Information Technology Macro Trends 2012-13

Ramanujam RaoChief Technology Officer, Nationwide Insurance

Nov 2011 10/01/2011

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“It’s tough to make predictions,especially about the future.”

­ Yogi Berra

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Technology Industry Shifts

Source: ZDNet

 Significant simultaneous shifts in the computing landscape driven by innovation, economic models, business environment, changing customer preferences and interactions

 Data continues to dominate for insurance and financial services with growing emphasis on predictive analytics

 Traditional communication modes are giving way to social media

 IT Delivery shifting to lean and on­demand, pay­as­you­go “cloud” architecture

 Users accustomed to simpler, clean interfaces in personal lives demand same from enterprises

 Personal lives are blending with work lives in preferences and expectations. Consumer drive technology landscape rather than enterprises

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Need for Trends

Disruptive and influential trends that can be anticipated­ User behavior and expectations, industry models and   economics, technology markets and pricing

 Potential areas for improvement, investment and efficiency- IT budgets, business operations, new business opportunities

 Technologies and trends already here and have reached critical mass for adoption in next couple of years

­ Price or functionality threshold, complexity, security & vendor activities

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Trends shaping in 2012 and beyond

A combination of technology breakthroughs, socio­economic trends and business environment is shaping the nature of how technologies are evolving and trending in coming near future. 

Big Data and Analytics Consumer-driven IT IT Automation and Delivery

Social Media and Collaboration Pervasive Computing

Anytime

Anywhere

Anyplace

Cloud Computing

DecisionSupport

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Social Media and Collaboration

Widespread adoption and sharing of personal information on social platforms from personal relationships to entertainment and purchasing Social media services, initially started for personal use, now leverage their numbers to offer enterprise services Consumer pull, time and place independent Age of recommendation. 69% consumers research products online, 62% look at online peer review, 39% compare outlets 72% of marketers attribute social media as catalyst for new business  Revenues growth of social businesses is 24% higher than less social ones.  “Business Networks” tie enterprises closely to suppliers, partners and customers to create “Social Enterprises”

Challenges and Adoption: Not a core IT competency. Social media driven by technology, but not large enterprise IT. Concerns of data privacy and personal information liability Lack of continued focus and investment, due to staggered, uncertain outcomes

Source: Zoomerang

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Pervasive Computing

Significant reduction in the cost of processor and memory, availability of high­speed network bandwidth and popularity of voice/tactile interfaces has resulted in an explosion of use of hand­held devices. Phone, tablet PC and mobile internet will be the device of choice for a large segment of users, shifting towards online, 24/7 access  By 2015 Tablet market be will 479 million units while PCs will come down to mere 535 million units Devices are context aware, including location, orientation and affiliations/subscriptions Near Field communication (NFC) used for electronic commerce and data exchange using hand­held devices. Mobile payments to grow to $45B by 2015 Security and privacy controls are getting unprecedented focus, however  newer uncharted avenues are simultaneously pursued Organization internally adapt to changing personal computing needs of associates, and partners. Lines between personal and enterprise assets blur

Challenges and Adoption Delivery to diverse channels and devices will become exceedingly complex unless standards emerge Enhanced risk of device security and exposure of personal data

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Big Data and Analytics

 Refers to datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze. Easy access to data complemented by cheaper storage and high speed processors, have provided capability to analyze large volumes of data to derive insights not possible before. Social network (organizational, social circles, influence), sentiment (reviews, recommendations, popularity) and contextual analytics (social network activity, location, preferences) Customer experience analytics. Insights in customer experience across channels and purchasing behavior Current tools cannot be used to derive benefit from Big Data. Require a whole new set of tools to effectively process, analyze and develop insights. Faster algorithms, cloud adoption for on­demand scale, are almost integral complements

Challenges and Adoption• Adoption will invariably require to be a pioneer, as new tools emerge and old tools are insufficient. • Data is currently not stored in a consumable form or location

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Consumer-driven IT

 IT innovation and technology evolution driven by consumers rather than enterprises. Shift toward application simplicity, usability and low barriers for participation away from complex singular enterprise perspectives. Personalized, context­aware services Decentralized, scalable, services­driven architectures Independent third­party applications in app stores.  Third­party integrators and aggregators with specialized capability now control usability with end user.  User experience is a combination of  mobile apps, portals, mash­ups and social media. All delivered to user’s preferred channel, typically integrating with Cloud­based solutions Enterprise functions largely limited to building robust, scalable, discrete and generic integration points

Challenges and Adoption• Third­party control content delivery and user experience. Enterprises run risk of content mismatch and brand impact. Similarly with data security and consumer privacy issues.• Consumer tastes can be transient, self­serving, economics driven or just plain fads. 

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Cloud Computing

Challenges and Adoption• Data security, unreliable partners, challenges with service level agreements and systems management• Using current processes and programming models can result in high exit barriers and sub­optimal use.

 On­demand self­service. Provision, use and manage application, platforms and infrastructure. Low barriers for entry and exit Anytime anywhere network access. Geography independent hosting and service availability Multi­Tenant / Resource pooling. Shared economies of scale Rapid Elasticity when needed. Reduced capital expenditure and on­demand scalability. Metered Use. Pay­as­you­go and pay­for­use. Costs shift from capital expenditure to operating expenditure Service types includes software, platform and infrastructure Deployments can be on private infrastructure, public or hybrid Core systems will continue being hosted on “non­cloud” environment, but most others will be actively considered for move Requires a different mindset and skills for administrators and programmers to leverage the capabilities of highly scalable, multi­tenant cloud environment

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IT Automation and Delivery

 Industry move towards further adoption of Lean and Agile processes for software development, operations and support Modernization of legacy platform from monolithic (typically) COBOL­based solution stacks to discrete loosely coupled business components. Insurance industry shift from custom built software and in­house enhancements to standard COTS products for billing, policy and claims.  Business process management solutions including work­flow and rules engines Fraud detection and predictive modeling Open architecture with service integration Fabric­based computing. Computers made by discrete components over network fabric Continued focus on virtualization for segment not ready for cloud or for implementation of internal private cloud

Challenges and Adoption• Requires some cultural shifts that are difficult to implement and can cause organizational discord• Skilled architecture and management talent combined with organizational will• Wider recognition compared to peers and significant strides on almost all facets. Agile, legacy transformation,     services architecture  etc. 

BPMSOA

Lean IT

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Appendix

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2010 IT Trends

Key Trend Description Examples Impact Opportunities

Paradise of Choice

Time and Place IndependentConsumer PullPervasive AccessAge of recommendation. 69% consumers research products online,62% look at online peer review, 39% compare outlets

Internet, Blackberry’s, cell phones, instant messaging, iPodsBlackberry used to increase sales and improve service.The Internet usage to connect to vehicles, pallets of consumer products, smart devices and even the human body.Telematics in the auto industry.Podcasts, Tivo, On Demand TVPricegrabber, TripAdvisor, LendingTree, Insurance.com

Consumers now expect to do business with us whenever and however they want. They want secure and accurate information available easily and quickly (anywhere/anytime).

Integrated (Embedded) advertizing on podcasts and internet videoConsumer recommendation and discussion forums Periodic financial market trends and report for general public. “The Nationwide Report”

Growing Influence of the Internet

Web 2.0 (Rich, ynamic interfaces)Semantic WebXInternet Mashup. Website with aggregation of disparate functions

Gen X, Gen Y and one-person households (all avid Internet users) are on the rise.In 2005, 24% of advertising was dedicated to Internet versus 15% on television.More buyer decisions are made through social contact and the Internet enables “word of mouth”. Democratization of sales (Amazon, eBay), music/video production (Youtube, iTunes), publication (lulu, Wikipedia) and search (Google, TripAdvisor)

The buying patterns of consumers, especially for financial services, is changing. The way we market products and services is changing.Customers expect us to know who they are and what products they own.74% penetration in North American markets

Handheld device applications (calculators etc.) Financial services portable web applications Marketing and brand management through semantic searchEnhanced online channel with multi-device supportIntegrated accountsSingle sign-onMashup support

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2010 IT Trends

Key Trend Description Examples Impact Opportunities

Social Networking Fostering relationship through content and communicationCollaborative Economy/Development

Facebook, LinkedIn, MySpace1M users per week on Facebook with 18000 hosted applications.Interoperability APIChoice platform for digital nativesBusiness collaboration suites from Microsoft and IBM

Shift from information to knowledgeLeverage the relationship data with business applications, such as sales force automationRelationships translate to sales prospects, recruits, customers and business partners

AdClick program on MySpace, Facebook pagesFinancial tools for hosting on Facebook pages. Better agent and insurance professional interaction. Analytics of customer on social networks.

Cloud Computing/ SaaS

IT capabilities are provides as a serviceCloud abstracts infrastructure and resource management complexityUtility Computing with usage-based cost

Software as Service (Google Apps, SalesForce)Payment Systems (Paypal, Google Checkout)Storage (Amazon, MS LiveMesh, Nirvanix)Full virtualization (GoGrid)Customer Data CleansingGeocodingSalesforce.com

Delegated processingDelegated resources and infrastructureOn-demand capacity/consumptionLow capital expenditureDevice and location independance

Leveraging capability and integration with internal applications Delegated business functions in the areas of CRM, Geocoding etc.External storage and archival

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2010 IT Trends

Key Trend Description Examples Impact Opportunity

Workforce Demographics

Off-shoringSkill shortageOpen-source

The number of students pursuing an IT career is plummeting while an aging IT workforce grows. The sophistication and complexity of IT is rapidly increasing.Outsourcing, off-shore, mass collaboration, open source software, service-oriented architectures and software on demand are changing the economics of IT.

Attracting and retaining top IT professionals is increasingly difficult.Improved IT capabilities are required.

Green IT VirtualizationPower ManagementRecyclingTelecommuting

Virtualization - IBM zOS, Intel/AMDIntel/AMD power control features, solid-state drives, faster graphics processor units, LEDsHardware, paper recycling Teleconferencing, VoIPBarge-computing.

Lower carbon footprintLower energy costsSmaller, efficient hardwareBy 2009, at least 1/3rd of IT organizations will consider the energy efficiency of servers, PCs etc. just as important as performance.

Cost savingsOpportunity for industry leadership as pioneer in green enterprise Green branding

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2010 IT Trends

Key Trend Description Examples Impact Opportunities

Business Modeling (BPM, SOA)

Business process modeling a pre-requisite for a strong services oriented architecture (SOA). SOA leverage assets, entities and functions defined by BPMServices architecture is built on strong semantic validation of data using MDM

IBM, Oracle etc., SOA tools and reference architectures

Streamline business processes from document or human-centric to system-based or services oriented. Optimization of existing processes Allows business agility through reusability and easy adaption. Better audit capabilitySOA provides a framework for implementing BPM

Adaptive IT systems and processes to changing business strategy and needs. Improved efficiency of existing application Improved regulatory compliance

Information Risk PrivacyData EncryptionIdentity

Security GovernanceRisk Management and Business ContinuityFederated Identity Management (shared identities)Personal Identity Management (wallets, passports, 2-factor)Web Access Management Authorization frameworksData Encryption software

Privacy protectionStronger regulatory compliance (Sox, HIPAA etc.)

Market pioneer in bundling identity protection along with offerings. Newer products in identity and privacy insurance Market pioneer in advanced security features

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Appendix - An IT Framework

Business

Impact

Co

nflu

ence

IT Trends

(Possibilities)

It is the confluence of innovation from these individual technologies that create IT macro trends -- which have the potential to create the most business value.

Business

Innovation

Individual TechnologiesPersonal Computing

NetworksIntelligent Objects

SoftwareInfrastructure

Biometrics

?

Awareness Marketplace and Business

Need

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Sources

• Forrester Research• MDG Advertising• Gartner• Insurance and Technology• Guidewire• Celent• Zommerang• NIST• ZDNet