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.
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.
During the digital transformation journey, a Global 2000 enterprise uses more than 150 software solutions and toolson average to support its product or services delivery. Despite the huge investment, the value realized from this technology is still unclear to most enterprises. Read on to understand the importance of measuring the value delivered by software applications or products with value stream management (VSM) and our 4D framework to implement it.
More than 90% of enterprises have adopted agile development methods in some shape or form, and DevOps adoption is on the rise. But surprisingly, less than 20% consider themselves highly mature agile enterprises. These few have adopted a Scaled Agile Framework (SAFe) to implement agile and DevOps practices across the enterprise with some having DevSecOps and BizDevOps processes for product development. Even then, enterprises are unable to track and measure the organizational-wide technology value. Most of the remaining 80% have agile and DevOps adoption in pockets, making it tougher to align outcomes and realize meaningful benefits.
With the increasing investment overload and absence of tangible outcomes, the critical importance of delivering and realizing value is gaining enterprise attention. Concerted efforts for defining, measuring, and enabling value are needed.
Agile and DevOps adoption is considered by many as the ultimate step toward digital transformation. However, enterprises must realize it is just a starting stage for continuously tracking, measuring, realigning, and improving digital solutions’ outcomes and value. This is where the concept of value stream management (VSM) becomes pertinent.
Before we delve deeper into what VSM is, let’s understand what VSM is NOT.
People often use value stream management and Value Stream Mapping interchangeability, which is thoroughly misleading. The two are related but not the same.
Exhibit 1: Differences between value stream management and value stream mapping
As the graphic above illustrates, Value Stream Mapping is an activity or a subset of VSM. The value streams and processes are defined during Value Stream Mapping and act as an initial step for effective outcomes from value stream management. VSM focuses on a data-centric approach to decision making and promotes a culture of innovation and improvement through a continuous feedback loop and collaboration.
Now that we are clear on what VSM is not, let’s delve deeper into what VSM is, why enterprises need it, and how to adopt it.
Value stream management – the next step in the enterprise agile journey
In an enterprise setup, there are broadly two sets of value streams – operational and development.
Operational value streams or business value streams comprise the processes and people who deliver the value to the end user by leveraging systems or solutions created by the development value streams. Operational value streams are defined by the nature of the business and its business unit. Some examples of operational value streams are product manufacturing, software product sales and support, order fulfillment, and support functions.
Development value streams or IT value streams consist of the systems and software developers, product managers, and other IT practitioners who design, build, deploy, and maintain systems/solutions. These systems/solutions are used by either internal customers (members of the operational value stream) or external customers who are direct buyers and users. The definition of processes or steps in the development value stream is standardized and runs in parallel with the phases of the Software Development Lifecycle (SDLC) – plan, build, release, and operate.
For example, order fulfillment in a software product company is one operational value stream involving different teams and processes – from sales enablement, licensing, and provisioning to customer support and renewals. These teams require software systems like a Customer Relationship Management (CRM) portal, service management platform, license management systems, etc., to support their processes. The development value streams will be aligned to build and support each of these software systems, enabling the operational teams to deliver the product effectively.
The SAFe principles apply to the development value streams. However, enterprises currently focus SAFe implementation efforts on delivering good products or solutions with agility versus delivering customer value. To deliver value along with agility, adopting VSM in the development value streams should be the next step. This will act as a management layer enabling more data-driven decision making at the SDLC level. VSM also can be extended to operational value streams.
Today the focus for VSM has expanded to the enterprise level bringing the delivery and operational value streams closer.
Making the business case for value stream management adoption
Aligning development value streams to the objectives of operational value streams is key to delivering optimum value to the end customer. VSM platforms connect people, processes, and technology across the SDLC and can be extended to integrate heterogeneous value streams across the enterprise.
Some of the key benefits enterprises stand to achieve with a successful VSM approach are:
Identify value streams, organize people, and perform cost-benefit analysis during product discovery
Make data-driven investment decisions and prioritize product delivery based on end-to-end visibility
Improve the value delivery strategy based on real-time metrics
While we understand the need for VSM in enterprises, implementing it in a structured manner to gain maximum value delivery is equally important.
Implementing VSM effectively using the 4D framework
Below is a recommended starting approach:
Determine the current state of value flow and define value streams at an enterprise level, starting with identifying the operational value streams and the respective development value streams. Align the operational and development value streams to the final value to be delivered by the value stream. Identify current system behaviors and interdependencies.
Design value stream maps to achieve the future state of value flow right from ideation to the value delivery stage. Organize teams to value streams by bringing together the right stakeholders accountable for each value stream step for a mapping exercise to decide steps, handoffs, and metrics.
Deploy VSM tools to connect all value stream parts to measure the flow of value in real time using metrics that track the time, velocity, load, and workflow efficiency. Expand to integrate with other value streams as necessary. Providers like Digital.ai, ConnectALL, Micro Focus, Plutora, and Tasktop offer VSM tools to consider.
Demonstrate continuous improvement in value delivery by using real-time insights from flow metrics as feedback to realign the strategy to increase throughput, efficiency, and value stream productively. Continuously measuring flow metrics gives all stakeholders end-to-end visibility to make informed decisions on investments and prioritization.
This 4D framework is a starting point to implement VSM. Additional factors like talent, governance, organizational culture, etc., can further optimize the value delivery through VSM. Adopting a performance-oriented, highly cooperative, and risk-sharing-based environment will enable smooth VSM implementation.
With growing enterprise investments in agile and DevOps adoption for software development, it will be interesting to see how adding a VSM layer will change the value measurement and value delivery game in upcoming years. Stay tuned for our upcoming blog further exploring the enterprise VSM adoption roadmap.
The pandemic’s effects on the digital landscape are long-lasting. Businesses are evolving to rely on the intelligent process automation market (IPA) to promote growth and keep up with competitors. Read on to learn more about five growing IPA trends.
In a world becoming increasingly reliant on technology, financial services organizations are digitizing and automating more processes to keep up with the competition. The intelligent process automation market, growing by about 20% across all fields, is now becoming ubiquitous.
IPA is defined as automation in business processes that use a combination of next-generation automation technologies — such as robotic process automation (RPA) and cognitive or artificial intelligence (AI)-based automation, including intelligent document processing and conversational AI. Solution providers are offering solutions across RPA, Intelligent Document Processing (IDP), and workflow/orchestration, as well as crafting innovative solutions such as digital Centers of Excellence (CoE) and investing more in as-a-Service offerings.
Five intelligent process automation market trends enterprises should know
The question of how to become faster, more efficient, and more resilient is the focus for just about any organization undergoing digital transformation. Very often, the answer to this question is at least, in part, intelligent process automation. In the near future, we can see five emerging IPA trends:
IPA will get smarter
A greater proportion of cognitive elements is finding its way into the intelligent process automation market. About 60% of new automation projects involve more advanced cognitive tools such as IDP, conversational AI and anomaly detection. As the maturity of AI-based solutions increases, cognitive automation will be in greater demand. All-round adoption of IPA will be fueled by providers entering new geographies and organizations starting IA initiatives.
IPA will be more scalable
Although many organizations are trying to adopt intelligent process automation, the real question is if it can be scaled up or, in other words, if it can be brought across the organization. To help enterprises scale automation, solution providers are investing in expanding their partner ecosystem, strengthening technology capabilities, and enhancing their services portfolio.
Providers are also expected to help enterprises scale up through more effective change management and CoE set-up strategies. Aided by the prevalence of process intelligence solutions to form robust pipelines and orchestration tools to facilitate holistic automation, enterprises are better equipped now to move away from siloed applications of IA to scaled-up automation implementations.
Citizen development will grow
Many organizations are experimenting with what they can do with citizen development, especially with the current talent shortage. Citizen-led development also holds the power to disrupt the current state of building automation and addresses the issue of talent availability. Solution providers are expected to invest in citizen development and low-code/no-code technologies enabling business users to build automation, consequently also addressing the talent shortage in the market.
Solution and technology providers are also expected to invest substantially in developing the low-code/no-code capabilities of their platforms to enable business users with limited technical exposure to build automation solutions on their own. A few solution providers are implementing citizen development programs in their own organizations and are planning to leverage the learnings to develop effective governance programs for enterprises.
IPA service providers will bring IPA solutions packages to the market
Packaged solutions are gaining traction in the IPA market due to their ease of implementation and quick Return on Investment (RoI). Solutions for F&A are the most prevalent in the market. These solutions will need training on particular data sets to make them functional for a particular process, but they will speed up implementation. Providers are expected to take conscious steps toward promoting sustainable AI by developing solutions complying with environmental, social, and governance (ESG) parameters. They are also investing in AI solutions that are transparent about their working and usage of data.
IPA service providers will pre-build connectors to legacy and other systems
There are a host of technologies, including RPA, conversational AI, process mining, and process orchestration in the IA ecosystem. Very often these IA solutions need to talk to the various other systems. Many IPA service providers are driving innovation and crafting new solutions to keep pace with the fast-moving IPA market and create a more holistic integration process. One such method is offering enabling capabilities like pre-built connectors for a faster and less complex implementation.
If you would like to learn more or discuss the intelligent process automation market and IPA trends, reach out to [email protected].
Comprehending aCloud Service Agreement (CSA) can be difficult. With the increasing clout of hyperscalers, buyers need to fully understand a CSA to effectively negotiate with cloud service providers.Learn how to better evaluate these contracts in this blog.
With the increased adoption of cloud services, Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure have come to dominate the public cloud space in recent years. The negotiating power of these hyperscalers has significantly increased, changing the dynamics of the CSA.
As the influence of cloud providers grows, customers need to carefully evaluate the proper terms and conditions in the CSA. First, let’s better understand the key terms:
Cloud service agreement (CSA) – a service level agreement (SLA) for cloud computing services between the cloud service consumer and cloud service provider
Cloud service consumer – an individual or a corporate enterprise end user accessing cloud computing resources and services from the cloud service provider
Cloud service provider (CSP) – third-party suppliers of cloud-based platforms, infrastructure, application, or storage services
Customer agreement – the relationship between the provider and the customer, including roles, responsibilities, and processes used by the CSP
The contract may be written according to the service delivery model selected, such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS). CSPs can modify their contract terms at any given time.
Based on our observations, many customers have difficulty understanding these contracts. With the growing portfolio of cloud services in every organization, understanding the nuances to better negotiate contracts with service providers is crucial.
Below is a practical reference to safeguard customers’ interests.
Ten Steps to Evaluate a Cloud Service Agreement
Understand the roles and responsibilities properly
Evaluate business-level policies thoroughly
Understand service and deployment model differences
Identify critical performance objectives
Evaluate security and privacy requirements of the environment
Identify service management requirements
Ensure proper backup for service failure management
Driven by the increasing numbers of mobile workers during the pandemic, VDI implementation has rapidly grown as a secure solution that provides flexibility and cost savings. While it’s a good fit with today’s steadily growing remote workforce, VDI must be implemented properly to avoid pitfalls. Read on to learn the challenges and benefits of implementing a virtual desktop infrastructure.
Workplace infrastructure is quickly evolving. While Virtual Desktop Infrastructure (VDI) transformation has been in the industry for some time, COVID-19 has spurred its increased use to manage IT consumerization and control costs.
The benefits of implementing a virtual desktop infrastructure for enterprises can be remarkable and include easier accessibility for users, device flexibility, increased security, and lower costs. However, if not implemented correctly, VDI can bring organizational challenges. Many projects fail due to improper design leading to performance issues.
Based on our experiences helping organizations understand and optimize VDI implementation to achieve the right model for their budgets and timelines, we identified the following seven best practices:
Understand end-user requirements – Boot storms can be avoided by being cognizant of such details as the number of VDI users, end-user applications, and the times of day users will log in and access their virtual desktops
Consider end-user location – VDI architecture and resources may vary for users at different locations. Bandwidth and latency also have a big impact on the end-user experience
Choose the ratio of persistent or non-persistent desktops – The virtual desktop type can sometimes be determined by the user type, such as task workers, power users, kiosk workers, etc. Persistent desktops retain a user’s personal settings when they log off, while non-persistent virtual desktops do not
Consider client device options – A desktop virtualization benefit is that nearly any device can have a virtual desktop client. Deciding the best mix of thin client devices, converting old personal computers into thin clients, and having bring your own device (BYOD) clients are key factors in VDI deployment. Maintenance requirements and ownership will differ for each case
Design for high availability – While a problem with one physical desktop affects just a single user, an overall VDI failure has the potential to impact all employees. Design the underlying architecture to be highly available to avoid this
Craft a BYOD policy – VDI lets organizations deliver a desktop experience to many types of endpoints and devices – even those owned by end users. Carefully design and distribute a BYOD policy indicating what users can and cannot do on their personal devices
Factor in security – Do not overlook infrastructure security. All security best practices that apply to physical desktops/laptops also pertain to virtual desktops. Administrators should make sure to extend patch management operations to cover virtual desktops
A deep interest in the metaverse is emerging. It comes at a time when companies increasingly want to fund value-creation initiatives that enable competing better and engaging clients and employees in new and better ways. To help your company consider how it could benefit from the metaverse, I’ll discuss in this blog what companies are doing today – those that have a first-mover advantage with a presence in the metaverse already, as well as companies currently investigating its potential for creating business value.
Enterprise adoption of low-code platforms has been invigorated in recent years by its potential to drive digital transformation. This fast-rising platform solution offers promise to democratize programming with today’s talent shortage and help companies develop applications and enhance functionalities faster. While the opportunities are clear, charting a path to successful adoption is ambiguous. Learn the 4Cs approach used by best-in-class enterprises for selecting and adopting the right-fit low-code platforms in this blog.
As many as 60% of new application development engagements consider low-code platforms, according to Everest Group’s recent market study. Driven by the pandemic, the sudden surge in demand for digital transformation accelerated low-code annual market growth to about 25%. Considering its potential, low code is appropriately being called the “Next Cloud.”
Interest by investors also has accelerated, further driving R&D spend for new product development. Funding activities in 2022 to companies featuring low code in their profiles already amounts to $560 million across 40 rounds.
Platform providers are responding to these elevated expectations with equal fervor by building platforms with deep domain-specific expertise, while others are providing process-specific solutions for enterprises’ customization requirements.
While these markets have resulted in a proliferation of low-code platforms to choose from, it also has led to confusion and inefficiencies for enterprises. As more and more enterprises explore the potential of these platforms, IT leaders are faced with numerous questions and concerns such as:
“How do I select the platform that can address my current and future requirements?”
“Which platform will work best in my specific enterprise IT landscape?”
“How can we optimize the investment in this technology?”
“How do I compare the pricing structures of different low-code platforms?”
“How do we ensure governance and security of the IT estate with these new tech assets?”
Adoption journey and evaluation parameters for low-code platforms
In addition to the high-priority use cases that initiate the adoption, enterprises should consider the platform’s scalability potential, talent availability for support and enhancement, and integration with the broader IT landscape to make the right selection.
Additionally, low-code platforms are intended to address the requirements of the IT function as well as business stakeholders. Considering the drivers, expectations, and requirements of both when making the selection is essential. A collaborative decision-making set-up with the central IT team and key Line-of-Business (LoB) leaders is critical for a successful platform selection. Let’s explore the 4Cs to low code success.
4Cs to low code success
The key steps to ensure successful low-code platform selection and adoption are:
Contemplate: Initiate platform adoption by a set of high-priority use cases but plan for scalability at the enterprise level during platform selection
Collaborate: Bring together the central IT group to lead the selection and adoption effort and meaningfully involve the LoB stakeholders
Compare: Start with business and tech drivers, expectations, and requirements from both IT and business to prioritize and rank platforms and select the best-fit platform
Customize: Make small and incremental enhancements post-adoption to broaden the platform’s scope without disrupting daily operations
This approach can provide a roadmap for enterprises with distinct outcomes. We have witnessed enterprises either adopting the best-fit approach resulting in a platform portfolio or leveraging a single platform as a foundation for an enterprise-grade innovation engine.
For instance, the Chief Technology Officer (CTO) of a leading bank in the US invested in establishing a low code Center of Excellence (CoE) that uses different platforms for process automation, IT Service Management (ITSM), and enabling point solutions for business users.
On the other hand, a large US commercial insurer built its entire end-to-end multi-country app on a single low-code platform. This comprehensive, business-critical application managing claims, billing, and collection is accessible by all underwriters and service personnel.
Next, we explore how to best compare platforms based on their offerings and capabilities. The tables below illustrate the top five business and technology-oriented parameters to consider when evaluating platforms, along with their relevance and enterprise expectations.
Technology parameters for low-code platform selection
Factors associated with the platform’s technical robustness are of key importance to IT decision-makers. Integration and UI/UX capabilities are at the top of enterprise’s technology priorities when comparing multiple platforms.
For instance, Appian ships with 150-plus Out-of-the-Box (OOTB) connectors. Appian SAIL, a patented UI architecture, takes declarative UI definitions to generate dynamic, interactive, and multi-platform user experiences. It also makes the applications more secure, easy to change, future-proofed, and native on the latest devices.
Business parameters for low-code platform selection
Assessing these parameters is important to understand whether low code can be sustained and scaled long-term and if it addresses the business users’ expectations. Pricing and security constructs are at the top of the list for businesses looking to adopt a low-code platform.
Let’s consider Salesforce as a case-in-point. Salesforce has security built into every layer of the platform. The infrastructure layer comes with replication, backup, and disaster recovery planning. Network services have encryption in transit and advanced threat detection. The application services layer implements identity, authentication, and user permissions. In addition, frequent product updates that help it to align its product offering with changing market demands put Salesforce as one of the go-to platforms for all the CRM needs of enterprises.
Low-code platform outlook
The plethora of options makes it difficult for enterprises to zero down their investments on a particular low-code platform. Enterprises must also leverage their network of service partners for guidance in this decision-making process.
Talent availability for implementation and enhancement support is critical to keep in mind during the platform selection. For the same reason, multiple system integrators are now taking the route of inorganic growth to bolster their low-code capabilities.
This is the time to hop on the low-code bandwagon and establish low code as the basis for enterprise digital transformation.
Low-code platforms are software solutions now creating a major shift in how companies can develop their applications and enhancements to functionalities faster. But will they reduce the need for highly skilled engineers that build and evolve digital platforms? Will low-code solutions be transformative and, if so, what are the implications?
Using voice to create applications is the next evolution of low-code software development, but it has many challenges to overcome. Voice-based development can make it easier for users with less experience to create code and help fill the talent void. Is voice-driven software development the next pioneer in low code, or is it all talk? Read on to find out.
As low-code development software continues to grow, one way to make it even easier is by using voice to create applications. Voice can become an important interface to engage with low-code platforms in addition to the standard way of users building applications through drag and drop functions.
While professional software development has been talking about voice-based development for at least a decade, it hasn’t taken hold at the rate expected and still has a long way to go. Attempts have been made to create voice-based enterprise workflows using devices such as Alexa. However, these are voice “triggered” and not voice “developed.”
Voice-based software development hasn’t worked in the mainstream. Why would it work in low code?
Low-code development is full of challenges around aligning requirements and outcomes, security, debugging, portability, building complex functionalities, etc. Therefore, adding a voice layer to engage will be an obstacle in low code.
Software development through voice is an exciting area, and firms like Talon, Nuance (Dragon), and Serenade have attempted to incorporate voice-based software development. OpenAI Codex-based CodeVox also has tried to build software using voice as input.
The challenges with voice-driven software development are well documented and include speech recognition, interpretation, Integrated Development Environment (IDE) support, programming language support, formats, and building the actual code.
Moreover, professional developers do not generally like the idea of coding through voice because they believe they think and type faster than they speak. Therefore, non-professional developers and business users – the key targets for low-code software – become good audiences for enhanced value.
Despite the difficulties, voice can add meaningful benefits if done well in low-code applications and can further increase the user pool who are comfortable in building business line or workflow apps to start with.
Few, if any, low-code vendors today are providing voice-based development support because the industry does not have a strong AI-led base platform to incorporate such complex functionality.
As the market matures and low-code demand scales, enterprises and vendors will soon realize they will need to further simplify low-code application development beyond the current drag and drop model. If they don’t, low code will meet the same fate as professional development, where costs are astronomical, timelines are longer, and talent is scarce.
The big issues around the need for more software, lack of talent, rising costs, and poor time to market are not going anywhere and, in fact, will worsen in the future. While low-code platforms are an attempt to address some of these hurdles, the current model is not sustainable. Voice must become an integral part of low-code development for it to succeed.
Big changes are coming as Europe moves toward digital empowerment by 2030. Governments are building frameworks for the regulation of emerging technologies to protect consumers and companies while promoting innovation and digital leadership. What impact will the drive toward technology sovereignty have on BigTech providers, buyers, and investors? Read on for the latest in our series ontechnology sovereignty.
In our last blog, we explored the emerging and growing focus on technology sovereignty in the United Kingdom and Ireland (UK&I) and European markets. Let’s continue our discussion of this important topic.
The focus on Europe’s data sovereignty is back in the spotlight as a result of new European Union (EU) rules to limit big online platforms’ market power. The risk of global cyber-attacks by Russia as retaliation against Ukraine also has made this an issue to watch.
Europe’s latest moves for technology regulation are not in isolation. Representatives from business, politics, and science from Europe and around the globe have already been working together since 2019 to create a federated and secure data infrastructure through the GAIA-X initiative.
With data security, privacy, and technology sovereignty becoming key issues for the region, Europe is setting up new regulatory frameworks to protect consumers and companies, while trying to ensure a competitive market and encouraging innovation.
What does the Digital Markets Act (DMA) entail?
Under consideration by the European Commission, the DMA intends to ensure a higher degree of competition in the European Digital Markets, by preventing large companies from abusing their power and by allowing new players to enter the market.
Beyond the hyperbole that surrounds any technology regulation, the DMA provisions include:
New regulations on BigTech companies providing “core platform services” that are most prone to unfair business practices, such as social networks or search engines. These companies that have a market capitalization of at least €75 billion or annual revenue of €7.5 billion are considered gatekeepers
To be designated as gatekeepers, these companies must provide services such as browsers, messengers, or social media, which have at least 45 million monthly end users in the EU and 10,000 annual business users
Sizable messaging services (such as WhatsApp, Facebook Messenger, or iMessage) will have to open up and interoperate with smaller messaging platforms, if users ask, promoting more choice
Combining personal data for targeted advertising will only be allowed with explicit user consent from the gatekeeper. Similar to instant messaging, allowing users to freely choose their browser, virtual assistants, or search engines will be required
If a gatekeeper does not comply with the rules, they can receive fines of up to 10% of total worldwide turnover in the preceding financial year and 20% for repeated infringements. Companies who systematically violate the regulations could be banned from acquiring other companies for a certain period
In addition to DMA, the EU reached a consensus on the Digital Services Act (DSA) in April, which focuses on setting up a standard for the accountability of online platforms regarding illegal and harmful content. If voted into law, the DSA will apply across the EU within fifteen months or from January 1, 2024, whichever is later. Meanwhile, the DMA likely will go into effect next summer.
The battle for sovereignty and security is just getting started
While these acts are significant steps in Europe’s focus on curbing the perceived monopolistic power of BigTech, they are part of larger movements such as:
A growing global reckoning exists around BigTech companies that control multiple industries, such as enterprise cloud computing, consumer-oriented economies, and media and advertising, to name a few. Complicating this further is the way their roles (especially social platforms such as Meta, Twitter, etc.) are evolving into digital town squares, and the subsequent impact on democracy, free speech, and bullying
Most BigTech companies originated in North America but are now global businesses. There’s a degree of circumspection in how Europe views this shift in innovation and control and reining it in. These acts are a natural successor to Europe’s previous foray into data protection through the General Data Protection Regulation (GDPR), which came into force in 2018. It subsequently inspired other acts globally, including the California Consumer Privacy Act (CCPA)
The region’s increasingly fragile geopolitics is creating new implications for cyberwarfare and rogue state actors, fueling the desire to shore up digital resilience. We can also expect this to have a knock-on effect on other regions (the US is considering similar steps and Australia took measures to regulate the relationship between BigTech and traditional media, to name a few)
We expect this conversation on the regulation of emerging technologies to evolve and shape the future of technology spending and strategies in the region.
Implications of technology regulation for the European ecosystem
Owing to these triggers and the broader conversation around technology regulation, sovereignty, and BigTech reach, we expect the following three implications for buyers, providers, and investors in the European technology space:
Buyers should include sovereignty requirements in sourcing decisions: We are starting to see enterprise buyers of technology and services embed sovereignty of the tooling and service providers they choose in RFPs. Expect this to continue and become a hygiene factor for technology providers to showcase in the sourcing process
Establish regional market partnerships: BigTech companies are smart and understand they can’t be upstaged overnight. They are already establishing partnerships and tweaking their business model to ensure compliance with the evolving European regulatory environment. Look for more partnerships with specific players in the region to play by these rules (for instance, Google Cloud and T-Systems partnering on cloud sovereignty in the region). IT service providers will also train more people on BigTech technologies as a result
Look beyond sovereignty-washing: As with any big shift and trend, new and existing competitors to BigTech will latch on to this market theme. We foresee more press releases announcing the amped up focus on sovereignty. Investors, buyers, and partners should look beyond this marketing hype and truly understand how these firms are solving these issues. For instance, are they embedding sovereignty at the application or data layer? Where does the data reside, and who owns it? Answering these questions can help buyers spot the real innovators
We anticipate a floodgate of activities as we approach implementation timelines in the next 12-18 months. This will create a one-time discontinuity in the market and result in additional spending on compliance. However, market participants will be wise to consider the long-term impact of technology regulation in Europe on their strategies.