Riding the Seven Waves of Change That Will Power, or Crush, Your Digital Business

Riding the Seven Waves of Change That Will Power, or Crush, Your Digital Business

From hyper-personalization to API-driven ecosystems, here’s how to master tomorrow’s technologies and business models today.

RAJ BALA CHIEF TECHNOLOGY OFFICERCOGNIZANT TECHNOLOGY SOLUTIONS

[email protected]

2 KEEP CHALLENGING January 2016

Amid perpetual and accelerating technology shifts, businesses must ratchet up their ability to see, make sense of and respond to proliferating volumes of data. This data can yield predictive insights on everything from developing more personalized products and services, to unsnarling complex operational logjams.

Progressive organizations are already opening their APIs to business partners and embracing micro-services to fuel continuous innovation and build profitable e-business platforms. Meanwhile, these forward-thinking enterprises continue to address persistent security challenges with pervasive, layered approaches that keep mission-critical data and networks safe from prying eyes.

What follows is our crystal ball into seven critical technology and business upheavals your organization must navigate to succeed in the digital age.

We hope you find our perspective thought-provoking and prescriptive. Feel free to contact me at the e-mail below to discuss how these trends relate to your business and industry.

Preface

mailto:Rajasekaran.Balasubramaniam%40cognizant.com%0D?subject=

RIDING THE SEVEN WAVES OF CHANGE THAT WILL POWER, OR CRUSH, YOUR DIGITAL BUSINESS 3

Executive SummaryAcross every industry and in every corner of the globe, customers are demanding smarter, more personalized and more secure (yet less expensive) products and services. Meeting these imperatives will require new technologies and information architectures, as well as new ways of working and thinking about business and customers.

To understand these emerging business and technology mandates, look no further than the mirror.

Whether as an individual consumer or a business customer, you are more apt to buy from companies that don’t just meet but anticipate your needs, as well as customize products and services around your wants and desires. You mercilessly shop for the lowest price but expect the highest levels of service. You demand superb, instant support anywhere and anytime over any device, including mobiles and wearables. And any company that compromises your personal or corporate information because of a security breach is relegated to your blacklist.

As buyers and as sellers, the ground is shifting beneath our feet, propelled by seven fundamental technology and business waves. These include:

1. Gaining insights from the digital data generated by the online activities of every person, device and process. By analyzing these ever-growing data volumes — which we call Code Halos — organizations can uncover opportunities for revenue, savings and the development of new markets, products and services. Read more about the emerging insights-driven enterprise on page 6.

2. Serving “markets of one” by hyper-personalizing products and services that meet and anticipate customers’ spoken and unspoken needs. Business impacts include increased market share and the ability to command premium pricing. Read more about the coming age of hyper-personalization on page 9.


3. Establishing a smart, pervasive security strategy for a hyper-connected world that replaces “walled gardens” with self-protecting assets. This approach will enable businesses to securely provide customers, employees and business partners with the digital capabilities and information they need. Read more about over-the-horizon developments in pervasive security on page 12.

4. Seeing, knowing and responding in real time, using just-in-time intelligence from inside and outside the enterprise, including the ambient information generated by the proliferating Internet of Things (IoT). Embracing the IoT is already enabling pioneering organizations to sense and respond to everything from looming problems in machines and production processes, to subtle but important shifts in customer behavior and sentiment. Read more about coming trends in just-in-time intelligence on page 16.

5. Enabling enterprise control through digital code, using software-defined automation. Doing so enables organizations to not only slash IT and operational costs but also respond more nimbly than competitors to changing market requirements. Read more about the expanding software-defined enterprise made possible by “automation everywhere” on page 19.

6. Opening application programming interfaces (API) to create “network effects” that transform connected applications and data into holistic business platforms (think Salesforce.com in the software-as-a-service space). These platforms drive revenue as partners leverage your organization’s data and systems. Read more about the evolving API ecosystem on page 23.

7. Creating new skills and technology sourcing models that dramatically reduce the cost of acquiring and using information technology. Tapping new sources of global talent and technology allows businesses to ramp usage up or down as needed without prohibitive onboarding, training and other overhead costs. Ultimately this will accelerate the

“gig economy” trend that has already emerged. Read more about real-time skills sourcing on page 27.


Meeting these challenges, and exploiting these new models, requires a keen understanding of today’s dynamic world, in which the pace of technology change is accelerating more rapidly than ever before. All of the drivers we have identified are tightly interrelated and cannot be understood in isolation. The insights-driven enterprise, for example, both drives the need for and helps deliver hyper-personalized products and services. Just-in-time intelligence from IoT devices helps deliver real-time intelligence to enable better business decisions, as well as the real-time awareness required to improve security.

Understanding and responding to these transformative shifts holistically is not an academic exercise. In just the last few years, industry giants have been increasingly challenged and even rendered irrelevant by upstarts that have applied new technologies and business models to win the hearts and pocketbooks of switched-on digital consumers.

With shifts in all these areas moving at breakneck speed, the greatest danger is failing to imagine how an unknown startup could disrupt your business just when you think all is safe. At the same time, proactively exploiting these trends can open new horizons in terms of careers, business models, products, services and lifestyles that are unimaginable by even the most digitally-savvy industry guru.

Read on to learn more about the opportunities and challenges created by these seven interrelated trends, and see how our field-proven recommendations can help your business gain an unfair advantage on the competition.


Move from Raw Data to Insights, Faster

Today’s RealityEnterprises have access to more data than ever, originating from a plethora of sources, including consumers’ Web activity, wearable fitness monitors, smart manufacturing equipment, social media and internal legacy systems (see Figure 1). Translating these bits and bytes of structured and unstructured data into insights and foresights is a concept we call Code Halo™ thinking.1 As computing and storage costs decline yet enable ever-faster and more precise analysis of this data, enter-prises can react more quickly, even proactively, to changing market requirements, as if they were reading their customers’ minds.

Being first to discover and act on these insights also enables organizations to maximize profit margins (through cost reduction or premium pricing) or gain market share (through smarter upselling and cross-selling). Analyzing sales data can reduce costly inventory and improve the accuracy of staff scheduling, while the mining of network log data can uncover hidden security threats. Analyzing past outcomes can help hospitals save lives by deciding which patients to treat first in emergencies. Monitoring machine status (such as temperature, vibrations and energy consumption) can prevent costly damage or failure.

GraphicsX4 >Student

ExcitementX4 > Student

Battery LifeX4 > Student

LoveX4 > Student

4

3

ttitudeStore 1234 >

Laptops > Ted

CPUX4 > Student

2

5 Churn TargetCity > Store 1234

Churn TargetCity > Store 12343

2

In-Store OrganizationCity > Store 1234

In-Store Wait Time20 minutes > City

Store 1234 > Laptops > Ted

TrainingCity > Store 1234

Buying ExperienceCity > Store 1234 > Student

1 Website SearchX4 > Student

System removes unknown variables from customer feedback and categorizes it.

Username: bsmithE-mail: [email protected]

Sex: MaleAge: 22Location: Madison, WIPersona: Student

Website: ACME.com

Product: X4 UltrathinReview Date: 05/23/2011Overal Rating: 3.0Display: 3.0Performance Rating: 5.0Convenience Rating: 3.0Likelihood to Recommend: 8

I was so excited to get my new laptop from ACME. It has super sick graphics, beefy cpu and awesome battery life. The laptop was not easy to ebsite. When I found it I didnt want to pay for the redicu-lous shipping cost...so I went to the store to pick it up. The place was a di-saster area it made me sick. I couldn’t

anything. After waiting for 20 minutes for a yellow shirt help. Ted was friendly, but, he had no idea how to answer question about the X4. Man, i loved that laptop but this sale should have been easy and it wasn’t. #fail ACME :( I’m going to Target.

Combining Structured, Unstructured Data to Generate Actionable Customer Insights

Source: “Customer Insight Command Center Speeds ‘Just-in-Time’ Marketing,” Cognizant Technology Solutions, September 2014.

Figure 1

The Insights-Driven EnterpriseSECTION 1:

Accurately linking structured data to unstructured data enables actionable customer- and store-level insights that were previously unavailable with other methods and systems.

http://www.cognizant.com/InsightsWhitepapers/customer-insight-command-center-speeds-just-in-time-marketing-codex1015.pdf

http://www.cognizant.com/InsightsWhitepapers/customer-insight-command-center-speeds-just-in-time-marketing-codex1015.pdf


Even more powerful are the new business models built around real-time, even predictive, awareness of customer needs and trends. Examples range from auto insurers that can price policies based on real-time driving behavior gleaned from on-board sensors, to Amazon’s ability to predict orders from a given geography and pre-ship them to a local warehouse for faster delivery when the actual order is placed.2

Whatever your industry, failing to move toward an insights-driven approach will render you progressively blind to market opportunities and risks, and at risk of being outmaneuvered by competitors with a clearer view of near- and long-term trends.

The following are some of the new tools businesses are using to build and extract meaning from Code Halos:

• Cognitive computing, which uses machine learning to create systems that are easier and more natural for humans to use.

• Machine learning, in which applications learn new patterns and responses without being specifically programmed.

• Natural language processing that mirrors human speech and writing patterns.

• Predictive analytics that anticipate and meet the needs of customers at ever-lower costs and greater speed.

• Prescriptive analytics that help enterprises identify the next best action for a given scenario.

Tomorrow’s Possibilities The dual forces of improved analytics and cost-cutting pressure will lead enter-prises to automate more strategic decision-making. This is already happening with routine text entry and accounts payable tasks and will spread to more sophisticated decisions, such as audit and tax compliance. Over time, software bots (programs that operate on behalf of a user or another program and mimic a human activity) will optimize business processes, bringing more intelligence to both customer-facing processes, such as real-time product recommendations and discounts, and internal processes, such as IT security and management.

Analyzing consumer data — location, purchases, social media postings, etc. — will enable businesses to more accurately predict customer needs and offer customized solutions. IoT data will enable manufacturers to more completely understand the lifecycle of the devices they produce and better support them. Recognizing the importance of customer sentiment, businesses will also look for new ways to measure emotions such as enthusiasm and excitement, along with customer actions, such as downloads and clickthroughs.3

At the same time, more powerful analytics and big data tools will enable organi-zations to move from backwards-looking dashboards to proactively addressing customer needs, identifying market trends and creating new business models.


• Focus on providing a superior customer experience, which is where businesses must outshine their competitors. For example, organi-zations can build personalized models of various customer types through machine learning, and apply predictive analytics to drive higher-margin sales and improve marketing campaigns. They can also use social, mobile and analytics tools to collab-orate with customers, obtain their early feedback on new products and services and adapt offerings in real-time to best meet their needs.

• Develop expertise in, and acquire appropriate tools for, big data analysis, modeling, analytics and data visualization, such as in-memory computing or stream processing.4 Put special emphasis on modeling — choosing the proper data, algorithms and variables and validating that they reflect how the business actually operates. Learn when to use deductive modeling (working from general hypotheses to more specific predictions) vs. inductive modeling (working from specific observa-tions and building hypotheses from them).

> Understand and acquire skills in managing and analyzing the different types of structured and unstructured data required for real-time insights into various types of problems.

• Master the visualization and sharing tools that enable self-service, on-demand analytics for employees. New services such as Amazon Web Services’ QuickSight are already coming online to provide on-demand business intelligence.

• Plan for the move to predictive analytics by iden-tifying key processes for which taking action “before it happens” can result in outsized business benefit.

• Invest in the infrastructure and application tools and skills required for agile, relatively low-cost experimentation, quickly proposing hypotheses, testing them and then acting on the results. If the cost of experimentation is too high, businesses will not be able to build a culture of sustained improve-ment and innovation.

• Carefully choose which data to collect and analyze based on your specific industry and business challenges, as well as the value of the customer, device or process involved. A health

insurer, for example, might focus data collection on policy holders at risk of developing chronic and costly conditions such as diabetes. Aggregating every bit of old and new information from all sources can drive storage, processing and data management costs to unacceptable levels. Collecting everything and sorting out the relationships later can lead to higher costs and delayed business benefits. Keep in mind the “garbage in/garbage out” rule, focusing relentlessly on data quality.

• To make the best use of IoT data, employ abstrac-tion layers, such as master data management and metadata models, that allow business users, not just IT professionals, to understand what data is available, what the data represents and how to quickly generate insights. Leverage existing data from legacy industrial sensors, as well as the analytic models used in legacy systems, to schedule maintenance, production runs and the ordering of raw material.

• Don’t be discouraged if existing algorithms cannot process the amount and variety of data generated by devices on the IoT. Employ a “divide and conquer” approach, splitting the largest business problems into subsets that can deliver useful and accurate results, using current analytics tools and real-time data.

• Remember that human input is still needed to ensure problems are properly modeled in ways that reflect the actual data. This is especially true for activities in which it is unclear which variables influence each other. Similarly, people-focused

“sanity tests” should be applied to the insights generated. Just because an algorithm detects a customer is pregnant doesn’t mean she would welcome a congratulatory package of coupons for baby gear, as one U.S. retailer found with an underage customer living with her parents.5

Advice for the Insights-Driven Enterprise

Quick Take


Serving Markets of One

Today’s Reality Every customer has unique wants and needs, even if he or she is the same age or in the same income bracket or ZIP Code as countless others. Today’s most loyal and lucrative customers expect products and experiences to reflect their ever-changing preferences, needs and context, such as their past behavior, choice of device and location, and forward-thinking companies are responding (see Figure 2).

By analyzing big data analytics, geolocation and historical metadata, enterprises can customize products and services to meet, anticipate and exceed customer needs (see Section 1 on the insight-driven enterprise, page 6). The supply chain for physical products and digital services must support just-in-time customization, or hyper-personalization, and technologies such as natural language processing, text-to-speech and avatars must provide hyper-personalization capabilities in the most user-friendly form.

More Than Half of All Marketers Use Personalization

Hyper-PersonalizationSECTION 2:

Marketers were asked if they were using real-time (<1 second) personalization in any of the following channels. (Multiple responses allowed.)

Website MobileWebsite

WebApplication

MobileApp

None of theabove / NA

H E L L Omy name is

44%

17%

13%

9%

42%

Base: 242 respondents with marketing or line-of-business titles. Source: “Trends & Priorities in Real-Time Personalization,” Researchscape International, 2015

Figure 2

http://www.evergage.com/wp-content/uploads/2015/06/Evergage_Trends__Priorities_in_Real-Time_Personalization_2015.pdf?utm_source=hs_automation&utm_medium=email&utm_content=18406238&_hsenc=p2ANqtz—RXeGRbN5TsdVE3J1ZqU8bnDVr_jwymFl2Dz9lpbs4kkasbOGV0C70qaLFLRIo8Cijfc2QpPtweavbHrLDx-6wl7CSmA&_hsmi=18408831

http://www.evergage.com/wp-content/uploads/2015/06/Evergage_Trends__Priorities_in_Real-Time_Personalization_2015.pdf?utm_source=hs_automation&utm_medium=email&utm_content=18406238&_hsenc=p2ANqtz—RXeGRbN5TsdVE3J1ZqU8bnDVr_jwymFl2Dz9lpbs4kkasbOGV0C70qaLFLRIo8Cijfc2QpPtweavbHrLDx-6wl7CSmA&_hsmi=18408831


British Airways’ “Know Me” program, for example, combines various data sources to create a single customer view, and uses it to give extra attention to high-value customers or those who have recently experienced delays or other problems. It also allows employees to search Google Images for a photo to immediately recognize such customers.

Some retailers are already using big data analytics to build detailed records of the behavior of their best customers and proactively push offers to them in anticipation of their needs. These records might show, for example, that a customer submits a clothing order every six to eight weeks at lunchtime on Wednesday. If the shopper hasn’t purchased by Thursday morning on that cycle, the retailer can send an offer for the customer’s favorite sweater style in a color he doesn’t yet own.

For some products, technologies such as 3-D printing (at a site near the customer or vendor) can speed production and delivery of hyper-personalized products. An example is Normal,6 which provides a smartphone app that allows customers to take a photo of their ear canal, from which the company can custom-print earphones.

Another example of the hyper-personalization phenomenon comes from wireless provider Virgin Mobile, which enables customers to build their own service plans based on the number of users and amount of voice, data and texts they wish to pay for, even how much data different family members can use. In India, wireless provider Tata Docomo used Facebook Custom Audience to display customized ads to users based on their recent Facebook activity. As a result, the company won back more than 350,000 lapsed customers, boosted the use of services such as paid subscriptions for songs by 26% per user, and realized more than $2 million in incremental revenue per month.7

Tomorrow’s Possibilities The first wave of personalization is well underway, with customers responding to shopping recommendations from businesses such as Amazon and entertainment recommendations from Netflix. Such on-the-fly customization is now spreading to other services and mainstream markets.

In healthcare, doctors sometimes use insights into a patient’s unique biome — the unique mix of bacteria and other organisms in their bodies — to tailor diet or medication recommendations.8 Successful businesses are also intuiting customers’ intentions from their actions, both online and offline, in increasingly sophisticated ways to understand the implicit requests they make.

For example, a retailer’s Web analytics might indicate a customer has conducted three searches on the company’s site for “extra-large buffalo plaid flannel shirts” but failed to make a purchase. The business’s CRM records might show the customer


initiated a chat on the issue but gave up after failing to connect with an agent. The retailer could respond by generating a customized offer to check its remainders, back inventory and upcoming shipments to find the best price on the specific item. A customer receiving such proactive help is much more likely to complete that transaction and recommend the site to others.

Businesses that generate the greatest sales and margins will explore opportunities to push highly personalized offers to customers, based on their location in the store, their Web search patterns or other behaviors that indicate a need for assistance (see Figure 3). This will require the adoption of emerging technologies such as locator beacons and “smart mirrors” that allow a customer to view how an item would look on them, and share the image on social media.

Such on-the-fly customization can boost customer loyalty and sustain, even expand, market share. Moreover, it can provide the opportunity to create and deliver products and experiences that command a premium and possibly disrupt entire industries. Think Uber and its ability to match the needs of individual vehicle owners (i.e., to earn money) with passengers who need transport (and are willing to pay).

On a more tactical level, hyper-personalization driven by analytics and machine learning can reduce support costs and improve customer service by providing highly customized services without costly human intervention. Imagine the convenience for a commercial customer, and the associated reduction in administrative costs, if a supplier could predict its use of various raw materials and automatically deliver just the right amount of the right material at the right time. Assuming an organization has properly tweaked its supply chain, such hyper-personalization can also help it profitably serve niche markets with smaller production runs.

Of course, this requires a business to enable hyper-personalization at low enough cost levels (or charge enough of a premium) to make the effort worthwhile. Further, faulty execution (poor recommendations, hard-to-use interfaces) will hurt rather than help the brand, as will the failure to create ordering, production and distribution systems flexible enough to deliver the customized product, services or content.

Ensuring data quality to support such hyper-personalization can be a major challenge, especially as data is drawn from multiple internal and external systems. Finally, organizations need to meet increasingly stringent security demands to protect customer data (see Section 3 on pervasive security, page 12).

Welcome, Angela! Today’s deal: Buy this top for 50% off!

BEACON

Targeting Customers with Custom Offers

Figure 3


Deploying Layers of Self-Protecting Digital Assets to Mitigate Cyber Risk

Today’s RealityEvery day, more applications and services move to the cloud, as businesses realize cost savings and boost agility through highly networked, just-in-time IT and human resources. Along with the explosion of mobile devices and applications, this approach dramatically increases the variety and complexity of technologies that employees, partners and customers need, when and where they choose.

Securing this hyper-connected world requires organizations to move beyond the traditional secure perimeter they established around their business-IT infrastruc-ture. While this may once have protected their business-critical traffic, attackers who penetrate the organization’s “walled garden” can now compromise almost any critical system, posing unacceptable risk. This is a no-win proposition in today’s digital age when it’s difficult to predict which employees, business partners and customers may need system resources at any time.

The dangers are only magnified by the rise of organized hacking for profit, and espionage or sabotage by nation-states. One look at the rise of security breaches in the retail space — such as the recent hacks into toymaker VTech’s website and Mattel’s Hello Barbie algorithmically-powered doll9 — reflects the magnitude of the problem that will only get worse over time if organizations do not plug the gaps in today’s leaky IT environments (see Figure 4, next page).

Advice for Hyper-Personalization

• Provide intuitive tools for “self-customization” of products and services. For example, one wireless provider already lets customers use their current bill to estimate the most suitable custom plan.

• Be clear with your customers about which of their actions are being tracked, and provide an “opt out.”

• Experiment with the proper medium and timing of personalized offers. Many businesses may begin by over-personalizing their offers in ways that customers reject as intrusive, and then pull back in the face of resistance.

• Start small, iterate often and be prepared to “fail forward” by learning from your mistakes. Even with the most advanced analytics, it can still be difficult to determine the context of a customer’s actions and intent.

• Put business-savvy humans in the loop for a “common-sense” review of the validity of the analysis and the action taken based on it. For example, if an algorithm finds that lower-income home buyers in a specific age group are a better loan risk than previously thought, human experts should review the underlying data to ensure it has not been manipulated by, for example, unscrupulous lenders.

Quick Take

Smart, Pervasive Security for a Hyper-Connected World

SECTION 3:


The answer lies in implementing pervasive layers of assets that are intelligent enough to protect themselves. Such approaches include containerization — multiple, isolated environments that enable personal and professional use of the same system — and technologies like encryption and mobile management tools that control what users can do with their company-supplied or personal devices.

Machine learning and artificial intelligence also help by correlating multiple security- related events from various systems to identify the source of a breach, and adaptively learning how to counter it.

Tomorrow’s Possibilities The number and types of systems vulnerable to attack will explode with the acceler-ating adoption of mobile technology, as well as the 50 billion smart devices expected on the IoT by 202010 (see Figure 5, next page). Public concerns over IoT security will only grow as more revelations emerge, such as the misuse of embedded software to seize control of a vehicle11 and the hacking of medical equipment to change drug dosages.12

Securing devices on the IoT will be especially challenging because some, such as sensors, lack the computing power or memory to support security mechanisms such as encryption and authentication. Because of their long lives, variety and upgrading difficulties, these devices will continue to be a weak link in the security chain. This reinforces the impossibility of physically controlling every end point,

JANFEB

MARAPR

MAYJUN

JULAUG

SEPTOCT

NOV

TARGET40M individuals’contact informationstolen

AARON BROTHERS400K customers’ credit & debit cardinformation stolen

NEIMAN MARCUS350K individuals’credit card information stolen

SALLY BEAUTYCompany admits that about 25K credit card numberswere compromised,but others speculatethat 280K+ recordsmay have been impacted

ALBERTSONSSUPERVALUPayment card datacompromised at180 Supervalu stores between June 22 & July 17

MICHAELS2.6M individuals’credit cardinformation stolen

P.F. CHANG’S33 P.F. Chang’slocations affected

UPSCustomers’personal information from 60 UPS stores compromised

BARTELL HOTELS55K customers’informationreportedly stolen

GOODWILL868K credit &debit cardsreportedly stolen

HOME DEPOT56M individuals’credit cardinformationstolen

STAPLES113 U.S. storesaffected, 1.16Mshoppers’ debit &credit card datastolen

KMARTMalware stolecredit card numbersfrom 1,200 Kmart stores for overa month

DAIRY QUEENCredit & debit card informationcompromised at395 Dairy Queen and Orange Julius stores

Retail Under SiegeDigital theft and fraud committed in 2014.

Source: “2015 Dell Security Annual Threat Report,” Dell Computer, 2015.

Figure 4

https://software.dell.com/docs/2015-dell-security-annual-threat-report-white-paper-15657.pdf


as well as the need for stronger authentication models (certificate revocation, biometrics, a trusted platform module) to protect not only “dumb” devices but also the software “bots” that will increasingly perform functions such as price negotia-tion on behalf of people.

Meeting tomorrow’s security challenges will require a multi-layered approach and ongoing investment in assessing, monitoring and remediating an ever-changing mix of attack vectors, as well as ongoing cooperation from and monitoring of business partners. Stakeholders must realize that vulnerabilities considered acceptable when applications were seen only by employees must now be addressed now that every breach is open to the world. Businesses should assume they have been com-promised (because they likely have been) and reinvigorate their attempts to identify anomalies in network traffic and application behavior that could indicate a breach.

With the right approach to security, organizations can avoid regulatory fines, reputational damage and sales declines, as well as plummeting market share and customer loyalty in the wake of breaches. Additionally, businesses can also use security as a competitive dif-ferentiator that enhances their brand, given increased consumer awareness of cyber risks. Consistent, reliable and easily implemented security measures, supplied by multiple layers of self-protecting assets, can also drive the business by allowing it to more quickly and easily access, analyze and share data with employees, customers and business partners. Building security at all levels also gives businesses the confidence to move quickly, innovating and experi-menting with the knowledge that their core assets are protected.

However, new technologies and ongoing user education require serious investment and effort. Correctly calibrat-ing the cost of security with its benefits

is difficult and can lead to over- or under-spending. Security staffs must also be careful not to reflexively deny access to corporate systems without evaluating the business benefits of such access, so they are not seen as — or actually become — a roadblock to innovation.

0

10

20

30

40

50

2012

8.711.2

14.4

18.2

22.9

28.4

34.8

42.1

2014 2015 2016 2017

Penetration of connected objects in

total “things” expected to reach 2.7% in

2020 from 0.6% in 2012.

Number of connected objects expected to

reach 50 billion by 2020.

2018 2019 20202013

2%

3%

5%

Number of global connected objectsin billions

Percent of total things in the world

50.1

The Exploding Internet of Things

Source: Cisco

Figure 5

Meeting tomorrow’s security challenges will require a multi-layered approach and ongoing investment in assessing, monitoring and remediating an ever-changing mix of attack vectors, as well as ongoing cooperation from and monitoring of business partners.

http://newsroom.cisco.com/feature-content?articleId=1208342


Advice for Pervasive Security

The most important pillar in a digital security strategy is new thinking. Security is no longer only the job of the IT department, and cannot only be focused on the perimeter. Security must now be the concern of every employee and business unit, with the understanding that it’s not a matter of if, but when, the business will be compromised. The chief information security officer (CISO) needs visibility into, and a reporting relationship with, the highest levels of management. CISOs must make it clear that security is no longer a “gating” function that slows innovation but a critical enabler of the business and protector of the brand. As organizations adopt DevOps13 to speed application deployment, they should consider adding security experts to the scrum teams. Security must also be “industrialized” through increased automation and the auditing of not only code but also production and test environments at all stages of the development lifecycle.

Technologies Pervasive security requires a host of emerging and estab-lished technologies, deployed in multiple locations, including:

• Software-defined security that allows multiple layers of assets to protect themselves, using abstraction technolo-gies that apply customized policies to any combination of users, devices or assets and among multiple service providers. Much as “software-defined networks” can be reconfigured without touching physical devices, “software-defined security” can easily adapt to changes in business processes, the sensitivity of data or the needs of customers, employees or business partners.

• Homo-morphic encryption, which enables workers to use encrypted data without decrypting it. Data remains protected even if the corporate firewall is breached.

• Ephemeral systems, which are built from known components and last only as long as the business needs them, which reduces the number of vulnerable assets.

• Micro-services that can be cost-effectively “plugged into” applications. This approach can provide pervasive security by enabling functions such as identity and access management or encryption. The business owner of each process must ensure adequate levels of security for each corporate resource or process. (Read more about micro-services in Section 6 on API-driven ecosystems, page 23.)

• Easier to use and more robust authentication approaches. Such techniques include multi-factor authen-tication, such as verification codes sent to smartphones, and identification of a user’s unique pattern of typing or shifting among applications.

Processes

• Robust audits and sharing of detailed post-incident analysis across the business to reinforce that security is everyone’s responsibility.

• Creation of detailed user- and platform-specific baselines of normal behavior to help identify potential threats anywhere in the enterprise.

• Use of automation to cost-effectively protect exponen-tial increases in users, data and traffic. This includes the use of IT forensics and related technologies and algorithms to detect potential breaches more quickly.

• Tailoring of security to specific devices and users to minimize cost and effort. For example, clusters of devices with lower levels of CPU and memory might use symmetric key pairs to manage encryption, while more capable devices could employ a public key infrastructure (i.e., the use of keys and digital certificates to verify identities and allow the secure exchange of data over public networks) with asymmetric keys.

• Rewards such as less stringent security requirements for users who follow best practices, such as the use of strong passwords, not downloading malware or keeping applications patched.

• Ensuring pervasive security through automated threat tracking to determine which vendors are safe to work with, and what data to share with them.

• Use of DevSecOps (the integration of development, security and operations teams) to include security in all phases of the development lifecycle.

• Ongoing user training and education to guard against phishing or other fraud schemes.

Security must be the concern of every employee and business unit, with the understanding that it’s not a matter of if, but when, the business will be compromised.

Quick Take


Sense and Respond in Real Time for Customer Benefit

Today’s RealityThrough the IoT, businesses face an historic opportunity to use just-in-time intel-ligence to create new business models or extend existing ones that save customers time and money, as well as make their lives safer and easier. IoT data is well on its way to tracking everything from the fuel consumption of a jet engine in flight, to the temperature of a pallet of frozen food, to a shopper’s location in a mall or their heart rate at the gym (see Figure 6). Devices ranging from drill bits to production machinery and household appliances are, or soon will be, continuously sensing and responding to environmental conditions, and sending updates about their health and status.

Just-in-Time IntelligenceSECTION 4:

$30 billion Jet fuel

Estimated cost savings (cumulative) in five industries over 15 years, propelled by a 1% reduction in fuel, capital expenditures and inefficiencies.

COMMERCIAL AVIATIONThrough better flightplanning and operationalchanges.

OIL & GASBy boosting availability of keyequipment sets, reduced fuel

consumption, enhanced productionrates and reduced costs.

$66 billion

Gas generationefficiency

POWERImproved gas-generation

through integration ofnatural gas and power grids.

$27 billion System

inefficiencies

RAIL TRANSPORTATIONReduced maintenance costs throughreal-time diagnostics and predictiveanalytics, and eliminating waste in fleet scheduling through fleetinstrumentation.

$63 billion System

inefficiencies

$90 billion Capital

expenditures

HEALTHCAREIdentify equipment issues and improve resource usage and outcomes to drive downthe cost of clinical and back-office operations.

How IoT Helps Generate Value

Source: “Decomposing the Internet of Things: A $14.4 Trillion Opportunity,” Cognizant Research Center, 2014.

Figure 6

http://www.cognizant.com/perspectives/decomposing-the-internet-of-things-a-144-trillion-opportunity


Imagine having a complete view across the value chain, from the latest cost and shipping time for a raw material, to the status of work in progress in the factory, to the latest social media sentiment about your organization’s brand and product usage statistics from the field.

Take the Nest thermostat, which learns a homeowner’s schedule and automatically adjusts heating and cooling to match it. Manufacturers of products ranging from commercial air conditioners to truck engines and transformers in electric grids are reducing repair costs and improving customer service by analyzing performance trends to identify problems early on and trigger repairs to prevent more costly failures.

Tomorrow’s Possibilities Just-in-time intelligence will expand as Web-enabled sensors become embedded in clothing, facilitating continual remote health monitoring. Businesses can use this data to offer products and services, including customized training regimens, health alerts and personalized equipment, such as an ankle brace if a sensor’s analysis of a runner’s stance indicates he needs one. One company already offers shoes that sync with customers’ smartphones, track their location and provide directions by generating vibrations in the shoes.14

Sensors embedded under the skin could eliminate the need to wear a separate monitor, and even be used for authentication to log into devices or open doors. Sensors from cars, buildings, roads and weather monitoring facilities will create “smart cities” that help citizens avoid traffic jams, reduce energy use and react more quickly to safety issues, allowing authorities to instantly close streets and route traffic around emergencies. The combination of real-time information on location, weather and other elements, combined with the instant delivery provided by drones, will provide unparalleled levels of convenience, as well as new sales opportunities.

Just-in-time intelligence will be the next competitive battlefield, as businesses race to meet consumer and business expectations for immediate information, enter-tainment, help and product delivery. For businesses, timely analysis of field data will improve the tracking of goods in transit and in the production process, reduce inventory overhead through just-in-time delivery, and cut transportation costs through more efficient routing. Better monitoring of equipment in remote locations will allow proactive detection and resolution of problems, reducing downtime and repair costs. Analyzing patient information in real time will reduce costs and enable remote diagnostics and personalized coaching to prevent or reduce the impact of chronic disease.

The combination of real-time information on location, weather and other elements, combined with the instant delivery provided by drones, will provide unparalleled levels of convenience, as well as new sales opportunities.


Quick Take

Such real-world, real-time awareness — if communicated to the right stakeholders and acted on properly — could also help prevent “extinction events”15 that threaten the survival of a brand. Consider, for example, if location data from smartphones indicated that large numbers of customers at a restaurant chain are arriving during lunch hour but then leaving. The business could immediately investigate to see if

the problem is long lines, poor customer service or discourte-ous wait staff. On the IT front, real-time analytics of network, user and application behavior can uncover security breaches while they are happening, allowing organizations to address them before they do harm.

However, with so much data available from so many sources, businesses can incur unnecessary costs, or fail to generate insights in a timely manner, by storing more data than they need. Additionally, as with other insight-driven services, businesses will also need to respect customers’ privacy and ensure their security. This will be especially challenging for IoT sensors that lack the compute or memory resources to support robust encryption or authentication (see Section 3 on pervasive security, page 12). Early movers must work around a lack of standards that makes it more expensive and

difficult to integrate legacy or proprietary devices into modern networks, and raises the risk of vendor lock-in. Organizations must also ensure data quality and consis-tency between fast-changing “edge” data and historic information stored at the core of the network for longer-term analysis.

Advice for Just-in-Time Intelligence

• Tapping the radical new possibilities created by just-in-time intelligence requires a broader view of customer needs and potential new markets. Engage with stakeholders from across the business and with external partners (legacy and startups) to uncover the broadest range of opportunities to add value. While cost reduction, efficiencies and incremental sales might drive the first round of innovation, do not overlook the transformational potential of entirely new business models built around the convenience, speed and health benefits of real-time intelligence.

• Avoid “big bang” initiatives and instead experiment with relatively quick, easy and inex-pensive analytics projects that test and refine hypotheses about critical business trends. Scalable, cloud-based platforms for storing and sharing data will help enable a fail-fast-and-learn strategy.

• Machine learning, cognitive computing and other advanced analytics techniques will be essential for improving both the quality of the insights generated, and the speed with which

they can be shared and acted on. Finding staff with the appropriate skills in these areas may require retraining or finding creative approaches, such as crowdsourcing.

• While the technical challenges are formidable, organizational and cultural issues are equally important. Real-time edge analytics involve activities that occur closest to the business and the customer, whether that is at an oil wellhead, retail store or customer smartphone. Successful companies will effectively use the real-world experience of savvy front-line staff to decipher clues that emerge from sophisticated machine learning environments.

• To be sure just-in-time insights don’t sit on the shelf, share them not only with headquar-ters, but also with customer-facing employees and decentralize authority to empower front-line decisions. For example, a local restaurant or store manager might be given more freedom to change hiring practices or prices or take other remedial action, based on their knowledge of the local market.

Real-world, real-time awareness — if communicated

to the right stakeholdersand acted on properly — could

help prevent ‘extinction events’ that threaten

the survival of a brand.


Enterprise Control through Code

Today’s RealityTwo related trends — virtualization and automation — are changing the face of everything from network security to insurance underwriting.

Virtualization (the abstraction of software from hardware) is rapidly spreading from servers and storage to other devices and services. Everything can be defined as software, from enterprise networks (and underlying systems), to business and IT functions such as security, in the form of abstraction layers and code that can be easily deployed on-premise or in the cloud. eBay’s online auction service, for example, has made infrastructure a competitive differentiator through the creation of a software-defined data center that automates not only infrastructure but also load balancing, object storage, databases as-a-service, configuration management and application management.

At the same time, businesses are better able to cut costs and cycle times by automating processes, thanks to increasing computing power, the ability to perform faster and more predictive analytics and the development of new tools to model and describe processes, from claims processing, to invoice entry, to x-ray analysis. An example is drones that scan inventory in warehouses and, if Amazon has its way, deliver packages to consumers.

Within IT, more and more tasks (from application testing to infrastructure deployment) are performed reliably and inexpensively by rules-based scripts, providing the IT infrastructure that produces the insights on which the business relies.

Automation enabled by mobile devices provides consumers with a virtual control panel to function in an increasingly automated world, allowing them to control everything from thermostats to security systems through mobile applications. Robotic vacuum cleaners and pets are already available for the home, with automated care-givers not too far behind.16

The common thread in this drive toward automation is the ability to use code, rather than human interac-tion, to perform critical everyday functions. While cost reduction is the short-term business driver, the long-term payoff lies in greater agility and the ability to cost-effectively experiment by developing new products, services and business models.

Software-Defined Everything/ Automation Everywhere

SECTION 5:

The common thread in this drive toward automation is the ability to use code, rather than human interaction, to perform critical everyday functions.


Tomorrow’s Possibilities Automation, currently confined to provisioning and management of the IT infra-structure, will next expand to IT processes.

For example, developers working in multiple locations today must alert each other when they commit code to a repository. It can then take days to compile the source code and create a build that can be tested before it is deployed. A fully automated process would algorithmically create new builds, test them and then return them to developers with a list of defects or enhancements for the next build. These levels of continuous integration and deployment are needed to deliver market-facing appli-cations quickly enough to define and dominate new markets.

Moving beyond IT into business process automation will take longer and require improved skills in business process modeling to accurately replicate manual processes in software.

A further step is automating interactive repetitive services, such as answering questions from customers and conducting routine transactions. Early versions of this capability can be seen in the automated wealth management and robo-advisors at some of our clients in the financial services industry. If this could be extended

to service processes in every company — providing automated, intelligent answers to customers — the benefits of lower prices and higher quality would be immense.

For example, within a month of deploying an autonomic platform, a U.S. investment bank with which we work was able to resolve 80% of failed trades without human involvement. It reduced average resolution and fix time from 47 minutes to four minutes while reducing staff costs 35%.

Another frontier is marketing automation, which analyzes customer behavior over various channels

and automatically provides the next best offer (whether content or a product or service promotion). The logical next step would be combining the automated services with marketing, and automating processes such as price negotiations, buying and reordering.

Over time, the increased use of machine learning (the use of algorithms that can learn from experience) and predictive analytics will allow these “robots” to take on more and more complex tasks. For instance, many news aggregation websites use automatic authoring tools to deliver customized news updates to readers, while programmatic direct ad buying provides advertisers a guaranteed number of impressions from consumers on publisher sites.

Moving beyond IT into business process automation will take

longer and require improved skills in business process modeling

to accurately replicate manual processes in software.


Automation enabled by hardware virtualization allows administrators to reconfig-ure networks and change security or service policies with a mouse click rather than visiting a server rack. It reduces management costs and errors while improving security through automated, error-free configuration and policy-based, real-time responses to threats.

Just as in application development, automated straight-through processing can also deliver lower costs, shorter time to market and improved customer service for business processes (see Figure 7). (Read more in Section 1 on the insights-driven enterprise, page 6.) Imagine, for example, the integration of multiple automated activities that enable customers to select a vehicle, choose financing and insurance, and complete the purchase through a single user interface. Analysis of consumer choices could be used to continually refine the interface, as well as the associated products and services that can be cross-sold or up-sold to different customer segments.

COST REDUCTION

Reduction of operational support costs on average by 30% to 35%. IT avoidance of unnecessary automation software licensing costs.

SERVICE LEVELENHANCEMENT

Dramatic enhancement of service level and improvement in SLAs with reductions in cycle times.

IMPROVED PREDICTABILITY& AVAILABILITY

Significant improvement in application service availability. Significant improvement (approximately 60%) in mean time to resolution (MTTR).

SERVICESSCALABILITY

Unlimited scaling of virtual engineers for automating repetitive and mundane taks; freeing expensive and critical resources for innovative and people-focused work.

FLEXIBILITY

Interoperability with current support infrastructure and investments.

Autonomics Drives Efficiency and Flexibility

Source: “Autonomics: Mastering Self-Learning and Self-Healing,” Cognizant Technology Solutions, March 2014.

Figure 7

http://www.cognizant.com/insightswhitepapers/Autonomics-Mastering-Self-Learning-and-Self-Healing.pdf


Organizations must carefully assess whether these software-defined capabilities will scale and perform as promised, and sometimes wait for robust management and security capabilities. Automation also requires balancing the benefits of lower costs and greater speed against the loss of human control over business-critical infrastructure and services. Organizations may also struggle with how to cost-effectively and securely extend automation across on-premise and cloud environments. Staff who built their careers on manual configuration and fine- tuning of infrastructure might lack the willingness or the ability to switch to a more automated, program-

matic approach. This could require new skills or new staff, replacing single-platform experts with those who have the big-picture view, as well as the skills to implement best practices as scripts and algorithms.

Automation also requires balancing the benefits of lower

costs and greater speed against the loss of human control over business-critical infrastructure

and services.

Advice for Software-Defined Everything/Automation Everywhere

• Automate IT infrastructure provisioning and management first, as it is typically the most mature organizational area, delivers the greatest short-term cost savings and is essential to driving business agility.

• Automate specific steps such as the creation of user interfaces or testing, as well as code hand-offs from requirements through deployment. A good starting point is automating the creation of regression test cases, along with continuous integration and build. Getting to full seamless automation requires overcoming concerns (such as security) about sending test data and code to the cloud.

• Automation can also be aided by the use of containers, which create secure “sandboxes” for multiple applications sharing a common operating system. This significantly reduces the amount of CPU and RAM required because

each application does not need its own instance of an operating system.

• To automate business processes, take advantage of emerging tools, such as the S-BPM (subject-oriented business process management) modeling language that allows users to describe processes in a way that is understandable to both people and computing systems. Focus first on processes that don’t change too often.

• Digitize all the relevant data as early in the process as possible and present it in a single user interface. Doing so minimizes the delays, errors and costs of manual re-input.

• Focus on the low-hanging fruit — those processes in which productivity is so low or volume is so high that even modest reductions in effort yield significant results.

Quick Take

Automate IT infrastructure provisioning and management first, as it is typically the most mature organizational area, delivers the greatest short-term cost savings and is essential to driving business agility.


Delivering the Network Effect for Enterprises

Today’s RealityAs software “eats the world,”17 APIs are becoming a core corporate resource, as they allow applica-tions to communicate with other systems.

The power of APIs lies in their speed and ease of use, compared with the brittle system-to-system interfaces that businesses have historically used to connect applications to each other or to back-end systems.

On a tactical level, businesses tap APIs from business partners and vendors to enable rapid, easily maintained connectivity among an ever-changing mix of data, services and devices (see Figure 8). They also publish their own APIs to create interoperable ecosystems with customers, and to enable business partners and other third-parties to connect with their systems and applications. A leading discount drug retailer, for example, uses APIs to allow users of third-party mobile applications to print photos directly from their smartphones at their local store. This not only drives revenue from photo printing services but also draws customers into stores for possible additional purchases.18

On a more strategic level, easy-to-use APIs can turn a business into a “platform” from which it — as well as third-party developers — can generate revenue (see Figure 9, next page). The platform economy spans organizational boundaries, fueling innovation from internal business groups and trusted partners. APIs from Salesforce.com, for example, allow third-party developers to write appli-cations that increase the value of its namesake customer relationship management system. Google’s APIs allow developers to tap into Google services such as its maps, resulting in the funneling of users and ad revenue to Google. APIs generate nearly half of the annual $3 billion in income at Salesforce.com, and close to 90% for the Expedia travel website.19

Tomorrow’s PossibilitiesThe importance of APIs increases with the sale of every smartphone, wearable fitness tracker and smart appliance or industrial device. Each of these devices instantly generates data about its status, communicat-ing its owner’s wants, needs and behavior. The metadata generated enables organizations, or their partners, to derive and apply insights (see Section 1 on the insights-driven enterprise, page 6). This may be as straightforward as offering homeowner’s insurance to an auto insurance policy holder who just changed addresses, or as complex

API-Driven EcosystemsSECTION 6:

ApplicationProgrammingInterface

Partner Apps

Company’s App

Users benefit froma robust, streamlinedexperience.

The platform economy spans organizational boundaries, fueling innovation from internal business groups and trusted partners.

The Art and Science of APIs

Figure 8


as tweaking the fuel flow in a jet engine running too hot for peak efficiency. APIs can deliver anything from the seemingly simple “Log in with Facebook” button that makes it easier for new customers to register at your site, to more complex services, such as receiving a real-time video security feed from home.

Almost any business with data or expertise (including business rules embedded within legacy applications) must master the disciplines required to develop, secure, share, use and monetize APIs. They will become even more essential and strategic tools in organizations’ push for market share and revenue as the number and variety of applications, devices and data types grow.

APIs also ease the move to micro-services architectures by replacing monolithic Web applications with services that can be deployed and changed as needed. They slash the time required to integrate organizational systems with those from a business service provider to drive joint revenue. An example is the applications interoper-ability that allows United Airlines passengers to book a ride with Uber from within United’s mobile app.20

In a survey of 300 IT decision-makers:

75%

50%

said their company has an API strategy

said they are generating revenue via an API or will within a year.

OVER

of whom

APIAPI

33%

50%

OF FINANCIAL SERVICES

ORGANIZATIONS

OF MEDIA/TELECOMCOMPANIES

are deriving revenue from APIs, making over $10 million through the channel.

70% of organizations are integrating about 20 apps.

OF THOSE MAKING $10 BILLION OR MORE IN REVENUE:

are integrating 100 or more apps.50%

APIs by the Numbers

Source: “Mulesoft 2015 Connectivity Benchmark Report,” Mulesoft, May 2015.

Figure 9

https://www.mulesoft.com/press-center/businesses-embracing-cloud-mobile-microservices-iot


APIs also make it relatively easy to enhance an application, such as adding support for a new mobile payments platform or a new trading partner, because each micro-service is operationally encapsulated. Developers seeking to make use of the service only need to understand the API, not the inner workings of the application or service to which they are connecting. This agility is enhanced when the use of APIs is leveraged by DevOps, which combines development and operations to speed app deployment.

API-driven ecosystems also allow enterprises to sell selected internal systems or data as profit-making products. One leading bank worked with us to offer an internal training platform to its partner banks, turning what was an internal cost center into a revenue source. Other financial services firms with which we work offer APIs that make it easier for new applications such as mobile payment systems to work with their legacy platforms. This prevents the loss of revenue and market share from customers defecting to newer “direct” banks, or allows existing banks to sell back-end processing services to such new entrants.

We assisted a U.S.-based bank holding company to develop a micro-services archi-tecture that allows outside developers to create mobile applications that help customers apply for auto and home loans. Our work began with a functional analysis of 150 existing loan-related services that suffered from a lack of governance, support and evaluation of the business requirements for the mobile applications. Based on this, we published and documented a set of core services through APIs, and defined an orchestration layer to handle specific channels such as Web and embedded software for devices on the IoT. We also developed requirements and implemented DevOps to build, deploy, configure and monitor the services.

The failure to deliver secure, easy-to-use APIs (or choose the right APIs from a partner) can isolate systems and data from customers and partners, depriving orga-nizations of potential revenue and market share. Businesses should also consider the costs of delivering, maintaining and managing APIs, realizing that every micro-service requires ongoing support and enhancement.

Developers seeking to make use of the service only need to understand the API, not the inner workings of the application or service to which they are connecting.


• Build APIs with the end customer and the data to be transferred in mind, which includes thorough documentation and ease of use. A retailer that sells product sales data through an API, for example, should include granular access controls over which manufacturers can see what data and for how long, while ensuring that competitors cannot see each other’s infor-mation, and that the data access does not slow the retailer’s own systems.

• The use of pre-fetching or caching can help improve performance on the recipient’s end.

• Consider platforms that help companies develop, secure, share, monitor and monetize their APIs, such as Apigee and Mashery.

• The use of the 12-Factor App methodology21

can help enforce best practices. Examples include explicitly declaring dependencies. (i.e., the databases or other systems on which an application relies so they can be accessed when needed) and keeping the development environ-ment as close to the production environment as possible to reduce the risk of code failing when put into production.

• To avoid the creation of too many expensive services, we recommend designing them to support specific business capabilities, such as price look-up or inventory check, rather than technical functions, such as data access. Design each service to be as small as possible while still delivering its required function. Service creation and deployment can be aided by useful open source tools, as well as emerging integration platform as-a-service offerings.

• A successful API-powered micro-services strategy requires DevOps, continuous integra-tion, testing, logging and tracing, monitoring, messaging, service registration and discovery. Service design reviews help avoid duplicate services, while service structure reviews ensure that services follow approved designs. Use of JSON22 or a similar language makes it easier for other developers to understand and work with the services offered by the business.

Quick Take

To avoid the creation of too many expensive services, we recommend designing them to support specific business capabilities, such as price look-up or inventory check, rather than technical functions, such as data access.

Advice for API-Driven Ecosystems


For Your Next App or Next Employee, Look to the Cloud

Today’s RealityBetween the rise of global services and open source software, enterprise sourcing models have changed more in the last decade than in all of the previous decades of the information age.

However, those changes pale beside the shifts that businesses will make to meet tomorrow’s demands for low-cost, high-quality and agile delivery to accommodate, if not exceed, the needs of digital business. Fewer organizations can afford the massive internal IT staffs or proprietary hardware that sits on the balance sheet whether they’re used or not. Nor can they watch competitors grab market share while HR seeks special-ized skills with the latest data query language or IT deploys the servers needed to deliver responses to real-time queries.

On the skills front, new cloud and Web-based sourcing provides IT with high levels of flexibility and efficiency — with the additional benefit that customer and provider need not be in the same town, time zone or even continent. Many of these collaborators inside and outside the organizational firewall will leverage open source software for everything from research and development applications to software testing. Increasingly, talent will come and go on an as-needed basis, in what has increasingly been termed the “gig economy.”23

On the technology front, everything from open source develop-ment platforms and applications to security will be available as a service from the cloud (see Figure 10). This will save massive investments in in-house data centers, but decimate sales and margins at legacy vendors. As a result, the shift is already on to small, innovative software vendors, many of which sell products based on lower-cost (and often more feature-rich) open source software (OSS) that customers can tweak to meet their needs (see Figure 11, next page).

Amid these changes, enterprises must balance the drive for efficiency and agility with their need for security and reliabil-ity. Legacy systems that would be too difficult, expensive or sensitive to move to the cloud must co-exist with cloud-based services. To help

Digital SourcingSECTION 7:

In a recent survey of 930 IT professionals,

93% are using the cloud. The public cloud makes up 88% of users, and 63% of users employ the private cloud, while over half use both.

Cloud, the New Normal

Source: “2015 State of the Cloud Survey,” Rightscale, Feb. 18, 2015.

Figure 10

http://www.rightscale.com/blog/cloud-industry-insights/cloud-computing-trends-2015-state-cloud-survey


manage this mix, many IT organizations are struggling to become “honest brokers” of internal and external services, expert at assessing their own capabilities and pro-actively looking outside for faster, less expensive or more effective solutions.

Tomorrow’s Possibilities With growing levels of education and broadband penetration, the global pool of independent, highly skilled workers will grow rapidly. According to McKinsey & Co., up to 540 million people worldwide could benefit from online talent platforms by 2025, boosting global GDP by $2.7 trillion.24 Advances in analytics and machine learning will provide businesses with increasingly rich real-time insights into the skills and qualifications of this talent pool. Declining costs for cloud-based services (Amazon Web services cut its price 8% from Oct. 2013 to Dec. 2014, while Google and Microsoft dropped prices 5% to 6%25) and new business models such as crowd-funding26 will help collapse barriers to entry for new competitors.

Organizations should look for:

• The provision of more IT and business services over the cloud, with increased automation through software-defined services and improvements in machine learning and predictive analytics (see Section 5 on the software-defined everything/automation everywhere, page 19).

39%plan to start own external OSS project

47%will release

internal tools and projects as

open source

expect to reduce barriers

to employee participation in

OSS

53%

In the next 2-3 years, corporate participation in open source solutions will increase.

Open Source Takes Off

Source: “2015: The Future of Open Source,” Blackduck Software, April 15, 2015.

Figure 11

http://www.slideshare.net/blackducksoftware/2015-future-of-open-source-survey-results


• The spread of open-source software, forcing reliance on a distributed “volunteer” global support system that is not accountable through traditional contracts.

• The explosion of “shadow IT” as business units bypass central IT to meet urgent needs. This will drive adoption of software-defined infrastructures and pervasive security that is flexible enough to manage and protect decentralized infrastruc-tures.

Tapping global talent reduces costs and improves quality. Walmart’s use of the Kaggle crowdsourced platform to analyze pricing strategies led not only to useful insights but also the hiring of specialists that the retailer might otherwise have overlooked.27 We used our “Crowd-on-Cloud” crowdsourcing solution to field-test a mobile financial education application for global financial services giant UBS. Seasoned staff in different locations tested the application on a variety of devices for performance, functionality, security, content and user interface parameters. This helped boost the application’s performance while speeding turnaround and reducing costs.28

Skilled local workers can help organizations tailor their products, marketing and business practices to a new market, and quickly ramp staff up or down without committing to full-time staff. Crowdsourcing is also an opportunity to apprentice or audition staff before hiring them.

The smaller data center footprints found in this new model do not have to mean reduced clout for IT. CIOs that can change their skill sets and mindsets can gain influence by becoming “trusted brokers” that monitor the market for needed technologies and skills, and help manage the risks and benefits of working with new providers. By protecting core data and systems while meeting rising needs for data and services, they also can become trusted guardians of the enterprise’s core assets.

Many IT organizations are struggling to become “honest brokers” of internal and external services, expert at assessing their own capabilities and proactively looking outside for faster, less expensive or more effective solutions.

CIOs that can change their skill sets and mindsets can gain influence by becoming “trusted brokers” that monitor the market for needed technologies and skills, and help manage the risks and benefits of working with new providers.


Advice for Digital Sourcing

• Technologies such as semantic search and machine learning can help find and rank workers, while new collaboration tools will make it easier for them to share their work, be eval- uated and get paid. Technology vendors such as Textkernel offer software that provides multi-lingual parsing of resumes and semantic search that understands when employers and job seekers use different terms or phrases to describe the same assignment or skill. Wazoku’s

Idea Spotlight allows

access management, can ease the use of dis-tributed systems through single sign-on, as well as enabling logging and analytics. A loosely- coupled architecture, in which applications and services are not tied to specific hardware, makes it easier to switch suppliers of either IT or business process services (see Section 5 on software-defined everything/automation everywhere, page 19).

• As IT struggles to weigh the security and reliability risks of purchasing from smaller, lesser-known vendors against the cost and agility benefits, effective due diligence will become more important than ever. Businesses should work closely with their organization’s legal department to understand the licensing and intellectual property issues around open source software, and how use of the cloud could be affected by the latest rulings and regulations around data privacy (particularly in regions such as the European Union, where privacy regulations are particularly restrictive).

• The gig economy is an opportunity to work more closely with business heads, legal and project management offices to minimize the risk of working with new providers. This might include terms, conditions and contracts for trial runs that allow businesses to end the rela-tionship without loss once short-term goals are attained, or if the vendor can’t deliver.

• Organizations should assign an individual or group to monitor sources of alternative technology, such as crowdfunding sites and universities. Furthermore, decision-makers should seek out the most innovative individuals or groups within their organizations to discover best practices and sources of technology.

• Internal crowdfunding programs should be considered that allow employees to “vote” (with company dollars) for the projects they believe would deliver the most business value.

Quick Take

A loosely-coupled architecture, in

which applications and services are

not tied to specific hardware, makes

it easier to switch suppliers of either IT or business process

services

users to capture, evaluate, prioritize and select ideas, and provides analytics to track activity on crowd-sourced projects.29

• Organizations must understand local labor laws and how they affect how this distrib-uted workforce is paid, the benefits they receive, and who owns the code and other intellectual property they generate.

• Creative organizations should tap the power of social platforms to allow peers to rank each other’s skills, much as renters (and guests) rate

each other on Airbnb. The tools to automati-cally, and accurately, assess and verify such skills are not yet widely available, but this is an area IT organizations should monitor.

• Business and IT leaders should work together to understand the specific levels of skill and experience required, in which specific areas, for each potentially crowdsourced task. This will make it easier to create rules for the predictive analytics required to accurately rank potential collaborators.

• Using cloud services across the enterprise reduces capital and operating costs for the distributed workforce by allowing the provi-sioning of virtual devices as needed, as well as automating their management. The use of API-enabled systems, such as identity and


These new staffing models can fail if IT cannot properly evaluate and verify the identities, skills and experience of contributors, or find the required gig economy skills. Lapses in these areas can cause waste, delay and even security risks. Businesses must educate just-in-time staff on their priorities, cultures and goals, and battle reluctance to trust unknown outsiders with corporate data or code. This is where a micro-services architecture can help by providing standalone test envi-ronments that do not expose core systems to vulnerabilities, while pervasive and self-protecting assets defend against attacks that penetrate the corporate core. (Learn more in Section 3 on pervasive security, page 12.)

On the infrastructure front, use of the cloud — especially combined with traditional on-premise IT — may trigger complex licensing, access management, data privacy and security issues. Some legacy systems will be too difficult or expensive to move to the cloud, requiring costly integration or the movement of large amounts of data to and from the cloud. Local privacy and security regulations may make it impossible or cost-prohibitive to move some operations or data among cloud providers.

Footnotes1 Code Halo thinking describes the art and science of distilling and applying

meaning from the digital code that surrounds people, process, organizations and devices, or things. To learn more, read “Code Rules: A Playbook for Managing at the Crossroads,” Cognizant Technology Solutions, June 2013, http://www.cognizant.com/Futureofwork/Documents/code-rules.pdf, and the book, Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business, by Malcolm Frank, Paul Roehrig and Ben Pring, published by John Wiley & Sons. April 2014, http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118862074.html.

2 Greg Bensinger, “Amazon Wants to Ship Your Package Before You Buy It,” Wall Street Journal, Jan. 17, 2014, http://blogs.wsj.com/digits/2014/01/17/amazon-wants-to-ship-your-package-before-you-buy-it/.

3 Laurie Sullivan, “Disney Finds Emotion Next Targeting Metric For Advertising, Marketing,” MediaPost, Oct. 2015, http://www.mediapost.com/publications/article/259739/disney-finds-emotion-next-targeting-metric-for-adv.html.

4 Stream processing allows some applications to exploit a limited form of parallel processing. Source: https://en.wikipedia.org/wiki/Stream_processing.

5 Kashmir Hill, “How Target Figured Out A Teen Girl Was Pregnant Before Her Father Did,” Forbes, Feb. 6, 2012, http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/.

6 Normal website, https://nrml.com/.

http://www.cognizant.com/Futureofwork/Documents/code-rules.pdf

http://www.cognizant.com/Futureofwork/Documents/code-rules.pdf

http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118862074.html


http://blogs.wsj.com/digits/2014/01/17/amazon-wants-to-ship-your-package-before-you-buy-it/

http://blogs.wsj.com/digits/2014/01/17/amazon-wants-to-ship-your-package-before-you-buy-it/

http://www.mediapost.com/publications/article/259739/disney-finds-emotion-next-targeting-metric-for-adv.html

http://www.mediapost.com/publications/article/259739/disney-finds-emotion-next-targeting-metric-for-adv.html

https://en.wikipedia.org/wiki/Stream_processing

http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

https://nrml.com/


7 “Tata Docomo: ‘Hyperpersonalization’ Direct Marketing by Interface Business Solutions,” Coloribus, Jan. 2013, http://www.coloribus.com/adsarchive/direct-marketing/tata-docomo-hyperpersonalization-18372455/.

8 Melissa Dahl, “The Future of Dieting Is Personalized Algorithms Based on Your Gut Bacteria,” New York Magazine, Oct. 2, 2015, http://nymag.com/scienceo-fus/2015/10/future-of-dieting-is-personalized-algorithms.html.

9 Chris Morris, “More than 20,000 Kids Just Got Hacked,” Fortune, Nov. 30, 2015, http://fortune.com/2015/11/30/vtech-hacking-children-data/; Whitney Meers, “Hello Barbie, Goodbye Privacy? Hacker Raises Security Concerns,” Huffington Post, Nov. 30, 2015, http://www.huffingtonpost.com/entry/hello-barbie-security-concerns_565c4921e4b072e9d1c24d22.

10 “Gartner Says 4.9 Billion Connected ‘Things’ Will Be in Use in 2015,” Gartner press release, Nov. 11, 2014, http://www.gartner.com/newsroom/id/2905717.

11 Andy Greenberg, “Hackers Remotely Kill a Jeep on the Highway—With Me in It,” Wired Magazine, July 21, 2015, http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/.

12 Kim Zetter, “Hacker Can Send Fatal Dose to Hospital Drug Pump,” Wired Magazine, June, 2015, http://www.wired.com/2015/06/hackers-can-send-fatal-doses-hospi-tal-drug-pumps/.

13 DevOps is an approach to software development that is focused on streamlined communication, collaboration, integration and automation (of testing as well as coding), as well as measurement of cooperation between software developers and other IT functions. The term was popularized through a series of “DevOps Days” starting in 2009 in Belgium. Since then, DevOps Days conferences have been held in many countries worldwide. Source: https://en.wikipedia.org/wiki/DevOps. For more on DevOps, read our white papers “How DevOps Drives Real-Time Business Growth,” http://www.cognizant.ch/InsightsWhitepapers/How-DevOps-Drives-Real-Time-Business-Growth.pdf, and “DevOps Best Practices: Combine Coding with Collaboration,” http://www.cognizant.ch/InsightsWhitepapers/DevOps-Best-Practices-Combine-Coding-with-Collaboration_nn.pdf.

14 Amanda Kooser, “Smart Shoes Vibrate You in the Right Direction,” CNet, July 29, 2014, http://www.cnet.com/news/bluetooth-smart-shoes-vibrate-you-in-the-right-direction/.

15 To learn about extinction events caused by the inability by companies to compete on code, read Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business, by Malcolm Frank, Paul Roehrig and Ben Pring, published by John Wiley & Sons, April 2014, http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118862074.html.

16 Timothy Torres, “Are You Satisfied With Your Care?’ New ‘Gentle’ Caregiver Robot from Japan Enters Experimental Stage,” Tech Times, March 2015, http://www.techtimes.com/articles/36950/20150303/satisfied-care-caregiver-robots-japan.htm.

17 An expression coined by Netscape inventor and venture capitalist Marc Andreessen to explain how software pervades today’s products and services. Source: http://forwardthinking.pcmag.com/none/300368-marc-andreessen-explains-why-software-is-eating-the-world.

18 “Walgreens: Putting an API around their Stores,” Apigee, http://apigee.com/about/customer-story/walgreens-putting-api-around-their-stores.

http://www.coloribus.com/adsarchive/directmarketing/tata-docomo-hyperpersonalization-18372455/

http://www.coloribus.com/adsarchive/directmarketing/tata-docomo-hyperpersonalization-18372455/

http://nymag.com/scienceofus/2015/10/future-of-dieting-is-personalized-algorithms.html

http://nymag.com/scienceofus/2015/10/future-of-dieting-is-personalized-algorithms.html

http://fortune.com/2015/11/30/vtech-hacking-children-data/

http://www.huffingtonpost.com/entry/hello-barbie-security-concerns_565c4921e4b072e9d1c24d22

http://www.huffingtonpost.com/entry/hello-barbie-security-concerns_565c4921e4b072e9d1c24d22

http://www.gartner.com/newsroom/id/2905717

http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/

http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/

http://www.wired.com/2015/06/hackers-can-send-fatal-doses-hospital-drug-pumps/

http://www.wired.com/2015/06/hackers-can-send-fatal-doses-hospital-drug-pumps/

https://en.wikipedia.org/wiki/DevOps

http://www.cognizant.ch/InsightsWhitepapers/How-DevOps-Drives-Real-Time-Business-Growth.pdf

http://www.cognizant.ch/InsightsWhitepapers/How-DevOps-Drives-Real-Time-Business-Growth.pdf

http://www.cnet.com/news/bluetooth-smart-shoes-vibrate-you-in-the-right-direction/

http://www.cnet.com/news/bluetooth-smart-shoes-vibrate-you-in-the-right-direction/



http://www.techtimes.com/articles/36950/20150303/satisfied-care-caregiver-robots-japan.htm



http://forwardthinking.pcmag.com/none/300368-marc-andreessen-explains-why-software-is-eating-the-world

http://forwardthinking.pcmag.com/none/300368-marc-andreessen-explains-why-software-is-eating-the-world

http://apigee.com/about/customer-story/walgreens-putting-api-around-their-stores

http://apigee.com/about/customer-story/walgreens-putting-api-around-their-stores

http://www.cognizant.ch/InsightsWhitepapers/DevOps-Best-Practices-Combine-Coding-with-Collaboration_nn.pdf

http://www.cognizant.ch/InsightsWhitepapers/DevOps-Best-Practices-Combine-Coding-with-Collaboration_nn.pdf


19 Pratap Ranade, Devin Scannell, Brian Stafford, “Ready for APIs? Three Steps to Unlock the Data Economy’s Most Promising Channel,” Forbes, Jan. 7, 2014, http://www.forbes.com/sites/mckinsey/2014/01/07/ready-for-apis-three-steps-to-unlock-the-data-economys-most-promising-channel/.

20 Dennis Schaal, “Uber Secures a Top Spot in United’s Mobile Apps in Business Travel Push,” SKift, Aug. 20, 2014, http://skift.com/2014/08/20/uber-secures-a-spot-in-uniteds-mobile-apps-in-business-travel-push/.

21 The Twelve Factor App website, http://12factor.net/.

22 JavaScript Object Notation is an open standard format that uses human-read-able text to transmit data objects consisting of attribute–value pairs. Source: https://en.wikipedia.org/wiki/JSON.

23 Arun Sundararajan, “The Gig Economy Is Coming. What Will It Mean for Work?” The Guardian, July 25, 2015, http://www.theguardian.com/commentisfree/2015/jul/26/will-we-get-by-gig-economy.

24 “Connecting Talent with Opportunity in the Digital Age,” McKinsey Global Institute, June 2015, http://www.mckinsey.com/insights/employment_and_growth/connecting_talent_with_opportunity_in_the_digital_age.

25 “Cloud Computing Price War, Only the Beginning,” Cloud Tweaks, January 2015, http://cloudtweaks.com/2015/01/cloud-computing-price-war-beginning/.

26 “2015CF: The Crowdfunding Industry Report,” Crowdsourcing.org, April 7, 2015, http://www.crowdsourcing.org/editorial/global-crowdfunding-market-to-reach-344b-in-2015-predicts-massolutions-2015cf-industry-report/45376.

27 “Walmart: The Big Data Skills Crisis and Recruiting Analytics Talent,” Forbes, July 6, 2015, http://www.forbes.com/sites/bernardmarr/2015/07/06/walmart-the-big-data-skills-crisis-and-recruiting-analytics-talent/#2715e4857a0b153185cd247d.

28 “Cognizant 2014 Annual Report,” Cognizant Technology Solutions, 2014, http://www.cognizant.com/SiteDocuments/Cognizant_Annual_Report_2014L.pdf.

29 More information on Textkernel and Wazoku can be found at http://www.textkernel.com/ and http://www.wazoku.com/.

CreditsThis white paper was researched and written by the Cognizant Global Technology Office (GTO). Providing key technology trend insights and analyses were Joseph Tobolski, GTO Vice-President and U.S. Chief Technology Officer, as well as Gerhard Koch, Prabhakaran Sabhapathy, Uma Ramachandran, M. Murali and Mahesh Balaji, who function as business unit CTOs and play key roles within the Cognizant Technology Labs organization.

http://www.forbes.com/sites/mckinsey/2014/01/07/ready-for-apis-three-steps-to-unlock-the-data-economys-most-promising-channel/

http://www.forbes.com/sites/mckinsey/2014/01/07/ready-for-apis-three-steps-to-unlock-the-data-economys-most-promising-channel/

http://skift.com/2014/08/20/uber-secures-a-spot-in-uniteds-mobile-apps-in-business-travel-push/

http://skift.com/2014/08/20/uber-secures-a-spot-in-uniteds-mobile-apps-in-business-travel-push/

http://12factor.net/

https://en.wikipedia.org/wiki/JSON

http://www.theguardian.com/commentisfree/2015/jul/26/will-we-get-by-gig-economy

http://www.theguardian.com/commentisfree/2015/jul/26/will-we-get-by-gig-economy

http://www.mckinsey.com/insights/employment_and_growth/connecting_talent_with_opportunity_in_the_digital_age

http://www.mckinsey.com/insights/employment_and_growth/connecting_talent_with_opportunity_in_the_digital_age

http://cloudtweaks.com/2015/01/cloud-computing-price-war-beginning/

http://www.crowdsourcing.org/editorial/global-crowdfunding-market-to-reach-344b-in-2015-predicts-massolutions-2015cf-industry-report/45376

http://www.crowdsourcing.org/editorial/global-crowdfunding-market-to-reach-344b-in-2015-predicts-massolutions-2015cf-industry-report/45376

http://www.forbes.com/sites/bernardmarr/2015/07/06/walmart-the-big-data-skills-crisis-and-recruiting-analytics-talent/#2715e4857a0b153185cd247d

http://www.forbes.com/sites/bernardmarr/2015/07/06/walmart-the-big-data-skills-crisis-and-recruiting-analytics-talent/#2715e4857a0b153185cd247d

http://www.cognizant.com/SiteDocuments/Cognizant_Annual_Report_2014L.pdf

http://www.cognizant.com/SiteDocuments/Cognizant_Annual_Report_2014L.pdf

http://www.textkernel.com/

http://www.textkernel.com/

http://www.wazoku.com/



World Headquarters500 Frank W. Burr Blvd.Teaneck, NJ 07666 USAPhone: +1 201 801 0233

Fax: +1 201 801 0243Toll Free: +1 888 937 3277

[email protected]

European Headquarters1 Kingdom Street

Paddington CentralLondon W2 6BD

Phone: +44 (0) 207 297 7600Fax: +44 (0) 207 121 0102

[email protected]

India Operations Headquarters#5/535, Old Mahabalipuram Road

Okkiyam Pettai, ThoraipakkamChennai, 600 096 India

Phone: +91 (0) 44 4209 6000Fax: +91 (0) 44 4209 6060

[email protected]

© Copyright 2016, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. TL Codex 1320

About Cognizant Technology LabsCognizant Technology Labs is Cognizant’s specialist technology group that researches, pilots and prototypes emerging tech-nologies with the highest potential for sparking transformative business innovations. Our eight Research and Acceleration Centers focus on extending our footprint in specific areas where we believe technology trends are headed. We develop solutions that bring real value to our clients’ businesses, and help them own and embrace emerging technologies in ways that make sense for their organizations. We also draw on our existing building blocks and emerging technology expertise to accelerate development of new applications, bringing tangible and immediate benefits to our clients.

About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing ser-vices, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 100 development and delivery centers worldwide and approximately 219,300 employees as of September 30, 2015, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing com-panies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

mailto:inquiry%40cognizant.com%0D?subject=

mailto:infouk%40cognizant.com?subject=

mailto:inquiryindia%40cognizant.com?subject=

http://www.cognizant.com

http://www.cognizant.com

https://twitter.com/Cognizant

Date post:	22-Jan-2018
Category:	Documents
Upload:	cognizant
View:	526 times
Download:	0 times