Modified by Ellen Cornillon email@example.com
Consultant, IBM Center for Applied Insights
We hear a lot of chatter about a growing IT skills gap, both here in the US and globally. A recent New York Times article provided some statistics that were both frightening and illuminating. Approximately 20 percent of American adults don’t use the Internet at home, work, or school, and don’t own a web-enabled mobile device. While the government has funded a $7 billion effort to expand Internet access across the country, there has been little to no increase in adoption. Employment opportunities are increasingly web-based, but digital literacy rates have remained stagnant.
This gap is not only apparent in the general population, but also in the IT workforce. At the Center for Applied Insights, skills gaps often emerge in our studies as top barriers to success in specific fields. Our 2012 Tech Trends study, which surveyed more than 1200 IT professionals, found that only 1 in 10 organizations has all the skills it needs to be successful. This indicates a major gap – and when we talked to students and educators to get headlights into the future - roughly 75 percent of them report a moderate to major gap in their ability to meet the skill needs of the IT workforce. If the workforce of tomorrow and their teachers are telling us the gap is this big – clearly there’s a problem.
There is also a major skills gap in the security realm. In “Cybersecurity education for the next generation”, we addressed the need for cybersecurity-related academic programs around the world. Less than 60 percent of the students and educators surveyed believe their academic programs address the creation and development of IT security practices for emerging technologies such as Mobile, Cloud, and Social Business.
How can we close it?
Forbes, like the New York Times, wrote an article about the skills gap, emphasizing the disconnect between traditional education institutions and the current, fast-changing job market. Bottom line: institutions aren’t evolving as quickly as they should; only 42 percent of employers believe recent graduates are ready for work. Forbes’ solution? Job seekers must take it upon themselves to develop their own skills, by utilizing online resources. At the same time, companies must invest in comprehensive training programs for their diverse group of new employees, and make job requirements clearer. Noticeably absent was a suggestion for how traditional education institutions can improve. IBM has a tactic to address this. Ad Age featured a story on how IBM, in partnership with its clients, works with academic institutions to design programs that prepare students for real world IT work experience. Examples of these programs include integration with GM at Michigan State, and GlaxoSmithKline at Yale.
At the IBM Center for Applied Insights, we’ve looked at the IT skills gap from both the supply and demand sides. In terms of demand, our Tech Trends paper provides suggestions for IT leaders and practitioners on how to close this gap. For IT leaders, we suggest encouraging skill development across a range of disciplines, designing diverse teams and using social tools to assemble expertise, and extending the skills mission beyond IT, making business leaders smarter consumers of analytics. For practitioners, we suggest concentrating on integrating expertise and deepening specialized skills while broadening knowledge across new areas. Practitioners must combine areas of expertise to deliver more value, strengthen business acumen, and use social tools to solicit and supply expertise.
On the supply side, we discovered that cybersecurity education programs are entering a period of transformation. In order to work in concert with today’s demands, we suggest five key initiatives. (1) Increase awareness of security across the academic community, and produce more graduates from cybersecurity programs. (2) Treat security education as a global issue. (3) Approach security comprehensively, linking technical to non-technical fields. (4) Seek innovative ways to fund labs and pursue real-world projects. (5) Advance a “science of security”.
As technology continues to rapidly transform, skills gaps will continue to emerge. While we won’t try to tackle the 20 percent of non-Internet users in the US population, we in the Tech world have the tools to bridge the gaps in the IT workforce. We must be innovative, adaptable, and forward-thinking. What are the next skills gaps that we’ll explore? Stay tuned for more studies from the Center for Applied Insights that address this skills gap, specifically looking at IT leadership in Africa.
Client Insights, Consultant, IBM Center for Applied Insights
In this post, I will explore some interesting facets of the mobile money market in India such as market opportunity, regulatory environment, market participants, and the way ahead for the market.
Market Opportunity: The Indian economy has shown strong growth in the recent years, making it a USD 1.3 trillion economy. It is predominantly a cash economy with more than 65% of all retail transactions (total transactions are estimated as USD 410 billion per year) being conducted in cash. According to Reserve Bank of India(RBI), the central bank of India, more than 57% of the electronic transactions happen through credit and debit cards and the rest through Electronic Clearing Service (ECS) and Funds Transfer.
In India, 40% of the population remains unbanked. In contrast, it is estimated that more than 70% of the 1.17 billion people in India own a mobile phone. Moreover, this subscriber base has been increasing by 20 million customers per quarter. Hence, with a huge mobile subscriber base and a very small percentage of the transactions taking place over mobile, the potential for mobile money to take off and replace cash is immense.
Regulatory Environment: Government and the Reserve Bank of India are the nodal agencies which formulate regulations pertaining to mobile money. The Indian regulatory system has been gradually allowing the expansion of new products and solutions aimed to take advantage of the vast opportunities in this space.
RBI recognizes that individual banks need to work in conjunction with operators, mobile devices and payment technologies. In 2009, it mandated that a bank account is needed to send money but in 2010, it allowed ‘Other Persons’ (non-banks/NBFCs) to issue m-based semi-closed instruments with certain conditions and caps on transfer amounts. As a result, banks started offering mobile banking services. Further in 2010, it allowed semi-closed instruments to be used for bill payments and ticketing services, also, and permitted issue of co-branded instruments.
In late 2010, an interbank system had been set up in India enabling instant money transfers between bank accounts via mobile phones. NPCI's Interbank Mobile Payment Services (IMPS) is India's first instant fund transfer facility in the retail payment sector. It provides an inter-operable infrastructure for the banks and facilitates real time money transfer facility to their customers through the mobile channel. The unique feature of this system is that banks can choose any mobile banking application of their choice. Interestingly, IMPS can be made available in all forms (SMS, USSD, thin client, thick client) and hence it can support the transactions directly from low end mobiles to high end mobiles.
Market Participants: As compared to mobile money deployments in other emerging economies like Kenya, Philippines and Uganda, the Indian market is at a very nascent stage in terms of market consolidation and volume of transactions. The Indian telecom market is quite fragmented with fifteen different mobile operators providing service to more than 900 million subscribers. Among them, BhartiAirtel, Reliance Communications and Vodafone together hold more than 50% of market share.
BhartiAirtel has recently launched its mobile money services across India, offering services like payment of utility bills, mobile recharges, purchase at retail outlets, person to person money transfer, etc. Only Airtel customers can use this service and transfer money to other customers on Airtel.
My Mobile Payments Ltd (MMPL), a mobile payment service provider, had recently announced the launch of ‘Money-on-Mobile’ (MOM). It is a M-Wallet service which permits a mobile phone subscriber to purchase a wide range of goods and services using the mobile phone instead of paying by cash, cheque, debit or credit cards. It offers services like mobile recharge, utility bill payments, purchase of bus and movie tickets, to name a few. It claims to be India's first operator and bank agnostic mobile payment system.
The way ahead: As outlined in my earlier post, though the opportunity is huge and growing, companies need to address security apprehensions associated with mobile payments and build the awareness of the technology and the product.
India’s unique demography is an important factor to consider while taking strategic and marketing decisions during the ‘launch’ and ‘scale’ phases of mobile money deployments. Some of the notable factors are:
- It is estimated that 60% of the 1.17 billion population lives in rural areas most of which suffer from a lack of basic infrastructure and education. Companies generally face significant challenges in building the infrastructure and consumer awareness in these areas.
- Also, more than 50% of the Indian population is below the age of 25 years. This segment of population embraces new technology more readily but at the same time, it is a lot more value conscious and has little loyalty to a brand.
Besides offering regular services like person to person transfer, utility bill payments, mobile recharge etc. other useful revenue streams can be explored too.
- The internal remittance market – The internal migrant population is estimated to be around 100 million people. This market for internal remittance is estimated to be around USD 8 billion to USD 12 billion.
- Government payments market – Government of India offers a number of subsidy and support programs like Mahatma Gandhi National Rural Employee Guarantee Act (MG-NREGA), fuel subsidy, fertilizer subsidy and public distribution system which is estimated to be around USD 40 billion. A lot of it is wasted due to leakages and fraud in the distribution system. To ensure that the intended recipients do get their payments,mobile payments can play a very crucial role. The Indian government’s ‘Aadhar’ program to provide a unique identification number to every citizen of India would further lend support to the rapid uptake of financial services and transactions over mobile.
I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
Consultant, IBM Center for Applied Insights
Mobile money has progressed by leaps and bounds in the recent years and a lot of innovations are happening globally. The industry is undergoing a lot of changes and ecosystem participants are trying to learn from their successes and failures to innovate further. I have been an avid follower of the various developments happening in the industry. In this post, I will capture my thoughts on key segments of growth/developments which I would expect to happen this year. I believe these segments of growth/developments have the potential to bring further scale and innovation in this industry:
1. Development of ‘App Store’
– I expect that some of the major mobile money service providers may open up their platforms via an Application Programming Interface (APIs) that allows third parties to hook in and innovate. This development has the potential to replicate the success of the ‘Apple Appstore’ by providing an incentivized ecosystem to the developers. They would develop innovative and customized applications for specific markets which would address specific needs and in turn, attract more customers to the service. Thinking further, an ecosystem of these Apps stores from various service providers can provide further scale up and growth opportunities to them.
For example, a Kenyan MPesa customer on his visit to Ghana, can simply download an app to pay parking fees or make some quick purchases in a busy market in Ghana. Implementing platform level and customer level interoperability
would be the foundation to build this big ecosystem.
2. Transformation of traditional model of B2B payments
– Increasingly, mobile money is finding its application in the Retail industry for Point of Sale (PoS) transactions. Interestingly, I would expect more Business to Business (B2B) mobile money solutions to emerge for various industries. These solutions would focus on transforming the way payments are being made throughout the value chain. The aim would be to reduce risk of carrying cash, optimize liquidity, and provide delivery of goods and payments with security.
For example, Coca-Cola Sabco
is looking at the use of mobile money as a way to shift the supply chain of its Manual Distribution Centers away from cash. In Papua New Guinea, IFC is looking at piloting mobile money to reduce the use of cash in the coffee supply chain.
3. Development of new business models
– Traditionally a Mobile Network Operator (MNO) or a bank provides the mobile money services either individually or in collaboration. Of late, new business models are emerging as different industries are exploring mobile money based custom applications.
For example, Bharat Sanchar Nigam Limited (BSNL), a leading telecom service provider in India, has a mobile banking
platform which will help mobile subscribers to send money orders electronically. The unique thing is that this SMS based service is done in association with India Post. Receiver will be able to encash the SMS at all post offices in the country. Starbucks, a leading coffee chain is already among the most successful early adopters of mobile payments, claiming to have processed USD26
million in mobile transactions in the US just 12 months after launching the service. Recently, it has forged a partnership with Square
that will see the mobile payments company power in-store credit and debit card payments for Starbucks.
I expect that more of these innovative and interesting partnerships will emerge which would utilize mobile money to conduct business more efficiently and effectively.
I look forward to your comments and observations. Please click “Add a Comment
” below or “More Actions
” to share this with others.
Modified by Ellen Cornillon firstname.lastname@example.org
Client Insights, Managing Consultant, IBM Center for Applied Insights
This is the second post in a 3-part series about our new Sourcing research. My first blog post in this series looked at current outsourcing market shifts - a broader and more strategic view of sourcing relationships. Today I am exploring the financial impact of sourcing decision-making. Enterprises that source broadly across the organization and with a primary focus on innovation perform better financially – racking up 2x the revenue growth and 5x the gross profit growth compared to their peers.
To learn more and read the full report, access our new white paper here: Why Partnering Strategies Matter: How Sourcing of business and IT services impacts financial performance.
Partnering strategy and financial outperformance
An initial look at average revenue growth and gross profit growth across segments suggested a potential correlation between partnering strategy and business performance. You can see below that respondents who are both sourcing broadly and sourcing for innovation, outperform by considerable margins (as you may recall we are calling these outperformers 'Enterprise Innovators'). However, we knew that a number of other factors – such as industry, company size, geography – could be influencing these results.
We initiated analysis to help rule out firmographic characteristics as the reason for Enterprise Innovators’ outperformance. Against a slate of financial measures, each based on 3-year 2011 compound annual growth rates, Enterprise Innovators trended higher than the average of the other segments combined. This overall pattern is statistically significant. However, since this sourcing study is observational, we could not definitively conclude that Enterprise Innovators’ approach to sourcing causes better financial performance based on this correlation. To help make that case, we used an analytical technique called propensity score modeling.
Propensity score analysis matches Enterprise Innovators with other organizations in the sample that have similar firmographic characteristics, such as industry, company size and geography. In this case, we calculated propensity scores using 68 Dun & Bradstreet variables – those which showed a significant difference between Enterprise Innovators and the other segments.
For a more detailed description of this analysis, please see the complete report.
Enterprise Innovators scored higher than other businesses on all financial measures even after propensity score matching, suggesting their approach to sourcing – i.e., sourcing broadly to drive innovation – was a contributing factor to this higher performance.
My next blog post in this series will look at top business priorities and partner capabilities across the sample, and then explore how Enterprise Innovators structure, scope, and govern their sourcing relationships. Please log in and leave a comment!
Susanne Hupfer, Consultant, IBM Center for Applied Insights
Our director, Steve Rogers, recently interviewed Paul Brunet, IBM Vice President of ISVs, Start-ups, and Academic Programs, about his perspective on the 2012 Tech Trends study. Whether you're an IT or business decision-maker, an academic, or an IT practitioner, you may discover valuable insights and recommendations in their broad-ranging conversation.
IT and business leaders:
Why are CEOs regarding technology and skills as top concerns -- now outranking even market and economic forces? Why is it crucial to leverage emerging technologies for competitive advantage?
Paul discusses four technology areas -- mobile, cloud, social business, and business analytics -- and contrasts adoption and skill levels in mature and growth markets. He covers challenges to adoption -- such as security, skill gaps, and integration -- and explains why security is a business imperative. IT and business decision-makers may also be eager to learn more about the elite "pacesetter" group identified by the study, who are unlocking competitive advantage by being more market-driven, experimental, and analytical.
How can academia better monitor the needs of the enterprise and teach relevant skills their students will need upon graduation?
Paul also examines how using sandboxes and collaborative spaces can encourage experimentation, skills development, and collaboration across universities and practitioner areas.
Where should you be expanding your skills? What traits are IT leaders looking for today?
Paul and Steve talk about the importance of integrating business along with IT skills.
You can check out the full podcast here.
(24:16, 22.2 MB)
Client Insights, Senior Consultant
Center for Applied Insights
There has been a great deal of recent press stating that Platform-as-a-Service (PaaS) is “the future” of cloud. With a PaaS model, the user retains control of the application data, capabilities and updates, while the provider manages the software and infrastructure beneath that application. A lot has been made of the potential value of the technology – making the entire application lifecycle more efficient and less risky, while opening the doors for new organizational constructs and increased innovation and differentiation.
In its latest cloud hype cycle, Gartner placed PaaS at the summit, stating that it will be a transformational technology in the next two to five years. However, Gartner also said that PaaS is one of the most misunderstood aspects of cloud platforms. Adam Wiggins, one of the founders of cloud application platform provider Heroku, thinks that the PaaS market is just getting started. Finally Frost & Sullivan recently reported that “the platform-as-a-service market will be the next area of keen competition for cloud innovators, as the infrastructure- and software-as-a-service spaces have been commoditized.”
All of this may be true. A lot of enterprises are just getting started experimenting with and testing PaaS implementations, and it may take a number of years for widespread adoption. Technology adoption rates are always difficult to predict, but I think we can say with certainty that PaaS is a hot topic, with great potential, and much more will be written about it.
We're just getting started!
Consultant, IBM Center for Applied Insights
In this post, I shall try to have a closer look at some of the important questions pertaining to interoperability: what do we mean by mobile money interoperability, what are the arguments for and against interoperability, and what practical steps can be taken to achieve it?
The mobile money industry has witnessed a remarkable activity in the recent years. There are more than 165 pilots in the mobile money segment in emerging economies, mostly being run by MNOs, banks and other financial institutions. It is now possible to find two or more deployments in many Sub-Saharan African and South Asian countries. Yet, only a very few of these deployments have been able to achieve significant scale. In a recent survey of 52 mobile money service providers, the GSM (Groupe Spéciale Mobile) Association identified 11 service providers that have more than 1 million registered customers. This has led many to make a case for implementation of interoperability in mobile money ecosystems so that customers are more inclined to use mobile money and the deployments can achieve scale by increased customer adoption. Let’s try to explore this important concept further.
Defining mobile money interoperability: Interoperability occurs if different systems are technically able to work together. For mobile money, interoperability can happen between handsets, networks, financial processes and retail processes etc. The Consultative Group to Assist the Poor. (CGAP) has proposed a framework that categorizes interoperability in three levels: platform, customer, and agent levels.
- Platform level interoperability – It permits customers of provider A to make payments to customers of provider B. They may also transact via any mobile network operator channel and switch operators without having to switch banks. For example, M-PESA allows consumers to send money to any phone. In South Africa, MTN offers subscribers not only MTN Banking’s application but also access to their First National Bank, ABSA, Standard Bank and NedBank accounts. WIZZIT works across all mobile networks in South Africa.
- Agent level interoperability - It permits agents of one mobile money service to also serve customers of another service, in other words, agents having non-exclusive partnership with operators.
- Customer level interoperability - It permits the customers to access different mobile money operators from one SIM. Also, it permits the customers to access mobile money account from same handset, regardless of SIM
The debate around interoperability: Market participants and regulators have not reached a consensus about the need and benefits of interoperability. Some regulators believe that interoperability is the way to go as the market matures and operators try to scale up. For example, governments of Ghana and India have mandated interoperability in their countries. Some regulators have taken a neutral position and have allowed market forces to decide the course. The Bank of Zambia prefers, but has not mandated, that mobile money solutions be interoperable. It is encouraging interoperability through the development of a national switch. Others feel that interoperability will erode the competitive advantage of market leaders and its implementation may not result in sufficient addition in subscribers to justify the investment required. For example, a report by GSM (Groupe Spéciale Mobile) Association suggests that the business case for implementing interoperability is unlikely to justify the initial investments of implementing it.
How to achieve interoperability: Though industry leaders seem to agree that interoperability is a key issue, they have different views on how it can be achieved. There are two broad approaches to achieving interoperability:
- Standards – In global mobile telecommunications industry, Global System for Mobile Communications (GSM) has played a key role in setting up the standards and allowing the users to roam freely across various markets. Another example of common standards aiding the development of industry relates to SMS, where standard development in Europe led to a huge growth in SMS usage. Mobile money industry is still in its early stages and has not agreed to a set of common standards across all the elements described above. I believe it is unrealistic to take an entirely standards-based approach to interoperability. Standards are consensus based and take a long time to develop. Since a number of standards exist, it is unclear whether common standards can also impede the fast growth of mobile money industry; some of the players would have to wait before launching their services and many might have to migrate to common standards with significant costs and time. As the industry develops, a flexible approach based on experimentation would be needed. It will take time but governments & industry players should do what they can to monitor & promote standards,without holding back growth.
- Bilateral Agreements – Bilateral agreements, both commercial and technical, have become quite common. To develop compelling product offerings and to scale up, the market participants are experimenting with various business models and forging partnerships with other MNOs and financial institutions. For example, MasterCard and Telefonica announced a joint venture using the MasterCard Mobile Payments Gateway to lead the development of mobile financial solutions in 12 countries within Latin America where Telefonica’s Movistar® brand is present.
With respect to the timing and extent of interoperability, maybe the real answer lies somewhere in between. The timing and extent of interoperability needs to be specific to the state of market and needs to be continuously assessed. A report by Mobile Money for the Unbanked (MMU), suggests some valuable recommendations:
- Regulators should carefully consider the costs and benefits of implementing interoperability at an early stage of market development.
- Even when the enabling regulatory framework is in place, market should be monitored on a continuous basis to assess the need of further intervention.
- In the absence of interoperability regulations, monopolies and competition should be assessed periodically.
- Regulations should focus on ensuring that interoperability remains feasible at low cost to provide appropriate incentive to service providers and benefit users.
Have you ever been blocked by interoperability issues? What steps are your companies taking? I look forward to your comments and observations. Please click “Add a Comment” below or “More Actions” to share this with others.
IBM Center for Applied Insights
What is driving these shifts? In a January 28, 2012 New York Times Op-Ed piece Made
in the World
, Thomas Friedman argues, “Many CEOs, …increasingly see the world as a place where their products can be made anywhere through global supply chains (often assembled with nonunion-protected labor) and sold everywhere.” Globally integrated supply chains are transforming traditional business models and shifting yesterday’s outsourcing choices and trade-offs.
Mr. Friedman provides a provocative perspective. But, is this really happening?
The transfer of control of a process, product, or service to an external provider can take a variety of forms. The value in strategic outsourcing can include an organization’s ability to:
- Reduce costs
- Improve services delivery
- Engage in strategic partnerships that enable innovation, growth, and desired business outcomes
Traditional strategic outsourcing has often centered on transferring services to an external services provider with a focus on cost reduction. Outsourcing models are changing in new ways - why? What is driving these shifts and what can an organization do to capitalize on these changes?
Our team at the IBM Center for Applied Insights set out earlier this year to investigate market changes, identify emerging trends, and develop evidence-based research that explores how forward-thinking companies are responding to these trends.
Our premise is that the changing global dynamic, combined with technology-driven market shifts, is creating an opportunity for organizations to move beyond sourcing primarily for cost advantage to partnering for competitive advantage and desired business outcomes. Some of the technology-fueled market shifts reshaping the outsourcing landscape include:
- New and disruptive business models are changing how business is done
- Empowered consumers are driving companies to deliver customized client experiences to build enduring loyalty
- Big data generated from multiple sources is changing how organizations make decisions and leverage predictive insights for competitive advantage
Recently, IBM conducted a survey of 97 C-Suite Sourcing executives and found that seven out of ten plan to outsource for strategic reasons like driving growth and innovation. Based on their chief motivation, we categorized these organizations as:
- Cost-cutters–27 percent outsource their IT infrastructure to reduce operations costs
- Growth-seekers–37 percent outsource IT infrastructure, application management or business processes to achieve operational efficiencies and revenue growth
- Innovators–36 percent outsource multiple parts of the business to enable transformation and innovation
What we found most interesting was the progression of objectives across these three groups. Cost-cutters indicate they want one primary outcome from their sourcing relationships: cost savings. The majority of growth-seekers want to reduce costs, but also faster time to market for new products and services, and increased efficiency and effectiveness across the entire value chain. Innovators expect all of the above–and more. In addition to cost reduction, speed-to-market, and value chain efficiency, the majority of innovators want providers to help them:
- Drive front-office effectiveness (not just back-office)
- Better anticipate and respond to disruptive technological changes or market forces
- Proactively manage risk, compliance and security via technologies like predictive analytics
- Share risks and rewards based on business outcomes
I look forward to your comments and feedback!
According to Gartner, the use of Software as a Service (SaaS) is expected to grow from US $18.2 billion in 2012 to US $45.6 billion in 2017. And while our recent global SaaS study found that reducing total cost of ownership (TCO) was the top driver for adopting SaaS, 47 % of IT and business respondents report that SaaS is actually transforming their businesses and providing a competitive advantage in the market.
The business benefits of SaaS are clear: lower upfront costs, flexibility and scalability. But SaaS is more than just economics, it's about market agility and innovation. On a Smarter Planet, SaaS is about helping organizations transform their businesses. SaaS solutions can help cities improve water management, help non-profits save lives, and help businesses engage and better serve their clients. Today, Marc Dietz, Director of SaaS Strategy and Marketing at IBM, and Judith Hurwitz, Hurwitz and Associates, are joining the regular #P4SP chat to discuss how SaaS can enable a Smarter Planet.
Twitter Chat, April 3, 12:00 Noon - 1:00 PM Eastern Time