Category: Digital Transformation

Managing Risks In Third-Party Services Is Changing | Blog

Digital transformation is accelerating as we come out of the COVID-19 pandemic, with more and more companies starting to achieve tangible and meaningful business results. Companies are also undertaking the grand adventure of implementing new operating models that offer better competitive positioning and a lower cost to serve. In addition, we now face an acute talent shortage, and companies must shift their focus away from controlling or cutting costs to instead focus on building an assured supply of the necessary talent. As a result, increasingly, focusing on risk is more important than focusing on profits.

Read more in my blog on Forbes

LCLC not SDLC: Low-code Life Cycle Needs a Different Operating Model | Blog

Low-code platforms are here to stay because of the rapid application development and speed to market it enables. But why is no one taking the same “life cycle” view for low-code applications and workflows as typical software development? A new model of Low-code Development Life Cycle (LCLC or LC2) is needed for enterprises to realize the potential benefits and manage risks. Read on to deep dive into these issues in this latest blog continuing our coverage of low-code.   

Our market interactions suggest enterprises adopting low-code platforms to build simpler workflows or enterprise-grade applications are not thinking about life cycle principles. Though enterprises for ages have adopted Software Development Life Cycle (SDLC) to build applications, it is surprising no such initiatives exist for low-code applications.

As we previously discussed, low-code platforms, requiring little or no programming to build, are surging in adoption. We covered the key applications and workflows enterprises are focusing on in an earlier blog, The Future of Digital Transformation May Hinge on a Simpler Development Approach: Low Code.

Given its staying power in the market, it’s time to consider Low-code Development Life Cycle (LCLC or LC2).

Here are some recommendations on how LCLC can be structured and managed:

Rethink low-code engineering principles: Enterprises that have long relied on SDLC concepts will need to build newer engineering and operations principles for low-code applications. Enterprises generally take long-term bets on their architecture preferences, Agile methodologies, developer collaboration platform, DevOps pipeline, release management, and quality engineering.

Introducing a low-code platform changes most of this, and some of the typical SDLC may not be needed. For example, these platforms do not generally provide an Integrated Development Environment (IDE) and rely on “designing” rather than “building” applications. In SDLC, different developers can build their own code using their IDE, programming language, databases, and infrastructure of choice. They can check in their code, run smoke tests, integrate, and push to their Continuous Integration/Continuous Delivery pipeline.

However, for most low-code platforms, the entire process has to run on a single platform, making it nearly impossible to collaborate across two low-code platforms. Moreover, enterprises might be exposed to performance, compliance, and risk issues if these applications and workflows are built by citizen developers who are unaware of enterprise standards of coding. This also might increase the costs for quality assurance beyond budgeted amounts.

Even professional developers, who are well aware of enterprise standards while building code in an existing manner, may not know how to manage their LCLC. Many low-code platforms allow SDLC steps within their platform, such as requirement management. Therefore, all the collaboration will have to happen on the low-code platform. This creates a challenging situation requiring enterprises to have different collaboration platforms for low-code applications separate from the other standard tooling they have invested in (such as Teams, Slack, and other agile planning tools) – unless they are integrated through APIs, adding overhead and cost.

Also complicating issues is the desire by some developers to have the developer portal of these low-code platforms extend to their IDE. Most platforms prefer their own CI/CD pipelines, although they can also integrate with third-party tools enterprises have invested in.  A different mindset is needed to manage this increased technological complexity. Because low-code applications are difficult to scale for large data sets, some of the scaling imperatives enterprises have built for years will need to be rethought.

Manage lock-in: Most low-code platform vendors have a specific scripting language that generates the application and the workflow. Developers who are trained on Java, .net, Python, and similar languages do not plan to reskill to learn proprietary languages for so many different platforms. While enterprises are accustomed to multiple programming languages in their environment, they normally have selected some primary languages. Though low-code platforms do not extensively rely on developers coding applications, enterprises generally would want to know “under the hood” aspects around architecture, data models, integration layer, and other system elements.

Build governance: We previously covered how low-code platform proliferation will choke organizations that are blindly prioritizing the speed of software delivery. Therefore, governance is needed not only in the development life cycle but also to manage the proliferation of platforms within enterprises. Enterprises will need to closely watch the low-code spend from subscription and software perspectives. As low-code platforms support native API-based access to external platforms, enterprises will need to govern that spend, risk, and compliance (for example, looking at such issues as whether some third-party platforms are on the blacklist).

What should enterprises know?

Low-code platforms can provide enterprises with a potent platform. But, if not managed well, it can be risky. To manage the potential risks, enterprises need to be aware of these three considerations:

  • Understand vendor solutions and their history: Different vendors can have different views and visions around low-code based on their history around being led by API, Business Process Management (BPM), BigTech platform, or process automation. Most will need their run time engine/platform to be deployed to execute the application/low-code. Others may allow code to be run outside of their platform. Moreover, their capabilities around supporting aspects such as forms, process models, simple-data integration, application templates, and library components can significantly vary. CIOs need to understand these nuances
  • Require business and CIO collaboration: Businesses love low-code platforms as it allows rapid application development and shortens time to market. However, as the adoption scales, businesses will realize they cannot manage this low-code ecosystem on their own. Whether CIOs like it or not, the businesses will punt over their responsibility to the CIO organization. Therefore, CIOs need to proactively address this requirement. They will need a strong discovery model to take inventory of their low-code adoption, workflow, and applications that they are supporting
  • Assess the applications and workflows the low-code platform can support: Vendors normally claim they can build “complex” applications through their low-code platforms. However, this definition is not consistent and may not be as complex as vendors say. Enterprise-class applications need code standardization, libraries, documentation, security, recovery, and audit trails. Most of these platforms provide out-of-the-box or custom integration with other enterprise applications, project management, and other SDLC tools. CIOs need to evaluate the cost, performance, maintainability, and security aspect of these multi-point integrations

Expect M&A activity

Enterprises’ desires to drive digital transformation will make low-code proliferation a reality. Currently, most low-code vendors derive a small $100-500K revenue per client, indicating the focus is mostly on Small and Medium Business (SMB) segments or small line of business buying. As a result, we expect consolidation in this market with large vendors such as Salesforce, ServiceNow, and Microsoft furthering eating into small vendor’s share. Enterprises should keep a close watch on this M&A activity as it can completely change their low-code strategy, processes, and the business value they derive out of strategic investment into a low-code platform.

What has your low-code journey been like, and how are you using life cycle concepts? Please reach out to share your story with me at [email protected]

How Persistent Teams Improve Productivity In IT | Blog

Every company wants to create new value for competitive advantage. One component of value is hyperproductivity. In the past, I blogged about eight levers that help achieve hyperproductivity; and I have observed more than one company achieve a 350% productivity improvement in a year using these levers. I now want to focus on one of those companies and key strategies the CIO used to produce the outcome.

Read more in my blog on Forbes

The Future of Digital Transformation May Hinge on a Simpler Development Approach: Low Code | Blog

In today’s high-tech world, low-code software development is emerging as a lever to accelerate digital transformation. With strong activity and broad capabilities by players in this space, who are the leaders to watch, and what are the obstacles to adoption? Read on for more on the state of low-code application platforms, real-world use cases, and our outlook.    

Compelled by COVID-19, many enterprises are now looking beyond their traditional development approaches for ways to deliver faster, more agile applications and processes. Low-code platforms, requiring little or no programming to build, are surging in adoption.

These platforms combine declarative tooling with pay-as-you-grow business models, enabling enterprises to accelerate application development and delivery, and align it with their businesses.

Low-code application platforms: state of the market

Market participants in the low-code space are focusing on new products, partnerships, and acquisitions to drive growth. Here’s a look at the flurry of activities by leading players.

Product launches and expansion: In April 2020, Microsoft released a beta version of Power Apps on mobile for no-code application development allowing anyone with knowledge of programming languages to assemble business applications easily and quickly. A month later, Quickbase announced the addition of drag-and-drop integration and new workflow automation functions enabling business users to build and execute workflows connected to third-party apps. Pegasystems also launched Pega Express, a new low-code software development methodology.

Partnerships and collaboration: As part of recent collaborations, Appian signed a technology partnership and integration initiatives with Celonis, the market leader in AI-enhanced process mining and process excellence software. Appian also entered a strategic alliance with Deloitte Consulting, LLP to help modernize mission-critical systems for their clients within the commercial, federal civilian, defense, state, and local government agencies.

Mergers and acquisitions: In February of 2021, SAP acquired AppGyver Oy, a pioneer in no-code development platforms. Then months later, Siemens acquired TimeSeries to expand its portfolio through the development of industry-specific apps built on the Mendix platform. Google’s acquisition of AppSheet last year to bring no-code development to Google Cloud has added heat to the market as it demonstrates hyperscalers’ interest in seizing market share.

Low-code platform types

As we attempt to simplify the highly fragmented low-code platform market, three broad categories emerge, with each offering unique strengths as shown below:

Picture1 3Our research identifies automation of process applications as the highest priority for low-code applications. It can help enterprises shape next-generation workflows to enhance customer experience and spur the development of innovative apps in areas such as service delivery/management, human resource management, field services management, supply chain transformation, etc.

The below exhibit provides an overview of opportunities that low-code platforms can deliver and the key players focusing on each of these areas.

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In terms of industry adoption, we see banking, financial services, and insurance (BFS&I) leading the pack, followed by healthcare, public sector, education, and manufacturing.

Let’s take a look at one use case example of how low-code technology platforms are enabling transformation. The exhibit below illustrates how a bank is using low code to enhance each step in the customer experience lifecycle and realize value faster.

Picture3

Pain points to adopting low code

To better understand why low code is gaining such quick popularity, we looked beyond what is being portrayed by the platform providers and identified three challenges that enterprises will need to overcome to adopt low-code development.

  • Talent availability: Despite the low technical barrier to usage, most low-code systems are proprietary and require at least a modest amount of system-specific training. Highly skilled traditional developers often view low-code with skepticism and defensiveness – partly due to the slow devaluation of the traditional skillset
  • Licensing cost: The pay-as-you-grow model makes the licensing costs more opaque and somewhat higher than those of traditional opensource development environments and tools
  • Lack of proof points: Although low-code makes it possible to quickly create a working application, low-code tools can stop just shy of enabling the development of enterprise-wide apps. Enterprises need to analyze the scalability of these platforms for integrations and security as they expand to the enterprise level before committing to a buy decision

Positive outlook

The adoption of low-code platforms is still in its infancy, but the COVID-19 pandemic has compelled enterprises to look beyond their traditional way of IT application development and resort to much faster and agile application delivery models materialized through these low-code platforms. Undoubtedly, these platforms will gain more prominence in the very near future. A line of business way of looking at these platforms is needed to enable enterprises to gauge their capabilities accurately and ultimately lead to more enterprise-level adoption.

To share your thoughts and discuss our research related to low-code platforms, please reach out to [email protected] and [email protected]

Three Critical Tips For CIOs Managing Change Resistance | Blog

Many of my blogs over the past several years focus on the need for – and challenges of – IT groups becoming strategic partners in delivering IT services that meet the business needs. My three most recent blogs (Why Is IT And Business Alignment So Elusive?, Where Is The Bottleneck Between Business And IT Aligning?, and How A CIO Can Align IT With Business Needs) provide insights into why alignment is so elusive. Like any major transformational change, there is always stakeholder resistance on both the IT and the business sides. What can a CIO (or CTO or other IT leader) do to manage potential resistance?

Read more in my blog on Forbes

Equipment as a Service – A New Business Model in the Realm of IoT | Blog

Over the last decade, the subscription economy has become synonymous with how we consume everything from music to beauty products and videos. Could the same type of customer-driven model work for Original Equipment Manufacturers (OEMs) to rent or provide access to their machinery and industrial equipment to users for a recurring fee? The rise of devices connected by the Internet of Things (IoT) and sensors might make this the right time for Equipment-as-a-Service (EaaS) to take off but let’s look at the obstacles that first need to be overcome.   

Subscription-based e-commerce has been the biggest gainer in recent years, with firms like Birchbox providing monthly beauty samples and Spotify providing access to millions of songs at one go. The winners of this phenomenon have been Netflix which forced giants like Blockbuster to close shop and led Disney to change its operating model.

The subscription model demand has been resonating with manufacturers around the world who would like to shed their capital expenditure (Capex) heavy model of acquiring assets instead of directly purchasing outcomes. OEMs typically ramp up production to meet demand or look to slash costs when sales are down.

With the pandemic onslaught, OEMs specifically catering to the travel and hospitality industry as well as certain sectors in manufacturing saw a steady decline in production. This makes the case for creating new sales models that generate more consistent revenue streams for OEMs – and EaaS could provide a needed solution.

Decoding the EaaS phenomenon

EaaS represents a business model that aims to reduce the Capex for enterprise customers while the OEM retains ownership of the asset and charges the customer subscription rates. This helps the OEM create a recurring revenue stream while ensuring the asset ownership remains in-house. EaaS was pioneered by Rolls Royce when it trademarked “power by the hour” as a notion to sell power jets based on performance. This model further allows airlines to pay for their engines based on their usage, such as the number of flight hours.

IT has witnessed this model with firms like Dell, Hewlett Packard Enterprise, and Cisco selling IT equipment through an “as a service” model. Hyperscalers like Amazon Web Service, Azure, and Google Cloud Platform have also been selling their infrastructure services on a pay-as-you-go model where these data center operators continue to own the physical servers. However, IoT-enabled solutions in manufacturing would not be as easy of a transition as seen in IT.

With the onset of the Internet of Things (IoT) across the manufacturing landscape, it has become easier for any manufacturer to measure equipment usage or performance, which can then be used to compensate in the EaaS model. While giants like Caterpillar have initiated EaaS, more time is needed for industry-wide adoption.

Role of IoT in propagating EaaS

IoT devices have rapidly grown across the ecosystem, finding applications in the industrial space as well as in our homes in the form of voice-enabled Alexa. IoT in the industrial area generates large volumes of data collected from smart meters, delivery trucks, and equipment. This has given rise to IoT analytics. IoT analytics can help organizations by monitoring and alerting them in case of anomalies, identifying problems, and answering pertinent questions to make better forecasts and future decisions.

IoT also is being used across devices for flexible pricing and billing. As the IoT sensor captures pertinent data, it can help create pricing models based on consumption patterns.

How can OEMs provide EaaS?

With the success this model has seen on the IT side, EaaS looks attractive and has the potential to be a sure-shot success, or does it? EaaS is plagued with a few fundamental flaws that inhibit its spread across the manufacturing industry, with only a few large players opting for it.

OEMs need to figure out these two key issues before jumping on the EaaS bandwagon:

  1. Pricing model – OEMs must determine the pricing models they want to offer to customers. A simple usage-based model can be followed that measures the output generated by the machines. This, however, presents a problem if there is a pandemic-like situation or a strike that halts operations across factories, wiping out the recurring revenue mandate. The other is an outcome-based model. These outcomes can be operational or financial, such as a reduction in Capex that results in financial benefits. This is a riskier model because of the uncertainty in determining the value generated by the machine. Each factory is optimized in a certain way, making it extremely difficult to provide an exact benchmark stating performance levels without sourcing the factory data. OEM suppliers would have little or no control over factors such as market demand, making this model more difficult
  2. Organizational change – Moving from a product formation selling equipment to providing continuous services to customers would require organization-wide change across various departments from sales to product development. A revamp in hiring strategy also would be needed to go beyond providing technical support to developing collaborative relationships and providing customer service for this type of business arrangement. On the product side, the equipment would need to be equipped with IoT sensors making it easier to maintain, repair, and measure the outcome

The way ahead  

Of course, no enterprise can shift overnight from a product selling model to services. Some companies have found success in making this change. For example, German-based manufacturer Heller offers HELLER4USE, which provides customers with pay-per-use of their machinery and insurance during equipment downtime. Companies specifically focused on coffee vending machines and 3D printing have moved significantly towards the services space.

As OEMs move into this space, it would open a completely different revenue stream in the form of IoT integration, data analytics, and system design. These high-value add-on services would ensure OEMs maintain a constant stream of recurring revenue rather than a one-shot sale of equipment. OEMs initiating the EaaS model would gain a first-mover advantage in making close relationships with buyers as they get entrenched into the data ecosystem generated from the industrial unit, making them much more valuable partners. We predict these first movers will become key players in grabbing the full-service models that will float in the future.

If you have any questions about how an enterprise can go ahead with EaaS, or if you would like to share how your organization has used EaaS or any other innovative business model, please write to me at [email protected]

Where Is The Bottleneck Between Business And IT Aligning? | Blog

Stuart McGuigan, the former CIO of the U.S. Department of State and, earlier, the CIO of Johnson & Johnson, says innovation-driven companies (like pharmaceuticals) usually “either furiously spend money to support the launch of new products or later go back and then cut costs. To do both at the same time requires an operational mindset and an incredibly focused use of technology.”

Payments Modernization: It’s Now or Never | Blog

The rapid shift to digital payments due to the recent COVID-19 pandemic has accelerated the need for banks to modernize their antiquated payments infrastructure as demand rises for contactless payments and automation of accounts payables.

While banks’ corporate and retail customers have constantly strived for faster and secure payment experiences to ensure seamless business operations and fulfill commerce needs, now is the time to act.

According to GlobalData, in the next decade, 2.7 billion transactions worth $48 trillion will shift away from cash to cards, interbank payments, and alternative payments instruments. This can be attributed to changing customer demands in this digital era, where users want immediate execution, security, transparency, and a low-cost and omnichannel payments experience.

Payments modernization is also a key imperative for banks as the industry transitions to real-time payments infrastructure. Across the globe, government and private organizations are collaborating to launch real-time payment schemes to support innovation in low-cost multi-currency payments processing. This is pushing banks to invest in the consolidation of fragmented legacy payments systems to achieve interoperability and support these payment schemes.

Regulations also are creating pressure. Market infrastructures such as the Federal Reserve, The Society for Worldwide Interbank Financial Telecommunication (SWIFT), European Central Bank, and Bank of England have announced the go-live date for the ISO 20022 payments messaging format. ISO 20022 will become the de-facto standard by 2025 for high-value payments systems of all reserve currencies. As banks face compliance deadlines for ISO 20022, they need to invest in convertors or translation systems to upgrade their existing payments infrastructure that cannot support the new messaging format and leverage opportunities it presents.

On top of this, the cloud-native and integrated platforms offered by BigTechs and FinTechs to disrupt the digital payments industry are also forcing banks to rethink their payments strategies. As central banks do not completely regulate these new market entrants, they have more freedom to innovate in the payments market. They can leverage their customer base to commercially distribute payments to end-users and utilize payments data to build other profitable overlay services.

Key Considerations for Successful Payments Modernization

As banks face the triple mandate to meet customer requirements, comply with emerging payment regulations, and control costs, it has become imperative for them to either build a proprietary system or leverage a third-party modular payments platform.

Banks should keep the following in mind in their modernization journey:

  • Take a phased migration approach – Ripping and replacing the entire payments system in a single project may lead to a failed attempt and higher costs. Select an integrated platform that enables phased migration across payment types such as real-time payments or high-value transactions
  • Deploy the payments application on cloud – As payment processing volumes are volatile, leverage a platform that is cloud-native and can be scaled based on business needs to ensure flexibility and operational efficiency
  • Invest in agile and future-proof solutions – Select a platform that is agile enough to enable the addition of new payment types, channels, and device types. It also should be configurable to integrate payment types that create big, quick wins
  • Leverage open-API and microservices-based architecture – Adopt a modular platform built on microservice architecture to launch and scale new transaction types such as Request to Pay (RtP) with Application Programming Interface (API) integrations to provide third-party payments services atop existing payment rails
  • Upgrade data infrastructure to support payment innovation – Seek a platform that transforms and stores different payment messaging types into a single form (ISO 20022). This can be leveraged for analytics to drive predictive performance management and enable new payment products and data/insights services
  • Embed fraud prevention and compliance across the value chain – Secure high-risk real-time payments on digital channels by investing in a platform that offers a solution for fraud prevention or provides integration of fraud management solution into the existing architecture

Investments by Payment Technology Vendors 

As banks undergo their payments modernization journey to bring payments innovation for their customers, reduce the cost of payments processing, and manage evolving regulations across geographies, they are leveraging payments platforms from third-party vendors such as ACI Worldwide, Global Payments, and Temenos.

These payments technology vendors are expanding their payments offerings to deliver integrated payments solutions and provide support for multiple global real-time payments schemes by investing in partnerships and augmenting their digital technology capabilities.

Picture1 11

Some examples of these investments by payment technology vendors include:

  • Partnering with other payments technology vendors to provide value-added digital payment overlay services such as in-app payments, QR-code enabled payments, and Request-to-Pay (RtP)
  • Accelerating investments in cloud-based payments solutions and SaaS to enable enterprises with cost-effective, scalable solutions and reduce time-to-market for innovative payments services
  • Investing in Artificial Intelligence (AI) and Machine Learning (ML) and advanced analytics-driven solutions to support banks in effective payments fraud management and bring personalization to their payment offerings
  • Building microservices-enabled and open API-driven integrated payments platforms to enable banks to leverage the open payments ecosystem and provide innovative offerings to customers

In our recently released report, Payments State of the Market Report 2021: Modernizing Data, Applications, and Infrastructure for the Next Phase of the Payments Revolution, we take a deeper look at the payment technology market trends across products, experiences, infrastructure, regulations, data, and technology themes. We also study how technology vendors and service providers are gearing up their investments to cater to these demand trends.

Please feel free to reach out to [email protected] to share your experiences.

Existing ERP And IT Systems Constrain Collaboration And Productivity | Blog

The world’s businesses are moving into a deeper level of competitiveness and productivity. In the past, when we introduced sailing into the oceans, it improved trade, which resulted in a huge explosion in wealth. When we introduced the telegraph and phones into the world, it dramatically changed communication. When we introduced common accounting practices where we could professionalize the accounting function and rely upon a consistent way of record keeping, we thereby improved productivity. The next wave is where companies will share information across countries and organizational boundaries. However, this transition necessitates moving away from current IT architecture.

Read more in my blog on Forbes

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