In Search of the Next-Generation Talent in Manufacturing

Maggie Slowik (Senior Research Analyst, IDC Manufacturing Insights)
Talent is a much-talked topic across all industries at the moment, and there is a good reason for it: with baby boomers retiring around the world within the next 5 to 10 years, the global workforce will face a significant loss of skilled and experienced workers. Read more

Initiating Start-Up coverage in Europe: Introducing YellowDog

Phil Carter (Vice President)
Margaret Adam (Associate Vice President)

The technology start-up community is a critical element of the digital economy. These new players are constantly looking to push the boundaries using emerging and disruptive technologies. They are also important ‘idea generators’ that constantly challenge the status quo for traditional incumbents (or the digital dinosaurs as they are often called).

Over the past decade, most of the start-up activity has been driven out of the US (and in Silicon Valley in particular). However, more recently, European countries have set up similar ‘start-up hubs’ in key cities such as London, Berlin and Paris. One such example is the Engine Shed in Bristol. We recently visited the Engine Shed, hosted by a start-up incubator by name of SETsquared to get a sense of what these startups in Bristol and broader South Western parts of the UK were focusing on. SETsquared was founded in 2003 and is borne out of a partnership of five universities: Bath, Bristol, Exeter, Southampton and Surrey. It focuses on commercialization of research, student and business incubation. What distinguishes it from many start-up incubators is that it is a not for profit, in other words, it doesn’t have commercial interests in any of the companies it incubates.

One of the interesting startups that IDC spoke as part of the meetings set up by SETsquared was a company called YellowDog. YellowDog was set up in Bristol in 2015 by Gareth Williams (who is currently the Managing Director of the company). As of the beginning of 2017, it has more than 500 customers and has raised approximately US$ 1.48 million in funding. It is at an exciting juncture on its growth curve, with plans to run a Series A funding round this year to help quadruple its existing business by 2020.

Its initial business model was based on providing cloud rendering services to animation film studios and artists via a crowdsourced model (i.e. the YellowDog application will leverage your PC’s spare processing power, and leverage that additional capacity to provide rendering services for animation work at these studios). This model has served it well for the last 2 years. However, it is a fairly niche market. Gareth and his team have got their sights focused on the next phase is focusing its attention using this type of model in the enterprise. YellowDog believes that despite all of the cloud offerings available (whether those be general purpose IaaS or dedicated application compute (i.e. private cloud)) enterprises still do not fully take utilize existing capacity in their data centers. It plans to use an on-premise version of its offering to help enterprises first fully utilize their existing compute stock before helping them burst to the right public cloud for their needs, in the most cost efficient way.

Whilst there is a clear opportunity for this type of cloud service ‘brokering’, it is very much dependent on the maturity of the company (and where they are on the journey of cloud adoption). It is moving into ‘multi-cloud’ which involves leveraging and managing multiple cloud services – which is at a very nascent stage of development within the broader cloud market. YellowDog’s ability to execute on this new strategy will depend largely on the extent (and the pace) at which the adoption of these multi-cloud services moves into mainstream.

Some of these emerging start-ups like YellowDog might become partners, some might become competitors and others are potential customers. In order to work these important stakeholders on a proactive basis, we recommend the following:

  • Evaluate start-ups in Europe as part of your broader Merger & Acquisition (M&A) strategy. Take an ecosystem-first approach to go-to-market strategies.
  • Create links to start-up incubators so that your organization can raise its profile and brand as a ‘start-up friendly’ player – this could also involve providing these incubators (and associated start-ups) with booth space at industry events or sitting on panels to highlight their offerings.
  • Provide access to start-ups to your innovation labs (and your customer innovation labs).

The start-up community is a critical element of the digital economy, and is a key driver of digital innovation adoption and disruption to the technology industry status quo. As part of this technology start-up hubs are gaining momentum across Europe leveraging local support and talent. We believe that the clustering of technology start-ups can lead to co-innovation and synergies that can lead to truly discontinuous and market disruptive products, services and business models.

For more information on Start-Ups in Europe and related topics, please contact Philip or Margaret.

Blockchain: What's in It for Utilities beyond the Hype

Jean-François Segalotto (Associate Research Director, Energy Insights)

The intersection of Blockchain and the energy industry looks like a great place to be today. A technology that promises to bring order and automation in a distributed world could be the perfect match for a system (the energy system) and an industry (utilities) that are slowly but relentlessly decentralizing. Almost like a marriage made in heaven.

I recently came back from one of Europe’s seminal events in this technology intersection, EventHorizon 2017 – the result of one year’s hard work by people at Grid Singularity, supported by EY, Vattenfall, PwC, Energie Steiermark, Microsoft, Fronius, and Parity Technologies.

Here’s what I bring home from this finely produced two-day gig in Vienna.

Blockchain: Why you should care

From a utility’s perspective, there’s a whole lot of good reasons for closely monitoring the evolution of blockchains, the developments in the technology community and, ultimately, to be at the event. These essentially cluster around four categories (two obvious and two lesser known):

  • Process improvement (from simple optimization to total transformation) and the cost savings that go with it. Imagine being able to move past today’s complex and expensive billing systems by implementing a decentralized ledger that is inherently trusted (or trustless), secure, and auditable. Once users get the technology, utilities might even improve on their terrible consumer trust levels.
  • New services and new revenue streams – a lifeline in a world where value pools are shifting out of a utility’s traditional value chain: utilities have to be ready to offer blockchain-enabled services if and when use cases mature. Take for example the ability to offer hassle-free, fully automated home energy management and P2P local electricity exchange, in the future. Or end-to-end e-vehicle charging services, including the infrastructure, commodity, and automated M2M billing functionality. And this is just to name two of the most discussed use cases out of a plethora (see below).
  • Disrupt or be disrupted. This may come as a surprise to many, but utilities have come a long way from those rich and dull distributors of commodity whose responsibility was “only” to keep the lights and heating on. If competition and digital transformation are teaching utilities one thing, it is that building the right ecosystem is what makes the difference between getting to market first and being displaced (or disrupted).
  • Attract talent. For many of the same reasons, the days in which utilities represented an attractive destination for engineering talent are also long gone: utilities have ageing workforces and a growing need for fresh digital skills. By making technology incubation a part of their vision, utilities can at least keep this talent within their gravitational pull.

On the lookout for use cases

In a survey published late last year by Germany’s energy regulator Dena, the countries industry decision makers identified 107 blockchain use cases, ranging from “platforms” (e.g., P2P trading, distributed generation) to process optimization use cases (e.g., billing, meter data management, mobility). We now stand at 184 and counting: a mind-boggling number of use cases for a single piece of technology and undoubtedly a testament to its transformative nature.

The Viennese event showcased a dozen of the world’s most promising startups in this space, some of which already grabbed headlines over the past few months. The use cases featured on stage include IoT (from EV charging to M2M data authentication), “tokenization” of renewable energy, AI-aided home energy management, P2P and autonomous energy trading, settlement and portfolio reconciliation (from the microgrid through to the distribution and wholesale levels).

Many use cases have already moved beyond the proof of concept stage, with demonstrators and even real-world pilots being initiated that leverage public or private “permissioned” type of blockchains. Some companies can even boast actual commercial deployments and DSO-scale trials involving thousands among smart meters and other grid devices.

Instant polls of the event’s roughly 500 attendees reveal that virtually all domain observers are persuaded of the transformational impact of blockchain on the industry and very few see utilities endure in their current form. While most companies are still trying to figure out which use cases to focus on, some claim to have found the first low-hanging fruits and confirm they are developing pilots. Overall, people think the first blockchain-driven business models will appear in the real world in 2-3 years’ time, with an optimistic minority already expecting something in production next year.

Looking at the expected impact of the core “platform” use case, the consensus is for P2P trading to account for under 20% of the total electricity market in Europe, by 2025. On the contrary, at between 20% and 60%, the consensus around the cost saving potential of blockchain-driven process optimization is less clear-cut.

Blockchain in energy: a matter of endurance

Overall, the enthusiasm and dynamism of technologists and startups contrast with the generational timescale on which the energy transition is measured. And, understandably, it also contrasts with the cautious stance of most utilities and investors.

The former have been looking at this space for the past 12-18 months and may be piloting a few ideas, but don’t expect the first full-scale blockchain project to be financeable before just as long. For the latter, it isn’t quite prime-time yet. The business models and technology roadmap need maturing and large venture capitalists are only dipping their toes. In addition, there seems to be somewhat of a disconnect in the blockchain conversation between the most widely discussed use cases, like P2P trading, microgrids and EV charging (currently niche markets) and some of the technology’s sweetest spots (e.g., “enterprise blockchains” for billing).

Regulation will also need to change before blockchain can produce any meaningful impact on the way energy is bought, sold and accounted for (e.g., market role of smart contracts and agents, grid fees in P2P trading, consumer access to spot markets, etc.) So-called “regulatory drag” is very strong in this industry, not least because of the broad health, safety and consumer protection remits that market regulation and technical norms have in utilities.

One clear call to action from the EventHorizon 2017 attendees to industry regulators is that they should look into the implications of blockchains – and the sooner the better! – possibly by installing a dedicated task force. Luckily, a debate has started among European regulators, and legislation is being drafted that sets certain preconditions for the use of blockchains in the sector. But do we really need market regulation in a world where compliance and auditability are upfront? According to blockchain enthusiasts, the energy regulator’s role will likely evolve to become one of “smart contract certification” and “audit of last resort”.

From a broader market system perspective, blockchain is expected to simplify customer data management, enable dynamic retail pricing and enable users to better react to price signals, incentivizing demand-side response and ultimately leading to lower retail energy bills. This, of course, provided the blockchain ecosystem has enough endurance to get there!

If you want to learn more about Blockchain and Energy Insights, please contact JF Segalotto.

The Security Opportunity through the Channel - Key Trends, Opportunities & Challenges

Margaret Adam (Associate Vice President)

Customer demand for security remains high and remains a priority for most organizations. The growth of security products and markets has implications for the full ICT stack.  In our opinion, security also represents a prime opportunity for the channel, due to this intrinsic value to customers.

Additionally, the complexity of the security landscape creates an abundance of services opportunities.   Customers seek trusted partners who can identify and implement the security products required to protect themselves against the evolving threat landscape.   With so many point-based solutions and vendors available, customers want help unifying this into a full solution.

Channel partners are looking to transform from generalists to specialists, and are looking to differentiate their services through deeper specialization.  Building a security practice can help them achieve this.  Security vendors also recognize the value that good partners can unlock, such as unifying point solutions, and providing the required consulting, integration, and managed services.

However, many channel partners struggle to build a credible security practice. The security eco-system is fragmented and complex. Skills are in short supply, and often prohibitively expensive.

Security is a ‘horizontal’ technology, underpinning ICT environments end-to-end. This creates lots of room for implementation and integration engagements by partners. But partners also have a more strategic opportunity to help enterprises transform their approach to security in several areas whether through:

  • Unified security;
  • Repositioning security as an enabler for change (including digital transformation);
  • Adopting proactive approaches towards security (i.e., identify and respond to unknown threats before they can cause a breach) to stand alongside more traditional reactive ones (i.e., block known threats as they address the enterprise);
  • Building IT solutions that are secure by design and default, rather than being added as an additional “layer” added as an afterthought (i.e., eliminating problems such as usability friction and gaps in coverage).

Market demand in areas such as unified security and repositioning security as an enabler (rather than a blocker) are key business themes that create immediate channel opportunities. Significantly, these are themes with board-level exposure, giving partners the chance to cultivate longer-term and more strategic prospects. Furthermore, an increasing reliance on specialized security skills, along with growing regulatory pressures, provides opportunities for solution providers to differentiate their services.

Vendors need to pull together an ecosystem of partners. By creating communities, alliances, and partnerships, vendors not only increase their channel base but also create opportunities for different specialist channel partners to collaborate. The 3rd platform enables a host of opportunities through digital transformation, modernization, evolution, and expansion. However, it also represents an exposure to risk, presenting opportunities for evolving threat landscape to target enterprises. Customers look to their partners to support their digital transformation in a secure way while also helping them mitigate risk.

Current and future business imperatives, as well as market evolution, provide a strategic opportunity to transform the traditional, reactive approach to security. Partners need to position themselves as strategic partners for enterprises as they seek to harness security as an enabler for change in an intuitive, usable, and intrinsically secure fashion. If you are interested in reading more about this topic, our report, The Security Opportunity Through the Channel: Key Trends, Opportunities, and Challenges , discusses the further impact of security specialization on the channel, and vendors.

If you want more information about Channels and Alliances and its implications on Security, please contact Margaret Adam.