Click image to enlarge
Insurers are facing significant challenges, which is driving business opportunities and leading to investments that are driving significant outsourcing activity
Capital markets ITO contracts scope characteristics: Regulatory compliance and analytics highest; digital components on the rise
Leaders are investing in technologies and striking partnerships
The mobile app space offers service providers the potential for new growth platforms. However, these are often small projects that are delivered quickly and are not a great revenue stream. But recent studies we came across reinforce our growing opinion that the mobile app space is changing.
Mobile apps are costing more and taking longer to develop; they’re far more expensive than expected. We believe there are a couple of reasons for this.
First, mobile apps are moving out of the experimental phase into the mainstream business and therefore are far more complicated. That alone requires more rigorous development and testing. But they also must be integrated in today’s IT ecosystem. So they are bigger projects that take far more effort testing. This should give greater opportunity for service providers to benefit.
Recall the early days of the Internet. In the beginning websites were simple and easy to launch. Now they are extremely important to eCommerce and branding and thus require significant resources to develop and maintain. We believe mobile apps are following the same path as the Internet.
So there is a frustrating aspect despite the fact that mobile apps are starting to generate revenue for service providers. Providers are impatient for mobile to take off and give them a new growth platform, but growth is slow.
Companies’ end-user compute budgets are flat to down. Yet they’re challenged by much more complexity in terms of many more devices. This is a surprising fact. There is an explosion of devices that need to be secured and managed and that are often paid for by the corporate enterprise. Why has the explosion of mobile devices not resulted in corresponding growth in companies’ budgets for servicing end-user computing?
There are several reasons for new offers not coming into play despite the hope generated by the increase in devices. But the main reason is that the way support is provided has shifted.
The level of robustness of the support has shifted spend away from the central groups that used to provide support. Increasingly the manufacturers of the devices are taking on far more of the support responsibilities. They do this through extended warranties and service agreements attached to the devices.
The end-user compute services landscape is shifting in unanticipated ways.
On 15 July, 2014, IBM and Apple announced a sweeping enterprise mobility-focused partnership to create business apps and sell iPhones and iPads to Big Blue’s corporate customers, thereby bringing IBM’s big data and analytics capabilities to the iOS ecosystem. The venture includes more than 100 industry-specific enterprise solutions, including native apps developed for the iPhone and iPad, targeted at the retail, healthcare, banking, travel, telecommunications, and insurance verticals. IBM will leverage its 3,000 mobile experts and industry/domain consultants, to provide cloud services and onsite support for enterprises. The two companies will collaborate on IBM’s MobileFirst for iOS solutions, combining their distinctive strengths – IBM’s big data and analytics capabilities and Apple’s consumer experience and developer platform.
The intention of the deal for Apple is to enable its products to become go-to-offers for large enterprises. It also principally underlines the company’s immediate need to expand its presence in the enterprise world, as consumer sales peak and competitive intensity in its core market heightens. Meanwhile, IBM hopes Apple’s mojo can help revitalize its fortunes after nine consecutive quarters of year-on-year revenue decline, as it places its bets on mobility in the workplace. It will also help IBM solve its big data and analytics growth issues (i.e., providing Watson with much needed impetus through enhanced mobile users’ data), forming a pivotal part of a new growth story. (To this point…think back three decades to Apple’s iconic television commercial titled “1984,” when it attacked IBM as an evil Big Brother figure. Talk about a 180-degree turnaround!) iPhones and iPads are already owned by employees in large enterprises but are hard to manage and govern. IBM can leverage its enterprise-wide system management expertise to make a compelling value proposition, complementing its Fiberlink acquisition (a provider of cloud-based enterprise mobile management solutions). Additionally, it will help IBM cement its reputation as a leader in the “mobile first” movement in enterprise solutions.
Microsoft will feel most uneasy about this alliance, as while its products are ubiquitous in corporate PCs, it has been a laggard in serving the mobile workforce. This is a critical whitespace its new chief, Satya Nadella, is determined to fix. Google, Samsung, and the Android bandwagon will also feel threatened, given their recent push in the enterprise market. To allay fears about Android’s security for enterprise use, Samsung has built a system called Knox into its devices. Last month at its developer conference, Google announced that it would embed software elements of Knox in the next version of Android. They will also have to look at alliances with other enterprise-focused vendors to shore up their business case. Also, if IBM becomes the de facto champion for iOS, it will have potential ramifications for other service providers such as Dell, HP, and CompuCom.
Apple has not targeted enterprises with any zeal in the past. Steve Jobs was infamous for his contempt for selling to enterprises, even referring to CIOs as chief information “orifices.” While the Tim Cook era has seen Apple making small but significant progress in courting corporate stakeholders, IBM’s significant experience in the space makes Apple/IBM a very unlikely pairing. Apple and IBM have drastically different people cultures. Any effective partnership will need to account for these differences. They also have very different go-to-market and channel strategies, which will result in friction over the direction the alliance takes. Their sales motions tend to be at odds, with IBM solutioning for a client, while Apple caters to essentially product categories. IBM has defocused severely from the end-user computing space. Does this alliance signal a revival in this regard? The companies’ divergent investment attitudes will make joint investments problematic. To complicate matters further, both have stark but strongly held philosophies about design, customer support, and sales, making collaboration painful.
Partnerships and alliances such as this are notoriously difficult to manage. Both organizations will find it challenging to bring two entirely different culture sets to work cohesively as one. The alliance will need sustained resources, time, and senior leadership investments, along with a steadfast commitment to change management. Given the complicated dynamics sweeping the enterprise market, IBM and Apple have certainly stolen a march over rivals. We will need to keep an eye on the investments both are making into the alliance, the steps they are taking to mitigate the challenges, and the success stories that emerge as a result.
One thing is certain. The enterprise IT market is in for some interesting times. For further insight into the enterprise mobility space, check out our recently published viewpoint.
“A customer is not an interruption in our work. He is the purpose of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
….Mahatma Gandhi
The above quote by Gandhi takes a whole new meaning in the current banking and financial services (BFS) landscape. There was a time when banking customers were plagued by issues such as obscure contract terms, hidden costs, and protracted complaints handling. While this may still continue to be the case, a confluence of different forces has created a new era in which all efforts by banks seem to point in one direction – customer centricity.
Exhibit 1: Key forces driving customer centricity in banking and financial services
Drivers of discretionary IT spending in BFS
In such a scenario, almost all banks are investing in one or more customer-centric initiative to enable a differentiated customer experience and servicing:
The table below shows select examples of technology initiatives taken by banks and financial institutions to drive customer centricity.
Exhibit 2: Key customer-centricity focused IT outsourcing transactions announced in 2013
| Investment theme | Buyer | Service provider | Deal value (US$ million) | Duration (years) | Scope of services (Among other things) |
| Data management and customer data analytics | Banorte | IBM | 1,000 | 10 | Investment in master data management (MDM) software to create a 360-degree view of the customer |
| Janalakshmi FS | Accenture | N/A | 5 | Implementation of CRM software and MDM enabling customer onboarding | |
| Springleaf Financial | Acxiom | N/A | N/A | Customer/prospect database management support, including customer acquisition, engagement, and development through analytics | |
| Mobility | ING Vysya Bank | IBM | N/A | N/A | Development of mobile banking channel to reach into untapped markets, such as remote cities and rural areas |
| Omni-channel experience | Industry Bancshares | FIS Global | N/A | N/A | Upgrade of core banking system which enabled real-time access to customers across various channels |
| Large Middle East Bank | Atos | N/A | 3 | Atos implemented Backbase Customer Experience Platform enabling a multi/omni-channel environment for the bank | |
| Front-office modernization, omnichannel experience | BBVA Group | Accenture | 25 | 4 | Upgrade of core technology for the bank. Improved customer service through reduced account opening time, centralization of customer account information, creation of a multichannel environment |
| Front-office modernization | Maybank Singapore | NTT, Dimensions Data | 47 | N/A | Upgrade of Maybank’s IT infrastructure to improve service reliability and customer user experience |
Source: Everest Group’s proprietary Transaction Intelligence Database
Service providers have identified the market need for technology that enhances customer experience and have developed capability accordingly either organically, inorganically or through partnerships.
But we challenge the providers to further think how they can become partners in achieving business outcomes for their clients. As for the banks, how successful have they been in implementing these initiatives? In the current whirlwind of regulatory compliance and governance, are some finding it too difficult to innovate customer facing functions?
Photo credit: 10ch
The service provider community is very fond of clever terms, and SMAC — standing for Social, Mobile, Analytics, Cloud — is a good example of that. However, if you’re a service provider looking to sell to new or existing clients, talking about SMAC may not be the most productive way to hold the conversation.
The most productive way to uncover a significant opportunity is to talk to your customers in their language about the business issues they have. Sure, they’re looking for technology answers to their issues, but very few of them use the term SMAC of their own volition.
So if you’re talking to a retailer about their out-of-stock condition, for instance, talk about the practical ways that your solution will help them identify where they’re out of stock and how you can help them prevent that from happening.
Software tools can be very powerful. But as I’ve blogged several times in recent months, decision rights and buying influence are flowing toward the business users rather than CIOs. Providers must change terminology and communication to successfully capture their attention and serve them well.
Use simple business terms to communicate what you can do for a customer. If you use clever technology terms, you’ll probably just marginalize your impact and consign yourself to the realm of being a geek.
My advice: Keep the acronym out of your sales toolkit. Don’t SMAC your customer!
The state of today’s enterprise mobile apps industry is akin to the dark side of a jungle: a dense forest and tangled vegetation, inhabited by hundreds of largely unfamiliar animals and plants that rely on its delicate ecosystem to survive, perhaps to thrive. This is creating frustration among stakeholders including the CIO, CFO, CMO, and CEO, who believe they might have over-invested in mobility initiatives.
However, this is far from the truth. Mobile apps have a long way to go in enterprise. Yet, to avoid the earlier pitfalls, enterprises and technology providers need to be fully aware of the following dangers in the mobile apps jungle:
Business process transformation: Few enterprises or technology providers even consider that enforcing mobile access to an existing business process may be a poor idea. Making the end-user consume the same business process albeit through a different, perhaps “cooler,” app is not true mobility. User interest will not last if the business process is itself unsuitable for mobile. At the same time, not all business processes require this change. Enterprises must be selective in changing business processes while undertaking the mobility journey. Consultants, vendors, and others with vested interests will always extol the virtue of business process transformation for mobility, but enterprises should be very wary of this aggressive spiel.
Line of business collaboration: In their desire to be the first movers, many line of business managers are creating all kinds of mobile apps with little collaboration with other business units. Given the increasing influence of non-CIO budget centers to approve technology funding, the tried and tested processes of application development are being compromised under a convenient, self-pleasing argument that mobile apps do not require a structured or “traditional” approach.
Will this ad-hoc development blow up in our faces? I think it will. Can we prevent this? Unfortunately not. Business users are happy getting the needed application functionality on mobile devices, yet no one is thinking about the mobile application lifecycle. A long-term technology adoption framework is an unthinkable thought for these budget owners. They do not believe collaboration is their mandate or their responsibility. Their KPIs are linked to business outcomes, not to channelizing or seamlessly introducing mobile technology, and thus they will rarely ever have an incentive to create the needed structure.
Cost of mobility: Enterprises and technology providers need to understand that while business agility, flexibility, and access is all good, the cost of these should not outweigh the rewards. Therefore, enterprise mobility should be viewed in its entirety to understand whether the incremental business has come at a greater cost of management and complexity. Yet the existing mechanisms across enterprises, where different unconnected lines of businesses are creating their noodly soups of mobile apps, does not engender great confidence that they will take a view of the broader picture any time soon.
So what can enterprises do to quash the mobile apps jungle’s beastly flora and fauna?
If you are undertaking an enterprise mobile application initiative and want to share your experiences and perspectives, please comment below or reach out to me directly at [email protected].
While insurers have traditionally been slow with technology adoption, they’re now jumping on the mobility bandwagon, leaving no stones unturned in devising their mobility strategies.
So what has made mobility adoption a non-negotiable choice for insurers? They’ve realized that investments in mobility are essential for keeping pace with competitors and meeting the demands of an increasingly mobile “Facebook generation,” and that mobile offers unique benefits over the traditional brick and mortar, or even online, engagement models.
Following are some innovative uses of mobility in insurance and how they are transforming the industry:
To support insurance companies’ needs for industry-specific solutions and enablers, leading service providers are investing in development of a wide range of mobility solutions. While telematics and UBI are broad areas of investment, key insurance functions in which providers are investing are sales, claims and account management. The graphic below illustrates select major investments by service providers:
To gain additional insights and perspectives on leverage of mobility, key mobility initiatives by leading insurance firms, and questions key stakeholders must have answers to, read Everest Group’s IT Outsourcing in Insurance – Annual Report 2013: SMAC is the Panacea for all Insurance Industry Problems, and IT Outsourcing in Insurance – Service Provider Landscape with PEAK Matrix™ Assessment 2013. So, will insurance customers of the future use mobile as their primary interaction channel? Our research and current industry trends certainly bode so!
©2023 Everest Global, Inc. Privacy Notice Terms of Use Do Not Sell My Information
"*" indicates required fields