IDC-Leverage Technology-Road to Recovery

The Role of Technology in Rebuilding European Business

Philip Carter (Chief Analyst, IDC Europe)

IDC’s vision of the “future enterprise” is an organization that is completely digitally transformed. Such an organization underpins business processes with technology, is fueled by innovation, and is platform-enabled and ecosystem-centric. The COVID-19 pandemic underscores the importance of digital transformation in the eyes of CEOs across all industries. But with a recession on the horizon, CEOs face a tough call — to follow the same course of cost cutting as in previous recessions or to use technology to flatten their own organizations’ recessionary curve.

Leverage Technology to Transition to the Next Normal

IDC-Road to Recovery-Leverage Technology

Where Are Organizations on the Road to Recovery?

According to the latest IDC COVID-19 Impact Survey, conducted in June among 730 organizations in Europe, the largest pool of organizations — 37% — are still in the business continuity stage (Stage 1) of the journey to the “next normal.” 33% are still in the cost optimization stage (Stage 2), while 18% are focusing on building business resiliency to drive profitability during the pending recession. The remaining 15% have already started their recovery journey and are working toward growth in the next normal. (Note that we are frequently asked for a timeline for these stages, but the reality is that every geography, industry, and organization will follow its own trajectory.)

Stage 1: COVID-19 Crisis — Business Continuity Is the Leading Business Priority

Whether we’re dealing with the current pandemic or the next shock to the global market, hyper-volatility will increasingly become the norm. Business continuity plans are already being rewritten — and will need to become a lot more dynamic as they are constantly tested and innovated.

C-suite narrative: “We’re in crisis mode. We’ve had to rip up our business continuity plans and look at everything from scratch.”

Organizations in this stage are desperately looking for new ideas, emerging best practices, and greater input from technology partners. This is not a time to push the product. More importantly, the support and help that technology partners provide in this period will be the basis for genuine long-term partnerships.

Stage 2: Economic Slowdown — Cost Optimization Is the Leading Business Priority

In this stage, organizations are in cost optimization mode, with businesses looking to technologies that can either help them manage the economic hardships or generate financial outcomes for the current fiscal year. These organizations look for financing assistance and/or opex options to manage their cashflows and working capital. Their decisions are driven by the short term as they seek projects that provide productivity gains and savings in cost-to-create or -serve.

C-suite narrative: “We’re in cost-saving mode and we’re prioritizing projects and programs that can tide us over during this challenging period. We’re not interested in exploring bleeding-edge technology use cases or jumpstarting any transformation program.”

Organizations in this stage tend to prefer technology vendors, SIs, and service providers that are closer to them — in both proximity and cultural alignment — and provide cheaper offerings, flexi-pricing and payment terms, or modular offerings.

Stage 3: Recession — Business Resiliency Is the Core Driving Force

In this stage, organizations have overcome the initial phase of the COVID-19 crisis and have stabilized their financials. Their focus now is on building business resiliency — adapting to changing circumstances while maintaining their central purpose. The purpose or mission articulated in the company’s digital transformation will remain a primary focus even as remediation actions are taken to reduce costs or take advantage of pandemic-related revenue opportunities.

Many organizations will recognize an opportunity to “flatten the curve” or minimize the impact of the recession on their organization by leveraging technology. These organizations will also double down in technology investments to emerge, on the other side of the curve, more resilient, more digitally fit, and ready to capture a greater share of the new opportunities.

C-suite narrative: “We’re ready to move our organization to the next level of response. We understand the criticality of technology and are reprioritizing our focus and investments to compete differently post-COVID-19. Adaptability and agility are our main thrust.”

Organizations in this stage tend to prefer technology vendors with established presence and delivery capabilities in their geographies and with the financial muscle to ride through the crisis. Access to the vendor’s product/capability road map is also important as organizations here are preparing for longer-term growth.

Stage 4: Return to Growth — Targeted Investments Are the Key Business Driver

At this stage, economic activity is returning to pre-crisis levels and companies are looking to invest more aggressively, but with a focus on technologies that advance their digital capabilities. As they get back on the path to being relevant in the digital economy, they will look back at their efforts around resiliency to ensure they are more prepared for a similar shock in the future.

IDC anticipates that corporate boards and government bodies will have a better understanding of the value of technology and will prioritize digital initiatives.

C-suite narrative: “We consider periods of market volatility as opportunities that well-prepared organizations can embrace and exploit.”

This will be a critical stage for technology vendors as organizations look for a safe place to innovate. Vendors that are financially healthy, have scale, and have robust ecosystems will be preferred. Vendors will earn strategic partnerships at the board level that will shape post-recession spending and permanently impact market shares.

Stage 5: The Next Normal — The Future Enterprise

When organizations come out of the recession, they will be operating in a new type of economy — the next normal. This will be the beginning of the digital economy with some new twists as a result of COVID-19. CEOs who have been consistently investing in digital transformation will be running the future enterprises and employing a digital enterprise agenda that centers on nine items (see below).

 

The CEO Agenda for the Future Enterprise

C-suite narrative: “Operating as a digital enterprise is vital to the success of our business. We will continue to invest in technology as it is a competitive advantage.”

Strategic vendor relationships are established during Stage 5, and the fortunate vendors that have won those positions must prove they can innovate with speed and scale to maintain them. Resiliency will remain a key expectation, not just to mitigate against a potential repeat of the pandemic but to enable companies to quickly recalibrate to the changing demands of customers, citizens, and patients.

Conclusion

Organizations’ response to COVID-19 will shape the perception of their brand and reputation over the next decade. As part of this, there needs to be a rethink of the core principles of how business operates.

In the short term, technology has proven to be a key enabler that has kept businesses afloat during the crisis by enabling remote work, agile business, and external digital engagement. In the longer term, organizations will leverage technology to underpin every single process, initiative, or value chain as they journey to the future state — the future enterprise.

If you want to know more about how COVID-19 will affect the European IT Market, see more resources here.


Quantum Computing Revolution

Quantum: Towards the Next Computing Revolution

Stefano Perini (Senior Research Analyst, Customer Insights & Analysis)

Quantum computing has a very good chance of becoming the next revolution in the computing world. Even though we’re still far from the commercial maturity of real quantum computing applications, companies, universities, and research institutions worldwide are working hard to fill in the technical gaps to make those technologies ready for business.

This was clear during the Quantum.Tech Digital Week (June 15–19, 2020), the online edition of the Quantum.Tech European event that should have taken place in April in London. Quantum.Tech is one of the pivotal business-oriented events in the field of quantum applications, connecting people from IT companies, start-ups, academia, research institutions, and governments.

The event shines a light on worldwide quantum computing developments, highlighting the most recent technological advancements as well as the first insights and road maps for quantum applications experimentation and adoption in a business context. The event is also an opportunity for leading companies working on quantum computing — such as Google, Honeywell, IBM, and Rigetti — to present their latest research updates.

Quantum Technological Race Is Accelerating

It’s clear that the overall effort of IT companies in quantum research and development is increasing, and that the announcements of more and more performing prototypes are multiplying. Honeywell has announced the highest-performing quantum machine currently available, a trapped ion quantum computer with a “quantum volume” of 64. The quantum volume doesn’t represent the number of qubits (which is 6 for Honeywell’s machine) but the overall capabilities of a quantum computer in terms of execution of larger quantum circuits and hence the complexity of problems it can solve.

After the announcement of the so-called “quantum supremacy” achievement in 2019, Google introduced during the event the results of the largest quantum chemistry simulation and the largest quantum approximate optimization to date, as well as its new open-source framework for quantum machine learning, TensorFlow Quantum. Also, IBM introduced its latest advancements in Qiskit’s circuit library and algorithms, and how they are co-designing codes and hardware to improve the error correction process. Rigetti presented its efforts in quantum hardware scaling, and in particular in cryogenic systems with large qubit capacity and modular quantum processing unit (QPU).

If we consider the number of other IT companies (e.g., AWS, QC Ware), start-ups (e.g., Aliro, Oxford Quantum Computing), universities (e.g., University of Cologne, Imperial College London), and research institutions (U.K. Innovation & Research, Russian Quantum Center) that took part in the debate by presenting their technical achievements, we can see the impressive increase in contributions from all over the nascent quantum computing ecosystem.

Quantum Technologies and Business: Growing Interest from End-User Companies

Technology, of course, is just one side of the quantum computing coin. Though it’s still some way off, the proper experimentation and deployment of quantum applications in a business context will be ever more crucial for quantum computing success. In particular, industries and use cases suitable for quantum computing development should be identified and exploited right away to be ready for real business impact when the underlying technology reaches maturity. IT companies taking part in Quantum.Tech Digital Week are increasingly aware of this, and the event was also an opportunity to see some interesting examples of quantum experimentations across different verticals.

Applications mentioned throughout the week involve several end-user companies in materials science and chemistry (Covestro, BASF, Johnson Matthey), manufacturing (Airbus, BMW, Volkswagen, Rolls Royce), finance (Goldman Sachs, Barclays, Standard Chartered Bank, Morgan Stanley, ABN AMRO), healthcare (GSK, Roche), utilities and oil and gas (Total, E.ON), and telecommunications (Telecom Italia, BT). All the experimentations are still at an R&D level, but it’s already possible to see the main problems quantum technology is trying to solve there, namely optimization (especially in manufacturing), machine learning (finance), simulation (chemistry), and secure communication (telecommunications).

Quantum Computing: A Key Challenge for the Future of Technology

The road to effective quantum technologies is still long and full of obstacles, but the Quantum.Tech Digital Week sent an optimistic message for the future.

Besides purely technological challenges to be addressed (e.g., stability of the system, error correction), a key to the potentially revolutionary success of quantum computing will be the achievement of significant business impact for companies. For this to happen, IT companies and the whole European quantum ecosystem in general should consider the following recommendations:

  • Partner with top research centers and start-ups worldwide to create efficient innovation ecosystems to reach the necessary R&D critical mass.
  • Adopt a “hardware-agnostic” approach for applications development to avoid switching between different types of quantum technologies as they evolve, and develop a “hybrid quantum-classical approach, as quantum will likely support and not fully replace traditional computers.
  • Identify and focus on the most promising industries and use cases, and adopt a business-oriented language to involve and make an increasing number of end-user companies aware of quantum’s potential.
  • Focus on skills and quantum tech talent recruitment and, in the near future, on the importance of training real “quantum business consultants” to link the technology to the business needs of end-user companies.

For more on IDC’s European Quantum Computing Launchpad market research, you can listen to a free recording of my presentation Quantum Computing in Europe: The Road to Business Impact at Quantum.Tech Digital Week, or contact me directly at sperini@idc.com.


Largest Ever DDoS Attack Shows the Value of Digital Trust

Dominic Trott (Research Director, European Security & Privacy)
Romain Fouchereau (Research Manager, Security Appliance Program, European Systems and Infrastructure Solutions)

An unnamed AWS customer suffered the largest distributed denial of service (DDoS) attack in history, a third larger than the previous record-holder — a 1.7 Tbps attack mitigated by NETSCOUT Arbor in March 2018.

While news headlines in June 2020 remain dominated by COVID-19 and the Black Lives Matter movement, another major development this month has been somewhat less reported: the publication of the AWS Shield Q1 2020 Threat Landscape Report.

While the title may not scream “headline news,” it may yet echo down the ages given a statement made on page 3 of the report: “In Q1 2020, a known UDP reflection vector, CLDAP reflection, was observed with a previously unseen volume of 2.3 Tbps. This is approximately 44% larger than any network volumetric event previously detected on AWS.”

While the size of the attack is significant, there is another important angle to consider: although AWS Shield (the DDoS protection service provided to customers who host web apps on AWS) acknowledges that it took three days to contain the attack, it was able to protect its customer against the attack using in-house capabilities.

Gaining (Digital) Trust Is Key

For companies on the receiving end of such attacks, gaining and retaining trust from customers, partners, and public opinion is of paramount importance to remain competitive in business. According to IDC’s global CXO survey, which was in the field earlier this year, trust is now the top priority new agenda item for CXOs over the next five years.

Trust introduces new variables that go beyond the traditional idea of “security” to include risk, compliance, privacy, social responsibility, and even business ethics.

In an organization with a strong digital trust posture, enterprises, users, and partners can interact and innovate without having to worry about security implications.

To get there, security teams must engage with lines of business and consider the evolving technology landscape to better support people and process. This is a clear means by which, if they get this right, security can support business outcomes and elevate their influence.

Security by Design: Milestone for Enterprise Security

This development is indicative of the rise of “native” security tools being offered by the big 3 cloud “hyperscalers” (AWS, Google Cloud Platform, and Microsoft Azure), as well as major SaaS providers such as Salesforce.com and ServiceNow, built into their platforms. In fact, the now well-established boardroom criticality of IT security means that cloud service providers (CSPs) cannot afford to go to market with solutions that are not “secure by design.”

While security by design is a major milestone for enterprise security, unfortunately the practice of working with secure-by-design CSPs is not a silver bullet. That is before we even consider that the number of organizations whose IT is based entirely on public cloud services is vanishingly small.

The vast majority of enterprises are operating across a complex “multicloud” blend of on-prem, private cloud, and public cloud infrastructures and applications.

Why DDoS Attacks Are Difficult to Negate

To further complicate the picture, there are two conditions that make DDoS attacks particularly difficult to negate. First, “DDoS for hire” services mean that anyone with sufficient motive can launch an attack, regardless of their capability.

Second, as many DDoS attacks achieve scale through botnets (such as the October 2016 Mirai Botnet attack on Dyn), enterprises cannot mitigate these attacks by remediating vulnerabilities in their own environment. Rather, they are dependent on the security hygiene of third-party connected devices that botnets prey on.

This shows the importance of the digital trust that comes from visibility into connected assets and the data they generate.

While DDoS attacks highlight the vulnerability of connected devices, this is far from their only risk factor. This is especially relevant when considering the interconnectedness of partner ecosystems that operate across shared infrastructures, such as those based on IoT and IT/OT convergence.

Varying approaches to tasks such as patch management, asset maintenance, and compliance make it tough to understand the provenance of data generated by third-party assets. Yet this exposure to third-party risk may be critical to the development — or indeed loss — of brand reputation.

This challenge is prompting interest in how trust can be distributed across partner ecosystems to foster transparency and confidence between partners to minimize risk, while simultaneously honing efficiencies through greater automation of transactions with trusted third parties.

IDC is launching a new research theme — Future of Trust — to shine a light on how enterprises can build trust, and the benefits that this can bring. Please visit our new dedicated European security and trust website to learn more.


Emerging-Technologies-COVID-19-Europe

How Has COVID-19 Changed the Emerging Technologies landscape in Europe?

Andrea Siviero (Associate Research Director, European Customer Insights & Analysis)
Gabriele Roberti (Research Manager, European Industry Solutions, Customer Insights & Analysis)

IDC recently held a webcast on emerging technologies and their role in enabling not only resilience during the COVID-19 period, but also paving the way toward the successful enterprise of the future. You can replay the full webcast here, but for a sneak peek please continue reading.

What Does Emerging Technologies Mean?

Emerging technologies are those technologies that have not yet reached an inflection point, defined in terms of a series of criteria such as adoption rate, investment, and business impact.

Emerging Technologies in the COVID-19 Era

Although these technologies already attracted major interest and mindshare, COVID-19 affected sentiment around innovation, especially in terms of the more innovative, and emerging technologies.

Emerging Techs Threatened by the Covid Quake

Source: IDC COVID-19 Tech Index, IDC European IT Buyer Sentiment Survey – Wave 5, 18-25 May 2020, n = 730; IDC Worldwide Blackbook Live Edition, May 30, 2020

IDC structured a framework in five steps to describe how the pandemic affected companies, and how their technology focus changed. To simplify, during the webcast we described two phases:

  • The descent (from Covid crisis to recession), and
  • The ascent (from the return to growth to the next normal).

According to IDC’s European IT Buyer Sentiment Survey (wave 5, May 18-25, 2020) the great majority of the organizations still place themselves in the descent phase.

So, the question is how these two phases are connected to emerging technologies, and what is their role?

Source: IDC Worldwide Digital Transformation Spending Guide, V1 Apr 2020

To answer these questions, we need to start thinking about the priorities of the organization in the descent and ascent phases, linking them to the use cases they are prioritizing, and only then understanding the key enabling technologies. In this way we discover constellations of emerging tech-infused use cases across the two phases. But there’s more. The two phases are also connected to different approaches end-user companies should take.

Descent — Emergency is Experimentation

Despite the impact of the pandemic on digital transformation efforts, our biweekly survey shows that more than half of companies are changing their technology road map to take advantage of the uncertainty and introducing new business models. This means that the emergency period is the right time to experiment. And we collected also lots of examples from European companies leveraging emerging tech experimentation to cope with the emergency in the past few months. Technology providers are also taking the experimentation approach.

Source: IDC Europe, 2020

Ascent — Place Your Safe Bets

Once the descent is over, the following phase is the moment to set up for the future, preparing for the future enterprise, defined by extreme automation, remote everything, hyper connectivity, omni-experience, intelligent everywhere and full collaboration. In the short term, this implies looking at new trajectories according to the industry and the ecosystem each company plays in, and placing safe bets that ensure short-term ROI related to core modular and flexible competencies that can be quickly launched and tested, and fuelled by trickle budget. For many companies this is already reality and we name many examples in the webcast.

Where to Start?

We believe that to build anti-seismic foundations for the future enterprise, making it resilient to market quakes and shocks, companies should focus on three pillars: People, (technology) Platforms, and Power of Sight, orchestrating an emerging technologies value loop.

To make it concrete, CxOs should:

  • launch now one experiment aimed at disrupting traditional models,
  • Select one KPI to track on a weekly basis and picking 3 digital use case short-term bets.
  • They should also bring in 2 other C-suite members in any digital initiative (emerging tech-dedicated taskforce)
  • Prioritize an ROI focus, plugin & play impact, and an act-fast approach as key features in tech provider selection.

You can replay the webcast here. Get in touch to know more about IDC European Emerging Technologies research.

If you want to know more about COVID-19’s impact on the technology sector see more resources here