Resource Regions: Central and Eastern Europe

Marc Dowd, Executive Partner from the IDC Executive Advisory service opened the call by thanking everyone for joining and with some of the Analyst Industry report data. Using extensive research IDC predicts that companies which use process mining tools will be 20% more profitable than their peers who do not use these tools. 

Evidence shows that 74% of organizations which start a process mining project are successful with the implementation.

Lessons Learnt

One leader felt that business tend to love business process mining tools or not use them at all. He said that he had used process mining to get ready for new ERP. 

He found that old ERP system is not a good way to figure out actual processes as this was fine where you had an end-to-end process in a single system, but this became more complex outside of this theoretical view. He hopes that these tools will help figure out actual processes.

Another attendee told the team about a BPM deployment they had begun 4 years ago. He was skeptical of the business benefits of these tools. His organisation found that these tools were too labour intensive to use to accurately define processes. 

The eventual outcome was where the business decided to drop BP tools– but use SAP instead to establish same processes, and procedures.

Marc thanked the attendees for their honesty on successes as well as less successful initiatives as a learning point for the others on the call as these lessons were invaluable.

Success with Process Modelling and ERP

Another attendee spoke about how he had used these business modelling tools for 10 years. The process had started with the idea of moving from internal development systems to SAP and the tools they implemented were to clean up processes taking 5 years of work to clean up business processes in a continuous improvement cycle. 

The CIO spoke of how they worked through but didn’t finish before SAP was introduced. Now after the fact, they are still trying to clean up processes which means they have implemented some of these which are sub optimal into their new ERP system. 

Marc asked about which process intel models the attendees had used. SAP Signavio solutions, which states it “can help you quickly empower your organization with business process transformation” had been used to mine SAP processes but people had issues where the process extended outside the SAP system. 

Managing Non-standard Apps and Processes

Marc opened the floor for the leaders to ask each other for help. One asked, how do you measure how custom developed apps and forms are used?

I Keeling, another IDC Executive Partner, explained that there are a number of tools and techniques available, but the fallback can always be basic manual process mapping and optimization and data flows are a good validation that you have captured everything.

BPM uses

Marc asked the audience, whether you need to model all your processes and how to know what should be modelled? 

A participant commented that they were pitched BPM tools to audit their systems as they needed to know how many issues were being handled as exceptions, rather than as normal processes and therefore costing the business money. They then asked, what is value that people get out of these tools?

Another Digital leader replied they had used business process mapping with ERP systems implemented 20 years ago to find out what parts of system/data was actually still being used by the business and remove redundancy to clean up the system.

Another said it was pitched to the board as a tool to help to find value destroyers and optimize.

The Executive Partners from IDC discussed how combining BPM with AI with automation tools could be used to track SLAs and trigger action.

Rolling out BPM

Some of the CIO’s said they have created a Centre of Excellence around processes within their business which had been successful.

I brought her experience as an ex-CIO to the proceedings and spoke about how she has done BPM using a Lean Six Sigma Black Belt to process map with alternative methods. She did not choose a blanket approach but looked for immediate value and savings. 

In both cases, she has used different approaches to look at ‘procure to pay’, ‘order to cash’ as the first key areas as well as with the data flow for GDPR which has given a good grounding in processes optimization. “For peripheral areas, we asked do we need to have all of these processes. Once we can see them, we can evaluate them” she said. 

It took a few years to work through the key processes across other areas, but reduced wait times, improved SLAs and got great results.

Another CIO agreed. He stated, “We focus on key processes – cash in, cash out, or in operations heavy organization. The focus on key processes is save time/money. He felt that if you try to model all processes, you get lost in the detail. They were now trying to use RPA and UI Path, feeling that maybe process modelling will help the automation.

Different Models

One CIO told us that in their experience with companies, one team is modelling, a different team is working to improve the processes. This didn’t work as well as one team working end-to-end.  

It was also felt that using process tools to help with IT governance to help with business cases for new technology allows you to measure demand better, but this had not been used extensively.

Shaping the Future

Marc posed a question to the leaders, “Is process mining a prerequisite for advanced tech like AI, virtual reality, etc?” 

Another leader said that if we can find a model, all apps become connected, we have a full flow of processes, a full landscape, that will be the main model and we will be able to use it rather than spending time on documentation. He felt it would probably be used more to workflow applications and will control many of the systems in the future, in real time.

Marc commented that while many companies want to automate processes and decisions but often, trust in the data is lacking. The closer you are to a process and related data, the less trust you have in the data, something the IDC Advisory team have worked through with a number of clients based on industry reports.

Marc stated that maybe we are the last generation of leaders who make decisions without data before the processes are fully available and data is available at every point as industries move closer to industries such as manufacturing.

More in Depth Knowledge

A rhetorical question was asked by the audience; how are companies high in the S curve doing? What are they doing in terms of process mining?

Marc mentioned that IDC research with vendors indicates that some process tools will soon be able to write code themselves or make suggestions around optimization based on AI in the near future

Questions were also asked about how process automation and task automation fit in with process mining. It was mooted that a “360 degree” Master Class to look at the best practices in leading companies bringing together knowledge from an Advisory, Analyst, CIO, Business and IT leader perspectives could be planned for 2024 if there is appropriate interest from the Digital Leadership Community. 

I and Marc thanked everyone for their attendance and candid “Chatham House rule” protected discussions and the shared value they bring.

The start of the new year brings many people closer to realizing ways they can improve, perhaps its eating better, or fitting in more time with family and friends. There might be professional resolutions such as meeting more regularly with your boss, connecting with colleagues outside of your department. For IT, cutting back on wasted cloud spending is often high on the list but tends to eventually fall through the cracks, with no resolution to this pattern.

According to Forbes, while executives estimate that 30% of their cloud spending is wasted, at the same time enterprises intend to spend even more on cloud services. Clearly wasteful cloud spending is a recognized yet growing problem that for many continues to go unresolved. As this blog will show, where IT leaders fall short on is not identifying areas of spending that can be improved but implementing a plan of action for cost savings and maintaining it.

To elaborate on cloud costs, there are many tools available from cloud providers and third parties that provide reports and dashboards, and even recommendations about which instances can remove or reduce/enlarge (rightsizing). Tools that provide intelligence can also determine how to use discount options (reserved instances, savings plans, reserved capacity, etc.), how to handle licenses smartly and what to do in application architecture to save costs. And, instances can be disabled when not in use.

In summary these resources provide insight, but knowledge into your spending is only as useful as what you do with it to turn around your spending. And how you act will determine how effective you are at plugging the holes of your spending.

Because of the effort that’s needed its common for IT to plug their holes with patches. Take, for example, disabling instances outside working hours. In theory this is an excellent saving, but instances are part of applications, which in turn are part of chains. And then it may just be the case that data exchange takes place in a chain outside working hours. But also, test teams that are approaching a deadline may sometimes need their environment outside the pre-planned working hours. And if environments are used in the management chain, they must also be available after hours in case of an emergency. Overall savings is easier said than done, mainly because it takes work to get there.

Rightsizing is also more difficult than it seems. Users and administrators are often hesitant about removing capacity; users see their performance decrease, and administrators see the risk that more failures will occur because there is less overcapacity to absorb issues. In the latter case, you must carefully analyze where these issues come from; a mediocre application can benefit from more capacity, but that is not a long-term solution. Remember, if the roof leaks, you can replace the bucket that collects the water with a larger tub, but that too will become full at some point. You’ll eventually need to repair the roof.

Ultimately, you’ll have to move towards an entirely new approach in which you not only have insight into the costs, but also involve users and administrators, so that you can make the right decisions about saving on your cloud costs. This isn’t as daunting or unattainable as it sounds. In our next blog we’ll reveal how some IDC Metri Cloud Economics clients have transformed their cloud spending, so you can see how to get there too.

Last year we predicted that “70% of CEOs of large European organisations will be incentivised to generate at least 40% of their revenues from digital by 2025, driving more than €4 trillion of gross value added in Europe.”

As we approach 2023, do we expect this to change?

If anything, the trend has accelerated. According to IDC’s Digital Executive Sentiment Survey (October 2022), European organisations now expect more than 50% of their revenues to come from digital business models on average in the next three years.

Listening to C-level executive priorities for the coming year, it’s clear that despite the polycrisis macroeconomic scenario, the C-suite remains optimistic about future digital investments and is increasingly looking at technology as a critical business differentiator to better deliver business outcomes, increase resilience and accelerate revenue growth. According to the chief innovation officer of a transportation company: “For the next six months our priority will be to build capabilities, including bringing people onboard, to help us build digital products.”

This is the dawn of a new digital decade — the digital business era. But even if the “what” is clear, the “how” is somewhat less clear.

There is urgency, particularly in Europe, to connect technology investments and revenue generation. The majority — 61% of European organisations — take a very siloed and disconnected approach to software projects. This results in one-off or reactive software innovation efforts that only occur in response to urgent market or customer demands. More often than not these efforts do not have a positive impact on revenue generation.

To succeed as a digital business, we argue that companies need to leverage a digital business platform. IDC defines this platform as a multilayered enterprisewide technology architecture, integrating different systems and applications, to enable use cases that ensure business competitiveness and innovation. Only 13% of European organisations have such an architecture, according to IDC’s Digital Executive Sentiment Survey, October 2022.

The platform can be segmented into 3 main layers:

• Foundational IT. These are the key tech building blocks forming the foundational tech layer required to deliver digital products and services. This includes 12 main elements: APIs, data systems, automation and orchestration capabilities, OT technologies, microservices, programmable infrastructure, multicloud services, security, AI/ML and other emerging technologies (blockchain, AR, VR, robotics, edge, etc.), integration tools, network and connectivity. Some digital design principles and practices should guide the CIO in implementing the right digital architecture.
• Tech use cases to build business resilience. These are specific digital products that enable the company to remain competitive, responding to the key business challenge of building resilience. This includes use cases that future-proof business, organisational and operations models such as contingency planning for the supply chain and customer churn analysis.
• Tech use cases to accelerate business growth. These use cases to accelerate growth and innovate include ecosystem data monetisation and intelligent M&A modelling.

As organisations build out their digital business platforms, this paves the way for business outcomes such as:

• Expanded target markets through innovative partnerships
• Extended digital use case road maps
• Greater opportunity to diversify the business model
• Greater loyalty/reduced churn with both customers and employees

If you want more information, reach out to Giulia Carosella, Neil Ward-Dutton, Jennifer Thomson, Mark Child, Andrew Buss, Archana Venkatraman or Tom Vavra.

Next week I am attending the Smart City Expo World Congress in Barcelona. I’ve have been an attendee, exhibitor and speaker at this annual gathering for many years now, and it’s great to see that in the past couple of years there has been a growing focus on inclusion.

Gone are the days when speaking about bright and shiny new tech toys was enough. Cities are eager to understand how to become truly people centric, including for people with disabilities. On the inclusion front, one topic that I’d like to hear more about at the Expo, in 2022 and beyond, is how to make cities autism friendly.

A Global Phenomenon

According to the World Health Organization, one in every 100 children has autism spectrum disorder (ASD). The US Center for Disease Control estimates it is one in every 44 in the US. If we consider a conservative estimate of one in every 100, then of the 4 billion people worldwide that live in urban areas, 40 million would have ASD. UN projections indicate that we’ll have 7 billion urban dwellers by 2050, meaning 70 million with ASD, assuming the prevalence of ASD does not change.

Autism is a challenging neurodevelopmental disorder. It’s a broad spectrum that includes people with cognitive, speech and motion disabilities, people with milder challenges but that still have a hard time speaking and socialising, and people with high-functioning autism (such as Asperger’s Syndrome), who can be like the genius “good doctor” in the TV series of the same name, but with the crying, screaming and lashing out when overwhelmed by stress, shiny lights, loud noise or unexpected events — stress that can be caused by hypersensitivity to noise, light, smell, touch and an inability to comprehend social interactions. Coping with ASD in a hyper stimulating environment like a city is like trying to share a file between a Mac and a PC in 1985. I know this because I have a beautiful eight-year-old son who has ASD.

Making the Urban Space and the Community Liveable

Making cities liveable for the millions of people that have ASD is a global inclusion imperative. Cities such as Aberdeen, Edinburgh, Liverpool and Glasgow in the UK; Phoenix, Mesa and Austin in the US; Prato in Italy; and tiny villages such as Clonakilty, in Ireland, are exploring how they can reimagine urban spaces and community services to become more autism friendly.

When it comes to urban spaces — both indoor, such as shops, theatres, cinemas, restaurants, museums, public transport, and outdoors, such as streets and parks — unpredictable noises, lights, smells and queues may cause sensory distress to people with autism. Adjusting ventilation, acoustics, heating, lighting, creating quiet spaces to recalibrate after a stressful moment, deploying visual signage that combines words with images, making available sensory guides and social stories to reduce the unexpected and making available small kits with “stim” toys can go a long way to improve liveability for people with autism.

When it comes to the community, lack of awareness about autism can lead to judgements. Autistic people talking to themselves in a library, for instance, can get unfriendly looks. As a result, people with autism and their families tend to isolate from social life.

It’s essential to educate people working in shops, restaurants, cinemas, museums, libraries, schools and healthcare facilities. Business owners need to understand how they can leverage the great skills that many autistic people can bring to the workplace, such as declarative memory.

Government institutions have a role to play to provide coordinated support across family allowance programmes, mental health services, job training and placement, and schools, without requiring people with autism and their families to explain their condition and needs at every point of interaction with the public administration.

How Technology Can Help

Technology is not a silver bullet. Cities have had enough smart techno solutionism. Autism is the least suitable area for cookie-cutter approaches because every person with autism is at a different place on the “spectrum”, with their own special characteristics and needs. But technology can help.

When it comes to urban spaces, using location-based intelligence, digital twins and other tools can help map areas of the city that are the least liveable for people with autism and plan alternative designs. Apps can be used to offer people autism-friendly sensory and navigation maps.

When it comes to the community, online training can help increase awareness. Apps can help communicate with people with autism who are not verbal.

Online services can be used to pre-book fast-tracking entry at certain facilities to avoid the stress of queueing. And public administrations across the city ecosystem should scale trusted data sharing to do a better job of coordinating public services that support people with autism and their families.

I look forward to hearing and learning more about autism-friendly cities at the Smart City Expo and beyond. My son and the tens of millions of people with autism deserve to be included.

Retail has undergone a huge transformation in the past few years. It’s also still under pressure from external forces and changing buyer behaviour. With buyers changing how they shop and why they shop, retailers need to ensure that their brand purpose aligns with their customers and enhances their internal operations. At the recent IDC Retail Summit, IDC analysts and industry leaders got together to discuss how retailers can operate in a purpose-led world.

Watch IDC’s 2022 Retail Summit on demand here.

The Need to Bridge the Gap Between Online and Offline Retail Experience

The pandemic has forced many changes in retail and now, with offline beginning to expand again, retailers need to bridge the gap between expectations created by online experiences.

Customers are used to a certain experience online, and this can cause friction between their online experience and their experience in brick-and-mortar stores. Technology can help bridge this gap, bringing aspects of the online experience such as personalisation, rewards and speed into the offline experience.

A huge part of bridging this gap is identity management. Identity management isn’t just about security. As digital shopping experiences pick up, retailers can gather more and more data on buyer behaviour. Customers and the way they buy are changing quickly. Understanding who your customers are and how they are buying is important to ensure your company can adapt to a changing buyer.

Digital Transformation Needs to be Practical

Digital transformation is a key part of retailers’ development, and is key to bridging the gap between offline and online experiences and communicating and demonstrating brand purpose. But with all change, it must be effective. Technology that is implemented must be useable and easy to adopt, for employees and customers. Incremental changes that bring value without too much disruption are ideal.

Technology can be a bridge between stores, HQ and employees. Implementing technology as part of digital transformation can help break silos in retail organisations and drive innovation and collaboration by streamlining processes. It can empower teams in stores by giving them information and connecting them to the wider team. It can provide HQ with real-time store data and ensure that teams that work in all parts of the retailer work together effectively and efficiently. Collaboration and communication are vital. When introducing new programmes, tech or functionality, being able to communicate why is important across the organisation. Retailers’ key personas and employees need to understand business priorities but also feel that changes are there to help them and build towards achieving their goals and brand purpose.

Brand Purpose Impacts Everything from Buying Decisions to Employee Productivity

Purpose is becoming increasingly important to brands, but especially those in the retail sector. Customers are becoming more conscious of the social, ethical and environmental impact of the products they buy, and purpose is now part of many customers’ buying decisions.

Customers have expectations for a brand or company experience, not just for the retailer itself but for the whole supply chain. While some of those expectations might not be realistic, retailers have to ensure that their brand purpose is as much a part of their messaging as product information.

Brand purpose is also important for employees. A clear brand purpose that aligns with the products sold is effective in both recruitment and in creating a strong company culture. A strong company culture impacts productivity and improves the customer experience. A company purpose that reflects the core values of your staff and products is now crucial.

Purpose connects value for retail optimisation. It defines the what, the why and the how of a retailer’s business, and it is one of the most influential connectors for retail proceedings and a powerful facilitator of operation and process optimisation.

Retailers are operating in a shifting environment. Purpose is key to ensuring they continue to align with their customers. It also promotes internal coordination and the drive towards an aligned and connected organisation that delivers value. It enhances performance and creates value. This is why, of all the topics discussed at IDC’s 2022 Retail Summit, purpose stood out.

For more information, please watch IDC’s 2022 Retail Summit on demand here. For more insights and key takeaways from the summit from IDC Retail Insights analysts, see Retail Operations in a Purpose-Led World: Key Insights from the IDC European Retail Executive Digital Summit 2022.

For more on our coverage of the retail sector, please visit our website.

Agile development empowers teams with many benefits but also presents challenges around managing and measuring its effectiveness. The way to resolve these is Function Point Analysis.

From business impediment to business enabler, IT development has come a long way since Agile has become the favored practice. Now empowered with speed and responsiveness, organizations have left the days of slow, cumbersome, inflexible, and unresponsive practices behind in the dust. Instead they’re able to support business needs and experience better alignment with changing business environments better than ever before.

It’s easy to understand why Agile is experiencing a strong increase in adoption; as companies become more nimble to embrace the pressures they’re facing in digital transformation, IT development is able to respond aggressively to evolving competitors and exploit markets more easily. But these benefits rival the frustrations on the management side of Agile teams. The nature of Agile makes it so that IT has lost visibility and scope control while the business has lost predictability. While Agile might make teams fast and responsive, businesses don’t know when projects will be delivered, and quality of delivery is often poor.

This is due to story points. Story points is a relative and subjective effort measurement that allows teams to estimate how much work of a certain item is required compared to a certain reference story with a fixed number of points. Story points can be used as an assessment method within a team. But how do these points happen? In an Agile Scrum environment, productivity is often associated with delivered story points, often expressed in Velocity as an estimation unit. The problem is that story points are not standardized, and productivity based on story points means nothing outside of a team itself. Even within a team, story point deflation is always lurking.

Is it even possible to objectively measure productivity? This blog will show that using a ratio scale is the way to objectively measure productivity as proven by IDC Metri’s years of helping clients turn around this common challenge. Management information can be established through a ‘unit of measurement’, bringing answers to long-sought after questions such as which teams are performing well, which teams are not performing so well and when is which functionality ready at what cost?

If you want to use productivity to compare teams, departments, organizations and/or suppliers, or the market, it’s a necessity to use a standard measure of output. Even when this data is about trends on your teams, this insight creates a unified and common view.

For years IDC Metri has been offering function points to create this factual view to clients. Function point analysis was developed in the 1970s to determine the productivity of development teams when it was impossible to do this by counting lines of code. By making function point analysis independent of the technical implementation (programming language, architecture, etc.) and the development method (Waterfall, Agile, etc.), it’s also relevant today and fits into the solution that Agile teams and management need to resolve the challenges that story points create. In short function points are the de-facto standard to express the amount of functionality in a standardized size unit.

Several manual standards are available and one international ISO standard is available for automated function point analysis: ‘Automated Function Points (AFP)’. IDC Metri prefers to use automated measuring of functional size but also employs certified analysts who can manually measure when automated measuring is not possible for whatever reason.

To measure the size of the output of a team, it is also important to not only look at the added functionality but also at the changed and removed functionality. IDC Metri uses automated measuring of ‘Enhancement Function Points (EFP)’ to measure how much functionality has been added, changed and/or removed during a sprint, release or project. This gives the ‘Project Size’ in EFP, a standardized method to measure the output of a sprint or release.

While Agile is hard to measure and manage for full value, the IDC Metri proven approach of using function points transforms a team-driven, fast-moving, rapid iteration process that evaluates progress on qualitative measures into something that can be quantified and predicted.

Governments have never been in a storm like the one we’re in today, and national and local administrations need to reinvent themselves as a new era is about to start.

In these unprecedented times, European governments are aiming to improve their ability to withstand long-term volatility and uncertainty, particularly through digital trust and operational resilience programmes.

In doing so, new business models will emerge to fulfil current and future challenges:

• Allocating the Recovery and Resilience Funds to the right priorities and purposes
• Selecting the right technologies to achieve short-term efficiency and long-term resilience
• Improving the citizen and civil servant experience by making the most of technology but also implementing deep cultural and organisational transformation to enable them to reimagine service delivery

IDC conducted an in-depth survey, including 230 senior executives and directors, to investigate the strategic business priorities and key action plans for European governments. The survey looked at the technology solutions that governments are investing in to execute their strategy and action plans, and the challenges they face in their strategic technology innovation investments.

European Government Business Transformation and Technology Priorities

According to the 230 European government decision makers that IDC interviewed:

• Their main purpose is to improve citizen experience and quality of life. By keeping this in mind, they might also facilitate other short-term initiatives. This goal must become a state-of-mind for every civil servant and government decision maker.
• The main barriers to innovation are not only budget (with RFFs impacted by fast-growing inflation) but also citizen trust and outdated IT. Again, both technical and cultural changes should occur simultaneously to regain trust.
• Redesigning services and business processes around the needs of citizens are key steps to achieve resilience. Technology is a critical part of this transformation, but it should go hand in hand with innovative approaches and a greater focus on change. European governments believe that governance, risk and compliance and data management tools are critical to execute digital trust programmes. Digital sovereignty is frequently discussed by European policymakers, but our survey shows that only civil servants in some countries, such as France and Germany, are already prioritising it to increase digital trust.
• Emerging technologies such as 5G, AR/VR and edge computing are key areas of investment to imagine new ways of delivering public services.
• European governments that want to master a citizen-centric approach are adjusting their KPIs accordingly and aggregating data to build a holistic view of citizen needs and implement the once-only principle.
• Long-term challenges — especially sustainability — can’t be fought alone. Governments’ ability to work closely with an ecosystem, through data sharing and massive investments in data capabilities, will be key.

What Are the Key Components of a Disruptive Approach?

Check out the following IDC European government “PRIME” survey studies (subscription required) to learn more about how European governments are aligning technology investment to societal Purposes, strengthening Resilience, Imagining new service delivery models, Mastering citizen and employee centricity, and opening up to the Ecosystem:

• European Governments’ Purpose Programs: The Role of Technology in Improving Citizen Experience and Setting Up New KPIs
• European Government Resilience Programs: Digital Trust, Operational Redesign, and IT Architecture Transformation Must Converge to Achieve Resilience
• European Government Technology Innovation Strategies: Reimagining Public Sector Services and Operations
• What European Governments Need to Master Their Future: Citizen Experience, Employee Experience, and Environmental Sustainability Goals and Capabilities for the Future
• European Government Ecosystem Strategies: Accelerating Digital Transformation Through Ecosystem Collaboration