A few years ago, who could have guessed that a bunch of everyday objects or "things," could cause such upheaval in the way we live and do business? And yet, here we are in the midst of a data explosion, instigated in part by the so-called Internet of Things, a vast and growing network of sensor-enabled devices embedded in everything from vehicles, to healthcare equipment, to household appliances. These connected "things" — which in 2012 accounted for 0.6% of the estimated 1.5 trillion things in existence — are expected to number 50 billion by 2020 — or 6.58 connected devices per person.1
The market for wearable electronics alone is forecast to cross the $8 billion mark by 2018,2 across the consumer, healthcare, enterprise and industrial sectors. The result: A boom in global IP traffic volume, which will reach 1.4 zettabytes per year by 2017.3
This data explosion has significant implications for enterprises, particularly those seeking to sharpen their competitive edge by deftly interpreting the accumulated bits and bytes and transforming them into workable insights that inform and illuminate business strategy and direction.
The data deluge caused by increasingly chatty and connected products, services, industrial devices, consumers and enterprises has resulted in the creation of fields of information — or what we call a Code Halo™. In a business context, these halos enable meaningful connections among people, organizations and devices. Extracting meaning from Code Halos is a skill that successful enterprises of tomorrow will need to master, with the help of new technology foundations and skills based on the SMAC Stack™ (i.e., social, mobile, analytics and cloud technologies).
A Look at the SMAC Stack
Big Data & Analytics
Code Halo thinking is predicated on mastery of business analytics. To fan the analytics flame, organizations are betting big on big data, a global market that is projected to reach $48.3 billion by 20184 (see Figure 1). The advanced and predictive analytics software segment within the big data market is forecast to grow from $2.2 billion in 2013 to $3.4 billion in 2018.5 Through the application of best-in-class business analytics, enterprises across the retail, banking, insurance, manufacturing, communications, information services, media and entertainment industries could generate value worth $2.61 trillion per year, an increase of 8% beyond current levels.6
The growth in cloud infrastructure is enabling efficient data storage and easier data sharing. As cloud computing matures, it is paving the way for next-generation IT architectures, such as software-, platform- and business-process-as-a-service. In fact, the cloud is already delivering measurable improvements, including increased efficiencies, improved employee mobility and the ability to innovate,7 spurring levels of cloud-related spending that are expected to reach $235.1 billion in 2017, according to IHS8.
Enterprise Social Networking
While social networking seems to have historically received short-shrift from enterprises, we detect a subtle shift in the air. A recent Frost & Sullivan survey9 found that 88% of respondents believe social networking will be important in the coming years, especially to enable knowledge transfer within the enterprise and among geographically disparate employees. Social tools can also improve employee engagement, as shown in the early corporate use of "gamification" techniques. Enterprises' growing seriousness about social is reflected in the uptake of enterprise social software to enable document-sharing, micro-blogging, wiki publishing and creation of shared spaces for communities.10
The rise of "social" offers a glimpse into the emergence of a digitally-wired enterprise that fosters a collaborative work culture and enables knowledge to flow seamlessly among connected employees over smartphones, tablets and other devices of choice.
Whether they're used for social engagement, transactions, entertainment or customer service, mobile devices are now a crucial channel for customer interaction. Monthly traffic from mobile devices will surpass 15 exabytes in 2018, according to the 2013 Cisco Visual Networking Index and according to Nielsen, consumers now use their smartphones more than their PCs to access the Web.11 Both smartphones and wearable devices will push mobility even further, enabling businesses to interact more personally with customers, especially through localization capabilities that deliver offers, alerts and services to customers just when they are needed.
Impact on the Enterprise
With SMAC technologies as the fulcrum, pundits estimate that business spending on digital infrastructure will reach the $360 billion mark by 2016, transforming all functional areas of the enterprise. Social tools will improve customer engagement and unlock collaboration. Mobile will enable anytime/anywhere interactions and localized deals. Analytics will make these efforts personalized and even able to predict customer needs. Cloud-enabled digitization of processes will result in greater automation and better monitoring of internal processes. Integrated data management will be the crucial intermediary that brings disparate sources of data together and feeds the respective functions with the necessary insights.
Increasingly, financial executives will employ cloud-based SaaS solutions to supplement core financial applications in areas such as expense management and reconciliation management. Big data and analytics will enhance functions such as accounting, disclosure and governance. Accelerated runtimes for period-end reports could significantly reduce the time needed to close the books. Mobile solutions will improve employee productivity with self-service features such as data retrieval and sharing.
Marketing and CRM
Advanced analytics will provide an ultra-high-definition12 picture of a company's move-forward performance and promotional scenarios to refine customer engagement strategies on the fly.
A study13 of the UK market by the Centre for Economics and Business Research (Cebr) found that better customer intelligence, driven by big data and analytics, could infuse the UK economy with $123.8 billion (£74 billion) between 2012 and 2017 (see Figure 4), benefiting several industries, including retail, telecommunication and banking.
According to Ovum, customer engagement systems will be the fastest growing enterprise application between 2013 and 2018, with a CAGR of 10%.14 Using online tools (such as social media platforms) to handle customer issues will over time prove increasingly useful in improving customer satisfaction while reducing costs.15
Human Resource Management
Meanwhile, big data is gradually moving recruitment decisions out of the hands of individual interviewers. Analyzing in-house data about high-tenure employees will help some organizations better understand the characteristics to seek in prospective job candidates.16
Areas such as demand planning, order management and price management are also expected to benefit greatly from big data initiatives. Big data analytics will enable more intelligent use of channel data and a digitized supply chain will more effectively combine transactional data with interactional data to enable new forms of connectivity and manufacturing.17 Leaders will be able to interpret signals in the supply chain and transmit them to the right person at the right time to make the right decision.
Meanwhile, 3-D printing's print-on-demand capability is set to have a massive impact on the industrial economy in terms of savings in logistics and inventory. The economic implications of this technology will amount to $550 billion a year by 2025, according to McKinsey & Co.18
Preparing for the Digital Future
While the specifics of digital enterprises will vary by industry, the fundamentals of getting it right are consistent for everyone. End-to-end process digitization is not just about the technology that binds a multitude of devices into a coherent whole; it also involves the organization's culture, its present and future workforce and, importantly, its leaders.
Some important factors of successful digitization are:
A robust enterprise architecture: Continuous adaptation to a changing business environment requires an agile and elastic digital IT architecture, as well as an increasing array of analytics to guide decision-makers through a constant deluge of data.19 Enterprise architects need to work in tandem with key business stakeholders to keep the enterprise poised for continuous transformation.
People-centric digitization: Digitization efforts must focus on the people who make business happen. Decisions should be guided by the company's culture; if the organization moves too fast, it risks alienating traditional thinkers and skeptics, but if it moves too slowly, it risks market irrelevance. The imperative is to get employees thinking positively about digital.
New skills: Data scientists, business and data analysts, data visualizers, big data programmers, data architects, behavioral scientists and academic researchers will all be key to creating a digital future.
Preparing for complexity: Digital enterprises are based on a complex environment, full of sensors sending and receiving data. To excel amid this complexity, enterprises will need to support product digitization with equivalent process digitization.
Managing structural transformation: End-to-end process digitization requires large-scale and holistic change across the organization. Many enterprises will appoint a chief digital officer — a seasoned and savvy individual with a mix of the right leadership and technical skills — to oversee this change. Alternatively, individual business units could run their own digitization efforts using a shared infrastructure.
1. "Connections Counter: The Internet of Everything in Motion," Cisco, July 29, 2013,http://newsroom.cisco.com/feature-content?type=webcontent&articleId=1208342.
2. "Wearable Electronics Market to Hit $8 Billion Value by 2018, " PR Newswire, Aug. 18, 2014,http://www.prnewswire.co.uk/news-releases/wearable-electronics-market-to-hit-us8-billion-value-by-2018-271697591.html.
3. "The Zettabyte Era: Trends and Analysis, " Cisco, June 10, 2014,http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/VNI_Hyperconnectivity_WP.html.
4. "Global Big Data Market to Be Worth $48.3 Billion by 2018, " Transparency Market Research, June 4, 2014,http://www.prnewswire.com/news-releases/global-big-data-market-to-be-worth-483-billion-by-2018-transparency-market-research-277206041.html.
5. "Worldwide Advanced and Predictive Analytics Software 2014-2018 Forecast and 2013 Vendor Shares, " IDC, June 2014, https://www.idc.com/.
6. Paul Roehrig and Ben Pring, "The Value of Signal and the Cost of Noise, " Cognizant Technology Solutions, October 2013, http://www.cognizant.com/InsightsWhitepapers/The-Value-of-Signal-and-the-Cost-of-Noise-The-New-Economics-of-Meaning-Making.pdf
7. Thor Olavsrud, "How Cloud Computing Helps Cut Costs, Boost Profits, CIO, March 12, 2013,http://www.cio.com/article/2387672/service-oriented-architecture/how-cloud-computing-helps-cut- costs--boost-profits.html.
8. Louis Columbus, "Roundup of Cloud Computing Forecasts and Market Estimates, 2014," Forbest, March 14, 2014,http://www.forbes.com/sites/louiscolumbus/2014/03/14/roundup-of-cloud-computing-forecasts-and-market-estimates-2014/.
9. "Enterprises Harness Social Networking for Increased Agility and Responsiveness," Frost & Sullivan, March 13, 2014, http://www.frost.com/prod/servlet/press-release.pag?docid=289562565.
10. "Enterprise Social Software Market 2014-2019," MarketsandMarkets, May 2014,http://www.marketsandmarkets.com/Market-Reports/enterprise-social-software-market-568.html.
11. "How Smartphones Are Changing Consumers' Daily Routines Around the Globe," Nielsen, Feb. 24, 2014, https://www.nielsen.com/us/en/insights/article/2014/how-smartphones-are-changing-consumers-daily-routines-around-the-globe/
12. Wes Nichols, "Advertising Analytics 2.0," Harvard Business Review, March 2013,http://hbr.org/2013/03/advertising-analytics-20/ar/1.
13. "Data Equity: Unlocking the Value of Big Data," Center for Economics and Business Research, April 2012,http://www.sas.com.
14. Jeremy Cox, "Ovum Finds Competition for Customers Hotting-Up as CRM and E-commerce Are Set to be Fastest Growing Enterprise Applications," Ovum, July 2014, http://www.ovum.com/
15. Francesco Banfi, Boris Gbahoué and Jeremy Schneider, "Higher Satisfaction at Lower Cost: Digitizing Customer Care," McKinsey & Co., July 2013,http://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/Telecoms/PDFs/Digitizing_customer_care.ashx
16. Tim Smedley, "Forget the CV; Data Decide Careers," The Financial Times, July 9, 2014
17. Lora Cecere, "The Role of Analytics in the Race for the Supply Chain of the Future," DataInformed, Sept. 24, 2013.
18. Daniel Cohen, Matthew Sargeant, Ken Somers, "3-D Printing Takes Shape," McKinsey & Co., January 2014,http://www.mckinsey.com/insights/manufacturing/3-d_printing_takes_shape
19. Nick Vitalari, William Strain, Haydn Shaugnessy, "Creating Elastic Digital Architectures," Cognizant Technology Solutions, Elasticity Labs and Tammy Erickson Associates, September 2012,http://www.cognizant.com/InsightsWhitepapers/Creating-Elastic-Digital-Architectures.pdf.
Code Halo™ is a pending trademark of Cognizant Technology Solutions.
Note: The logos and company names presented in this article are the property of their respective trademark owners, are not affiliated with Cognizant Technology Solutions and are displayed for illustrative purposes only. Use of the logo does not imply endorsement of the organization by Cognizant, nor vice versa.