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The Evolution to Open Finance Offers Promise: Everest Group’s Open Banking Research | Blog

October 11, 2022

Open banking – a system that provides third-party access to financial data through application programming interfaces (APIs) – has unlocked digital financial innovation and disruption. Its next evolution – open finance – holds the promise to greatly enhance the customer experience and empower users of financial services. Read on for more on our latest open banking research.

A combination of government regulation and market forces has created a growing demand for open financial data to build an expanded provider ecosystem beyond banks and financial institutions to also include non-financial platforms, FinTechs, and payment facilitators.

According to the recent forecast by the Open Banking Implementation Entity (OBIE), more than 6 million individuals and businesses in the United Kingdom regularly use open banking services. Payment volumes on open banking-related services increased dramatically to around 21.1 million transactions over the six months through March 2022, compared to 6.1 million during the same period.

The first wave of open banking has given customers and third parties easy digital access to their financial data from banks and other traditional financial institutions. This has solved critical issues for customers by ensuring better account visibility and convenient payment access.

In the next stage of open finance, an individual’s entire financial footprint, such as mortgages, savings, pensions, insurance, and credit, can be opened up to trusted third-party APIs with consumer consent. Brazil is expected to move into this final stage of its four-part implementation of open banking by the end of the year.

Open finance offers the following key benefits:

Improved customer experience – By opening access to financial instruments, personal financing, and asset and wealth management, companies can create personalized products and services to meet customer needs
More inclusive – Open finance has addressed the critical need of making financial practices more accessible and provides simplified banking for a large portion of the unbanked population in growing geographies
Greater transparency – Open finance lifts the veil for customers on their financial options, giving them clearer insights into their full financial pictures
Customer empowerment – Banking customers are better informed to decide if their current providers or services are best for them, giving them greater financial freedom

Open banking research findings

Let’s take a look at how banks and financial institutions, FinTechs, small- and mid-sized businesses, and banking and financial services (BFS) providers will be impacted by this powerful trend:

Banks and financial institutions

Data architecture will need to be redesigned to help banks manage data securely, quickly, and efficiently. Firms will use an API-based microservices approach to make data more accessible, thereby enhancing digital agility.

For example, US Bank and Plaid announced a partnership in 2021 to connect the bank’s customers to third-party accounts. Plaid will provide the open APIs to initiate third-party payments between the bank and financial apps such as Robinhood and Venmo.

This approach also allows banks to leverage their data internally. Bankers and traders can access personalized front-end applications.

The potential to develop new API-led products with relative ease is another exciting benefit. New API products can create additional direct monetization streams and access to newer customer segments. This can lead to better customer lifetime value and predictably improve long-term profitability. Barclays, for instance, enabled account aggregation in their mobile banking app to allow customers to view other bank accounts within the same app.

FinTechs

Open banking has produced a space for FinTechs to innovate in a sector otherwise dominated by traditional banks. It has created countless opportunities for competition and collaboration. Some examples include:

Payment infrastructure provider Dapi and FinTech firm Afterbanks launched real-time account and data aggregation services via an API in Mexico in 2021
Prometeo, an open banking platform provider, launched its payment API for the Latin American market enabling efficient exchanges using API connectivity and providing a single access point to information and payments

As illustrated below, the FinTech ecosystem has morphed into three distinct categories: challengers (direct competitors that have built digital-only banks and financial institutions), collaborators (partners with traditional banks to leverage open APIs), and enablers (infrastructure and platform support providers):

Small- and mid-sized enterprises

Open banking creates efficient and seamless business processes for small- and mid-sized enterprises (SMEs) and can assist in effectively delivering accounting, payroll management, and auditing services. For example:

Mexican FinTech Kavak offers same-day application and loan approval to customers
Neobank Plurall launched its services in Columbia and focused on improving the financial inclusion of SMEs

BFS firms

Adoption of open banking poses some challenges for BFS firms that fall broadly under these categories, as illustrated below:

Change management and business alignment
- As banks adopt a customer-centric approach and align their business strategies with customer engagement, they will need to expand their offerings to position themselves as end-to-end customer experience enablers
- Banks must widely market their own APIs to developers for wider adoption across various open banking platforms being built
Extending offerings beyond the regulatory mandate
- Enterprises should not limit their open banking capabilities to what is mandated by regulators but venture beyond to gain a competitive advantage. They should offer more APIs and undertake integration with new sales channels
- Data security and privacy should take center stage in all branding efforts to earn consumers’ confidence
Augmenting the value proposition
- Banks must focus on giving customers greater control over their data and enhancing the customer experience by providing more convenient payment methods, account aggregation services, and tailored product offerings as incentives to adopt open banking
Managing the shortage of trained talent
- Access to the required skills for scaled open banking adoption is hampered by a demand-supply gap that requires BFS enterprises to pay a heavy premium for talent
- Financial institutions must focus on workforce hiring, training, and revamping to equip their employees to contribute to the digital metamorphosis powered by open banking

To learn more about our open banking research and discuss your experiences in these emerging areas, contact [email protected], and [email protected]. Follow our webinars and blogs to learn more about upcoming technologies and trends.

To learn more about customer experience trends and how CX leaders are assessing their future customer experience delivery needs, watch our webinar, How are Leading Organizations Delivering Exceptional Customer Experience?

Why Metaverse Growth Will Put Trust and Safety (T&S) Center Stage

September 20, 2022

With Metaverse growth expected to surge to US$679 billion by 2030, its influence and possibilities seem endless. But with great power comes great responsibility. Read on to learn why and how organizations must ensure Trust and Safety (T&S) for metaverse to realize its potential.

The metaverse’s arrival is inevitable and will, for better or worse, be part of our future lives. The metaverse could rival massive shifts in history like the telephone and the internet and, in the next few decades, bring together people in ways we never imagined.

Metaverse growth is expected to increase internet data use by 20 times from sharing personal and financial data, social interactions enhanced by Augmented Reality (AR)/Virtual Reality (VR), and the evolution of video and live streaming content.

But jumping on the metaverse bandwagon won’t be the difficult part – how to keep it secure will be.

Why now is the time to think through the risks of metaverse growth

Organizations that use or provide metaverse services will need to think hard about the implications and work to align with T&S policies, laws, and regulations in parallel to metaverse initiatives to inspire a safe, privacy-sensitive, and regulated environment.

The metaverse promises opportunities for innovation and growth. It could allow companies to reinvent the user experience through an immersive environment and create deeper engagement.

But, if the metaverse is a place where users are meant to communicate, collaborate, co-create, and share ideas, then shouldn’t we expect it to be safe? However, there are incidences already emerging of users being put at risk of security breaches, increased abuse, exposure to the proliferation of objectionable content, and financial fraud.

It will take a village to regulate the metaverse

Organizations will need to align with T&S providers and stakeholders, such as governments, academia, civil society, and possibly others, to identify loopholes and take measures to address gaps before any wrongdoing occurs. Organizations will have to put T&S policies, technologies, and processes in place and think through how they will moderate the metaverse at scale and how it can be done in real time to keep up with the complex forms of interactive live streaming. They will also need to consider how to ensure the well-being of their human moderators, who can be exposed to egregious content over long periods of time. This could mean initiating full teams that work in parallel to the development, deployment, and enrichment of metaverse.

What does this mean for the T&S services industry?

Enterprises across industries are already relying on third-party T&S services to make their current engagement platforms safe for their users. Over the next decade, the demand for T&S services to help maintain metaverse growth and safety will be immense and likely produce an ecosystem of T&S providers and partnerships from various entities. Utilizing T&S service providers, and even specialized service providers, is one-way enterprises can access expertise in risk mitigation and gain guidance and resources for safer metaverse deployments.

The T&S services market is already growing at a blinding speed of 35-38% and is estimated to reach US$15-20 billion by 2024. However, it can see additional 25-30% growth as metaverse scales.

See the exhibit below.

Learn more about the current market surrounding the metaverse and how partnering with third parties can keep the public safe and aligned with legal and regulatory T&S requirements in our report, Taming the Hydra: Trust and Safety (T&S) in the Metaverse. And discover how organizations are addressing the possibilities and challenges of metaverse growth in our upcoming LinkedIn Live session, Trust and Safety (T&S) in the Metaverse – With Great Power Comes Great Responsibility.

Three CRM Insights to Prepare for the Future of Customer Experience | Blog

September 13, 2022

Despite the overall growth in the Customer Relationship Management (CRM) industry, the CRM platform market remains static. To achieve the business value enterprises desire, changes need to be made. In this blog, we share our CRM insights and three recommendations for CRM platform evaluation.

With the rapid proliferation of channels, products, and customer personas, the industrialization of personalized experience delivery poses the biggest challenge for all enterprises across industries. CRM is integral to enabling this experience transformation.

According to Everest Group research, the overall CRM market has increased approximately 15% year-over-year, primarily driven by the growth of Salesforce and other SaaS applications of SAP, Microsoft, and Adobe.

But let’s not confuse the industry’s top-line growth with customer success. The Solow paradox or productivity slowdown is still here. The bottom line: today’s CRM platform market is oversold and underdelivered. In a frenzy to meet YOY linear growth targets and bigger deal sizes, almost 30% of the licenses sold go unutilized by enterprises.

Three key CRM insights to watch

As we enter Dreamforce’s 20^th year, below are our recommendations on fundamental changes that are needed in the CRM industry.

1- Bridge the customer experience and customer success disconnect: While most cloud CRM platforms are growing in high double digits, they are not achieving the same business value growth. Most customer success metrics are defined and managed by vendors and continue to have a singular focus on customer satisfaction. While an enterprise IT organization may be happy with completing implementations on time and within budget, our research suggests that almost 50% of enterprises are not satisfied with the business value realized from their platform investments.

Recommendation: CRM platform players need to evolve the definition of customer satisfaction (CSAT) and their customer success programs. These should be managed independently of the organization’s sales and marketing functions. Service providers must work closely with platform vendors and customers to proactively define and track IT-business metrics. Niche platform players such as Qualtrics stand to make a significant dent by putting experience and operational data side by side to wholistically define customer experience.

2 – Create data-driven and connected operations: Industry-specific cloud applications are a key investment area for most CRM vendors. However, our ongoing Salesforce industry cloud services PEAK Matrix assessment found CRM vendors are pushing these products rather than enterprises pulling for them. This is because these products need high customization and fail to make a dent in managing and integrating data for specific micro industries. Each micro-industry has a unique operating model that requires data architecture tailored to the context. These industry products need to get the data strategy right for each industry-specific operation and bring in the openness for ecosystem integration. Platform investments by Salesforce, Adobe, and others in the Customer Data Platform (CDP) space are a silver lining for the commerce industry. But these CDPs should eventually evolve into intelligent data hubs and provide a platform for enterprises to create dynamic and contextual applications.

Recommendation: Industry-specific cloud solutions need to be built by keeping data architecture and integration for the micro-industry at the core. Making such fundamental changes is difficult for platform giants, which creates opportunities for emerging platform vendors to compete and differentiate. Vendors such as Zoho have differentiated themselves in an almost monopolistic industry by taking a long-game strategy and changing products at the architectural level.

Service partners need to use their industry expertise and prioritize micro industries to closely innovate with both emerging and large platform vendors. Together, they need to build meaningful products for their customers rather than being caught up in the frenzy to fulfill license sale Key Performance Indicators (KPIs).

3- Expand and further simplify platform native workflow automation and low-code capabilities: As many as 60% of new application development engagements consider low-code platforms, according to Everest Group’s recent market study. Present workflow-building tools and low-code capabilities that are native to CRM platforms are still immature. This is pushing enterprises to spend hefty dollars on workflow and low-code platforms and then invest additional money on customization to integrate them with their CRM platform.

Recommendation: Salesforce has been a pioneer in this space and continues to lead the market, which has resonated well with its customers. Other CRM vendors who lack capabilities and focus here may give Salesforce inroads into their existing accounts. Service partners need to educate the market about low-code and workflow automation’s potential to transform industry-specific customer experiences.

We will be attending Dreamforce this September to share our CRM insights and would welcome hearing your views on CRM platform evaluation. To schedule a meeting, please reach out to [email protected] and [email protected].

Attend our webinar, How are Leading Organizations Delivering Exceptional Customer Experience?, to learn more about customer experience today.

Six Common Challenges Customer Experience (CX) Leaders Face | Blog

August 29, 2022

Delivering exceptional customer experience has become essential to meet changing expectations post-pandemic. But various challenges – from data analytics to talent – can prevent companies from delivering the highly personalized interactions consumers crave. Learn what issues keep customer experience officers (CXOs) up at night in this blog.

The outsourced customer experience management (CXM) market has seen historic growth in recent years, rising about 12% to 14% last year to more than USD$100 billion, according to Everest Group estimates.

While COVID-19 increased demand for CX-related services, it was not the only driver. Senior business leaders now realize delivering exceptional customer experience is no longer a “nice to have” but a “must have” to grow their businesses and thrive in an increasingly competitive market, especially with tough economic times forecast.

As a result, greater focus is being put on customer experience (CX) and customer service (CS) leaders to deliver an exceptional experience. From our conversations with senior business leaders, they all face the following six similar challenges:

Using data to improve CX – With data security being critical to running a CX operation, leaders want to better understand all their data, such as contact reasons. They realize data will help them identify ways to improve the experience and lower contact volumes, ultimately improving customer satisfaction and reducing cost. To capitalize on this opportunity, data analytics use within outsourced contracts has grown significantly over the past few years, and our recent research shows that analytics is now present in 30% to 35% of CXM deals

Navigating the talent crisis – Much of North America and Europe, as well as other locations across the globe, are experiencing a talent shortage. CX leaders find either their in-house operations or outsourced service providers are struggling to attract and retain talent or that they have to pay premium wages. While this challenge may subside if the economic situation worsens, forward-thinking CX leaders are actively working to address this by evaluating alternative talent sources (such as using gig workers or impact sourcing) as well as exploring emerging locations (Sub-Saharan Africa, for example). They also are focusing on improving the employee experience (EX) to retain the talent they find

Optimising delivery and location models – CX leaders have to think about the right delivery and location models to support their business. Using Work at Home Agents (WAHA) in either full or hybrid models is a key consideration in finding and retaining talent. Delivery locations have also come into focus not only in the talent search but also for business continuity planning (BCP), as mitigating risks is now more top of mind than ever. CX leaders are increasingly demanding insights and analysis on emerging delivery models and locations to support their strategies

Increasing value while reducing cost – CX leaders feel pressure to deliver value to the business, whether through increased sales, higher retention rates, or better Net Promoter Scores (NPS)/Customer Satisfaction Scores (CSAT.) However, this responsibility does not come with a blank check, and leaders are still challenged to reduce support costs. Leaders need to balance high-value interactions served by humans and then identify low-value contacts (to the business and end customer) to eliminate or automate

Modernising the CX infrastructure – The customer experience infrastructure can be modernized and improved at any stage. CX leaders should avoid rushing into a solution because it seems to be the latest hot topic and should understand how the digital solution will integrate into the business and deliver the desired experience

Anticipating future customer, industry, and technology trends – As we know from our discussions and experiences, busy executives find it hard to look outside their organisations to understand broader trends when working hard to deliver an exceptional customer experience. Competitors are unlikely to share their plans, and opportunities to collaborate with peer CX leaders in non-competing firms are scarce. CX leaders are seeking an unbiased external industry lens that advisors can provide

The CX or CS leadership role has gained greater significance in recent years as the world has awoken to the importance of delivering great customer experiences. While challenging, the obstacles these leaders face are not insurmountable with the right insights, data, and teamwork.

To discuss CX trends further, contact David Rickard at [email protected].

Learn more about how to optimize your customer experience strategy in our LinkedIn Live session, “How are Leading Organizations Delivering Exceptional Customer Experience?”

The Era of “Industrialization of Experience” Is Heralding the Metaverse and Web 3.0 Revolution: Are You Embracing It? | Blog

August 29, 2022

The advent of Web 3.0 is creating exciting new opportunities for Banking, Financial Services, and Insurance (BFSI) firms who invest in digital technologies to deliver next-generation customer engagement and enter the metaverse. To learn more about enterprises taking the lead in piloting metaverse and Web 3.0, read on.

With Web 2.0 laying the foundation for unique customer interactions, BFSI firms are increasingly adopting an omnichannel approach as industry trends indicate consumer mindshare often translates into wallet share. Driven by consumer demand for newer experiences as well as the limited potential for further innovation in Web 2.0, industry leaders are looking at Web 3.0 as the future.

Let’s explore how Web 3.0 is enabling firms to evolve from customer interactions to engaging customer experiences in a connected ecosystem.

Defining Web 3.0 and metaverse

Web 3.0 is the next phase of web hyperscale systems built on decentralized, autonomous, and distributed technologies. It enables decentralized protocols and technology stacks that can be used to build new communities and economies such as metaverse.

Movement over the past seven years toward Web 3.0 stalled because of the lack of superior computing power availability and supporting systems to drive sustained momentum. Now, with changing consumer behavior following the pandemic, the rush toward digitalization has taken off.

The need to build differentiated experiences backed by the rapid maturity of cloud-based processes and overall sophistication of systems supporting the digital agenda are healthy signs for the next wave of innovation based on Web 3.0 – metaverse.

Metaverse is a persistent immersive mega virtual smart space, akin to a universe, where people have seamless digital experiences that can extend to the real world.

Metaverse creates a virtual community that can provide immersive client experiences, collaborations, and employee trainings. To meet this demand, technology and services providers need to invest in next-generation technologies such as cloud, Artificial Intelligence (AI), and blockchain to extract the best out of Web 3.0.

Today’s metaverse is focused on allowing users to build a digital imitation of the physical world, leverage mixed reality devices to engage in various activities, conduct commercial transactions using digital assets, and drive collaboration and engagement through virtual events.

Web 3.0 and metaverse will enable next-generation experiences and alter economic and business models. Excitement about the potential significantly outweighs concerns.

Exhibit 1: Everest Group

Pioneers piloting Web 3.0

Leading financial services players have started piloting Web 3.0 concepts and experimenting with metaverse to test the market response. We believe this marks the start of an evolutionary change that will undergo multiple refinements rather than be revolutionary.

Exhibit 2: Everest Group

Most use cases we see are capitalizing on the following modular demand themes:

Banking:

Financial products and asset classes in the metaverse
Customer management through immersive technologies
Virtual branch inception
Affiliates and partnerships in the digital world

Financial services:

Portfolio management and client enablement
Front, middle, and back-office efficiency
Trade lifecycle management in the metaverse
Digital asset custody services
Decentralized brokerage systems

Insurance:

Decentralized insurance services
Risk profiling
Claim processing
Restructured underwriting services

Where is the market moving with regulations?

Despite the recent efforts, policymakers still need to be convinced to embrace the new possibilities of Web 3.0 to make it real for banking consumers and investors. Web 3.0 and allied technologies, such as metaverse, require a novel approach to regulatory thinking. Many governing bodies grapple with the nuances around Web 3.0 and the challenges it manifests. Governance and interoperability are critical elements to successfully scale Web 3.0 and metaverse.

Addressing these three regulatory areas can kickstart the formal growth of Web 3.0:

Investor protection – With blockchain-based transactions picking up pace, preventing fraudulent actions and safeguarding investors’ interests has become a priority for organizations such as the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)
Privacy and disclosures – The intricacies around the nature and type of disclosures and the effect these may have on individual privacy could have serious implications as this technology gains momentum
Jurisdictional concerns – The key concerns around decentralized internet are around control, individual laws applied, and interpretations across different markets

The new computing possibilities of Web 3.0 has the potential to dynamically impact the BFSI industry structure. Data decentralization and democratization can bring investment opportunities to enterprises as well as IT providers. To seize this potential, technology and services providers must invest in cloud, AI, and blockchain to realize the many benefits Web 3.0 can deliver.

At Everest Group, we are closely tracking the developments in BFSI based on metaverse – both from the demand and supply side. For more insights, see our report, Future of Financial Services – Web 3.0, Metaverse, and Decentralized Finance, which sheds light on the future of financial services in the Web 3.0 and metaverse era.

We would like to hear your thoughts on Web 3.0 and metaverse and its growing adoption in the BFSI industry. Please reach out to us with your inputs at [email protected], or [email protected].

Listen to our experts as they deliver their perspectives on Web 3.0 and Metaverse and provide actionable insights to enterprises, service providers, and technology vendors in our webinar, Web 3.0 and Metaverse: Implications for Sourcing and Technology Leaders.

Defining Software Value: Precursor to Successful Investments and Budgeting Decisions

July 26, 2022

Measuring software value in a standardized way is not easy, but it’s critical to making good investment and budgeting decisions. While defining “value” might be a nebulous concept, our value benchmarking framework can help provide clarity. Learn how to value a software product in this blog.

How to value a software product

It has been said a software product’s real value is not defined by the needed functions or required user stories but rather by the performance improvement customers can get from using the product. Stated more simply, value is what the customer really wants and what they are happy to pay for. However, like beauty, value will always be “in the eye of the beholder,” and it tends to be subjective.

Still, finding a tangible way for all business and IT stakeholders to visualize software value to make meaningful investment decisions is imperative. To measure the value delivered by a software product in a standard way, enterprises need to gauge the incremental improvement in efficiency (effort reduction, quality improvement), stakeholder experience (customer, partner, employees), and trust (security, compliance, ethics).

Measuring software value in a standardized manner is an onerous task

Software development is only successful when the value delivered by the product goes beyond the overall investments and helps solve business needs. However, both revenue and investment effort/cost occur over time. While effort or cost is easier to track and forecast, enterprises are still not clear on how to effectively track and measure a software product’s value.

Enterprises face multiple challenges in defining and measuring the tangible value delivered by software products in a standardized manner. This is because of the disparity in multiple aspects like software type, the number of users, type of users (internal versus external), automation extent, the talent required, etc. It becomes increasingly difficult to formulate a framework that can be applied to all these software types while accounting for the different metrics/KPIs used to track value.

Software value and portfolio-level strategy

Though difficult, regularly tracking value is necessary to determine investments. The two most common metrics adopted are revenue impact (for direct value delivered) and incremental brand equity (for indirect value delivered). While revenue forecasting is somewhat difficult, brand equity calculations are even more complex, and enterprises typically use external marketing agencies to measure brand-equity impact.

Every software product also has a north star metric that defines its success and future investments. For example, the north star metric for Netflix is watch time. However, product budgeting decisions are not so simple.

Everest Group has developed a value benchmarking framework based on its work helping a leading enterprise client solve the software product value equation by assessing and building best practices for defining, measuring, and fine-tuning software value, resulting in more efficient investment decisions.

Let’s first understand how product portfolio decisions are made with the help of our value benchmarking framework.

At a portfolio level, products are categorized into core capability, aimed at bringing incremental revenue, and purpose-led products focused on building sustainable relationships. Objectives and Key Results (OKRs) are defined top-down and then product teams define the feature pipeline to meet those OKRs. Product differentiation, value chain (market) presence, and portfolio synergies are evaluated next to understand product value. Some advanced enterprises have started practicing value stream mapping to optimize the effort spent, eliminating non-value-added activities.

But how is the ideation done? Product ideas are derived from four key distinct sources:

Coming up with ideas internally and scaling team-level initiatives
Capturing trends through partners and market shifts
Aligning with the market and capturing CXO inputs
Resolving customer pain points

Product value framework

The below graphic can be used to visualize an approach to defining product value. Product viability is a direct measure of whether to invest or not and answers the basic question of Return on Investment (RoI.) If the incremental revenue and positive brand equity impact are tangibly greater than the effort needed, then going ahead with the investment makes sense.

The other dimension, product impact, is the outcome the product delivers in efficiency upliftment, experience improvement, and trust. However, it is worth noticing that impact parameters like efficiency, experience, and trust are used reversibly to make product viability calculations and vice-versa, as indicated in the below graphic by the green bidirectional arrow.

New-age operational KPIs such as agility index and Digital Maturity Index (DMI) are gaining traction among enterprises to help track efficiency. Experience is increasingly becoming more important in making product decisions, and enterprises leverage user surveys as leading indicators to understand future adoption levels. Tools like Adobe Experience Manager, Sitecore XM, etc., also are gaining popularity to capture experience across product lifecycles. Trust is seen more from a cost-avoidance angle and becomes the foundational design principle for technology companies like Microsoft, Google, Amazon, Salesforce, etc.

Sustainability is again more prominent than ever, and directly relates to positive brand-equity impact. Although these investments don’t bear any short-term direct revenue impact, they help create societal impact that opens up huge long-term revenue opportunities. Examples include Google’s Project Loon, aimed at increasing internet penetration in under-developed countries, and Salesforce’s Philanthropy Cloud, built to address employee engagement in a distributed agile set-up.

Investment strategy and budgeting approaches

The next thing to discuss is how to use forecasted value to identify and make investment decisions. Enterprises are increasingly adopting agile budgeting practices to drive the trifecta of value, collaboration, and risk management. Value streams are used as foundational units to allocate and prioritize funding, helping enterprises to make best-performing and strategic investments.

When making investment decisions, products are categorized based on horizons, as illustrated by the below graphic:

Participatory budgeting processes maintain a collaborative ecosystem and ensure the following:

Alignment across concerned stakeholders before formal budget sign off
Right-sized investments with a value-first ideology

Overall, enterprises need to adopt a venture capitalist mindset when funding agile projects. Investments should be staggered with the provision to reallocate funds to the best-performing areas, keeping aside around 10% of the budget for funding mid-year ideas.

The below graphic illustrates the typical annual budgeting cycle:

Following these best practices can help enterprises significantly improve RoI from their software product investments and help them better understand value.

To share your thoughts and discuss our research related to value benchmarking of global software products, please reach out to [email protected], [email protected], or [email protected].

Learn more about defining value in software in our webinar, Is Agile Working? Where Enterprises Are Going Wrong.

Composable Commerce: For Composing the Best-of-Breed Customer Experience

July 20, 2022

From monolithic to MACH architecture, the next evolution in digital experience is here – composable commerce. Similar to building with Lego Blocks, this modular approach allows enterprises to create unique models by selecting “best-of-breed” digital commerce components. Learn how composable commerce is optimizing all aspects of the online shopping experience and what tech providers are pioneering solutions in this rapidly rising area.

Digital commerce growth leads to composable commerce

Just as the COVID-19 pandemic has been a catalyst in accelerating digital platform adoption among enterprises, modern consumers’ purchasing habits have dramatically changed due to frequent lockdowns and increasing online purchasing convenience.

According to a United Nations Conference on Trade and Development (UNCTAD) report, the average share of internet users who made purchases online increased from 53% before the pandemic to 60% across 66 countries following its onset in 2020/21.

The shopping experience has evolved from brick and mortar stores to online and moved to unified commerce – an amalgamation of offline and online channels with an ever-evolving myriad of customer touch points such as social commerce, video commerce, and now metaverse, etc.

Emerging business models such as Digital to Commerce (D2C), new and interactive channels, and advancements in technology, especially Artificial Intelligence (AI) and Augmented Reality/Virtual Reality (AR/VR), have fueled digital commerce’s growth. In response, the underlying digital commerce architecture principles have also morphed to meet the pace of change in digital-native customer expectations.

What is composable commerce, and how will it unlock business value?

Up until a few years ago, monolithic architecture-based platforms were the de facto choice for any digital commerce storefront. These big and chunky solutions providing standard out-of-the-box features for all customers offered a “one-size-fits-all” approach. Enterprises had to be content with these standard features and were required to spend huge budget and time on customizations to meet their business requirements.

However, major issues with scalability, complexity, longer time to market, and budget made this implementation approach less useful for modern commerce businesses where staying abreast of technological advancements, customer centricity, and nimbleness are of utmost priority.

The next major evolution in digital commerce architecture is MACH (microservices-based, API-first, cloud-native, and headless) architecture enabled enterprises. This approach will overcome the shortcomings of monolithic architecture and responsively and dynamically adapt to customer expectations.

Taking a step forward from MACH architecture, the era of composable commerce has dawned. Composable commerce – a modular approach to implementing digital commerce – uses interchangeable building blocks, leveraging the MACH Architecture framework. It offers enterprises the choice to select “best-of-breed” digital commerce components such as Product Information Management (PIM), Customer Relationship Management (CRM), pricing, etc., and is similar to Lego Blocks where users can create unique models. These composable components are the specific solutions provided by third-party vendors.

While the microservice approach breaks down the digital commerce modules into individual building blocks, composable commerce enables the linkage of these microservices to realize a specific business value. Composable commerce utilizes Packaged Business Capabilities (PBCs), a fully functional, independent component serving a defined business capability. These are used as building blocks for “composing” the unique platform. Each PBC can consist of several microservices. These PBCs can be individually replaced or modified without impacting the entire platform.

Thus, composable commerce has shifted the focus toward business-centricity. Composable commerce is built for an organization’s unique operating models, strategic priorities, and customer focuses. Businesses can select essential functionalities for their requirements and “compose” them into a custom application built for their digital commerce platform. This allows enterprises to focus on the relevant PBCs for their business that are sometimes unavailable in the traditional and bulky monolithic platform’s “out-of-the-box” features.

Below are some benefits of composable commerce that enterprises can realize.

The number of PBC vendors providing functionalities such as loyalty, promotions, search, reviews and ratings, analytics, etc., is rapidly growing. Enterprises have the flexibility to choose the best vendor for their platform, considering their individual business and technical requirements. They can manage multiple brands and varying business models, leveraging the same composable commerce stack to stay nimble in response to market changes. Complex business can be launched and managed more efficiently using composable commerce.

Technology providers are already pioneering composable commerce solutions

Technology providers have extensively started working on solutions to enable enterprises to get on board the composable commerce bandwagon. Below are some examples:

Spryker has launched the cloud-native “App Composition Platform,” which gives enterprises seamless access to third-party services and best-of-breed digital commerce vendors
Virto’s Atomic Architecture™ allows customers to get a composable, flexible, manageable, customized, and easily-updated digital commerce architecture that is fully adaptable to market challenges
Elastic Path’s Composable Commerce Hub is an open exchange of composable commerce solutions for digitally-driven brands that want to seamlessly create complete digital commerce experiences for their business
Fabric provides a configurable and composable commerce solution to rapidly deploy and scale unique brand experiences, product offerings, and services
Infosys Equinox is powering Nu Skin to compose unique and delightful digital journeys across ever-evolving channels
Avensia’s composable commerce solution Avensia Excite is built on commercetools. Avensia Excite uses Contentful for CMS, Inriver for PIM, and Apptus eSales for search engine

Composable commerce outlook

While MACH architecture had set a strong foundation for modern digital commerce architecture, composable commerce is the next logical iteration in the digital commerce business model to meet rapidly changing customer expectations and the growing number of touch points. Composable commerce adoption will continue to witness a rise as enterprises plan to move away from the traditional approach of implementing digital commerce solutions. More and more niche third-party vendors are emerging faster than before, providing ample choice for enterprises to craft and “compose” their digital commerce stack.

If you have questions about digital commerce, please reach out to Nisha Krishan ([email protected]) and Aakash Verma ([email protected]).

Stay tuned for insights on the digital commerce platform market from our recently launched inaugural Digital Commerce Platform PEAK Matrix^® Assessment.

Strategic Role of Technical Support in Driving SaaS Adoption

June 23, 2022

To meet the complexities of the software as a service (SaaS) world, leading providers are revamping their outdated support models to help enterprises achieve success in Industry 4.0. Technical support teams now have expanded roles in customer success, relationship management, and delivering other value-added services for clients. Read on to learn how the next evolution in technical support is turbocharging SaaS adoption.

For more on our continuing coverage of how digitalization is changing technical support functions, also read The Evolution of the Technical Support Engineer Job Role.

Customer support has been the “issue to resolution” function for many decades. When a customer calls with a problem, the support team works to resolve it as quickly as possible. In traditional perpetual licensing models, technical support is focused on operational metrics such as “the time to close a ticket” instead of offering an enhanced customer experience to improve customer retention and lifetime value. Legacy customers are accustomed to opening tickets when they notice an incident and expect companies to react quickly.

However, with the emergence of Industry 4.0 – characterized by technology-intensive transformation and the convergence of cyber and physical systems – enterprises have significantly shifted how they leverage technology-based solutions. In the experience-driven outcome economy, customers expect companies to monitor their solutions proactively to ensure outcomes are delivered as promised. This means companies should automate their monitoring, alerting, and self-healing capabilities to resolve most issues before customers notice them.

SaaS adoption is one of the key driving forces behind the emergence and success of Industry 4.0. Leading technology/SaaS vendors realize that traditional “break-fix” technical support models are outdated in the new environment and failing to evolve their existing technical support models is a major cause of dissatisfaction among SaaS customers. Hence, they are investing in revamping their technical support models. Let’s learn more about this interplay between SaaS adoption and technical support.

SaaS adoption and its impact on enterprise buying behavior

SaaS adoption is increasing exponentially across the globe. The global SaaS market is expected to grow at more than 100% CAGR through 2026, reaching a market size of US$300-400 billion. This increased adoption is driven by factors such as zero upfront/CapEx cost, reduced IT-related operating and maintenance costs, the ability to easily ramp up/down operations, adherence to best practices, and built-in functionalities providing users with ease of operations.

However, the increasing adoption of SaaS-based operating models has significantly influenced enterprises’ buying behavior, ultimately propelling SaaS providers to rethink their technical support strategies. Below are two key changes in buyer behavior and how they are impacting providers:

Shift from product to service mindset – No longer can you sell a technical solution with a perpetual license and consider your job finished. In a SaaS-based solution, revenue depends on the customer’s subscription and consumption of services. This is a dramatic shift in the treatment of SaaS-based solutions from a product to a service-based model with the quality of technical support determining the working relationship with the customer, affecting retention and lifetime value
Low client stickiness – With increased adoption of interoperability standards and heightened competition, the cost of changing from one SaaS provider to another has been drastically reduced versus on-premises solutions where switching costs previously locked clients into continuing with a specific service provider. This negligible switching cost has reduced client stickiness, making it essential for providers to help customers quickly realize value and deliver a differentiated experience to drive renewals and sales growth in a SaaS model

Evolving expectations from technical support

With negligible switching costs and a plethora of options available, technical support is becoming paramount to the SaaS solution’s success. A well-designed and well-implemented technical support model can help customers achieve desired objectives and increase revenue through differentiated technical support or even indirect lead generation by uncovering opportunities to cross-sell or upsell. Accordingly, the scope of technical support services has broadened beyond the break-fix solutions to involve the following dimensions:

Value-added services

Additional value-add opportunities include:

Proactive and omnichannel support – Proactive customer service and omnichannel customer experiences are the new standards for supporting customers and can differentiate your product from the competition. Customers today demand self-service for addressing low-complexity queries, which reduces the number of inbound issues and support tickets. Addressing customers’ needs, challenges, and concerns before they occur shows customers you are invested in their success, promoting customer loyalty and retention. With the growth of digital channels, omnichannel support is necessary to offer customers a consistent, seamless, and integrated experience regardless of the channel to create a unified brand experience
Product usage and feedback analysis: While the support function has always had access to detailed customer data, the ability to correctly capture, read, and apply the insights learned from this data — both directly and from support automation tools — can transform a support organization into a marketplace pacesetter. Customers expect technical support providers to continuously analyze their usage patterns and then use that knowledge to augment products and services to fit their needs

Act as customer success ambassadors

Technical support’s role has broadened beyond addressing customers’ queries and concerns to building customer loyalty and fostering long-term customer relationships. Now, technical support specialists also act as customer success ambassadors (also called Customer Success Managers (CSMs)), ensuring customers receive the needed tools and support to achieve their goals. CSMs strive to have an in-depth understanding of the customer’s needs and are responsible for communicating customer behavior/feedback to sales, marketing, and product teams. They help the organizations by:

Ramping up utilization: The technical support team acts as the SaaS provider’s brand face, ensuring customers quickly realize value and have a differentiated experience, which is vital to driving renewals and sales growth in a SaaS model. Keeping clients engaged is difficult if they don’t see the value in your products. They guide clients on product capabilities and use cases in which those capabilities can be leveraged
Cross-sell and upsell products/services: CSMs understand their customer requirements and can identify the best fit opportunities to upsell or cross-sell to their customers, as well as decide which features, functionality, or additional products would best suit each customer. When customers are ideal for an upgrade, CSMs can meet with them to explain why the additional purchase will be helpful

The shift in operating model for technical support

While the enhanced role of technical support is integral to the overall product experience and many factors are driving it, not all enterprises can deliver superlative technical support on their own. This can be due to multiple factors such as cost and geographic constraints, shortage of relevant in-house skills, inability to scale with product growth, failure to implement a true omnichannel experience, lack of accelerators to drive efficiency, etc.

Thus, enterprises are increasingly relying on both in-house and outsourced teams to offer technical support. A strategic third-party partner can bring technical domain skills, innovation, and customer success expertise to deliver an outstanding end-user experience and improved value realization for clients to supplement the capabilities of in-house employees.

As SaaS vendors explore the best fit from among the potential third-party technical support service providers, assessing providers’ potential strengths and shortcomings is important. For example, it may make sense for a SaaS vendor to partner with traditional contact center providers for high-volume low-complexity scenarios such as in a B2C environment. On the other hand, if the technical support required is characterized as low volume and high complexity such as in a B2B environment, then SaaS vendors may prefer to go for specialist technical support providers with strong domain experience and a highly-skilled talent pool.

Conclusion

As SaaS offerings become more ubiquitous, it will be critical for SaaS vendors to ensure technical support teams progressively evolve. In a SaaS set-up, enterprise technical support includes a range of activities, such as complex platform support activities and analytics support for product enhancement, proactively addressing customer needs through self-service, as well as understanding customer needs and behavior for enhanced value realization of products.

Enterprises need to continuously invest in skill development of their in-house teams, which includes domain-specific learning, and experience with specific tools, as well as seek partnerships with third-party technical support providers to address customers’ heightened expectations for technical support. The technical support team – in-house or outsourced – should act as the brand face when engaging with the end client and reflect the technology solution providers’ values and brand promise.

If you have questions or would like to discuss the strategic role of technical support in driving SaaS adoption and how it is evolving, please reach out to David Rickard, [email protected], Rananjay Kumar, [email protected], or Divya Baweja, [email protected].

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Watch our LinkedIn Live event, How Can Your Data Analytics Improve Your Customer Experience? for insights into how data and analytics can help businesses understand their customers at higher levels than ever before.

The Evolution of the Technical Support Engineer Job Role

June 23, 2022

Once viewed primarily as troubleshooters who solely fix computer issues, today’s technical support engineers are complex problem solvers delivering next-generation solutions who also are emphatic brand champions. This new breed of talent plays increasingly sophisticated roles in enhancing the customer product experience and realizing value for leading enterprises. The soft and technical skills needed for this integral position are morphing. To learn more about how the technical support engineer job role is rapidly evolving in the current era and where to find this expertise, read on.

For more on our continuing coverage of how digitalization is changing technical support functions, also see our blog on the Strategic Role of Technical Support in Driving SaaS Adoption.

What are technical support engineer roles and responsibilities?

Technical support engineers help clients fix technological issues related to specific products or overall technical infrastructure, either virtually or in person. They ensure products and systems function as desired and provide the technical skills needed to keep them working properly. These individuals also provide the required know-how to help customers understand the complete functionality of their products to maximize their value and proactively prevent issues. Activities performed by technical support engineers range from low-complexity queries such as account activation and troubleshooting known bugs to complex platform support activities and analytics support for product enhancement.

As companies heavily rely on technical support services to swiftly run their business, technical support engineers act as the face of the technology solution provider’s brand when engaging with the end-user and reflect their values and brand promise. Technical support engineers bring varied skill sets that are important for their job success.

Traditional skills and expectations from technical support engineers include:

Technical and product knowledge: A technical support engineer must be technically sound to troubleshoot, solve client problems, and initiate the work. They also need an in-depth understanding of technology solution providers’ products to quickly troubleshoot and solve problems
Problem solving: To turn things around swiftly, critical thinking ability and solving complex problems are musts for technical support engineers. This is especially relevant when supporting more complex and time-sensitive queries for enterprises
Interpersonal skills: Starting from actively listening, understanding, and explaining the resolution to the user, a technical support engineer is expected to possess excellent interpersonal skills
Client systems and platform knowledge: Clients often leverage multiple platforms and technologies that are interconnected and interdependent, making it critical for the technical support engineer to have an overarching knowledge of the client’s technology landscape

Changes to the technical support engineer job role

With companies around the world digitalizing rapidly and embedding technology in every business aspect, the adoption of as-a-service business models is bringing the importance of technical support to the forefront.

Along with increasing cloud adoption, the shift towards a SaaS-based model, and continuously evolving data governance regulations, the technical support engineer function has also been expanding. Technical support engineer roles and responsibilities have gone from traditional technical support work focused on “break-fix” hardware and software support elements to being customer success champions.

Modern technical support engineers play an important part in driving brand loyalty, increasing product and service consumption, and providing analytics-driven product enhancement insights. They offer proactive support capabilities and a differentiated client experience that maximize the end client’s value realization.

Let’s look at seven new competencies needed for this vital role:

Soft skills:

Innovative mindset: The growing number of technologies, products, and tools demand technical support engineers to think out-of-the-box and provide innovative solutions to solve both simple and complex problems for clients
Management capabilities: With more complex queries and increased interlinkage between products and platforms from multiple technology vendors, the technical support engineer job has progressed from being purely technical to having managerial aspects of coordinating between different stakeholders to arrive at quick and effective solutions
Empathy: Leading companies realize the importance of technical support in reinforcing and mirroring the brand promise and values. Technical support engineers need to be empathetic to user problems and deliver an optimal experience

Technical skills:

Data analytics: As support services become more dynamic and data-backed decision-making is more infused in businesses, analyzing data and proactively finding issues is an integral part of the role
Handling complex problems: With low complexity queries now increasingly solved by self-service and chatbots, technical support engineers are expected to handle more complicated queries
Adapting to next-generation solutions: The adoption of modern technologies and solutions such as cloud-based solutions, automation, and Artificial Intelligence (AI)-based solutions has demanded that individuals in these roles adapt to these new requirements
Understanding cyber security: Because cyber security is of paramount importance today, technical support engineers need to keep up with the evolving threats and proactively make users aware of the possible security risks

Evolving profiles of technical support engineers

With the evolving skill profile required from technical support engineers, service providers are increasingly looking to leverage new avenues for differentiated talent. Here are some of the key demographics actively being tapped:

Tech-savvy millennials: The global workforce has been shifting towards an increasingly large segment of tech-savvy millennials who have greater comfort with new-age products and technologies. This demographic stays up-to-date with the changing technology landscape and is better geared to handle complexities associated with the platforms and systems used by clients and technology solution providers

Industry expertise: Job candidates who have industry expertise are better suited for technical support roles, especially in energy, automotive, and manufacturing segments where industry-specific knowledge is difficult and time-consuming to attain. Employing technical support engineers who have first-hand experience with the problems they are solving is advantageous

Enterprise-specific experience: Individuals who have been associated with the brand and understand its technologies, work environment, and internal processes are better equipped to support it. Technical support engineers with previous experience working with the same or similar clients are desirable

With the changing technological landscape and evolving business models, the role of technical support engineer is expanding further to handle increasing customer expectations, product complexities, and changing dynamics. The need for technical skills in security, cloud infrastructure, analytics, and application development will further define the future role of technical support engineers. Emerging client demographics also are carving out new roles with differentiated skills that will be important going forward.

If you have questions or would like to discuss the technical support engineer job role and how it is evolving, please reach out to David Rickard, [email protected], or Chhandak Biswas, [email protected].

Explore our webinar, Building Successful Digital Product Engineering Businesses, to learn about investments in next-generation technologies and talent are now crucial in successfully building digital product engineering businesses.

Majorel and Sitel Group® Merger Would Create a CXM Behemoth – Deal Continues Unabated M&A Activity in the Customer Experience Management Industry

June 21, 2022

The potential merger between Majorel Group Luxembourg S.A. (Majorel) and Sitel Group® would create a CXM colossus and firmly put the combined entity in the top three providers of these services. Read on to learn about the synergies between the companies and what all the recent M&A activity means for the Customer Experience Management industry.

If approved, fusing the two organizations would create a new publicly-listed firm headquartered in Luxembourg, trading on Euronext Amsterdam. The new entity would have more than US$6.4 billion in revenues and 240,000-plus employees, creating a “Big Three” in the Customer Experience Management industry along with Concentrix and Teleperformance.

With both firms registering an impressive 30%+ growth in 2021, it will be interesting to see how the merger synergies help the new entity chart future growth. Potential growth drivers include:

Scale – The combined entity will have a scale of 240,000+ FTEs in 55 countries and 300+ sites, delivering services in more than 70 languages worldwide. It will have a global reach with 1,000+ clients across many industries and geographies, with particularly deep expertise in the Banking, Financial Services and Insurance (BFSI), technology and Fast Growth Tech (FGT), and telecom sectors
Markets – While the combined entity will be global, it can leverage both parent firms’ strong presence in the Americas and Europe markets. Sitel Group’s client portfolio in North America, UK, France, Nordics, and Asia-Pacific (APAC), catered through delivery sites in Latin America (LATAM) and Asia, complements Majorel’s clientele in LATAM, Germany, Spain, Portugal, Benelux, and Italy with nearshore delivery from Eastern Europe and Africa. This might also lead both players to sever regional partnerships now that their combined geographic footprint covers most regions
Capabilities – Both Majorel and Sitel Group have powerful CX, digital, and consulting capabilities. With the acquisition of SYKES by Sitel Group® in August 2021, the latter strengthened its automation and digital marketing capabilities, which could supplement Majorel’s suite of vertical-specific solutions, especially for the BFSI and e-commerce segments. Sitel Group’s extensive talent management practices through Sitel® MAX (My Associate Experience) and MAXhubs also will positively contribute to the new entity’s cloud-based, remote working model, supported by Majorel’s several multilingual hubs in Europe and Africa
Clients – Majorel’s subsidiary for start-ups, majUP, is expected to plug the gaps in Sitel Group’s Small and Medium Business (SMB) portfolio and would enhance the combined entity’s ability to cater to potential unicorns and hyper-scalers, especially in Europe
Integration experience – Both firms have a positive track record of acquisitions and integrations, especially with Sitel Group acquiring SYKES recently and Majorel purchasing smaller firms such as Mayen, junokai, and IST Networks in 2021

M&A frenzy

This latest deal continues the spate of big mergers and acquisitions in the CXM industry over the past year, in addition to Sitel Group buying SYKES. Webhelp purchased Dynamicall in March 2021, OneLink in July 2021, and Grupo Services in June 2022. TTEC bought Avtex in April 2021, and Concentrix acquired PK in December 2021. Comdata Group announced a merger with Konecta in April 2022.

Let’s take a look at the combined impact on the customer experience management industry at large:

Accelerated digitalization – The investment, from both a delivery and technology perspective, required to deliver CX and remain competitive in the industry has now increased, creating a potential barrier to entry for smaller providers
Increased supplier consolidation – With buyers looking for supplier consolidation post-pandemic, global providers such as Teleperformance, Concentrix, Sitel Group, Webhelp, and others are in a sweet spot as buyers want to work with fewer providers with more global and comprehensive capabilities. A larger footprint of capabilities helps ensure that bigger providers are top of mind in an ever-competitive industry
Smaller players find their niche – The fragmented CXM market comprises several specialist providers that continuously innovate and redefine themselves to stay competitive and grab a share of the US$300+ billion global CXM spend (comprising both outsourced and in-house operations by enterprises). These niche providers include Arise, a CXM provider for virtual delivery; GlowTouch, a women-owned services provider with a focus on impact sourcing; and [24]7.ai, a conversational Artificial Intelligence (AI) leader

We are excited to watch what the marriage of these two giants will bring to the customer experience management industry. Some concerns exist around the timing of the integration being so close on the heels of the SYKES acquisition, as well as buyers having less choice for transformation-oriented strategic partnerships. Despite these issues, this proposed merger, without a doubt, would create a global CXM leader with the ability to shape the customer experience management industry for years to come.

Please reach out to us to discuss this proposed merger and changes in the CXM market.

You can also attend our LinkedIn Live session, Who is Leading Customer Experience Management (CXM) Services in Europe?, to learn the results of our recently completed PEAK Matrix® assessment showcasing our latest CXM research in the EMEA region.

Announcing our inaugural conference: Everest Group Engage, The Pragmatic Edge: Designing Your Future. Learn more.

Category: CX / Customer Experience