The global nature of the recent economic collapse has reaffirmed that globalization took hold long ago and that the world is indeed "flat". The statements emerging from the G20 summit in London showed an awareness that any recovery effort would also need to be global in nature. Although issues around technology were not directly addressed, vendors and systems integrators should take heed of the proposed regulations and changes in policy, and consider how it will impact upon their operations. Customer interaction technology From a customer interaction technology point of view, any increase in regulations means greater opportunities for those vendors involved in helping enterprises with compliance. The G20 working groups made a number of regulatory recommendations, which means good business for customer interaction technology vendors. For example, companies that perform recording and logging for compliance will see increased business, particularly as logging requirements extend from the contact center out to branches (i.e. retail banking and retail brokerages). In the same vein, the companies that supply the scheduling and adherence tools to contact centers have been seeing greater interest from the enterprise for those same tools, in order to achieve the same auditability into the enterprise as exists in contact centers.
Most of the increased demand from enterprises will be in workforce optimization technologies which include the logging and workforce management mentioned above, as well as the analytics to help enterprises understand interactions with customers. While this could possibly lead to increased IT spending, the cause and effect will be less clear. Green IT and protectionism The communiqué on recovery and reform included a pledge to "build an inclusive, green and sustainable recovery." Technology is a huge consumer of energy and contributor of toxic waste, but can have a significant role to play in making the world a greener place. Indeed, in many cases it already does. The major take-away from this commitment is the need for vendors to continue to wrap their offerings and marketing campaigns in green, while emphasizing their cost-saving potential. Although the green trend is perhaps more prominent in Europe, enterprises in other regions, particularly North America, are increasingly turning to technologies such as video conferencing, cloud computing and virtualization to reduce costs, as well as their carbon footprint. For many technology firms, the fact that the G20 communiqué rejects the notion of protectionism is crucial. The goal of clause four of the Global Plan for Recovery and Reform is "to promote global trade and investment and reject protectionism, to underpin prosperity." Since the election of Barack Obama in the US, many contact center outsourcers with offshore deployments had been worried about a move toward protectionism, and the inflationary impact that this could have.
They will now be able to market an offshore component of operations without fear of reprisals. Going forward, targeted vertical offerings will be a key differentiator, as enterprises look for vendors that have a strong understanding of their industry's needs in challenging times. Following the summit, Datamonitor has prepared insight and recommendations on several key verticals. Financial markets The commitments of the G20 nations to strengthening and coordinating the regulation of financial markets are welcome. However, as the details are a long way from being defined, some thought must be given to the principles underlying a new approach. In designing a supranational regulatory body that is 'fit for purpose' in managing systemic risk, the challenge lies in obtaining and managing the vast quantities of data required to do so.
Market data must be captured and managed in combination with risk data from banks in order to monitor institutions' exposure and positions, and further investment will be required in monitoring, reporting and analytics technology, both within organizations and by regulators. The existing issues of aggregating data from a variety of risk disciplines have focused efforts on standardizing terminology and procedures so as to be able to maintain a far more current view of risk exposures. The renewed regulatory efforts will drive programs to move to enterprise-wide risk platforms; with the expansion of supervision to previously unsupervised institutions, such as hedge funds, many firms will need to identify solutions to meet current compliance requirements, and be flexible enough to meet tomorrow's requirements.
Retail banking Within retail banking, the outcome of the summit will not have a significant direct impact on technology deployments. Rather, vendors should consider the field in the context of the ongoing changes taking place in the financial services sector. These changes include the need for improved reporting (containing more details, with a greater degree of accuracy and increased frequency), additional and tighter regulation, improvements to risk management and lending decision-making, and a rigid focus on cost containment and increased operational efficiency. The G20 plans to name and shame offshore locations that do not meet disclosure requirements around tax information exchange and are 'non-cooperative' in moving to international standards in this respect, by blacklisting countries.
From a bank perspective, this has significant reporting implications, with institutions needing to pass on customer information to tax authorities across multiple markets. Given that reporting systems and processes are likely to be relatively basic for many banks, on account of limited prior requirements, this is likely to be an expensive requirement in terms of labor time for administration in the back office. Therefore, Datamonitor identifies an area ripe for technology automation around data warehousing, business intelligence and report generation. Public sector Government IT budgets, despite being hit hard by shrinking tax revenues, have remained among the most stable, as agencies continue to invest in interactive e-government, particularly among G20 nations. With transparency a key tenet of the summit, this trend is likely to continue apace, particularly around monitoring the various stimulus packages that are being implemented around the world. Because of the close monitoring of government spending, vendors and systems integrators will need to ensure they have a firm grasp of total costs and a clear implementation strategy, as departments are under pressure to demonstrate that the projects which they are implementing are increasing productivity and service capabilities, and lowering overall costs. Although there was no mention of healthcare at the G20, there is likely to a be a bump in technology spending in this area as more countries begin to implement electronic health records in hospitals and doctors' offices.
In addition, as unemployment increases around the globe, there has been a surge in enrolment in higher education, which has put increased pressure on institutions to invest in solutions such as constituent relationship management and online learning solutions, as well as exploring new, cost-effective delivery models such as software-as-a-service. Retail and manufacturing Both retail and manufacturing have been particularly hard-hit over the last year due to the economic crisis and decline in consumer spending. While retail has seen a decline in sales globally, manufacturing has been adversely affected in emerging markets, with technology budgets having been reduced significantly around supply chain analytics, product lifecycle management and marketing customer relationship management, which are not viewed as core or essential processes.
However, if the G20 stimulus has the desired effect, international trade will increase, leading to retailers and manufacturers selling more product, which may in turn lead them to invest more in technology. Opportunities in an interconnected world While the G20 summit is not is not the only remedy to the global crisis, it is nonetheless an important development that has the potential to stem the downward trend in the global economy. In particular, it is a reminder that the world has become increasingly interconnected, with decisions made in London affecting everything from outsourcing in Brazil to contact centers in India. It is important to note however, that the impact of the G20 hinges on turning intention into action; something which is not always done when it comes to grand international commitments. Even so, it will take months, perhaps even years, for the measures to be felt on a macro level. Despite the efforts of the G20, there is likely to be continued belt-tightening among enterprises and IT departments are no exception. According to a global Datamonitor survey of 520 IT decision makers conducted in the second half of 2008, 55% of enterprises are formulating their 2009 IT budgets by assessing the benefits and requirements of each individual project.
Going forward, vendors will therefore need to understand where the opportunities lie, plan for contraction in demand for non-core areas of IT expenditure and evaluate how they target vertical markets. Vendors who do not engage and seek to understand enterprise requirements, in the context of their specific industry, will fail to capitalize on the opportunities that exist. In an economic climate that discourages tolerance for risky IT investments, enterprises will be reassured by vendors that demonstrate a clear understanding of their unique needs and circumstances. Ben Madgett
source: www.mbtmag.com
