool required, building the ideal organizational structure becomes imperative for maximizing the potential of the sustainability enablement services talent. The organization can streamline business initiatives by aligning roles, responsibilities, and workflows, enabling seamless collaboration among experts from diverse backgrounds.

To explore the above strategies in detail, check out our viewpoint: A Provider’s Playbook to Bridging the Sustainability Skills Gap. This report sheds light on the sourcing, skilling, and organizational structuring strategies tailored to the unique needs of service providers in the sustainability space. To discuss further or for inquiries, please reach out to Rita Soni, Principal Analyst, Sustainability Research and Impact Sourcing, [email protected], Arpita Dwivedi, Practice Director, Sustainability and Talent, [email protected], or Ambika Kini, Senior Analyst, Sustainability Technology and Services, [email protected].

To hear our takeaways from Cop28 watch our LinkedIn Live session, Building a Sustainable Future: Reflections on COP28 and Insights for 2024.

Navigating COP28: Insights on the Evolving Landscape of Sustainability | Blog

November 30, 2023

As we stand on the brink of COP28 (November 30 to December 12, 2023), Everest Group’s technology service provider clients and industry leaders are poised to play a pivotal role in advancing the goals set forth by the Paris Agreement. In this blog, we bring you insights from Everest Group’s sustainability analysts on their hopes and expectations for this crucial global event.

As the world anticipates COP28, Everest Group’s insights shed light on the evolving sustainability landscape. Nothing could underpin the importance more than the fact that the first Global Stocktake (GST) of the implementation of the Paris Agreement will conclude at COP28, the mid-point in the implementation of the 2030 Agenda for Sustainable Development and its SDGs, including Goal 13 (climate action). We will explore key expectations that underscore the crucial role of technology service providers in meeting the objectives of the Paris Agreement, which we hope will be central in the COP28 deliberations.

As a reminder, there was a broad global consensus that COP28 will focus on four significant paradigm shifts:

  • Fast-tracking the energy transition and slashing emissions before 2030
  • Transforming climate finance, by delivering on old promises and setting the framework for a new deal on finance
  • Putting nature, people, lives, and livelihoods at the heart of climate action
  • Mobilizing for the most inclusive COP ever

With this context, we look forward to progress on five key topics:

  1. Digital transformation for sustainability:

The role of digital transformation in achieving sustainability goals is critical. Our research highlights the transformative power of technology in reducing carbon footprints, enhancing energy efficiency, and driving sustainable practices across sectors as diverse as oil & gas, banking & finance, and manufacturing.

This US$50 billion+ market also has a profound impact on sustainability beyond operational efficiency. In the realm of supply chain management, advanced technologies such as blockchain enable transparent and traceable sourcing, ensuring ethical practices and minimizing environmental impact. The integration of smart grids and renewable energy solutions empowers organizations to embrace cleaner, more sustainable energy sources. Additionally, data-driven insights derived from advanced analytics not only optimize resource allocation but also inform strategic decision-making for long-term sustainability. As businesses navigate a rapidly changing landscape, the fusion of digital innovation and sustainability becomes an integral strategy for fostering resilience and creating a paradigm where economic growth and environmental stewardship coalesce for a more sustainable future.

While optimization-driven engagements have continued to be the major theme, with almost one-third of the deals signed in 2023 (YTD), decarbonization and ESG data monitoring and reporting have also gained a lot of traction for the buyer side.

  1. Emerging technologies and climate action:

The intersection of emerging technologies and climate action is paramount. Insights emphasize the potential of artificial intelligence (AI), blockchain, and other cutting-edge technologies in creating innovative solutions for climate change mitigation. These technologies facilitate real-time monitoring, enabling swift responses to environmental shifts. AI-driven predictive models enhance climate resilience, while blockchain ensures transparent carbon trading.

Generative AI has been the talk of the town lately, and providers have not shied away from experimenting with gen AI use cases in sustainability either. The most common use cases are around rapid design, prototyping, and automation and streamlining of manual processes. There is immense potential in these emerging use cases to transform the way we look at sustainability engagements.

  1. Resilient and sustainable business models:

Integrating sustainability into business models must be the way of the future. Our research emphasizes the need for resilient and sustainable business models that align with environmental objectives, paving the way for discussions on these models at COP28.

Sustainability-driven innovation in product development helps enterprises increase market responsiveness and differentiated brand value. Products marketed as sustainable now hold a 17.0% market share, with significant growth during the pandemic, as per the NYU Stern Sustainable Market Index.

  1. Collaboration and ecosystem partnerships:

Collaboration is fundamental in scaling up sustainable initiatives. We have seen the importance of ecosystem partnerships, bringing together governments, businesses, and technology service providers to drive collective action.

This is a theme prominent not just at an enterprise level, but also at an international level. For example, the EU pledged €12 million in grants to support Kenya’s green hydrogen industry.

  1. Regulatory framework convergence:

We anticipate significant implications for the evolving regulatory frameworks surrounding sustainability.

Standardizing environmental guidelines aids businesses in navigating complex landscapes and investors in making decisions based on transparent and comparable disclosures. Industry associations like the International Council on Mining and Metals, the World Gold Council, the Copper Mark, and the Mining Association of Canada are moving to develop a responsible mining code to define one minimum global standard for the industry’s environmental impact, human rights, and due diligence.

The discussions at COP28 are expected to influence how governments, industry consortia, and businesses approach environmental goals, potentially shaping more streamlined regulations and standards.

Everest Group is cautiously optimistic

The negotiations will likely provide a platform for technology service providers to contribute their expertise in navigating the complex interplay between sustainability and technology. As Everest Group’s areas of research align with the ongoing discussions, we anticipate a nuanced understanding of how regulatory changes may impact the adoption of digital solutions, emerging technologies, and sustainable business practices.

COP28 represents a crucial juncture in the global pursuit for sustainability, and Everest Group’s research positions technology service providers at the forefront of this transformative journey. As the negotiations unfold, the impact on regulatory frameworks and the collaborative efforts of governments, businesses, and technology providers will shape the trajectory towards achieving the goals set by the Paris Agreement. Everest Group remains committed to providing insights that navigate the evolving landscape of sustainability, guiding organizations toward a more resilient and environmentally conscious future. To discuss further reach out to Rita Soni, Principal Analyst, Sustainability Research and Impact Sourcing, [email protected], Arpita Dwivedi, Practice Director, Sustainability and Talent, [email protected], Ambika Kini, Senior Analyst, Sustainability Technology and Services, [email protected], or Meenakshi Narayanan, Senior Analyst, Sustainability Technology and Services, [email protected].

Don’t miss our LinkedIn Live session, Building a Sustainable Future: Reflections on COP28 and Insights for 2024.

The Battle Unfolds: MGAs as the Next Frontier for InsurTechs, Services, and Technology Providers | Blog

November 28, 2023

The Managing General Agent (MGA) sector is a bright spot in a turbulent insurance market. Technology investments and strategic partnerships will be key to redefining risk and driving innovation for these specialized insurance agents/brokers. Read on to learn more about the opportunities that await MGAs, or contact us to discuss further.

Despite the economic turmoil, global instability, prevalent inflation, and a volatile year shaking the insurance industry, faith in the MGA sector has not wavered. In this challenging environment, MGAs need to demonstrate steadfast strategic underwriting prowess, build a solid business case heavily focused on cost optimization, and exhibit excellent data and engineering capabilities.

Increasing demand for specialized products, the need to underwrite newer business lines, and a push for efficiency are driving insurers to build relationships with MGAs – all suggesting the upcoming years could be a golden era for MGAs.

The data provides a compelling sense that MGAs have a bright future ahead. Conning’s analysis of statutory filings found that premiums generated by MGAs for US insurance companies grew at a startling rate of 27% in 2022. Interest in the MGA market also has significantly rekindled in Europe and the US, gradually garnering prominence and capturing interest among carriers. Everest Group’s research shows just about half of the major US-based property and casualty (P&C) insurers utilize MGAs to cover specialized risk.

Unleashing the potential of technology

In this era of expanding MGA channels and relations, forward-looking enterprises have already made significant strides toward capitalizing on technology solutions. By strategically investing, they are enhancing the overall experience for agents, brokers, and policyholders. Simultaneously, they are seeking to enhance operational efficiencies and carve out a larger market share. Nevertheless, this merely marks the inception of a far-reaching goal, as there remains a multitude of tasks to be undertaken to fulfill the above-stated aims.

To support their vision, MGAs need modern, flexible technology that enhances customer experience and increases new business and retention. Additionally, these agents require a well-integrated and comprehensive partner ecosystem that can provide support while augmenting technical capabilities.

The prevailing economic sentiment has accelerated the trend toward investing in technology and data in more impactful ways. Regardless of MGA type, technology serves as a driving force to propel growth and enable innovation.

Clyde & Co research highlights that MGAs’ willingness to invest in technology far surpasses their insurer counterparts, with 80% of MGAs investing in technology or InsurTech in the past year, compared to only 55% of carriers. Automation, digital platforms, and data and analytics are the most prominent areas that have garnered considerable investment attention during this transformation era.

Notably, a growing number of MGAs have harnessed the potential of Artificial Intelligence (AI) and Machine Learning (ML) to optimize operational performance. Specifically, they are using these technologies to streamline and advance capabilities and underwriting processes, assess risk, and handle claims.

Digital platforms have assumed a ubiquitous presence within the MGA community, facilitating seamless engagement with customers, brokers, and carriers. They also empower MGAs to extend online quoting capabilities, expedite policy issuance, and streamline claims handling digitally.

Data and analytics play a pivotal role in delivering insights that can potentially unlock boundless possibilities in MGA’s operations. This intelligence can help them track specialized and upcoming risks that need attention, identify business opportunities for carrier partners, and develop more responsive and accurate pricing models. Additionally, these solutions can allow carriers to underwrite risks at higher margins, as well as offer more personalized coverage for policyholders.

Some examples include:

  • ZestyAI, an AI-powered specialist provider of climate and risk analytics solutions, partnered with Coterie Insurance, a focused MGA, to provide instant quotes and issue small business insurance policies leveraging data and AI
  • Gallagher recently partnered with Novidea to transform its services for a specialty client base and execute and tailor its broking cloud-based data platform to automate processes. The platform will save time, create efficiency, and turn data into actionable insights

MGAs: a low-hanging opportunity for the ecosystem partners

Platform and technology partners, as well as various InsurTechs and low-code/no-code providers, are making strides toward building dedicated playbooks and products to assist MGAs. Service provider partners have heavily invested in developing broader capabilities and solutions to tap into the growing technology adoption demands from MGAs.

Various platform providers such as Socotra, Majesco, Novidea, Cogitate, Insurity, and Instanda are launching cloud and Application Programming Interface (API)-based dedicated core platforms for MGAs. These platforms will help MGAs strengthen relationships with insurers, expand distribution, leverage a vast collection of third-party data and microservices for underwriting and customer experience, as well as achieve scalability. The solutions also will quickly offer products for complex insurance lines such as general liability, physical damage, auto liability, cargo insurance, and insurance for complex terrain or hard-to-underwrite commercial property.

Let’s take a look at the key strategic priorities for MGAs and an illustrative provider landscape in the exhibit below:

w1

Emerging risks fuel further tech investments and partnerships to drive innovation and redefine risk management

The evolving risk landscape and uncertainty are major drivers for MGAs to invest in data-driven technology tools because the current models may be inadequate for the growing number, types, and complexity of risks.

While MGAs have the expertise and models to evaluate risk, the industry is failing to capture the full spectrum of potential losses, and simultaneously capture and analyze newer data sources. The historical loss data that these traditional models rely on is less useful for projecting future losses, giving rise to the need for fostering strategic collaborations with third-party data intelligence and analytics partners, as well as other technology players.

We are seeing increased traction from the MGA sector in the following product and risk segments:

  • Cyber risk: The lack of historical data and inability to accurately price cyber risks remain a key challenge for traditional MGAs, leading to increasing loss ratios and declining profitability
    • Many InsurTechs dedicatedly track this space such as Coinnect, helping loss adjusters, brokers, MGAs, insurers, and reinsurers handle cyber risk
    • They offer a cloud platform and APIs and leverage proprietary cyber intelligence data to assess, mitigate, and respond to cyber risks of prospects and insured clients
  • Excess & Surplus (E&S): The inherent uncertainty of a changing environment, which leads to extreme climate events, is a major driver of premium growth in excess & surplus (E&S) lines. According to an AM Best Market Segment Report, the direct premium for E&S lines grew by 25% to a record US$82 billion in 2021
  • Parametric insurance: Parametric insurance demand also is on the upswing, requiring MGAs to pay attention and substantially invest in cutting-edge technology to develop relevant and targeted solutions

Forward-looking MGAs are progressively seeking to embrace cloud-based solutions and develop niche and sophisticated underwriting expertise as they shift their focus toward streamlining operations, driving cost efficiencies, and improving their ability for advanced risk modeling and resilience.

The MGA market is undergoing substantial transformations fueled by the desire to invest in tech, data, and AI to build robust risk selection and underwriting capabilities and foster good carrier relationships. Elevating the emphasis on bolstering the partnership ecosystem will be important, fueled by prevailing market dynamics, including faster speed-to-market, higher profitability, and maximizing value.

At the same time, focusing on emerging risk categories, growth in E&S lines, and high parametric insurance demand has created an urgency for MGAs to build close relationships with InsurTechs, carriers, service providers, platform and technology providers. This strategy will help MGAs drive value creation, capitalize on new opportunities, innovate and launch newer products to the market, and, ultimately, deliver exceptional value.

To discuss this topic further, please reach out to [email protected] and [email protected].

Don’t miss our annual webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn the major concerns, expectations, and trends for 2024.

Tech Services Forecast For 2024 | Blog

November 28, 2023

In every quarter in 2023, the tech services environment became increasingly more difficult due to a growing more-for-less mindset instead of a build-for-the-future orientation. The discretionary spend component of the market largely evaporated. Here is an analysis of whether that will continue to affect the tech services market in 2024 and what it means for companies’ spending decisions.

Read more in my blog on Forbes
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