Gartner - The Nexus of Forces

The Nexus of Forces Gartner point of view Bart Mellink – 6 June 2013

GARTNER CONSULTING

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Introduction

Disruptive Technology is about technology changes that have a ―Transformational Impact on products, services and processes‖

Cloud

Disruptive Technology timeline

App Big Data Information

Social Media

Mobile Phones

E-Commerce

Mobile Data

Digital Enterprise

Consumerazation Mobility

“.COM buble” 2013 2011 2010

The Internet PC

2000 1990’s

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Introduction

Context: CIO priorities for 2012 – Enhancing the Customer Experience

The biggest value proposition is not in the individual priorities, but is realized at the Nexus of these emerging and disruptive technologies such as Cloud, Mobility, Big Data (business intelligence and data management) and Social Business.

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Introduction

The Nexus of Forces: People … …want to connect to…

…want to be mobile…

•

share experiences

•

•

find answers

using devices of their choosing

•

engage with the community

•

staying connected with people

•

being able to switch easily between work and non-work

…want a seamless experience to… • •

•

Digital Enterprise

access anything from anywhere use multiple devices (and apps), sometimes simultaneously blend work and non-work activities © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. 3 Copying,distribution or public displaying prohibited without the express written permission of Gartner

… consume and generate information •

Ubiquitous access to info and apps

•

Contextually relevant info to augment their activities

•

Don‘t care how it works, only that it does.

Introduction

Key questions around disruptive technologies related to financial services Disruptive Technology

Impact and key questions

Cloud

• Should we use cloud services for our computing infrastructure? • How can we leverage cloud services to reduce costs and increase agility while ensuring compliance with security and regulations? • Which Cloud based financial services become available on the market and how should we react?

Mobility

• How do we support ―bring your own device‖ in our environment? • How do we address the need for mobile applications? • Do we have to build our own internal App store?

Big Data/ Information

• How do we improve our data quality? • Which data (internal and external) should we analyze to improve our risk analysis, business performance, CRM and planning?

Social

• How will our products and brand be perceived by our (potential) customers that rely on information shared through social networks?

Digital Enterprise

• How to leverage innovative technologies such as Social, Big Data and Analytics to increase customer engagement, sales and services?

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Cloud

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Cloud

Gartner defines cloud as "a style of computing where scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet Technologies." Expectations and Concerns are Both Evolving

Agility

Security

Cost

Transparency

Less Complexity

Assurance

More Focus

Lock-in

Self Service

Integration

Innovation

Financial

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Cloud

Slicing the Cloud Vertically: Cloud Service Layers continue to evolve

Film Forecaster

SaaS

Business Proc. Serv.

PaaS

Information Services

Cloud Service Broker (CSB)*

Application Services

IaaS

App. Infrastructure Services

System Infrastructure Services Cloud Enablement © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. 7 Copying,distribution or public displaying prohibited without the express written permission of Gartner

Cloud Brokerage

BPaaS

Mgmt. and Security

Providers are developing offerings across multiple segments, making market segments increasingly interconnected

Cloud

Cloud deployment models: Private to Public

Enterprise Private Cloud

Managed Private Cloud

Virtual Private Cloud Hybrid

Public Cloud

Community Public Cloud

Owner

Enterprise

Enterprise

Provider

Provider

Provider

Operator

Enterprise

Provider

Provider

Provider

Provider

Service Access

Closed (enterprise)

Closed (enterprise)

Closed (enterprise)

Closed group (community)

Open

Level of Control

Full

High

High

Low

None

Points of Leverage

Skills (none) Assets (none)

Skills (strong) Assets (none)

Skills (strong) Assets (medium)

Skills (strong) Assets (strong)

Skills (strong) Assets (strong)

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User Z

Company X

Enterprise B

Enterprise A

Enterprise A

Enterprise A

Enterprise B

Enterprise A

Open Public Enterprise A

Closed Private

Cloud

Let's buy some Cloud Service — Are you still in control?

The Old Way Conduct an RFI process followed by an RFP process that, after six months, results in a 1,000page service contract, with 50 clauses and 20 attachments, that is then reviewed and signed off by the sourcing, IT, finance, procurement and legal departments.

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The New Way Press the I Accept button

Cloud

Service Layer Clustering - Potential Alternatives to mix Sourcing and Cloud Who is responsible for the overall IT Architecture? Traditional (out)sourcing portfolios Business Process Mgmt

Cloud models

Retained + Staff Augmentation

Solution Design

Retained + Staff Augmentation or Projects

Application Development

Retained + Project Based Application Development

Application Enhancement Application Maintenance & Support

AMS ITO

AMS ITO Extended AMS ITO

Application Operations

HW Platform

DC Facility

Retained

AMS ITO Extended AMS ITO

Extended AMS ITO

BPO BPaaS SaaS

IT Operations ITO

Middleware & DB admin Infrastructure management

Retained

Extended Infra Services ITO

IT Ops ITO

Infra Services ITO

Hosted Data Center & Equipment ITO

PaaS Infra Utility Service (IUS)

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IaaS

ITO = IT Outsourcing AMS = Application Maintenance and Support

Cloud use cases

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Cloud

Example SaaS: Google Apps Premier Edition (GAPE)

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Cloud

Brazilian Órama Internet based Investment Funds provider (for retail clients) fully leverages a mix of IaaS Amazon Cloud services Amazon services used: Elastic Cloud (EC2) - Computing

Elastic Load Balancing – Multiple Availability Zones Amazon S3 – Storage Amazon CloudFront – Reduce latency Amazon RDS – Relational Database Service Amazon Route 53 – Name service

Amazon CloudWatch - System Management

https://www.orama.com.br

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Cloud

Example SaaS: Ohpen uses the Amazon EC2 ―virtual private cloud‖ as production deployment platform for multiple front end web sites

Ohpen own (native) offering

Ohpen services as ―white label‖ product Robeco is launching customer

Amazon Elastic Cloud (EC2) (Ireland)

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Cloud

Business and IT Transformation: Usage-based Insurance 15

Pay-as-youdrive

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Accident coverage for 24 hours for 99 Cent

Mobility and Digital Channels

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Mobility

Key questions around Digital Channels and Mobility: From Inside/Out to Outside/In INSIDE/OUT FOCUS

Should we develop a ―Bring Your Own Device‖ (BYOD) strategy and how does such a strategy look like? What are the benefits, costs and risks involved?

How and where will our workforce be situated in the future and what are the implications for technology, security and application design? Should we enable our internal business applications for tablets and mobile phones and what is the impact on Application Development, maintenance and operational processes? Should we create an internal App store?

Which external business functions should be available for our customers and business partners on mobile devices and how do we manage this? Should we be part of an industry community or establish strategic relationships to strengthen our market position in the mobile space? OUTSIDE/IN FOCUS

Which will be our role within the Digital Channel strategy of our key customers and which services should we develop to support this?

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Mobility

How to leverage what is possible today (or coming soon) in your business? HD Audio/ Microphone

HD Camera

• Voice Authentication • Speech Recognition

• ―Kinnect‖ type gesture sensing • Facial expressions reading and interpretation • 2D to 3D to Holograms to 4D

Form-Factor Evolution • • • • •

Micro-electro mechanical systems • • • • •

Accelerometer Compass GPS (not a MEMS) Gyroscopes Sensors (i.e. Pressure & Temperature)

Other Features

Biometric Authentication • • • • •

• • • • • •

Fingerprint Vein pattern (in the palm) Retina scan Voice authentication Heartbeat pattern

Information Exchange • • • • • • • • •

Machine sensors (IoT) NFC New Bluetooth Wi-Fi Direct data transfer Device Pairing with multiple devices Information extraction from picture/video Augmented Reality (visual contextual info) Location-aware to activity-aware (i.e. smart VM) Active to Passive Computing

Common operating systems Form factor agnostic (mobile cloud) Holographic projectors (i.e. keyboards) Wearable/ implants More computing power (replace desktops)

Olfactory sensing (artificial nose) Kinetic movement (phone can move) Germ-killing UV light Solar powered batteries Wireless battery charging (3 ft. Proximity) Braille Input/ Display

Next-Gen Display Screens • • • •

Digital Assistants/ Delegated Control • Proactive recommendations • Appliance/ Machine Control (Chevy‘s digital keys) • Digital Assistant to Digital Assistant communication

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2-sided to multi-sided screens Foldable/ Bendable screens Expandable screens Transparent screens

Mobility

What may be possible in the future 2012 – 2013: Smartphones and Tablets

2013 – 2016: ―Up-rights‖ like Google Glass

Biometric Authentication • Voice • Fingerprints Information Capture and Exchange • Camera (MRDC and photo bill pay) • Wi-Fi Direct and NFC to exchange info

Augmented Reality • Get balances by looking at the bank's logo • Mood recognition can improve service • Auto-translation of documents /speech • Voice-control offers hands-free computing

1st gen iphone launched in 2007, ipad in 2010

Google Glass may launch in late 2013/ 2014

2017 – 2018: The internet of everything Self-managing devices and systems • Possibly a self-managing ATM or branch • Groceries refilled proactively would require access to payment methods Information exchange • Capture data for loans directly from cars, houses, etc. Qualcomm‘s Wifi coffee maker concept: Feb‘13

2020

2013

2013 – 2014: Watches and work-out bands Biometric Authentication • Heartbeat Pattern Remote Control (Gesture based) • Control any iDevice, even possibly ATMs? Payments (NFC) • Scan your iWatch at the POS terminal Gamification • Financial related loyalty points similar to fitness related Nike Fuel Points Apple ‗iWatch‘ may launch in 2013

2016 – 2017: Truly smart clothing

2018 – 2019: Bio-Computing/ Cybernetics

Fabric Keypads for mobile devices • Another possible form-factor for service interactions • Payments integrated into fabric which redefines the POS for clothing purchases

Implants and Electronic Tattoos • Microchip lets blind patients see shapes • Microchips provide cashless transactions • E-tattoos may auth and provide access to ‗closed‘ branches in the future True Artificial Intelligence • Genetic Algorithms AI that can learn and adapt to manage investment accounts

Google‘s talking shoes concept: March 2013

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FDA approved microchip implants in 2004

Mobility

Business and IT Transformation: Real-time Insurance 20

Real-time underwriting

Travel Insurance ATM

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Mobility Gartner Consulting Case Study: Customer, Channel, & Disruptive Technology Trend Assessment – Tier-1 US Bank Client and Business Context

Gartner Approach/Differentiation

Our client is a Tier-1 US Bank with a early adopter strategy on IT technologies. In 2008, the bank acquired a major other bank and was also effected by the financial crisis (the bank received a substantial federal bail-out from the emergency economic stabilization act)

Gartner used an "Outside-In" approach looking across multiple dimensions:



Due to the combination of the aftermath of the financial crises and the integration effort of a major acquisition, the Bank felt they were no longer in a front runner position related to their digital and channel strategy

Due to their dependency on the digital channels the bank needed to identify both a tactical and strategic innovation roadmap

Key business Drivers

 Banking Industry Trends  Macroeconomic Factors

Challenge 

 Demographic Trends

 Banking Industry Trends

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 Key business Drivers  Technology Enablers

Client Results The detailed roadmap Gartner created (in March 2013), contains a clear priority mapping. The bank decided to implement all Gartner recommendations

Technology Enablers

Priority mapping

Social

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Social

What Is Social CRM?

Social CRM is a strategy for harnessing communities to support customers, as well as sales, marketing and customer service organizations, along a purposeful and mutually beneficial business process.

Understanding the power of communities, the multiple personas of their members, their expectations, their aspirations and how to engage with them will become essential skills for companies in the 21st century. © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. 23 Copying,distribution or public displaying prohibited without the express written permission of Gartner

Social

Five Levels of Social Maturity: From Social Media to Social Business

Level 1: Reactive

No way, no how! It's too dangerous!

Level 2: Exploratory

Level 3: Emerging

There might be a pony in there somewhere.

Okay, it's worth spending some time organizing this stuff . . .

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Level 4: Integrated

Level 5: Optimizing

We've got goals, we've got metrics, we've got game!

OMG! How did we ever do business any other way?

Social

Emerging community based financial products in Europe: Paypool and Bankeez

Collecting money/ fundraising and donations:

―Social Savings Account‖

 Shared gifts for weddings and anniversaries

 Shared savings account (with real money)

 Cost sharing of parties and trips

 Shared ―goal‖ setting (i.e. trip, present, charity)

 Collecting registration fees, tickets, prizes, funds for (charity) organizations

 Social media to share progress

Leverages Tunz.com banking license in Belgium

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Social

Challenging Traditional Business Models: Peer-to-Peer Insurance

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Social

New Product Development via Crowdsourcing

Co-design Customer innovation

Customer engagement © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. 27 Copying,distribution or public displaying prohibited without the express written permission of Gartner

Big Data / Information

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Big Data / Information

Banking CEO‘s indicate the need for more information on regulatory compliance, customers, the competition and operations

Source: Gartner Research, CEO Survey 2012: Financial Services CEO Agenda

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Big Data / Information

Big Data Initiatives: The three V‘s Technical Challenges and Opportunities

Business Challenges and Opportunities

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Big Data / Information

Big Data – New Questions From the Business

Past

Future

What happened?

What is happening?

What is likely to happen?

Reporting, Dashboards

Real-Time Analytics

Predictive Analytics

Why did it happen?

Why is it happening?

What should I do about it?

Forensics & Data Mining

Real-Time Data Mining

Prescriptive Analytics

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Big Data / Information

Big Data requires Expanding Your Analytic Capabilities

Scenario Planning Gamification/Contests SELECT * FROM customers WHERE companyname LIKE 'a%'

Predictive Analytics

Mobile Deployment Complex Event Processing

Rule Engines Data and Text Mining © 2013 Gartner, Inc. and/or its affiliates. All rights reserved. 32 Copying,distribution or public displaying prohibited without the express written permission of Gartner

Natural Language Processing

Visualization

Big Data / Information

Social Media plus Information Equals Customers Insight

Gamification

Social Media Analysis

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Own Social Media Network

The Nexus of Forces driving the Digital Enterprise

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Gartner Point of View

The Nexus of Forces

Digital Enterprise

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Gartner Point of View

Best Practice: Use Pace Layering to drive decision points Organizations need to create a "layered" application strategy that recognizes that the business requires several types of applications with different governance, funding, and deployment models

Systems of Innovation Systems of Differentiation

Systems of Record Highly Flexible

 Systems of Record – Established packaged applications that support core transaction processing, i.e. core banking

Sales channel Client management

Marketing

Label / commercial offering Commercial Bundle bundle acceptance Margin

Service

Advice

Channel management Sales Support

Core product factory

Tightly Controlled

Underwriting / Acceptance

Policy administration

Claims

Product management

Reinsurance

Risk management

Output management

Billing

Finance

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 Systems of Differentiation – Applications that enable unique company processes or industryspecific capabilities. They have a medium life cycle (one to three years), but need to be reconfigured frequently to accommodate changing business practices or customer requirements, i.e. channels

 Systems of Innovation – New applications that are built on an ad hoc basis to address new business requirements or opportunities. These are typically short life cycle projects (zero to 12 months) using departmental or outside resources and consumergrade technologies

Contact Bart Mellink Vice President Disruptive Technologies EMEA Lead Gartner Consulting Telephone: +31 651272965 [email protected]

GARTNER CONSULTING

This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2013 Gartner, Inc. and/or its affiliates. All rights reserved.