Investing in cybersecurity can be costly for organizations but is essential in today’s risky environment. With a myriad of confusing pricing models, determining your cybersecurity spend shouldn’t be another threat. Learn some simple steps to feel more secure in negotiating cybersecurity pricing.
With demand for cybersecurity services skyrocketing in recent years, budgeting decisions have moved beyond IT discussions to C-level conversations by the boards of the largest enterprises.
This focus at the highest levels, along with the rapid evolution of cybersecurity technologies and services, has brought an unintended pain point – unwieldy cybersecurity pricing structures with a great deal of overpricing by providers.
The problem is exacerbated by a few practical issues, including:
Vendors using different pricing models for the same service: For instance, pricing for Managed Detections and Response (MDR) solutions varies with CrowdStrike and Red Canary having per endpoint pricing, Sophos offering per user pricing, and Rapid7 following an asset-based pricing model
Inconsistency in defining unit-based pricing metrics: Even for seemingly commonplace services such as security information and event management (SIEM), some vendors consider peak values of events per second (EPS) while others consider average values
Semi-asset heavy pricing nature: Pricing is frequently a bundled black box with provider-financed licenses for cybersecurity platforms
It is not surprising that most enterprises we spoke with in the last twelve months were unsure whether they had struck the right deal with providers for their cybersecurity spend. Let’s explore this further.
Steps to achieve clearer cybersecurity pricing
Despite the nebulous structures, transparency in cybersecurity pricing can and should be achieved by following these four simple steps:
Break the black box fee into logical components such as transformation costs, license costs, run fees, and project management office (PMO) charges
Break the run fee to the lowest unit level, such as per endpoint for antivirus or per IP address for vulnerability management
Benchmark pricing of transformation costs, license costs, and PMO charges to achieve maximum benefits
The potential savings that can be realized by going through this process can be substantial, as illustrated in this example of a large natural resources company that had a standalone cybersecurity services relationship with a Tier-1 IT service provider.
The relationship had comprehensive coverage across the security value chain (including endpoint security, host intrusion prevention, endpoint detection and response, identity and access management, cloud security, firewalls, email gateways, network intrusion prevention, security information, and event management).
The provider financed licenses for CrowdStrike and Netskope, while the client financed licenses for other platforms such as Symantec and Palo Alto Networks. The contract had a black box fee model for a defined range of volumes (number of endpoints, firewalls, gateways, EPS, etc.).
Working closely with the client through the four-step process described above, we benchmarked the current cybersecurity spend. As a result, the client locked in a 16% spend reduction at renewal, even though the general pricing trend in the industry was clearly inflationary.
For more cybersecurity pricing tactics to increase contract efficiency and competitiveness, please reach out to [email protected] and [email protected].
With the economy headed for slower growth, technology is more important than ever to enable companies to better serve customers by providing hyper-personalized experiences. Read on to learn how the disruptions will impact the wealth management industry and the role technology and service providers can play to help wealth managers navigate the choppy waters ahead.
In light of changing investor preferences, mounting regulatory pressures, and a looming economic slowdown, the wealth management industry is at the cusp of change. While the industry has demonstrated good resiliency and recovery post-pandemic, signs point to subdued growth in the next few years.
The wealth management industry has been experiencing one of the longest periods of market growth and economic stability in recent history. Financial support by governments, lower interest rates, and limited consumption opportunities have contributed to rising household wealth, generating increased revenues for wealth management companies from more fees and advisory support.
But the rapid rise in interest rates and fear of an economic slowdown will put pressure on this industry in 2023. Let’s look at the factors disrupting the wealth management industry in the first of our two-part series.
Fundamental change in ecosystem participants – passing trend or here to stay?
The industry is seeing structural changes in ecosystem participants. Traditional wealth managers are no longer the only players offering wealth management services and products. Challenger banks, pension providers, insurance firms, super-apps, nonbank financial companies (NBFCs), and nonbank financial institutions (NBFIs) are entering the market and creating competition.
These emerging segments already have access to a large customer base supplemented by data insights on demographics and buying patterns. This enables them to remove silos for customers and simultaneously improve income streams by reducing churn risk.
Customers now can access investment services within an umbrella of existing offerings. While this is a win-win for both parties, it is making wealth managers apprehensive as they realize the critical importance of retaining and more effectively serving their current customers.
Rethinking growth versus profitability conundrum – impact of a potential slowdown?
While the pre-pandemic era was all about expanding and tapping into new customer segments, the strategy for serving various customer bases has significantly shifted. With the changing market dynamics, the focus has morphed from expanding and tapping into newer segments to building trust with existing customer segments and enabling hyper-personalized experiences.
A potential economic slowdown would have ripple effects on the wealth management industry. The focus on rapid growth would take a backseat as enterprises pivot their attention to reducing costs and improving profitability. This would directly impact tracking advisor productivity, improving advisor-to-client ratios, and enabling hyper-personalized experiences.
Technology implications – will the IT estate need to be re-examined?
The wealth management technology estate traditionally has been characterized by multiple disparate systems siloed by products or functions, fracturing the customer experience. At its core, wealth management grapples with a massive data problem – how to effectively analyze customer data, understand their journeys, and identify better cross-sell/upsell opportunities.
Wealth managers need an IT estate that is flexible enough to accommodate these hyper-segments and different products, and their underlying data to address these evolving demands at speed and scale.
Identifying the right platform partner, enabling product expansion via ESG and digital asset offerings, and quickly disseminating this information to advisors will be key priorities for wealth managers as they assess their technology estates.
Identifying the ecosystem strategy for system integrators and other technology companies to improve fractured customer experiences will be equally important for technology providers. At the same time, service providers also will need to orchestrate and assemble best-of-breed solutions for wealth management clients by building a robust partnership ecosystem.
As wealth managers grapple with these market changes, technology has never been more important to help them better prepare and tackle the potential challenges coming their way.
The key questions that need to be answered include:
How can the service cost be reduced?
How can the right tools be used to improve advisor productivity?
How can a microservices-based Application Programming Interface (API)-enabled composable core be built?
How can data be leveraged to enable personalized client experiences?
How can a scalable and purpose-built cloud infrastructure be used to run mid- and back-office operations on the cloud?
We are interested in hearing how wealth managers are preparing and tackling these market dynamics, and how this is manifesting in the conversations technology and service providers are having with clients. Please reach out to [email protected] or [email protected] to share your thoughts. In our next blog, we will look at the future state of the wealth management industry and provide a technology architecture blueprint for this space.
Looking at the market for IT and engineering services right now reveals that companies are in a spending dilemma. They face high demand for these services, yet they look to cut back on spending because they are concerned about a possible recession. The strategies large companies are already putting in place to address this dilemma are changing the marketplace dynamics. Here is an overview of what your company needs to understand about these strategies.
The Indian IT industry, which has been facing macroeconomic challenges, might witness a further slowdown in BFSI (Banking, Financial Services, and Insurance) deals due to the recent collapse of Silicon Valley Bank (SVB).
Peter Bendor- Samuel, CEO of Everest Group, told TNIE that the direct impact of the SVB crisis on the Indian IT industry will be modest but the indirect could be more significant. In case of direct impact, this is going to have a negative effect on the high-tech customers, particularly the smaller start-ups.
By working together, employers, training institutions, the government, and other stakeholders can create a sustainable and inclusive impact sourcing movement in India that empowers the rural population and drives overall social transformation. Read on to learn about the benefits of impact sourcing and the role each group can play to advance this powerful business practice.
My eyes were fully opened to the transformative impact social organizations can have on rural populations as a first-time attendee to Development Dialogue 2023, an international gathering of diverse sectors with the common purpose of creating sustainable solutions, organized by the Deshpande Foundation in Hubli, Karnataka, India.
While I had done some basic research on the foundation’s operations, I never expected to be surprised by the social impact on the local rural economic development from their work that includes farmer support, start-up and micro-entrepreneur programs, and a youth skilling initiative.
Hearing a 14-year-old girl from a small village near Hubli conversing in fluent English with tremendous confidence with dignitaries such as Infosys Founder N.R. Narayana Murthy and Founder and CEO of iMerit Radha Basu amazed me.
This was the moment I realized the real empowerment and impact that NGOs and organizations such as Deshpande Foundation have on the rural population. These enabling institutions educate and train the rural youth population with job-ready communications and technical skills to improve their employment prospects and advance impact sourcing in India.
What is impact sourcing?
Impact sourcing involves intentionally hiring and providing career development opportunities to people from marginalized communities. This business practice aims to meet objectives such as maintaining service quality and cost at parity with traditional Business Process Outsourcing (BPO) and Information Technology Service (ITS) providers, fulfilling Corporate Social Responsibility (CSR), Environmental Social Governance (ESG), and diversity objectives of both the business and their clients, and leveraging the unique assets of the target marginalized group.
Impact sourcing creates opportunities for such groups as economically-disadvantaged individuals, women, minorities, LGBTQ+ individuals, survivors of gender-based violence, persons with disabilities, veterans, military spouses, refugees, rural residents, and single parents.
Impact sourcing in India
As one of the fastest-growing economies in the world, India has rapidly expanded its metro cities and developing urban regions in recent years. Almost all higher education facilities and formal sector employment opportunities are concentrated in the metros or tier-I cities.
Meanwhile, more than 64% of the population resides in rural areas with limited growth options. BPO companies in metro and tier-I cities face a severe talent crunch due to high contact center agent attrition rates. Shifting urban BPO centers to rural areas not only reduces operational expenses but also provides job opportunities to the rural population.
To drive major social impact through inclusive hiring models, India needs to create a policy and institutional environment to improve employment opportunities for the rural population that includes the value chain’s three main stakeholders: government support, NGOs/training institutes, and employer organizations.
Currently, India needs more private organizations, NGOs, and training institutes focusing on sustainable rural economic and social development. Increased impact sourcing initiatives are critical to improve job opportunities and drive overall social transformation. Let’s look at the role each of these groups can play:
Role of skilling institutions
Some of the prominent NGOs and training institutes working towards these goals include:
Deshpande Foundation, through Deshpande Skilling, focuses on skill development and training elementary and middle-school students as well as graduates from tier II and III towns and villages
Anudip Foundation, an NGO in partnership with the National Skill Development Corporation (NSDC), concentrates on providing technical training to Indian youth from underprivileged communities
Youth4Jobs focuses on the education and employment of persons with disabilities. Many similar NGOs focus on making unemployed youth job-ready by skilling them with technical education and developing soft skills
Support from government
To promote impact sourcing among disadvantaged rural communities, the government has launched numerous initiatives for skill development, including Pradhan Mantri Kaushal Vikas Yojana (PMKVY), the Employability Enhancement Training Programme (EETP), and the National Employability Enhancement Mission (NEEM).
NASSCOM Foundation frequently uses the mantra of “technology for good” and “changing India bit by bit” to encourage private organizations to actively participate in creating a sustainable impact sourcing movement.
Need for private sector participation
While some organizations such as B2R, Genpact, HGS, iMerit, IndiVillage, Infosys, Rural Shores, and Vindhya have taken steps towards impact sourcing and rural BPO, India needs active participation from all major private organizations.
Impact sourcing offers a compelling business case that goes beyond “doing good.” Studies have shown that impact-sourcing workers are more tenacious, dedicated, and hardworking, with very low attrition rates.
Shifting to rural areas not only reduces infrastructure and operational expenses but also lowers recruitment and training costs, resulting in overall cost savings for organizations. Enterprises also gain community support and social recognition by practicing impact sourcing while contributing to social transformation.
Everest Group, in partnership with the Clinton Global Initiative (CGI), has pledged to increase the impact sourcing workforce across the globe. Through our Commitment to Action proposal, the firm provides a platform for impact sourcing stakeholders to connect and access our research on the global impact sourcing market.
Cloud computing presents a huge opportunity for insurers to drive growth, improve efficiency, and deliver innovation, among other benefits. Read on to learn about the coming phase of industry cloud and the key role system integrators (SIs) can play in advancing cloud adoption in insurance.
As insurance enterprises navigate the volatile and risky macroeconomic environment combined with recessionary market sentiment, increasing operational resiliency and agility and delivering superior speed becomes essential.
Insurers have to work effectively, efficiently, and, most importantly, smartly. The urgent demand to innovate and move beyond risk remediation to risk mitigation is making insurers realize the importance of leveraging cloud as a key enabler of growth and efficiency mandates. Let’s explore this opportunity further.
Cloud rises to the top of the business agenda for insurers
Most insurers currently rely on cloud for non-core operations while they explore stepping up to full production. While cloud’s massive potential is well known, insurance enterprises hold back from completely leveraging it for various reasons, including security concerns, integration issues, and the existing legacy stack. The inability to realize full value from cloud investments also becomes a massive roadblock.
Fortunately, the mindset regarding cloud adoption in insurance is taking a huge turn. A cloud-first approach is becoming important to insurance enterprise business leaders who find its benefits too irresistible to pass up.
In addition to helping meet cost and efficiency mandates, deriving full potential and optimizing cloud investments, and driving business-focused growth and experience are arousing interest in cloud adoption in insurance.
A recent Everest Group study on cloud initiatives with more than 75 insurance enterprises found that 70% of insurance leaders believe that cloud insurance initiatives make up more than 20% of their IT spend, as illustrated in the exhibit below.
Driving business agility and lowering the total cost of ownership has become the most important aspect of cloud transformation for insurers. Achieving data-centricity by seamlessly integrating external data with internal datasets, facilitating real-time analysis of large data volumes, and enabling data-driven decision-making across the value chain are other desires gaining prominence among insurers.
The near future is industry cloud
Slowly and gradually, innovation is taking a front seat in managing the IT estate for the insurance industry. As insurers embark on their next growth phase, they increasingly need to run industry-specific workloads on cloud, such as premium payment processing, policy administration, loss notification, multi-channel sales and distribution management, and claims management and fraud detection.
With insurers moving away from a one-size-fits-all approach, industry cloud is expected to drive the cloud spend going forward to future-proof the technology estate, monetize data to generate alternate revenue streams, and re-think value delivery to end customers. Insurance leaders have started realizing that industry cloud can be a catalyst for transforming and automating industry-specific business processes.
Industry cloud allows industry leaders to get all the assets organized in one place which are specific to the use cases of the industries they operate in. This platform is becoming the next big thing in cloud computing and insurance as it easily allows enterprises to customize processes based on usage, differentiate faster, and innovate in a better way.
SIs need to support hyperscalers and carriers to shape industry cloud
As the need to develop the industry cloud story gains prominence, the concept of co-creating also is booming. Generally, hyperscalers provide the building blocks for cloud, and SI partners assist insurers in creating and customizing specific applications and business processes on top of that foundation.
Insurers increasingly expect cloud providers to create customized and insurance-specific core solutions that address their unique needs and enable modular business processes. However, industry cloud is the missing piece in full-stack capability for hyperscalers.
As a result, they need support from SIs to realize their vision of catering to the entire enterprise IT stack. SIs need to support hyperscalers in identifying high-potential insurance industry cloud use cases aligned with specific business segments, as shown below.
Cloud computing has moved beyond being ‘just a digital infrastructure’ to replace on-premise servers. The latest cloud services are more aligned towards integrating advanced technologies such as Artificial Intelligence/Machine Learning (AI/ML), the Internet of Things (IoT), and data analytics to transform the insurance value chain.
For example, cloud computing can take claims management to the next level by managing and automating claims handling and offering a superior claims experience. By combining cloud capabilities with data and AI, insurers can fundamentally change how they manage claims. Infusing AI/ML in claims processes can help insurers tap the plethora of data they possess and unlock immense value to come out on top.
Cloud enables insurers to reduce manual handling, lower error rates, and perform more straight-through processing, eventually leading to faster claims processing and a superior claims experience.
Everest Group research shows about 35% of P&C insurers’ priorities across claims management focused on enhancing customer experience (based on an analysis of 60-plus case studies involving claims modernization/transformation).
Cloud computing also allows insurers to drive superior efficiency by enabling data and analytics-driven claims processing and focusing on effective service delivery to reduce claims expenses and improve claims handling accuracy – all while ensuring greater customer satisfaction.
The time for insurers to go big on cloud has come
Cloud computing is no longer a choice but a mandate for insurance leaders. The insurance industry is finally catching up to the momentum of integrating SaaS into IT systems. As insurers replace outdated mainframe and on-premise infrastructure that has become harder to update and inefficient to scale and maintain, they must leverage the skills and experience SIs offer. Close partnerships between insurers and SIs also can help drive innovation and is where the future is leading.
Everest Group is launching an inaugural Cloud Services in Insurance PEAK Matrix® Assessment 2023. Please reach out to [email protected] and [email protected] for more information on cloud adoption in the insurance industry and to participate in the Cloud Services in Insurance PEAK Matrix® Assessment 2023.
In an IT marketplace marked by turbulence, inflation, and economic uncertainty, the process of contracting with vendors for technology products and services has gotten significantly more challenging for CIOs.
IT leaders may find that prices are going up without an accompanying increase in benefits, with technology providers — less dependent on any one industry or geography — taking a harder line on deals, says Achint Arora, Partner at Everest Group.
ChatGPT’s arrival has brought much hype and speculation that it could replace several human workforce areas. While ChatGPT shows great early potential, how will it impact the “future of work” and the overall talent landscape? Read the latest blog in our series to learn more about the impact ofChatGPT and other generative Artificial Intelligence (AI) solutionson the workforce.
Since its advent, ChatGPT has taken the internet by storm, reaching a million users in under a week. No wonder it is the most talked about subject in technology and innovation. While ChatGPT has generated a lot of curiosity among netizens, the big techs are not far from the spotlight.
Microsoft has already invested billions in the technology and even integrated it into its search engine Bing. Google has officially announced “Bard,” its ChatGPT rival based on an in-house language model that is undergoing testing before being released to the public.
Chinese search engine Baidu has announced the testing of a similar tool, “Ernie Bot,” while Alibaba also confirmed working on an AI tool. Worldwide, we are witnessing rapid innovation and updates in this field, and by the time you read this blog, we might expect some more new developments.
What does it mean for the talent and workforce industry?
While the utility of a generative AI like ChatGPT remains an area to explore, we expect HR and business leaders to leverage ChatGPT across various dimensions of work and talent management. The workforce industry has evolved over the past few decades, and with the advent of machine learning and AI, we can expect to see some major transformations in the coming few years.
While ChatGPT has the potential to impact talent management, it is still not a replacement for human recruiters. Instead, it can assist them by streamlining the process and making it cost-effective and efficient by automating routine tasks, improving the candidate experience, and enhancing the recruitment process.
Some functions like job screening, content development, and job pricing will see a greater impact than other roles, as illustrated below:
Current mapping of ChatGPT and similar AI across the talent management value chain
Where canChatGPT replace human involvement in the near and long term?
ChatGPT has already proven its capability to solve math, write code and content, create poetry and literature, converse with other AI tools, and assist with business problems. Soon, generative AI tools have the potential to replace most non-automated tasks such as targeting prospects, writing sales pitches, drafting reports, writing basic code, developing financial models, analyzing data, assessing candidates, optimizing operations, etc. Although the list has no definite bounds, the possibility exists for a single generative AI replacing jobs across multiple domains such as marketing, sales, finance, operations, etc.
The potential impact of ChatGPT and similar AI across workforce areas
Key examples of generative AI adoption
Here are some of the applications for these tools in the industry:
Content creators at leading cloud services company VMware use the AI-based content creation toolJasper to generate original content for marketing – from email to product campaigns on social media
Morgan Stanley is working with OpenAI’s ChatGPT to fine-tune its training content on wealth management. Financial advisors are using it to search for existing content within the firm and design tailored content for its clients
Codeword, a leading tech marketing agency, has already hired the world’s first AI interns as an experiment to assist them with content writing, design, animation, and marketing
On similar themes, we have seen companies leveraging AI, such as Tesla building driverless cars and McDonald’s experimenting with employee-less eateries. In a few years, AI bots could replace various roles, such as customer service executives, recruiters, content writers, and even coders.
We might expect to see a single generative AI tool functioning across multiple domains (finance, HR, marketing, customer service, operations, etc.) within an organization, reducing the need for human intervention.
Blue-collar jobs were already at risk, and the success of ChatGPT further threatens several white-collar professions as well. In the long run, ChatGPT and similar AI tools can open doors to many new opportunities for AI integration, and any prediction we make has a higher risk of falling short of reality.
What challenges are associated with ChatGPT adoption?
We have already discussed the technical challenges of ChatGPT in our earlier blogs (see links at the end of this post.) Human interaction and empathetic judgment are the two major challenges for any AI tool to penetrate the talent management space. Also, limited capabilities in languages other than English and text-driven communication style restrict the use cases of generative AI in non-English speaking regions. Ethical and legal concerns also need to be addressed as the distinction between AI-generated and human-generated data blurs.
In addition, most short-term use cases of generative AI, such as chatbots, already have an alternative available in the market. It will take time for ChatGPT to further integrate into the talent market and move from an experimental basis to organization-wide implementation. Integrating a new system also requires additional investments and training that organizations need to explore.
Impact of ChatGPT on the future workforce
Amid all the hype and speculation, one thing is for sure: AI is here to stay. As humans, we need to embrace it and learn to co-exist with it. With the rise in AI adoption, the talent dynamics also are expected to change, and certain skills/roles associated with it will soar as we enter the age of AI.
Going ahead, we can expect to see higher demand for relevant technical skills. This also creates opportunities for several related skills, such as people with specific domain knowledge to train models and personnel, review content, ensure data reliability, and integrate systems based on industry needs.
Follow our next blog in the series to learn more about the type of skills/roles that will be affected and the new roles that will emerge in demand.
Below are some illustrations of the current capabilities and limitations of ChatGPT on talent-related queries. (The screenshots were taken on February 20, 2023, from India and the responses might be different for other users.)
If you have questions about the latest trends in the talent landscape or would like to discuss developments in this space, reach out to [email protected] or [email protected].
Balancing experience with data and trust is essential to delivering engaging personalized experiences for customers and driving business success. Developing a robust and scalable automated process for data-driven personalization is critical for enterprises to win in the evolving personalization and interactive experience segment. Read on to learn more.
Customer experiences have become increasingly prevalent with the democratization of the internet, coupled with significant technological and data processing advancements over the past few years. Enterprises are now realizing the value of prioritizing the people side of business. Creating positive personalized experiences for customers can foster loyalty, increase customer satisfaction, and drive repeat business. On the other hand, negative experiences can damage a reputation and reduce customer loyalty. Let’s explore the importance of personalization.
Personalization – then, now, forever
Personalization is not a new concept. It has existed for decades. Enterprises must capture users’ attention and stand out to thrive. According to Everest Group estimates, more than 70% of consumers interact with a personalized promotional message.
Personalization, more commonly known as “persona-based personalization,” mostly involves grouping users into segments or personas based on common characteristics or behaviors. This approach can be effective in delivering relevant content or offers to a large group of users with similar interests or needs, based on demographics, purchase history, or browsing behavior.
Today, technological advancements have changed the landscape. Categorizing consumers is difficult because they don’t have just one interest area. The plethora of information available online has shifted the power to consumers who determine their preferences, disrupting brands that are no longer in charge.
As a result, brands now are also adopting “person-based personalization,” a form of personalization that considers the individual’s unique needs and habits instead of categorizing the user into specific buckets. Personality-based personalization is a 1:1 approach, where enterprises focus just on the customer as an individual. Everything revolves around the individual as a person, ranging from interactive experiences to advanced personalized marketing strategies. While persona-based personalization involves a large sample size, person-based personalization involves a sample size of just the individual.
Because person-based personalization has the potential to deliver high returns on investment (ROI) to enterprises, deploying an industrialized process for real-time person-based personalization is essential.
While most brands have invested in personalization, some remain reluctant to fully embrace real-time data-driven personalization at scale, which involves personalizing every touchpoint in the customer’s journey based on real-time context. This method requires a unique interplay of data, intelligence, and omnichannel strategies. Developing an industrialized process for delivering individual personalization beyond the required data analysis is essential for enterprises.
Data-driven personalization at scale is the need of the hour
Data is the most critical requirement for delivering effective personalization. Personalization is driven by insights into individual preferences, behaviors, and needs that only can be obtained by collecting and analyzing data. Data collection needs to be well-thought-out. Enterprises require large volumes of data collected from multiple sources, and this data needs to be of good quality, accurate, and relevant because poor-quality data can lead to incorrect insights. Collecting diverse and up-to-date information is another important aspect.
The scope of data gathering has increased too. In the past, customer data was mainly collected via offline surveys, point-of-sales, and telecommunication, just to name a few. But the increased digitization supplemented with advancements in data and analytics has greatly impacted personalization by also allowing for collecting and analyzing vast amounts of data through digital channels. This has led to more seamless personalized experiences for users and has helped companies build deeper relationships with their customers.
An Everest Group study suggests that 78% of startups in the customer experience (CX) space leverage Artificial Intelligence (AI) to develop more relevant and engaging solutions for customer conversion, engagement, and retention. With the rise of AI, personalization has become even more precise and can consider a wider range of factors such as emotions, mood, and context.
However, significant investments are required if enterprises want to set up in-house industrialized data collection and analysis. This is where data platforms come into the picture. Data platforms can be thought of as purpose-built systems or infrastructures to collect, manage, and process large data amounts. It typically includes technologies and tools for data storage, data processing, data integration, data security, and data governance.
Exhibit 1. Data collection tools for aiding personalization efforts
How privacy and data guidelines affect user data collection
As discussed, data is essential to personalization. Clearly, the more data enterprises have, the better insights they can gain, and the better experiences they can provide. However, in today’s digital environment, user safety and trust are crucial. Consumer awareness is on the rise, with people growing increasingly skeptical about sharing their data. Concerns over how personal data is handled and safeguarded by enterprises are growing.
According to the United Nations Conference on Trade and Development (UNCTAD), 71% of countries today have some legislation around data protection and privacy, while 9% have draft legislation. Stringent data regulations such as the General Data Protection Regulation (GDPR) in the European Union, Nigeria’s Data Protection Regulation (NDPR), The California Consumer Privacy Act (CCPA), etc., have provisions to heavily penalize enterprises misusing consumer data.
Adding to this is the increasing push to eliminate third-party cookies. While browsers such as Apple Safari and Mozilla Firefox have already taken the step, market leader Google Chrome also has announced its intention to phase out third-party cookies by 2024, extending its earlier deadline. This has brought into focus the collection of voluntary data from users (Zero-party data) and first-party sources (1P data).
Zero-party data is a valuable information source for enterprises as it provides the best clarity to individual preferences. Developing a trust-based relationship with users and having total transparency about the use cases of zero-party data is essential for enterprises. Establishing a trust-based relationship might lead users to voluntarily provide more insights.
First-party data collection also needs to be transparent and strong security measures should be implemented to protect personal data. Sensitive data must be encrypted, security regularly audited, and effective access control measures adopted. Brands need to consider the needs of empowered users by honoring their “right to forget” and “untraceable” requirements.
As enterprises possess an enormous amount of users’ personal data, they also need to take the moral responsibility to protect that data. Customers who provide their data to enterprises understandably want their data to be protected and not misused without their knowledge. According to Everest Group estimates, more than 50% of customers are willing to share their personal data with companies but only with a clear understanding of how it will be used.
Combining automation with data and trust
Winning user trust and gaining access to more voluntarily provided data is no doubt essential to achieving better person-based personalization. But this data needs to be utilized in the best manner by making use of tools (such as personalization engines and marketing automation tools) to set up an industrialized workflow for large-scale 1:1 person-based personalization. Without a robust and scalable automated process for large-scale person-based personalization, enterprises tend to lose.
Exhibit 2. The industrialized workflow for achieving data-driven 1:1 personalization
Greater trust = Greater data = Greater personalized experiences
Personalization starts from a persona-based mechanism and, with an ever-increasing user base, shifts to person-based personalization. User data is the only way to go forward. User data and trust need to go hand in hand. To win customer attention, trust, and loyalty, enterprises need to know how to use the right data at the right time and how to go ahead with individual personalization without breaching the intrusion barrier.
Exhibit 3. Relationship between Trust and Personalization
The outlook
Overall, the personalization and interactive experience landscape has become more complex and diverse, requiring brands to constantly adapt and stay up to date on the latest trends and technologies to reach and engage customers. However, even with increasing investments, the ROI might decline due to the heightened competition making it more challenging to stand out and generate returns, technical limitations, and privacy concerns, just to name a few.
Enterprises need to break down their user base into smaller, more targeted segments to achieve 1:1 person-based personalization and tailor products, services, and experiences to each individual user’s specific needs and preferences. The smaller the segments, the better enterprises can tailor their personalization efforts and achieve a more effective 1:1 experience.
In addition to the investment level, the strategy and implementation of personalization and experience efforts also needs to be considered. A well-designed and executed strategy can generate returns even with increasing investments. By balancing experience with data and trust, companies can deliver engaging personalized experiences that build strong relationships with users and drive business success.
If you have questions about selecting the right data platform or want to know more about personalization, interactive experiences, or discuss developments in this space, reach out to our analysts at the Adobe Summit, or get in touch with the Everest Group team at [email protected], or [email protected].
To learn about the comprehensive roadmap for enterprises to achieve business outcomes and mitigate challenges in their journey to accomplish truly industrialized 1:1 person-based personalization, see our report Emergence of CDPs: Charting the Path to Data-driven Personalization.
