IT Services Archives - Everest Group

Mars’ Acquisition of Kellanova Sparks Significant Opportunities for IT Service Providers | Blog

August 27, 2024

Mars’ acquisition of Kellanova could be the biggest acquisition announcement in the retail and consumer packaged goods (CPG) industry in 2024. With a price tag of US$83.50 per share, Mars has paid a substantial sum of US$35.9 billion for one of the largest snacking companies, which generated US$13 billion in revenue just last year. This acquisition positions Mars as a major player in the snacking category in the US, ranking just behind PepsiCo, which owns Frito-Lay. Read on to learn how this affects the CPG market and its IT service providers.

Back in October of 2023, Kellogg Company finalized the spin-off of their snacking business as Kellanova, and less than a year later, Kellanova may have found a new home with Mars, an acquisition that will be made at a 33% premium to Kellanova’s unaffected 52-week high as of August 2, 2024.

But how does this acquisition affect the CPG landscape and its IT service sector?

CPG companies are looking to diversify their portfolios

Post-pandemic, the trend of individual snacking has been increasing, with US consumers increasingly substituting traditional meals with various snack options. Hershey’s acquisition of Dot’s Homestyle Pretzels, Mondelēz’s acquisition of Chipita, and Nestlé’s acquisition of The Bountiful Company all reflect CPG companies’ efforts to broaden their range of snacking options for customers.

Mars’ acquisition of Kellanova is another example of this trend. As one of the leaders in the sweet snacking category, Mars now enhances its portfolio with savory snack options by adding billion-dollar brands such as Pringles and Cheez-It.

Investments in data and Artificial Intelligence (AI)/Machine Learning (ML) will rise along with new sustainability initiatives

Kellanova has listed data, AI, and machine learning as some of their top tech priorities for 2024, which aligns closely with Mars’ tech focus. Recently, Mars, particularly through its Snickers brand, announced a partnership with José Mourinho to pioneer a fully authorized AI clone for unique fan engagement.

Mars has traditionally embraced technology solutions to enhance sustainability in sourcing and manufacturing for their brands. The acquisition of Kellanova opens additional opportunities for Mars to advance its sustainability practices further.

Mars will require substantial consulting and system integration support

Every merger and acquisition is accompanied by substantial investment in post-merger integration and consulting services. A detailed approach is required to integrate the IT infrastructure of the two companies, consolidate technology vendors, and eliminate redundant applications and platforms. The extent to which this integration is needed in the case of Mars-Kellanova is yet to unfold.

Additionally, this presents an opportunity to modernize legacy systems, adopt new IT practices, and implement cutting-edge technologies that enhance operational efficiency and drive innovation.

Kellogg Company has long relied upon a diverse array of technology partners, including SAP, Microsoft, AWS, and Oracle, to support its enterprise applications, data management, and web services. In contrast, Mars has integrated SAP, Microsoft, Salesforce, and E2Open into its technology stack. Although a complete IT infrastructure overhaul for Kellanova is improbable, we can anticipate emerging opportunities for innovative service solutions, particularly in system integration and migration.

Conversely, Mars and Kellanova might choose to maintain their separate IT infrastructures, potentially adopting a tiered IT structure with strategic data bridges to facilitate enterprise-level consolidation and collaboration.

From a long-term perspective, Mars must focus on identifying the right partners to develop a comprehensive modernization roadmap, adapt their operational models, and refine delivery strategies and sourcing decisions. Investing in the appropriate technologies and tools essential for fostering growth and ensuring operational continuity will be crucial.

Service provider portfolios will likely reshuffle

Before the spin-off, Kellogg Company, the parent company of Kellanova’s brands, relied on IT service providers such as Wipro, LTIMindtree, and Capgemini while Mars has worked with service providers such as Accenture, TCS, and Cognizant.
The acquisition could potentially result in lost revenue for Kellanova’s current providers due to provider consolidation and the elimination of redundancies. However, providers offering unique intellectual property or specialized technology might have opportunities to increase their revenue by serving a larger enterprise.

Another plausible scenario, as stated above, is that Mars and Kellanova may opt to retain their distinct IT infrastructures and continue with their current service providers. This approach would mitigate the risk of major disruptions to existing systems and practices. However, it could come at the expense of potential synergies, both in terms of service vendor costs and collaborative opportunities. Maintaining separate IT infrastructures may also pose challenges for implementing enterprise-wide IT initiatives.

Ultimately, Kellanova’s IT infrastructure decisions will depend on whether it fully integrates within Mars or is kept as a separate entity. This choice will shape how its IT systems are managed, so it’s important to watch how Mars plans to position Kellanova.

What lies ahead for Mars post-Kellanova acquisition

The deal is expected to be finalized by the first half of 2025, at which point Mars will acquire all of Kellanova’s brands, assets, and operations. This includes its snacking brands, international cereal and noodle portfolio, North American plant-based foods, and frozen breakfast items.

According to a December 2023 article by Forbes, Andrew Clarke, Mars’ Global President of Snacking, stated that Mars aims to double its snacking division’s annual revenue from US$18 billion to US$36 billion over the next decade. The addition of a US$13 billion revenue brand to their snacking portfolio represents a significant step toward achieving this goal. With the right partners supporting its IT and operations, Mars is well-positioned not only to meet but potentially exceed this target.

In conclusion, this acquisition announcement presents numerous opportunities for IT service providers. These include, but are not limited to, system integration, data migration, change management, compliance and regulatory services, revenue growth management, and sustainability initiatives.

We are closely monitoring market and regulatory changes. To discuss the Mars acquisition of Kellanova and its impact on the CPG sector and IT services landscape, please reach out to [email protected], [email protected], and [email protected]

Learn more about Everest Group’s Engage Conference. The event will tackle forward-looking topics such as the impact of generative AI on businesses worldwide, future trends in location and talent, and cost optimization.

Breaking Down Content Silos: The Case for a Unified Content Supply Chain | Blog

August 13, 2024

The content ecosystem has evolved from text-based content in the 1990s to today’s short-form, engaging formats. Developing a consistent omnichannel content supply chain is crucial to meet consumer expectations. Read on to understand more on the challenges of developing a well-coordinated content supply chain, or get in touch.

The content ecosystem has evolved dramatically since the 1990s. Initially, the internet introduced digital content that was mostly text-based. Web 2.0 then brought dynamic, user-generated content, spurred by blogging platforms, smartphones, and social media.

The COVID-19 pandemic accelerated the shift toward the next generation of content preferences, favoring short-form, engaging, and easily consumable content. In this phase, which includes various formats such as text, videos, and AR/VR, the evolving content ecosystem continues to reshape consumption behaviors. As we move into a connected future, developing a consistent omnichannel content supply chain will not only determine which formats endure, but also drive the creation of new and more engaging content types.

Content is king! (but wait, is it really?)

In the ever-evolving digital world, content is the lifeblood of brand engagement and customer interaction. It drives awareness, consideration, search engine relevance, conversion, engagement, customer service, and even trains AI models. However, like everything else, content is governed by the laws of supply and demand. As content supply has exponentially increased on the internet and social media era, its value is diminishing, unless it is relevant and tailored to the consumer. While we do pay for some content with money, most of it is paid for with our time and attention—both of which are limited resources.

Is content still the king? Short answer, yes. Slightly longer answer: The right content for the right audience is.

In today’s world, personalization is crucial. Consumers now expect experiences tailored to their individual needs, preferences, and behaviors. To stay relevant and maintain a competitive edge, enterprises must create content that not only captures attention but also resonates deeply with their target audience.

However, enterprises face numerous challenges in developing a content supply chain, particularly in producing, distributing, and analyzing content performance to meet these expectations effectively.

Content supply chain challenges

Content overload The sheer volume of content generated today can be overwhelming. With information pouring in from various channels, managing and organizing this content becomes a herculean task. Companies often struggle to filter valuable content from the noise, leading to inefficiencies in content utilization.

Lack of quality content Amidst the deluge of content, maintaining quality becomes a challenge. Quantity often takes precedence over quality, resulting in content that fails to engage or provide value to the audience. Poor-quality content can damage a brand’s reputation and reduce customer trust.

Misinformation and fake news The rise of misinformation and fake news poses a significant threat to content credibility. Brands must ensure that their content is accurate and trustworthy, but verifying information and combating fake news can be challenging.

Enterprise challenges

Lack of modular integration Many enterprises struggle with integrating various content management systems and tools. A lack of modular integration leads to disjointed workflows and inefficiencies, making it difficult to manage content seamlessly across different platforms.

Siloed communication Communication silos within organizations hinder collaboration and information sharing. When departments work in isolation, it results in duplicated efforts, inconsistent messaging, and missed opportunities for synergy.

Excess manual involvement Manual processes around non-creative and laborious tasks drain resources and slow down content production. Automation can alleviate these burdens, but many enterprises are yet to fully leverage technology to streamline their workflows.

Lack of strategy-led business objectives Without a clear, strategy-led approach, content efforts can become aimless. Enterprises need well-defined business objectives to guide content creation and ensure that it aligns with broader organizational goals.

Managing change Orchestrating change management for the adoption of new tools, processes, and roles poses a formidable challenge for enterprises. Many organizations struggle with aligning their objectives with the impact on existing workflows, often facing difficulties in communicating the benefits and managing stakeholder resistance.

Technological challenges

Maintaining omnichannel brand consistency Ensuring a consistent brand message across all channels is vital for brand recognition and trust. However, managing the content ecosystem across multiple platforms can lead to inconsistencies, weakening the overall brand identity.

Lack of content organization Organizing content for easy retrieval and use is essential. Without effective content organization, finding relevant information becomes time-consuming and inefficient, impacting productivity.

Archiving and retrieval difficulties Archiving content for future use and ensuring easy retrieval are critical for maintaining a robust content library. Many organizations face difficulties in setting up efficient archiving systems, leading to lost or inaccessible content.

How does this impact me?

These content management challenges pose significant issues for each stakeholder involved:

Content developers

Content developers often find themselves in a feedback vacuum. Without clear Key Performance Indicators (KPIs) to measure the effectiveness of their content, they struggle to understand what works and what does not. This lack of actionable insights prevents them from refining their efforts and aligning their work with broader business objectives.

Marketers

Marketers face hurdles in reaching and engaging their target audiences, due to a lack of relevant and precise content. The inability to tailor content to specific audience segments undermines the effectiveness of marketing campaigns. This not only reduces engagement rates, but also results in missed opportunities for driving conversions and building lasting customer relationships.

Enterprises

For enterprises, the inability to manage and scale content efficiently translates to untapped potential and lost opportunities. As the volume of content continues to grow, managing ithe content supply chain becomes increasingly challenging, often resulting in a chaotic and inefficient workflow. This disorganization limits the company’s ability to respond swiftly to market opportunities, optimize content for various channels, and ultimately drive business growth. Enterprises that cannot adapt their content strategy to scale risk falling behind more agile competitors.

Consumers

Consumers often bear the brunt of poor content management practices. When brands fail to deliver personalized and relevant content, consumers are inundated with irrelevant and annoying information. This not only leads to disengagement but also fosters a negative perception of the brand. Consumers today expect tailored experiences that cater to their individual needs and preferences. Brands that cannot meet these expectations risk losing customer trust and loyalty, which can have long-term negative effects on their reputation and bottom line.

The fragmented content landscape presents numerous challenges that hinder effective content management and impact various stakeholders. Addressing these inefficiencies requires a shift towards a seamless and interconnected content supply chain. Wondering how to make this happen? Stay tuned for part 2 of this blog series to understand the tools and technologies that need to come together to make this happen and fix the content supply chain.

If you have any queries on content supply chain, please reach out to Nisha Krishan or Prachi Rohira. You can also read our State of the Market report on revolutionizing the content lifecycle for further information.

Insurance Technology Market Trends: Reflecting on the Recent Guidewire Kufri Release | Blog

August 9, 2024

Guidewire’s latest release, Kufri, showcases the company’s dedication to innovation, efficiency, and global reach in the insurance technology space. Emphasizing streamlined processes, advanced data analytics, and expanded global solutions, Kufri is set to enhance the competitive edge of insurers worldwide. Reach out to us to explore further.

In the rapidly evolving world of insurance technology, Guidewire continues to lead the charge with innovative solutions that cater to the industry’s growing needs. The latest “Kufri” release, the second of three planned releases for 2024, marks another significant milestone for the company. Named after the picturesque mountain town in Shimla, India, Kufri symbolizes Guidewire’s commitment to blending innovation with a global perspective. This release emphasizes process efficiency, accelerated time to market, and enhanced data analytics capabilities, all while expanding Guidewire’s reach beyond North America.

Key focus areas of the Kufri release

Process efficiency and time to market Kufri introduces several enhancements designed to streamline insurance processes, making them more efficient and reducing the time to market for new products. These improvements are crucial for insurers looking to remain competitive in a fast-paced market, where speed and agility are critical.
Enhanced data and analytics In today’s data-driven world, the ability to leverage data for better decision-making is invaluable. Kufri’s focus on data and analytics provides insurers with deeper insights, particularly in areas like property insurance and cyber risk assessment. This enhancement allows insurers to make more informed decisions, improving risk management and underwriting accuracy.
Global expansion and localized solutions One of the standout aspects of the Kufri release is Guidewire’s strategic push to expand its presence outside North America. A significant part of this strategy is the rollout of HazardHub in 19 additional countries across Europe, the Asia-Pacific region (APAC), and Africa. This move underscores Guidewire’s commitment to delivering localized solutions that cater to the specific needs and regulatory environments of different regions.

Opportunities for Guidewire

Guidewire’s strategic initiatives open up a multitude of opportunities for growth and market expansion:

Regional GTMs to unlock growth from emerging markets As Guidewire extends its footprint into new markets, it is crucial to develop regional messaging that resonates with local audiences. Collaborating with system integrators and solution partners who possess deep regional expertise will be vital. These partnerships can help tailor Guidewire’s offerings to meet the unique demands of each market, ensuring a smoother adoption process and better customer engagement.
Amplified messaging on industry-aligned digital customer experiences In a competitive landscape, offering a superior policyholder experience is key. Guidewire’s digital experience platform, Jutro, is designed to deliver personalized interactions and accelerate the time to build micro frontends. Highlighting LoB-specific design templates and high configurability could help Guidewire differentiate itself against other major digital experience platforms that lack off-the-shelf industry-specific contextualization.
Low-code capabilities and configurability over customization Guidewire’s platform has done well in building quick configuration capabilities and a low-code architecture that are increasingly sought by insurers. This allows carriers to improve time-to-market for peripheral capabilities, without making major customizations – so, insurers can stay agile in a dynamic market, while avoiding the added complexity for future upgrades. Such messaging and capabilities will resonate with Guidewire’s existing customers who need to drive value acceleration on their core technology estate, but are struggling to build a business case for a major upgrade or moving to Guidewire Cloud.
DevOps and FinOps integration To maximize the benefits of cloud adoption, Guidewire can further integrate its solutions with DevOps and FinOps practices. This integration will provide insurers with greater visibility into their operations, enabling better management of the total cost of ownership. Additionally, incorporating AIOps elements will enhance reporting and governance in cloud environments, driving efficiency and cost-effectiveness.

Looking ahead: expectations for the final 2024 release

As we look forward to Guidewire’s final release of the year, there are several areas where further advancements are anticipated:

Embedding generative AI Guidewire’s customers are increasingly interested in the practical applications of generative AI. The upcoming release could offer out-of-the-box AI use cases that provide insurers with new capabilities in underwriting, claims processing, and customer servicing.
Mature data fabric offering A mature data fabric offering would allow insurers to leverage powerful analytics capabilities, enabling more precise risk assessment and personalized product offerings. This evolution will be crucial as insurers seek to differentiate themselves through advanced data-driven insights.
Cost-effective data migration The final release should also focus on providing cost-effective data conversion and migration capabilities, leveraging cloud infrastructure. Simplifying these processes will help insurers transition to new systems more smoothly, minimizing disruptions and reducing costs.
Aggressive expansion in specialty products While the Jasper and Innsbruck releases have made significant strides in commercial and specialty products, there is a need for continued innovation in this area. Competition from niche tech providers is intensifying, and Guidewire must maintain its momentum to secure its position as a leader in this segment.

The role of Guidewire’s consulting and system integration services partner ecosystem

Guidewire’s consulting and system integration (SI) services partner ecosystem plays a crucial role in supporting its global expansion and product development efforts. Here are some key opportunities for this ecosystem:

Contextualized regional solutions As Guidewire expands in Europe and APAC, there is a growing need for region-specific solutions and go-to-market strategies. Consulting and SI service partners can leverage their experience and understanding of such regional markets to develop localized offerings and blueprints that address unique needs of each market.
Talent development and recruitment The demand for local talent with regional expertise is rising, particularly in emerging European markets. Guidewire’s partners should invest in targeted recruitment and talent development, including specialized training and certification programs. Partnerships with local universities and regional service providers can also provide a steady pipeline of skilled professionals.
Comprehensive support and technical debt remediation As insurers shift to cloud-based solutions, there is an increasing need for comprehensive pre- and post-implementation support. SI partners should plan to integrate service level agreements (SLAs) and develop detailed roadmaps for technical debt remediation, ensuring smooth transitions and sustained operational efficiencies.
Ecosystem-driven business value realization Guidewire’s partners should elevate their conversations with existing customers from a focus on maintenance and changes to a broader discussion about business value realization. This approach involves championing an ecosystem-led core augmentation strategy, leveraging plug-and-play solutions, and exploring new opportunities in data, digital experiences, and advanced risk modeling.
Focus on cloud migration and surround services Partners should align their co-innovation and GTM efforts with Guidewire’s vision on taking a cloud-first approach. They should also shift their focus to providing surround services around the core, working with Guidewire-affiliated solution providers to help clients realize value and achieve high-velocity outcomes.

As Guidewire continues to innovate and expand, the Kufri release sets a strong foundation for future growth. The company’s focus on efficiency, data, and global expansion positions it well to meet the evolving needs of the insurance industry. With the final release of the year on the horizon, expectations are high for even more groundbreaking developments that will further solidify Guidewire’s leadership in the market.

Recommendations for insurance enterprises:

Existing customers:

Based on current technology maturity and appetite for REQUIRED change, insurers must have a defined roadmap to maximize value from existing core investments, without making massive customizations. They should work with their SI partners to identify capability gaps and build future-proof playbooks to adopt plug-and-play solutions from the Guidewire marketplace.

New customers:

Insurers evaluating whether they should embrace modern core systems such as Guidewire must factor in off-the-shelf product capabilities and ecosystem-led scalability. They must bake in the integration effort involved in customizing the product to their business context and conducting a thorough cost-benefit analysis for the migration – for both the immediate term and long term. Enterprises must also adopt a “partner over vendor” mindset and encourage a two-way conversation, where the SI partners are incentivized to drive value additions and bring in best practices from other such engagements to drive on-time and on-budget implementations.

AI and cloud readiness

In line with the vision to scale data-driven decisioning capabilities, insurers should evaluate the potential of the Guidewire Data Platform and augmented data-sets for effective risk assessment and pricing capabilities. Insurers must gauge cloud-native and embedded AI capabilities and seek ongoing guidance from Guidewire and their SI services partners to ensure building a future-proof core tech estate.

Experience

Leverage Jutro’s off-the-shelf templates to accelerate the delivery of engaging digital experiences for policyholders as well as agents. Migrating to Guidewire Cloud allows insurers to access such updates quickly and adapt to evolving stakeholder needs, providing a more personalized and responsive user interface.

To learn more about Guidewire and the platform services market, please reach out to [email protected], [email protected], and [email protected].

Check out our webinar, Mid-market Digital Transformation: Insights and Outlook for 2025, for best-practice recommendations for adopting newer technologies, based on our analysts’ recent experiences.

What Recent Generative AI Updates and Announcements Signal for Some Industries | Blog

July 29, 2024

Generative AI is rapidly transforming industries as it evolves. Read on to learn how generative AI developments are impacting functions, including personalized learning, content creation, and web search, and surfacing the need for responsible AI practices. Reach out to us to discuss this topic.

Generative AI is fast transforming various aspects of the technology landscape. Major updates and launches announced in the OpenAI Spring Update, Google I/O, and Microsoft Build event this year, show how rapidly this technology is evolving. At present, the artificial intelligence (AI) market is marked by technology companies looking to rapidly develop IP and shape eco-systems and standards and by providers and enterprises looking to evolve their business models to absorb generative AI.

Generative AI’s current functionalities and its rapidly evolving capabilities offer much in terms of potential benefits but also come with their fair share of uncertainties. Figure 1 gives an overview of the areas of generative AI impact that we will dive into.

Hyper personalized learning may be upon us

Generative AI promises to personalize learning and make it interactive. It can empower teachers through AI assistants to offer more engaging and accessible learning. Examples of such context-aware AI innovations include OpenAI’s GPT-4o, Google’s LearnLM, and Microsoft’s Khanmigo. GPT-4o offers personalized and adaptive learning, identifying students’ strengths and weaknesses and providing solutions in their preferred learning styles, with multilingual support.

Recent generative AI updates have highlighted advancements in educational tools and platforms, showcasing new features and functionalities designed to enhance personalized learning experiences. Going forward, educators will likely be able to use generative AI tools to customize learning plans for students and understand their learning challenges through data and insights. Perhaps what is even more remarkable is the self-learning potential that generative AI offers. In a world where educators are largely overwhelmed, generative AI may be the force multiplier the education industry has been crying out for.

Generative AI-enabled learning tracks can help organizations thread the needle between scaling L&D initiatives and contextualizing them to different stakeholder needs. Generative AI may have the potential to not only provide 1-1 tutoring on emerging skillsets across a variety of languages but may also be leveraged to ideate and design the curriculum. At a time when the half-life of talent is becoming shorter, generative AI may be the answer to ensuring organizational L&D stays relevant and nimble.

Content creation may soon become commoditized

While generative AI has a wide-ranging impact across the media and entertainment value chain, content generation is where the impact is most acutely felt (see figure 2).

One of generative AI’s most striking use cases has been the creation of hyper-realistic content that seems indistinguishable from artist or studio creations. Recent generative AI updates and advances like GPT-4o have made content generation easier. These technologies can recognize tone, multiple speakers, background noises and produce outputs with embedded emotion such as laughter and songs. Innovations like OpenAI’s Sora or Google’s Veo empower creators and professionals to generate high-quality videos across different cinematic and visual styles without requiring extensive filmmaking expertise.

Advances in content generation have sparked fears about the ongoing relevance and demand for creative roles. Stories like that of Hollywood filmmaker Tyler Perry putting the brakes on a planned US$800 million expansion of his Atlanta studio upon seeing Open AI Sora’s video generation capabilities do little to allay such concerns. While current concerns about AI taking over creative work are understandable, it is more likely that going forward, we will simply see creatives engaged in higher-order work while AI solves for more time-consuming tasks. Content may become more synthetic, i.e., generated as opposed to filmed, produced faster, and more personalized. We may even start tiptoeing towards real-time content generation.

Hyper-realistic generated content also opens the door for deepfakes. False images, videos, and sound clips mimicking public figures or enterprises can lead to public unrest and material damage. With multiple elections being held around the world this year, deepfakes can have a meaningful impact on political discourse. This has understandably led to increased government scrutiny toward generative AI companies. Beyond politics, deepfakes are increasingly being used to commit fraud. Related to this, an employee at a multi-national organization was duped into paying out millions of dollars to those the employee believed to be key stakeholders at the company.

Generated content also poses some interesting intellectual property (IP) questions. Who has rights to the IP of generated content? Is it the person who prompted the output? Is it the technology company whose algorithms are being used to generate the content? Do the individuals or organizations whose data was used to train the algorithm also have some stake in what the model produces? Apart from adherence to IP laws, those using generative AI to create content will also have to be mindful of possible algorithmic biases manifesting in the generated content. Increasing efforts around responsible AI and transparency are needed to ensure biases in training data don’t get reinforced through the usage of generated content to train/tune other models.

Web search is changing

Generative AI is expected to have a massive impact on how web search takes place, and by extension, how online advertising plays out. Consequently, digital advertising, particularly SEO and SEM, are key areas being disrupted by generative AI (see figure 3).

The move from coursing through books at the library to typing out keywords in a search bar was one of the biggest shifts in how people looked for information. Similarly, the impending transition from typing out keywords to simply asking in natural language promises to be the next big shift.

Generative AI updates have introduced new features in search engines and voice assistants, transforming how users interact with these tools. Advertisers increasingly express concerns about bot traffic eating away at their ad dollars. How would they feel about bots being the norm? Imagine if search fundamentally shifts to an audio-visual interface, with those searching for information rarely scanning the website themselves. How might this affect existing advertising models? Here are some possibilities – advertisers may realize that the customer is no longer on the website and needs to be engaged elsewhere. This can lead to a shift in the advertising mix, with more audio ads being rolled into searched information. SERP¹ ads may also become more expensive due to their proximity to the search interface. For publishers, the shift may be from using ads to monetize content to directly monetizing the content itself based on how it is consumed to answer questions. Ad exchanges may evolve to become a network for generative AI bots to find content at a given price point. While these are indeed speculations, what is clear is that we are on the brink of a fundamental shift in information search and, by extension, digital marketing. All stakeholders within advertising may have to reassess their role in the broader ecosystem – be it advertisers, publishers, or ad exchanges.

For now, the impact of generative AI on everyday information search is limited. We are starting to see the integration of generative AI tools into existing search engines. For example, Google has integrated generative AI into its search tool. Through this feature, Google can interpret complex visual questions, provide explanations, suggest next steps, and offer resources using an AI overview. Voice assistants like Siri are also getting an overhaul. Apple’s partnership with Open AI promises to provide Siri with generative AI capabilities. The search space had one undisputed king for a long time – generative AI looks to be one of those seismic events that has the potential to reshape this hierarchy.

AI needs to be responsible

Generative AI promises to have a wide-ranging impact across multiple sectors. Given the massive impact that generative AI can have, tech companies need to balance innovation with safety. Responsible AI (RAI) is fast becoming an area of focus for enterprises looking to invest in and scale generative AI. Figure 4 illustrates some key considerations that will shape emerging RAI policies.

Enterprises will increasingly look to collaborate with service providers and technology companies that prioritize data security and have effective governance setups to ensure responsible usage of AI. Implementing ethical guardrails is essential to unlocking the full potential of generative AI and ensuring its responsible usage. As user expectations and government oversight rise alongside AI’s evolution, companies that embrace RAI will be the ones leading the charge in this exciting new era.

If you have questions about this blog or would like to discuss recent developments in the generative AI space, please reach out to Abhishek Sengupta or Oishi Mazumder.

Watch the webinar, Gen AI and the Future of Cybersecurity: Advanced Strategies for Cyber Defense, for insights into new developments, emerging applications, challenges, and opportunities presented by generative AI in cybersecurity.

The CrowdStrike Update Incident: Readying for the Next Black Swan Event | Blog

July 26, 2024

In just 78 minutes, a faulty update from CrowdStrike caused global chaos, grounding flights, disrupting hospitals, and halting banking services. This incident serves as a stark reminder of the urgent need for enterprises to bolster their resilience strategies. Read on to learn the essential steps enterprises must take to prepare for future disruptions. For more details, reach out to us to discuss this topic further.

What happened, and how did it happen?

CrowdStrike pushed a faulty sensor configuration update for Falcon that made the Windows devices crash; however, Linux and Mac devices weren’t impacted by this update. The update was pushed on July 19, 2024, at 4:09 UTC, and the remediation was provided on July 19, 2024, at 5:27 UTC – within 78 minutes, but these 78 minutes were enough to create waves that would result in major economic and societal impacts. CrowdStrike (or any other large software provider) can make kernel-level changes in Windows, and it was a kernel-level change that resulted in the Blue-Screen-of-Death (BSOD) error. This approach is very different from Mac, Apple revoked the kernel access to technology providers in 2020, but that resulted in a lot of technology providers having to re-write their entire software.

Microsoft confirmed that the number of Windows devices impacted was close to 8.5 million (around <1% of overall global Windows devices) in its recent press release, but we can’t ignore the severity of the impact.

Impacts of the faulty CrowdStrike update

Some of the major impacts were felt across the companies that directly dealt with end-consumers, including:

Airlines: Thousands of flights were canceled across the globe owing to the system outage on Windows devices. Delta alone reported that the pause in Delta’s operation resulted in more than 3,500 canceled Delta and Delta Connection flights through July 20. It wasn’t just the airlines; airports too suffered severely, with disruptions reported in airports around the world, such as Hong Kong; Sydney, Australia; Berlin; and Amsterdam
Healthcare: Several hospitals across the globe were impacted by the outage. In some cases, the outage resulted in the cancelation of non-critical surgeries. US-based Kaiser Permanente, which runs 16 hospitals and 197 medical offices across Southern California and provides care to 12.6 million members in the United States, said that all of its hospitals were affected, and it activated backup systems to keep caring for patients. In the UK, doctors were not able to access their online booking systems, and there are reports of cancelation of non-critical surgeries in Germany
Banks: Multiple banks saw disruption in services across the globe. Some of the leading ones that were unavailable are Arvest Bank, Bank of America, Capital One, Charles Schwab, Chase, TD Bank, US Bank, and Wells Fargo. There are reports of banks facing outages in Asia as well; the Reserve Bank of India (RBI) mentioned 10 Indian banks and NBFCs experienced minor disruption in services due to the CrowdStrike update

Microsoft called this outage a demonstration of the “interconnected nature of our broad ecosystem,” but this raises a lot of questions about how software updates are pushed, whether enterprises should trust all the updates, and what to do in such situations. In one interview, the Chair of the Federal Trade Commission said, “These incidents reveal how concentration can create fragile systems.”

Typical enterprise challenges that make these incidents more severe

This is not a one-off incident, and in no logical sense will this be the last either. Enterprises face several challenges in managing these kinds of incidents, but some of the biggest challenges are as follows:

Lack of agility: Enterprises often struggle to quickly adapt to and mitigate unexpected issues due to rigid processes and slow decision-making
Complex infrastructure: Diverse and outdated systems increase the difficulty in identifying and resolving issues, prolonging outages
Gigantic scale: Large enterprises operate vast and interconnected systems, making it challenging to quickly isolate and resolve issues, leading to widespread disruptions
Limited asset visibility: Inadequate tracking of assets hampers the ability to pinpoint and address affected components swiftly, exacerbating the impact of incidents

What should enterprises do for a long-term fix?

Enterprises must prioritize building business resilience to address black swan events, such as the CrowdStrike update incident or the COVID-19 pandemic. Business resilience is the ability of an enterprise to quickly adapt to disruptions while maintaining continuous operations and safeguarding people, assets, and brand equity. This approach not only ensures long-term sustainability but also provides a competitive advantage, as demonstrated by airlines and banks that remained unaffected.

One of the core pillars of business resilience is cyber resilience, which is more about how to deal with zero-day attacks that can literally halt the business operations of a company. We have internally developed a cyber resilience framework called 5R. Our 5R framework can help enterprises remain cyber resilient in the face of such black swan events.

A parallel can be drawn for operational resilience, the other important half of business resilience, using the same framework – enterprises can look at these individual 5Rs of Ready, Respond, Recover, Reinforce, and Revamp from a business perspective. In CrowdStrike’s faulty update push case specifically, enterprises need to focus on Reinforcing their learnings and leverage supply chain best practices to make sure that the impact of black swan events can be minimized.

To summarize, here are some key actions enterprises should take for a long-term fix:

Emphasize innovation in business resilience: While enterprises understand its importance, there has been little innovation in business resilience. Invest in solutions that match advancements in cybersecurity, cloud, and apps
Focus on cyber resilience: Develop strategies to manage zero-day attacks and other cyber threats, using frameworks like the internally developed 5R framework
Enhance operational resilience: Ensure continuity during disruptions by adopting best practices and integrating supply chain management to mitigate unexpected impacts
Foster strategic collaboration: Collaborate closely with service providers to build effective resilience frameworks, moving beyond treating them as mere order-takers
Establish Objectives and Key Results (OKRs) and Service Level Agreements (SLAs) on business resilience: Implement OKRs and SLAs to measure and ensure business resilience, aligning them with strategic goals for continuous improvement

While talking to some enterprises over the “outage weekend,” we realized how the industry leaders are looking to build stronger OKRs around business resilience and tie them to SLAs. Some of the OKRs and corresponding SLAs that we discussed are added below:

Objective	Key result	SLAs
Ensure operational continuity	Reduce system downtime by XX%	Maximum allowable downtime of XX hour per month
Enhance disaster recovery capabilities	Implement automated backup solutions across all systems	Data backup completed within XX hours of changes
Strengthen cybersecurity posture	Decrease security incidents by XX%	Incident response time of less than XX minutes
Improve supply chain resilience	Diversify suppliers for key components	XX% of key suppliers with alternative sourcing options
Boost employee readiness	Conduct quarterly business resilience training sessions	XX% employee participation in training sessions

How should enterprises partner with service providers to establish business resilience?

Enterprises should strategically identify and align with key service providers within their ecosystem to enhance business resilience, including preparation for black swan events. Service providers specializing in infrastructure management and cybersecurity services are ideal partners, as these areas are more crucial to overall business resilience. Opting for one or two partners enhances accountability and effectiveness in resilience efforts. Here are key recommendations for enterprises for choosing a strategic partner for business resilience:

Enhanced protection strategies: Partner with service providers to implement comprehensive protection solutions, including real-time risk detection and response. This collaboration helps safeguard against disruptions, ensuring continuous operations
Frequent data back-ups and recovery services: Ensure service providers offer automated, regular data backups and quick recovery solutions. This strategy enables swift restoration of operations after data loss or corruption, minimizing downtime
Better asset visibility: Work with service providers to gain enhanced visibility into digital assets through advanced tools and platforms. Effective monitoring and management of infrastructure allow for quick identification and resolution of potential issues
Robust supply chain through sandboxing: Encourage service providers to implement sandboxing techniques to test and validate software supply chain updates in a controlled environment. This approach ensures robust and resilient supply chain operations that can adapt to disruptions
Training employees on business resilience: Collaborate with service providers to conduct regular training sessions for employees on business resilience strategies. This training equips employees with the knowledge and skills needed to handle disruptions and maintain operational continuity

The recent CrowdStrike update incident underscores the vital need for robust business resilience. To mitigate future disruptions, enterprises should invest in innovative resilience strategies, enhance cybersecurity measures, and collaborate with service providers to ensure continuous operations and safeguard their assets. To learn more about the 5R framework or for questions, reach out to Arjun Chauhan or Kumar Avijit.

Beyond Conventional QA: Reinventing Quality Engineering for the Phygital Era | Blog

June 26, 2024

Enterprises are welcoming the adoption of phygital systems, blending physical and digital elements for next-level product experiences. While these innovations offer significant benefits, they also introduce unique quality challenges that require specialized quality engineering, multidisciplinary talent, and strategic partnerships. This blog explores these challenges and the necessary transformations needed to ensure seamless phygital experiences. Reach out to discuss further.

Enterprises are rapidly embracing phygital systems, or the integration of physical and digital components to bring out innovative and immersive product experiences in the market. For example, in the healthcare domain, medical devices are being augmented with digital capabilities for remote monitoring, telemedicine, and data-driven diagnostics. Point-of-sale (POS) systems are evolving into phygital systems with the integration of digital payment gateways, inventory management, and data analytics capabilities. The gaming industry is pushing boundaries with immersive phygital experiences through advanced gaming consoles, virtual reality (VR) headsets, and haptic feedback controllers. Automotive companies are revolutionizing transportation with connected cars, advanced driver-assistance systems (ADAS), and autonomous driving features. While these emerging workflows enhance user experience, they also increase the surface area of potential quality leakages.

Enterprise phygital challenges and the role of quality function

As enterprises accelerate the introduction of phygital systems to the market, they open the door to more encounters of unique quality challenges. Enterprises now recognize that compromised product quality can have severe repercussions, including business losses and brand erosion. Consequently, they must proactively plan for contextualized quality engineering interventions tailored to address these specific challenges. The exhibit below illustrates several domain-specific phygital quality engineering challenges and potential solutions required to ensure seamless phygital experiences.

Evolving quality functions to serve emerging phygital assurance needs

Addressing the quality challenges outlined above will require fundamental rejigging of quality functions across key critical dimensions highlighted in the exhibit below.

Transforming quality engineering talent: Quality engineering professionals will have to develop multidisciplinary skillsets spanning hardware, embedded systems, data validation, and deep domain expertise. Upskilling in essential areas such as regulatory compliance landscape, payment gateway workflows of POS systems, game logic, and safety requirements of automotive systems will be key for phygital assurance success
Adopting specific toolsets: Beyond traditional software quality engineering tools (be it open source or third-party toolsets), phygital assurance mandates would require investment in specialized toolsets such as hardware-in-loop (HIL) testing, robotic arms, and data validation tools. Enterprises will also need to invest in developing expertise in using these specialized tools
Forging external partnerships: Forging partnerships with external technology and service providers will give enterprise access to specialized product engineering and testing expertise these firms already possess, which will help enterprises in attaining phygital success

The road ahead

As enterprises race to roll out phygital products, faster time-to-market will not be a differentiator, but a necessity to attain competitive advantage. But this quest to shorten release cycles cannot come at the cost of product quality. Phygital assurance expertise is critical to ensure flawless phygital experiences. However, enterprise in-house capabilities alone may not suffice, and hence, ecosystem partnerships are pivotal. Enterprise must judiciously select partners that can bring in the right set of quality engineering talent and toolset expertise that will help enterprises meet their assurance requirements.

To share your thoughts and discuss research on the future of phygtial assurance, please contact Ankit Gupta, [email protected], or Ankit Nath, [email protected].

Check out our webinar, Engineering Services in 2024: The Market Outlook and Commercial Trends, to learn the pricing outlook, commercial dynamics, market attractiveness, and evolving buyer expectations for engineering services.

Why Continuity of Talent Is Now Crucial for Tech Platform Teams

June 24, 2024

Companies that are well into their digital journey invest a lot in their platform technology stack. As I explained in a prior blog, the relationship between their technology and their business operations is becoming very codependent and intimately related. This causes a need for continuity of talent in the tech teams, which has significant implications in the relationships companies build with their third-party service providers as well as how they configure their own teams internally.

The Region Aspiring to be the Next AI Innovation Superpower | Blog

June 24, 2024

Saudi Arabia is rapidly emerging as a global leader in artificial intelligence (AI) and generative AI (gen AI) innovation. Read on to learn how the nation is making substantial investments to become a pioneer in the AI landscape, attracting significant attention from global tech and investment communities.

The Kingdom of Saudi Arabia has been historically dominated by its O&G industry and, until quite recently, was not perceived as a tech-savvy nation. However, in alignment with the region’s Vision 2030 of diversifying its economy, Saudi Arabia has all its investments in line to become a pioneer in the AI and gen AI landscape. The ripples created by this region have attracted multiple service providers, tech providers, and even the global investment world. In the past two years, the Saudi government’s focus has positioned this region as one of the top AI innovation hubs in the world.

Fueled by its vast O&G wealth, Saudi Arabia is rocketing forward in the AI race, while other nations grapple with economic headwinds

While the resilient O&G industry of this region is one contributing factor for available funds, the region’s economy also did not take a huge hit when the global recession fears and macroeconomic conditions shook the US and Europe. While others took a cautious approach in experimenting with gen AI and budgeting for full-scale implementations, Saudi Arabia approached this opportunity head-on.

As the cost of AI experimentation is quite high, Saudi Arabia is expected to pump around US$40 billion in the development of AI and gen AI – making this region one of the biggest AI investors globally. It is also planning to invest in niche AI startups, including chip makers and data centers, which will power the next generation of computing.

Capitalizing on consistent and proactive government initiatives, Saudi Arabia is making steady strides toward becoming an AI innovation powerhouse

Saudi Data and AI Authority (SDAIA) along with International Centre for Artificial Intelligence Research and Ethics (ICAIRE) are driving the initiatives for AI and gen AI development within the region. The Gen AI for All program supports digital cooperation and capability building for 16 member nations led by Saudi Arabia and also emphasizes the utilization of gen AI for broader global benefit.

To bolster Saudi Arabia’s Media industry by harnessing the power of AI, two new initiatives have been launched – AI Center for Media and Future Camp of Generative AI for Media.

GAIA (Gen AI Accelerator) was launched in 2023 in collaboration with SDAIA, National Technology Development Program (NTDP), and New Native (a global AI platform). GAIA’s goal is to create 300 high-impact AI startups within three years by providing early-stage funding, mentorship, and AI technology access. In 2024, the region committed an additional US$1 billion to strengthen the accelerator program.

Saudi Arabia is prioritizing security and explainability in its gen AI initiatives and fostering a trustworthy environment can attract more investments

AI and gen AI governance concerns have made many regions (especially, Europe) cautious of adopting these technologies. However, SDAIA is proactively tackling this challenge and has already defined very robust guidelines specifically for gen AI. It has released a comprehensive document on gen AI guidelines, risks, and how to better manage or mitigate them. For example, the document lists deep fakes and misrepresentation as one of the top risks. It also enumerates multiple resolutions to combat this challenge, such as watermark implementation, KYC protocols, output verification, and better digital literacy.

The document also entails multiple guidelines targeted toward the developer community working on any gen AI model within the region including fairness, reliability, responsibility, security, privacy, and social concerns.

With dedicated initiatives and strategic investments, Saudi Arabia is paving the way for innovative local enterprises trying to embrace the potential of gen AI

The region is leading by example and is expected to augment many of its current industries, such as O&G and Media, with gen AI capabilities. State-owned O&G company Aramco which is also one of the largest organizations in the world by revenue has launched a gen AI model – Aramco Metabrain AI. A pioneering technology in its industry, it can work on more than 250 billion parameters while utilizing 90+ years of company data spanning seven trillion data points. Aramco expects this initiative to optimize costs and well options by analyzing drilling plans, geological data, and historical drilling time. It will also be leveraged to forecast pricing trends, market dynamics, and geopolitical insights. By the end of this year, Aramco plans to augment this model with 1 trillion parameters. This will add another feather to Aramco’s cap as the World Economic Forum has already recognized four of Aramco’s facilities as “Manufacturing Lighthouses” for their extensive use of advanced solutions.

Government efforts in gen AI have come to fruition with a wave of technology and service providers flocking to this massive and untapped market

The push from the Saudi government and the influx of investments in gen AI has garnered attention from multiple technology and service providers. The providers are focusing on capturing this booming market by making dedicated investments in the region. For example, PwC Middle East is partnering with Microsoft to launch an AI Excellence Center in Saudi Arabia. During Riyadh’s LEAP tech conference, AWS pledged to invest US$5.3 billion into Saudi’s technology market which will be focused on setting up cloud data centers. Based on interests, budget influx, and initial gen AI PoC requests from the region, service providers are expecting Saudi Arabia to be one of the fastest growing gen AI hotspots.

In a nutshell, Saudi Arabia is the new kid on the block, and all its strategies are aligned to become an AI superpower. Riyadh will soon be transformed into a gen AI innovation hub with service and tech providers flocking to it for new deals, investments, and strategic discussions. While LEAP 2024 was a massive success with the who’s who of the tech world in attendance, providers and technology enthusiasts are already looking forward to DeepFest and what Saudi Arabia will come up with next to try to claim its position as one of the top technology hubs of the world.

If you have questions about the key gen AI developments in the Middle East or would like to discuss recent trends in the data, analytics, AI, or gen AI space, please reach out to Mansi Gupta, [email protected].

Learn more about AI and gen AI in the blog, Agentic AI – Exploring its Enterprise Potential, to learn about agentic AI, the next frontier in AI-based automation.

Could CRISPR Genome Editing Technology Impact Your Business? | Blog

June 17, 2024

One of the SciTech trends I’m currently paying attention to is how scientists are developing CRISPR genome editing technology. When fully developed, it will dramatically affect food product manufacturers, the farming industry, and consumers. Many communities cannot produce enough food products for their population because of natural disasters, climate change, and other destructive factors. But food security is not the only area of importance. It will greatly impact several industries, especially healthcare and the pharmaceutical space. It promises to be disruptive and transformative when and if it enters the mainstream market. What do you need to understand about how it could impact your business?

Anticipating The Next Disruptive Technologies Is Hard But Essential | Blog

June 5, 2024

Technology runs the world. It affects every aspect of our lives. This immutable fact is doubly true for large organizations. Not only do we rely on technology to run our organizations, but it is at the heart of the value propositions we offer to customers and the business models we use to compete. Often, the most crucial bets companies make are those based on technologies. Many existential threats to companies come from failing to correctly anticipate how technologies are changing and failing to make the necessary adjustments and investments to capitalize on these changes.

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Category: IT Services