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  • 1. Six convergingtechnologytrendsDriving a tectonicshift in theBusiness-Consumerecosystemkpmg.com/in
  • 2. Tableof ContentsForeword01Impactonindustries14Riseofthedigitalconsumer06ImpactonITvendors58Conclusionandrecommendations70Acknowledgement73Executivesummary02Impactondecisionmakingprocess54Sixtrendsthatwillshapethefuture10Roadmap62AboutKPMGinIndia72© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 3. ForewordThe market dynamics are changing; there is a decisive shift in the economic, demographic andpsychographic indicators.While the economic turbulence in the form of financial crisis is verymuch evident, the drastic changes in demographic and psychographic indicators of consumersare not apparent to a larger audience. However, marketers are increasingly getting cognizant ofhow these factors which are reshaping the business landscape.Today’s consumer is a changed consumer; he/she will no longer walk down the street and standin queues to get a product/service. It is the era of an empowered consumer who has choices andwill come with a number of expectations. Since basic products and services are increasingly gettingcommoditized, in order to sustain, marketers can only differentiate in terms of quality of service,convenience, responsiveness and speed to market. ‘Push strategy’ adopted by erstwhile marketers,where products used to be simply pushed to consumers no longer works, there is a need to have ‘pullstrategy’ which creates a pull in the minds of consumers by giving them superior quality of service inleast possible time at best possible prices.Technology, which has witnessed a paradigm shift in business arena, has become a critical enabler toachieve this. Role of technology will have to be looked at from a totally different context as a demand driverand synthesizer .To cater to today’s tech-savvy digital consumers, enterprises will have to redesign their ITdelivery mechanism and leverage various disruptive technologies. Different technologies would be required toaddress different needs of today’s consumers:Mobility as preferred medium of purchase; social media as preferred communication channel; embeddedsystems for convenience and self-help services; cloud to be agile, scalable, cost effective, and for faster delivery;big data to understand customer needs better and stay relevant in the marketplace and augmented reality toenhance customer experience.These technologies are taking the centre stage in some of the leading enterprises of today and are likely to havethe maximum impact on the way traditional markets were behaving.Transcending the times when customer usedto come to the marketer, the current business scenario requires enterprises be in constant virtual touch with theircustomers.Therefore, understanding these technologies and the way these are being used by some of the leadingenterprises worldwide becomes imperative.This paper explores the potential opportunity from aforementioned disruptive technologies in various focus sectorscomprehensively and suggests ways in which the IT providers and the user community can better capitalize on thisopportunity.We hope you find this interesting and useful; we welcome your comments and feedback on this report.Six converging technology trends | 1Pradeep UdhasPartner and HeadMarketsKPMG in IndiaSom MittalPresidentNASSCOMN ChandrasekaranChairman NASSCOM andCEO & MD,Tata Consultancy Services© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 4. Disruptive technological innovations are transforming the world aroundus in unpredictable ways. A new era of ‘Digital Consumerism’ isradically changing the way customers shop for products and serviceswhich is impacting the business-consumer ecosystem.Technologyplayers have been fairly swift in responding to these changingmarket dynamics but in most cases they have treated these trendsin silos.A digital consumer does not differentiate between these trends.For a consumer, these trends are just an extension of hisexperience with the world around him, be it interacting witha retailer, or a bank or a hospital. KPMG in India believes thatwhen the consumer doesn’t differentiate between trends,then it logically follows that both – the industry verticals aswell as the IT-BPO vendors must also look at them in anintegrated manner.All these trends need to work together to deliver anoutstanding customer experience; just focusing onone technology in isolation of the other will not work.Businesses need to focus at creating a holisticplatform which encompasses all these trends.Technology players in turn must come up withintegrated solutions that will enable businesses toaddress the dynamically changing demands of thenew-age consumer effectively.Executive summary2 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 5. We have identified six trends viz. big data, cloud, social media, mobility, embeddedsystems and augmented reality which will have a logical maturity that inevitablybrings them together.Big dataEvery year, companies and individuals generate billions of gigabytes of data.Data, which properly analyzed and used in time, can emerge as an unbeatablecompetitive advantage. Enterprises need to recognize the prospect big datarepresents and should adapt their IT strategy to capture such opportunities’. Bigdata can help retailers predict buying decisions of shoppers; it can help banksweed out fraudulent transactions; while governments can use big data to provideservices directly to their citizens.Could computingThe undeniable power of cloud computing to foster innovations and improveproductivity is now accepted by both IT vendors and their customers.While thefinancial services and government sectors are mostly moving to a private cloudmodel due to information security concerns, other industries like healthcare andretail have adopted public cloud. Moreover, their existing infrastructure has helpedtelecom players to emerge as providers of cloud computing, leading to erosion inboundaries between IT and telecom vendors.Social mediaA social media strategy has become a must for all enterprises, be it banks, retailersor the government.With over one billion individuals logged on to various socialnetworks, people are now using social media for advice on what products to buy,where to shop and even regarding what firms they want to work with.While mostenterprises use social media for their customer service function only, many firmshave now started using social media in tandem with their sales and marketingfunctions.This in turn enables firms to use data generated by the customerseffectively to service their larger pools of customers.MobilityMobile devices have changed the way people access digital content. Smartphonesand tablets have brought rich, digital content to the fingertips of consumers. Mobilebanking has emerged as one of the most innovative products in the financial servicesindustry. Shoppers are increasingly using their mobile devices for everything frombrowsing to comparing to buying products. Governments are also reaching out to theircitizens, using mobile devices as an efficient channel. Enterprises must also jump on tothe mobility bandwagon, and ensure that their applications are mobile ready.Embedded systemsThe decreasing cost of embedded systems has made their presence ubiquitousacross the business landscape. Embedded systems like RFID chips haverevolutionized supply chains for retailers. Embedded systems are also having animpact in the healthcare industry, where hospitals attach smart chips to patientsto keep track of their entire medical regime.Augmented realityOver the past 24-36 months, augmented reality has moved from the world ofscience fiction, to our everyday lives.The spread of smartphones and tabletsgave rise to the spread of location-based augmented reality applications, andnow everyone from retailers to healthcare providers have embraced augmentedreality. Augmented reality enhances the customer experience, and enablesenterprises to add a fourth dimension to their products.Six converging technology trends | 3© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 6. Digital consumerism is also impacting the way companiesuse technology. Increasingly, the core business platform is nolonger the only source of information and insights. Additionalsolutions based on disruptive technologies are beingintegrated on to the core platform.This has led to a significantincrease in the level of insights firms have about theircustomers.We are already witnessing micro-segmentationof customer, and products and services being tailored at anindividual’s level.The coming decade will only see a rapidincrease in this transformation.IT vendors will need to change the way they are structuredto deal with these trends.They need to be nimble, and thinkon their feet. Rather than being bureaucratic organizations,IT vendors will need to create internal startups that willwork on adopting these trends.They will also need to lookat an inorganic strategy to add to their capabilities in someof these areas.This will also have the added advantage ofbrining in talent that will act as a force of disruption in theseorganizations.Going forward, IT vendors should seek to work closely withtheir customers to stay abreast of the latest technologicaldevelopments, and come up with solutions that can takeadvantage of the convergence of these technologies.Theyshould seek to use customer input more diligently whileinnovating / developing solutions and products.The emphasisshould be on tapping inputs from various channels, mediumsand devices and using these as critical inputs for newsolutions and incremental innovations. Industry bodies canalso play a vital role in this, and increase awareness aboutthese technological trends.Source: KPMG in India analysisThe Digital consumer and Disruptive technologies4 | Six converging technology trendsWe are in an era of technology-ledtransformation.Technology will becomecentral and critical to everything we do. Everyindustry, every process, every businessparadigm is being re-imagined, re-definedand re-engineered. Mobile, cloud computing,big data, anticipatory computing, Internet ofthings (IoT), augmented reality, unfetteredbandwidth, social computing will makea huge impact and not limited to just theenterprise; they will impact our personal andsocial lives as well as the communities andsocieties we live in.N ChandrasekaranChairman NASSCOM andCEO & MD,Tata Consultancy Services© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 7. Identificationof NeedOf web traffic comesvia mobile – more thandouble last yearOf global populationwhich is onlineEstimated number ofbusiness transactionson the internet, B2C andB2B, per day by 2020businesses planto increase theirdigital marketingbudgets in 2013• The social commerce market is forecast to reach USD 30 billionby 2015• Leading global retailers are spending between 20-25 percent oftheir advertising budget on social media channels• Mobile technologies can be used to cut the cost of a financialtransaction by up to 80 percent• Nearly 90 percent of top global banks use social networking toachieve customer engagementAmount of data inthe world by 2020Growth in the number ofglobal 3G subscribers inthe past yearSmartphones and tabletswill be installed globallyby mid 2013 – overtakinglaptops and PCsSeekInformationEvaluation Purchase Consumption FeedbackInfluence of digital channels across all stages of purchasing Disruptive technologiesCloudBig dataSocialEmbedded SystemsMobile handset shipmentTablet shipmentAugmented realityIn USD billionIn USD billionNo. of accounts in millionsIn USDTrillionin Millionsin Millionsin USD MillionsDrivers of convergenceIncreasing influence of digital channelsSix converging technology trends | 5The digital shift13%37%1.5billion30%450billion355.448zettabytes71%10920122012201220122012201220122016201620162016201620162016206.6313248701.2148218582.485354.15155.9304© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 8. The advent of technology has empowered the consumer likenever before.The rising presence and reach of the internet,coupled with the prolific growth of smartphones, tabletsand related technologies, has provided consumers withunmatched access to information on the go, therebyhelping them make informed purchasing decisions.The adoption of digital media is redefining consumermindsets, patterns of purchase and decision making.This, in turn, is transforming consumer behavior.Therapid pace at which digital media is being adoptedis also expected to propel growth in the use ofconsumer technology.Rise of the digital consumer6 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 9. Effects of digital channels on purchase decisionsA convergence of various factors — a growing social media user base, the rising presence and reach ofsmartphones, and the intensifying consumer demand to connect — is increasingly changing the buyingbehavior.Today, digital channels play a pivotal role at eachof these stages. A simple expression of intereston a social channel or the analysis of consumptionpatterns can help businesses understand whata consumer may purchase and when in the nearfuture. Based on such information, targetedmarketing programs can be developed and bemade available via different digital channels thatcould help influence consumers’ purchasingdecisions.A simple comparison engine has made theevaluation of alternatives more cut-throat.Customers can evaluate a product on the basisof any feature or metric. Moreover, with theadvent of technologies such as augmented realityand artificial intelligence, consumers have theopportunity to virtually experience a productbefore actually purchasing it.Channels through which products can bepurchased have evolved too. Online transactions,purchases through mobile-optimized websites andsmartphone applications (apps) are on the incline.Consumer feedback on products throughcomments on forums, social media and reviewsites has created the need for heightenedmonitoring; positive feedback can generateimmense goodwill, but negative feedback canspiral into a full-blown PR crisis.Source: KPMG in India analysisConsumer buying cycle in the digital ageTypical consumer buyingSource: KPMG in India analysisIdentificationof NeedSeekInformationEvaluation Purchase Consumption FeedbackSix converging technology trends | 7© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 10. The next big opportunityIn a short span of time, digital channels have come a longway, from just providing information (websites) to interactingwith consumers (blogs, forums, social media) and providingan actual purchase experience (Augmented Reality (AR)).There is no doubt that technology is rapidly reforming theway businesses interact with customers.The rise of digitalconsumers who shop online, seek recommendations andinteract with brands presents a tremendous opportunity forcompanies.Thus, an in-depth understanding of customer behavior onlineand their purchasing preferences has become essential.Customers live in an integrated online-offline world, socompanies need to aim for suitable presence on digitalchannels. New information and communication technologiesare constantly emerging, altering purchasing patterns.Whileit may currently be difficult to predict when and which ofthese new platforms/technologies will become mainstream,it is essential to analyze their potential impact on consumerbehavior.Several companies are already creating digital strategies fortheir brands; however, many fail to produce the expectedbusiness outcomes and value through such initiatives, asthese channels and technologies are being perceived in silos.A holistic and integrated strategy encompassing consumers,the enterprise ecosystem and channels is the need of thehour to cater to evolving demands and behavior.The effectiveuse of such channels can help increase sales by monetizingdemand, improve the effectiveness of marketing campaigns,enhance product development, drive multi-channelcommerce and, above all, strengthen consumer engagement.A Digital Consumer expects a seamless, consistent experienceregardless of hardware or software. They also want relatable, intuitiveand intelligent technologies enabled on their devices. Going forward,we will see a multitude of devices that will continue to get smarter,more power-efficient and more intuitive.Very soon devices willrespond to voice, gestures and moods, and will interact with eachother to provide more value and intelligence to the digital consumer.Digital Media in no longer just a mere spoke in the wheel; but thevery axle that can drive the wheels of a marketing campaign.We, asa company, are very clear that Digital Media is here to stay in a hugehuge way!Which is why we have complete cross-functional teamssupport to further the digital momentum of the company.At Shoppers Stop, we don’t retrofit ‘digital’ into our existingcampaigns. Rather, we create specific content for digital media;and sometimes even use offline mediums to supplementthese campaigns.Whether it is developing Augmented Realitycampaigns, the most Fashionable Facebook Profile picture contest,#SSTweetStore, exclusive mobile apps, and much more; each suchelement receives its due digital diligence.Kumud SrinivasanPresident-Intel IndiaVinay Bhatia(Customer Care Associate & SeniorVice President, Marketing & Loyalty, Shoppers Stop Ltd)8 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 11. Growth and MaturityFeeder CycleThe diagram above shows the interplay between digital consumerism and disruptive technologies.The increasing adoption and usage of technologies by consumers is fueling the growth and maturityof technologies and vice versa.This phenomenon is the key driver for convergence of new agetechnologies. In the following section, we discuss six technologies that KPMG in India thinks will bringabout a tectonic shift in the business-consumer ecosystem.Six converging technology trends | 9Source: KPMG in India analysisDisruptiveconvergingtechnologiesDigitalconsumerism© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 12. While technologies such as big data and cloud have beendominating the imagination of enterprises for the pastcouple of years, new disruptive trends like augmentedreality and social media have only now started having atangible presence. As per their studies, leading analystfirms have estimated that the maturity curve of thesetechnologies is to increase at a rapid pace over thenext decade, with big data and cloud estimated toreach a market potential of tens of billions of dollars.Six trends that could shape the future10 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 13. Big dataRise of social mediaEvolution of the cloud computing modelDigitization has made significant strides in recent years —racks of documents and piles of files have been replaced withzettabytes of data stored in the servers of data warehouses.Trends such as the growing use of mobile devices and socialmedia networks are generating considerable amounts of databoth structured and unstructured.Regarded merely as a hub for high school and collegestudents just a few years ago, social media now exertstremendous influence over the way people around the world— of all ages — get and share information.The implications forbusiness are immense.As per a 2011 analysis, every day, the world creates 2.5quintillion bytes of data — so much that 90 percent of thedata in the world today has been created in the last two yearsalone1, and even this volume would have been surpassed bynow.Analyzing this, big data is likely to become a key basis ofcompetition, underpinning new waves of productivity growth,innovation, and consumer surplus by 2020.No trend has had as much impact on the world of informationtechnology over the past decade as Cloud computing.Looking past the current industry hype surrounding it, cloudcomputing is a sustainable, long-term paradigm and thesuccessor to previous mainframe, client/server, and networkcomputing eras.Underpinned by both technology and economic disruptions,the cloud will fundamentally change the way technologyproviders engage with business customers and individualusers as it is a key driver for mobility and big data.1 “Big data:The next frontier for innovation, competition, andproductivity”, May 2011, McKinseyBig data global market size, in USD billionSocial media accounts & usersSocial media usageGlobal cloud computing market, in USD billionSource:Wikibon Big Data Market Size andVendor Revenues report,http://wikibon.org/wiki/v/Big_Data_Market_Size_and_Vendor_Revenues,Jan 2013Source: ”Social Media Market, 2012-16, Radicati Group, June 2012,Morgan Stanley, “InternetTrends 2011”, December 2011Source: Forecast Overview: Public Cloud Services,Worldwide, 2011-2016, 2Q12 Update", Gartner, September 2012Six converging technology trends | 11© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 14. Dominance of mobilityThe surging popularity of smartphones and tablet computers has createdripples across the computing industry. As industry players continue to shifttheir focus from traditional to mobile computing, a significant change is onthe horizon.The global market for smart connected devices — a combination of PCs,smartphones, and tablets — reached 267.3 million units shipped in thesecond quarter of 2012 (2Q12), a 27.4 percent increase y-o-y and a 2.8percent q-o-q improvement.Both consumers and business buyers around the world continue toharbor an aggressive appetite for such devices, adding to the alreadylarge collection of devices that are still in active use. Rising focus on themobile web platform is affecting a number of business aspects, includingecommerce spending and online advertising.Connectivity, content andcommunication are driversenabling business changetoday. Social media, mobile,cloud, and big data are majorthemes that are forcingorganizations to change theway they service changingcustomer demands andbehavior patterns.Wehave seen that data-drivencompanies are able tomonitor customer behaviorand market conditionswith greater certainty,and react with speed andeffectiveness to differentiatefrom competition.Also, the adoption of cloudis increasingly taking atruly strategic role in anorganization.The cloud hasrapidly established a newbenchmark in terms of howeasy, quick and flexiblesolutions should be availableto the business and it putsthe alignment betweenbusiness and IT from awhole new perspective.Aruna JayanthiCEO – Capgemini, IndiaMobile device shipments and mobile penetrationSource: Morgan Stanley, “InternetTrends”, February 2011, "Portio Research Free MobileFactbook 2012", January 2012Beyond pure-play hardware & software: towardsembedded systemsEmbedded systems range from portable devices such as digital watchesand MP3 players, to large stationary installations like traffic lights. Medicalequipment is continuing to advance with more embedded systems forvital signs monitoring, electronic stethoscopes for amplifying sounds etc.With technology erasing the boundaries between hardware and software,embedded systems are expected to bring the new wave of change.Embedded systems market sizeSource: IDC, "Intelligent Systems:The next big opportunity", September2011, http://www.cio.com/article/689563/IDC_Embedded_Systems_Market_to_Double_By_201512 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 15. Augmented realityAugmented Reality (AR) offers a live view of a physical,real-world environment whose elements are enhanced bycomputer-generated sensory input such as sound, video,graphics or GPS data.The spread of smart mobile deviceshas led to rapid growth in AR. Against the backdrop ofsteadily increasing processing power the future holdssignificant potential for AR, with applications in a wide rangeof segments, from agriculture and architecture to educationand medicine. Several technology firms have also jumped onto the AR bandwagon. For instance, Google has introducedGoogle GlassesTMto tap the potential of this technology.2Cloud, Mobility, Social and Big Data willimpact all industries, bringing in newproducts and business models, similar towhat Internet did over the last 20 years.Companies are looking at taking advantage ofthese trends to drive growth and acceleratetheir innovation agenda – to provide superiorcustomer experience, reduce time to marketor drive efficiencies.The level of technology adoption in India hasgrown immensely. A lot of that has got todo with India’s economic development as apowerhouse of talent, creators of some ofthe world’s successful business empires,hotbed for new technologies and start-ups,entrepreneurship, heightened growth insocial and mobile among enterprises andconsumers alike, and a tech-savvy, anxiousyoung population which will enter theworkforce.Technology is empowering awhole new wave of innovation and growththat is aiding businesses to gain and sustaina competitive edge.We see this changetaking root in industries as diverse as banking,telecom, e-governance, retail, e-commerce,professional services among others.The end-focus of course is on delivering greater valueto the customer.Technological advancementsaround big data and social media analyticsare allowing businesses to create and deliverproducts that are uniquely designed to meetthe needs of an individual customer.Kris GopalakrishnanExecutive Co-Chairman, InfosysSandeep MathurMD, Oracle IndiaAugmented reality applications marketSource: Research and Markets, ”Global Augmented Reality MarketForecast by Product 2011-16”, November 20112 http://www.nbcnews.com/technology/gadgetbox/google-shows-prototype-augmented-reality-glasses-653835Six converging technology trends | 13© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 16. The growing presence and reach of technologies that spanthe web, mobility and social media platforms has led tothe emergence of digital consumers.Today’s enterprisesare marketing to digitally active consumers preparedto adopt new technologies with ease. Gadgets suchas laptops, mobile phones, handhelds and personaldigital assistants (PDAs) have become common andpreferred media for transactions. Consumers tend tostay connected with the internet regularly and seekinformation online before making any purchases.Impact on industries14 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 17. Possible impact on select sectorsAs per KPMG in India analysis, thefollowing are common traits that thenew-age digital consumer:• Stays ubiquitously connected (thus,the role of cloud, social media,mobility and the internet)• Seeks personalization andconvenience (thus, the role of cloud,AR, mobility and the internet)• Needs innovative experiences andentertainment (thus, the role of ARand social media)• Is influenced by peer reviews andfeedback (thus, the role of socialmedia and big data)• Needs secure and easy purchaseprocedure (thus, the role ofembedded systems, cloud andmobility)• Needs transparency, accountabilityand convenient post-purchaseservices (thus, the role of mobility,big data and embedded systems).These traits reflect a significantevolution from the traditional consumerprofile — the way in which a new-ageconsumer communicates, transactsand makes purchase decisions haswitnessed a paradigm shift.This changeinduces the need for enterprisesto change the way in which theyoperate and connect with customers.To address this need and tap latentopportunities, industries need toleverage disruptive technologies andplace digital consumer at the core ofbusiness strategy.Enterprises need to leverage theopportunities that disruptive technologytrends present. However, the extentto which these opportunities areimplemented within an organizationwould depend on their relevance ofeach disruptive force on the industry towhich the organization belongs.KPMG in India has identified a number of select key sectorsthat account for a significant portion of it vendors’ revenuesand are also among the most promising sectors in termsof growth.These include retail, healthcare, telecom,government and financial services.The identified verticals collectively account for close to 70percent of the market. Further, the impact of disruptivetechnologies — - cloud, big data, social media, mobility, AR,and embedded systems — on these verticals will likely be thehighest.This report is aimed at gauging this possible impactthrough the analysis of various qualitative and quantitativeaspects of these technologies.Global market size and growth rate of select verticalsGlobal IT services market – Split by verticalsSource: Ovum’s Global IT Services Market Forecast Model, July 2011, OvumSource: Ovum’s Global IT Services Market Forecast Model, July 2011, OvumSix converging technology trends | 15© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 18. In terms of disruptive technologies Big data, Cloud and Mobility are all verysignificant.They will disrupt the industry in different and significant ways. So,it would not be wrong to say that among these, cloud can be considered thebiggest disruption of our times.Mobility is expected to be a game changer. New business opportunities andchallengers are being brought about by the flood of new mobile technologiesand the speed with which this landscape is changing. Customers now expect tohave access to products and services from anywhere, via both the web and apps,using the device of their choice to interact and transact. Mobile workers are alsolooking at mobile solutions to help them be more productive and efficient.Big data, backed with predictive analysis can help businesses generateactionable business insights. In addition to the aspects of complexity andvariability of big data, is the rate of growth or velocity, largely due to theubiquitous nature of modern on-line, real-time data capture devices, systems,and networks. It is due to this that the rate of growth of big data tools willcontinue to increase in the foreseeable future.We believe that in-memory computing is a breakthrough which will not onlyenable applications and analytics to run up to thousand times faster, it will enablebusinesses to be faster and nimble. SAP HANA in-memory technology platformis a completely re-imagined modern platform for real-time businesses. SAPHANA Cloud paves the way for developers to build applications in the cloud withembedded analytics and the massive speed of the technology itself.Together Mobility, Cloud and In-memory computing will transform thebusinesses to run faster and nimbler than ever before. So, SAP is activelyworking around all these three technology areas and is using both organic andinorganic growth models to strengthen its presence in these segments.Avaneesh DubeySeniorVice President, Business SuiteTest Engineering, SAP Labs India16 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 19. Six converging technology trends | 17© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 20. Following the global economic downturn and a subsequentdip in employment and consumer confidence, the global retailindustry has recovered since 2010. Stimulus packages providedby governments, reinforced by strong domestic demand insome developing countries, boosted the global retail industry’ssize to an estimated USD 17 trillion in 20121. North Americanand European retailers — with players such asWal-Mart StoresInc, Carrefour SA, Metro Ag, and UK-basedTesco — continue todominate the retail industry2.An expanding population base and a largelyurbanized consumer class provide a thrivingmarket for retailersEntry of large, organized retailer into developingnations like India will also be a big boostShift in demographics and purchasing power to theyounger section of the population is also drivingdemandThe rise of omni-channel retailers is also bringingthe shop closer to the consumer, and is leading toincreased spending.Key drivers of growthin the retail industryWith the rise of the digital shopper, shopping has increasinglymoved online and to the mobile platform, especially in theUS,Western Europe and East Asia. In the US, the online retailoutlook for 2012 was encouraging — fueled by the resultsof the 2011 holiday season. Online sales during the holidayseason in the US increased to US$43 billion, reflecting a 17percent increase over 20113.The value of mobile shoppingwas predicted at more than US$163 billion in sales, or 12percent of all e-commerce sales, in 20104.1 www.alpencapital.com/downloads/GCC%20Retail%20Industry%20Report%202011_1%20November%202011.pdf ; GCC retail industry report,Alpen Capital2 www.stores.org/2012/Top-100-Retailers, January 20123 www.comscore.com/Insights/Press_Releases/2012/11/comScore_Forecasts_17_Percent_Growth_for_2012_U.S._Holiday_E-Commerce_Spending4 www.verizonbusiness.com/resources/whitepapers/wp_near-future-of-retail_en_xg.pdfRetailGlobal retail industry, annual sales, in USD trillionSource: Economist Intelligence Unit, accessed January 201318 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 21. Change in footprint over the decade5 http://www.guardian.co.uk/technology/2012/nov/11/mobile-technology-leap-forward6 “Meet the Connected Consumer”, Jan 2012, Zmags.comAcross the world, the retail industry is at the centre of amajor shift in the way consumers shop and interact withtheir retailers. After almost a century of customers “goingto the store,” the store is now coming to the customer.Customers now demand that retailers be wherever theyare. E-commerce has also led to a global marketplace andhas given rise to new, online retailers who take advantage ofthis low-cost channel, creating a perfect storm for traditional,brick-and-mortar retailers.The growing might of online – and now mobile – shoppinghas led to terms such as “omnichannel”, which attempt toportray how customers use stores and websites in tandem5.Retailers find that the more channels their customers use,the more they spend.Source: http://www.guardian.co.uk/business/2012/sep/02/marks-and-spencer-multichannel-shoppingAccording to Marks & Spencer’s, people who shop onits website, as well in its stores, spend four times asmuch as people who shop just in stores. People whoadditionally use the mobile channel end up spendingeight times as much.Shopping preferences of digital consumersSource: “Meet the connected consumer”, ZMags6http://www.marksandspencer.com/Six converging technology trends | 19© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 22. Key components of retail industrySource: KPMG in India analysisSource: KPMG in India analysisCustomertouch pointsProduct Placement Promotions Point of Sale Delivery System After sales servicesPast Present Past Present Past Present Past Present Past PresentStore 4 2 4 4 4 1 4 3 4 3Traditional media 0 0 4 2 0 1 0 0 0 0Peer group 0 0 0 1 0 0 0 0 0 0Home 0 0 0 0 0 0 2 1 0 1Telephone 0 0 0 0 0 0 0 1 0 1E-mail 0 0 0 2 0 1 0 3 0 3Web 0 3 0 4 0 3 0 3 0 2Mobile 0 2 0 2 0 1 0 2 0 2Call centre 0 0 0 0 0 1 0 1 0 3Social media 0 2 0 3 0 1 0 0 0 2Thus, with the advent of the internet, and now mobile and social media, the retaillandscape has undergone a seismic shift. Channels including the web, mobileand social media have increased their presence in the retail value chain. In thenext decade, these new channels are likely to emerge as critical touch points forretailers, and providing an outstanding experience at these touch points can be thedifference between winners and laggards.4 Very high 5 High 6 Medium 7 Low 0 Absent20 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 23. Big data applications across different functions of theretail sectorEnabling technology transformationsRetailers understand that the key to the future of consumerengagement is to meet shoppers where they are.Sophisticated mobile devices, big data and cloud computingcurrently work in tandem to provide ready access toinformation, products and services from virtually anywhereat any time.The further integration of the cloud and mobilitywith social networking creates a powerful, new platform thatallows retailers to engage throughout the purchasing cycle.To take advantage of such trends, retailers need to invest intechnology resources that can help them stay a step ahead ofthe competition.Big dataWith large amounts of data being generated from the point-of-sale at stores, online transactions and social media, Bigdata offers numerous opportunities to retailers to improvemarketing, merchandising, operations, supply chain and after-sales service.Retailers use big data to help them manage inventory levels,and make better decisions about new orders7.The US-basedbook retailer, Barnes & Noble used a big data analyticssolution to enable suppliers to monitor its inventory andtake real-time replenishment decisions8. Demographic andpurchasing data patterns can be analyzed using big data tohelp in merchandising related decisions.Big data can also be used to better understand the targetmarket, gauge consumer behavior, understand theirshopping preference and hence do a better positioning of theproduct.CloudRetailers progressively need to process large amountsof data pertaining to customers and products in real timeto provide personalized solutions.The spread of cloudcomputing has helped retailers to not only have largecomputing resources at their disposal; it has also allowedthem to match their demand with their sales season.Moreover, retailers are looking to move all their platform-based solutions to the cloud.UK-based fashion retailer Anthropologies patterns arerigorously managed in-house. It was integrated with a coree-commerce system provided by on-demand e-commerceproviderVenda.The system included a payment mechanism,a product database and a site design accessible on the weband mobile platforms9.Cloud computing also facilitates the implementation ofan omni-channel strategy. It allows for the low-cost andsignificantly low-risk rollout of software that is needed tosupport multichannel retailing.This is particularly attractivefor small businesses that lack requisite resources. Retailerscan gain real-time visibility into their retail operations fromanywhere at any time, as well as provide a single view ofa customer across channels. Retailers can also keep theirinformation up to date10.Further, cloud computing helps retailers manage multiplechannels and locations, integrate their websites withbusiness, support their Point-of-Sale (PoS) systems, providea unified real-time view of business, perform automatedmerchandising and marketing, and gain a 360-degree viewof each customer. Recent surveys also reveal that whilecurrent cloud adoption rates in western European retail arelow, adoption is expected to increase 300 percent by 201411.Additionally, 61 percent of western European retailers planto invest in cloud computing in 2012, with a slight preferencefor increased investment from large retail companies (500+employees), and the budget for cloud being typically less than5 percent of the overall IT spend23.Supply chain Optimal stocking decisions; Distribution andlogistics optimization; Management suppliernegotiationsMerchandising Assortment optimization; Placement andprice optimization; Store layout planningSales andMarketingOnline and in-store: Cross-selling; locationbased marketing; Customer micro-segmentationOnline: Real-time personalization; Facilitateaccurate delivery schedulesIn-store: Customer behavior analysis;Improve multi-channel experienceCustomer service Customer behavior analysisTesco – Harnessing big dataTesco collects vast amounts of data on itscustomers shopping habits that allow it to sendprecisely targeted coupons.When a householdstarts buying nappies, signaling the arrivalof a new baby,Tesco usually sends discountvouchers for beer, knowing that the new fatherwill have less opportunity to go to the pub.Source: LinkSource: KPMG in India analysis7 “Big Data for Retail is Flying Off the Shelves”, Nov 2012, Forbes8 “Big Data –The Next BigThing”, Sep 2012, NASSCOM9 The Guardian, www.guardian.co.uk/cloud-computing/high-street-stores-turn-to-hosted-services, June 201010 Netsuite, www.netsuiteblogs.com/blog/2012/09/cloud-computing-open-doors-for-multichannel-retailing-in-australia.html , September201211 IDC Retail Insights, www.idc-ri.com/getdoc.jsp?containerId=prUK23533512, June 2012Six converging technology trends | 21© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 24. Sephora —leveraging socialmediaCosmetics retailer Sephora has created aninteractive shopping social space launchingits online Beauty talk community. It broughtits customers together and encouraged themto discuss their enthusiasm for beauty products.Sephora found that by creating a communityand by opening itself to its customers it wasflooded with people dying to talk to eachother. Moreover, a Beauty talk communityuser spends two-and-a-half timesmore than the average Sephoracustomer.Social mediaOver the past two decades, the internet has evolved into alarge, social community.The social media has given peoplea voice.The social commerce market is forecast to reachUS$30 billion by 2015, from an estimated US$9 billion in201212.Further, social networks offer retailers the opportunity toconnect with millions of customers and reach out to themindividually. Retail brands need to devise a social mediastrategy, one that goes beyond just having a presence onFacebook andTwitter. Strategy should involve connectingwith audiences over these social networks and leveragingtheir urge to talk about and share similar passions13.It also must be considered that even if a retailer decidesnot to have a presence on the social media, it could still feelits impact.Thousands of consumers write reviews, sharefeedback on their shopping experiences on social mediaplatforms.Therefore, even if a retailer is not present on asocial media platform, it may still be talked about.Therefore, aretailer must have a social media strategy that encompassesnot only social media platforms but also listening andmonitoring tools.According to a recent survey byThe Partnering Group,customer use social media primarily for coupons and productinformation, as well as to read comments from other users.Facebook has emerged as the leading social media platformfor such discussions, with an estimated 55 percent ofcustomers using it14.Worldwide social commerce market, annual revenues, inUSD billionLeading uses of social media by shoppersSource: Booz and CoSource:The Partnering Group12 www.booz.com/media/uploads/BaC-Turning_Like_to_Buy.pdf13 www.guardian.co.uk/media-network/media-network-blog/2012/jul/25/social-retailing14 www.shop.org/c/journal_articles/view_article_content?groupId=1andarticleId=1541andversion=1.0Source: EConsultancy22 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 25. MobilityThe spread of mobile devices has changed the way in whichcustomers interact with retailers.They have emerged asan integral part of the sales process. Many of the mobileapplications available today benefit the traditional brick-and-mortar stores by improving the in-store experience or drivingtraffic to stores with discounts.Product identification can take place at any touch point,whenever or wherever a customer sees a product.Theinteraction may be through an outdoor advertisement, in amagazine or newspaper, via a retailers smartphone app, amobile website, on a social network or even in-store, wherean out-of-stock size is required15.A mobile offers the advantage of instant checkout. If thecustomer’s preferred payment and delivery details arestored securely on their mobile device, they can purchaseanything from anywhere, anytime, simply at the touch ofa few buttons. More than 60 percent of pre-purchase websearches are initiated on a mobile device. In addition, themajority of people — 67 percent — researches products onsmartphones and then purchases them at a physical store16.Embedded systemsEmbedded systems are changing every point in a retailer’sbusiness, from sourcing of goods to their distribution todisplay in stores and finally, checkout. Embedded systemsare enabling a connected ecosystem of devices that allowa retailer to have a real-time view of every step in its valuechain17. Retail firms such as eBay, Amazon and Flipkart,whose business models are built around the long-tail, needto keep track of millions of items18.They spend considerableresources on analytics of data, resulting from tracking ofthese items. As analytics of the long-tail grows in importance,embedded systems become a focal point for retailers thatearlier saw only little need for them.RedBox, a US based retailer of rental DVD’s and video games,offers its customers a touch screen kiosk with information onmovies and the entire process is automated. All a customerhas to do is touch the item they want, use their credit card,and get the desired video19.15 www.guardian.co.uk/media-network/media-network-blog/2012/jun/26/mobile-retail-technology-consumer, June 26, 201216 www.cisco.com/web/about/ac79/docs/retail/Retail-Mobility-PoV_011312FINAL.pdf17 “Retailers Add Gadgets for Shoppers at EaseWithTechnology”, Mar 2012,The NewYorkTimes18 “Does the LongTail create bigger hits or smaller ones?”, Nov 2008, LongTail.com19 “Communication and Interaction Redesign for Redbox”, 2010, Ideo.comThe UK-based retailer Sainsburys launcheda new initiative called Mobile Scan & Gothat lets customers scan items as theyshop using their iPhone or Androidmobile device and pay at the till withoutunloading their trolley or bags.Thismakes the shopping experience evenmore convenient for customers byletting them track how much theyrespending, view savings instantly,and then pay at the till withoutunloading their trolley, basket orbag.Source: http://j-sainsbury.co.uk/media/latest-stories/2012/20121014-sainsburys-trials-mobile-scan-go/Source: “How Embedded Systems Are Changing theWayWeShop”, August 2012, bizcloudSource: “Carrefour uses NFC and QR codes to speed up groceryshopping”, May 2012, NFCWorldCarrefour City, the convenience storearm of French retail giant Carrefour,launched Mon Panier, a mobile appthat lets customers order and payfor their grocery shopping with theirmobile phone — and then identifythemselves via an NFC and QR-code enabled kioskwhen they arrive at the store to collect their order.The service is live at Carrefour City outlet at StLazare, Paris.Wal-Mart is one of the pioneers in implementingself-checkout stations that use embedded systemsto read the bar code on each item, compute thetotal of the sale, and process the payment.Six converging technology trends | 23© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 26. Another common application of embedded system, usedextensively in retail is Radio Frequency Identification (RFID).RFID devices are transforming the retail landscape withtheir ubiquitous presence in the supply chain. RFID’s enableretailers to keep track of each and every product in theirsystem, integrated into a common repository to have unifiedand centralized view of information. RFID systems may rangefrom source tagging, barcode labeling systems, hand-heldlabeling systems and retail merchandising systems and canenable applications such as automatic identification, retailsecurity and pricing and promotional labels20.Embedded systems are also enabling a new global standardfor retail payments designed to help exchange data betweenpayment terminals and POS terminals and support newpayment technologies. Use of Near Field Communications(NFC) and mobile payments are common applications in thisarea.This has the potential to improve customer experience,as well as sales.20 “RFIDTechnology In Retail”, Apr 2008, RetailTechnology Review21 www.guardian.co.uk/technology/2012/nov/11/mobile-technology-leap-forward22 www.pbs.org/newshour/extra/features/science/jan-june12/Google_04-09.pdf23 www.juniperresearch.com/viewpressrelease.php?pr=348Augmented realityIt is no longer enough for retailers to stock their outletswith the latest products; the popularity of smartphones hasgiven genesis to a new mobile shopping culture altogether.Apps such as Blippar, which links smartphone users toextra video and product content on retailers’ websites,have revolutionized the interface between shoppers andproducts21. Google has launched an augmented reality-basedhead-mounted display (HMD) called Google GlassesTM 22.This consists of wearable glasses that display information insmartphone-type format, are hands-free, and interact withthe internet via natural language voice commands.Theseglasses seamlessly project information on to the scene infront of the wearer; a customer can access reviews and pricecomparisons of any product in a store; restaurant menusand reviews can be shared; at a bookstore, a customer canaccess book reviews and author information.AR is also used to explore synergies in print and videomarketing. Marketing flyers can be designed with ‘trigger’images that, when scanned by an AR-enabled device usingimage recognition, activate a video version of the promotionalmaterial.AR technology has made it possible for phones to becomebarcode scanners that offer extra information and onlineprices. It is estimated that AR-based apps will generate closeto USD 300 million in revenues globally in 2013 as brands andretailers increasingly show appetite for such features23.24 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 27. Current state and way forwardRetail industry is one of the early adopters of disruptivetechnologies – be it cloud, mobility, social media, big data,augmented reality or embedded systems – owing to itsB2C nature.Till now, mobility, social media and embeddedsystems (mostly in the form of RFID) have witnessedgreatest adoption in the retail sector.With web-enabledsmartphones, online shopping is being done using cellphones and customers are using social media to get productreviews and give feedback.Augmented reality is expected to be the game changerfor the retail industry. Increasingly marketers are usingaugmented reality to enhance virtual shopping experienceand therefore, the industry would see significant investmentsin augmented reality applications in the near future,especially in the western world.Cloud has been there for quite some time but it is being usedas additional layer for niche applications, for example, to host/support a social media platform.The core retail platform is stillon-premise software as concerns loom large over replacingthe core platform with a cloud-based solution.A number of companies have also started experimentingwith big data tools such as Hadoop and MapReduce tounleash the power of big data analytics. Given the quantumof customer information that retailers have, if utilized in acorrect manner, it can help in identifying and targeting theright customer segment and better positioning of the product.However, it will take some time for marketers to develop abusiness case which can justify the investments made onsuch tools.In terms of convergence, retail is a sector which canencompass most disruptive technologies. It is not hardto think of a cloud-based platform providing integratedsocial media and augmented reality applications on mobiledevices.The data generated through such applications canbe analyzed using big data tools.There can be several othersuch applications which can encapsulate multiple disruptivetechnologies within them.The near future will see manymore such applications.Consumers in modern times expect products and services to cater to their every need,from world over, at times that they dictate and are willing to share information on theirexperiences across social media.The availability of information for customers hascompelled retailers to constantly strive to serve customers above their expectations.Social media, data analytics, advanced CRM etc. have created the ability of one to onerelationship between customers and retailers. No longer can retailers operate in themarkets by mere segmentation of customers; they have to serve customers based onindividual customer needs.Service providers to retail like IT companies also have to realize that retailers asclients expect the provider to give solutions to their business needs rather than merepieces of technology.Various functions of retailers including marketing, HumanResource Development, Finance, operations etc. need technologies that definitelyhelp the functional team. However these technologies need to form part of the totalsolution offered. Retailers also expect to get a clear understanding of the returnon investment which the IT services company is expected to calculate based onfunctional understanding of the business.This also means that IT companies need tounderstand the core business of their customers and create cross functional valuepropositions. For example a technology for social media can also cater to loyalty as wellas marketing requirements of retailers.This also means that IT providers need to be ableto communicate not only with the CTO of companies but also with head of marketing,head of buying and merchandising, the CEO. As convergence increases, and the needfor mobility increases, IT companies are well expected to provide state of art solutionsand not just technologies and these with best quantifiable benefits.Kumar RajagopalanCEO, Retailers Association of IndiaSix converging technology trends | 25© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 28. Healthcare services, as defined, refer to provisioning ofconsultation, diagnostic, patient care and medication services toa patient suffering from injury, illness, disease, etc.1The global healthcare market is well poised for growth withper capita healthcare expenditure growing in most countriesdue to changing lifestyle, ageing population, and availability ofbetter healthcare infrastructure.These countries were eithersignificantly underserved and are now witnessing capacityexpansion or are actively upgrading their healthcare systems.Changing lifestyle, ageing population and betteravailability of healthcare facilities is driving thehealthcare market.Rising penetration of health insurance is leading toincreased spending on healthcare services.Increased availability of doctors, medical services,and health portal is leading to an increasedadoption, especially in the developing economies.Increasing awareness of health related issuesis also leading to extensive usage of healthcareservices.Key drivers of growth inthe healthcare industryAlthough the global healthcare market is witnessing growth,the uptake of healthcare services in both developed anddeveloping economies remains skewed. Developingeconomies such as India, China, Malaysia andVietnamcontinue to lag behind developed countries such as the US,the UK, Japan, Germany and Korea, which have relativelymature healthcare markets2. For example, developedeconomies such as the US and the UK have over 3 hospitalbeds per 1,000 population2; meanwhile, countries such asIndia, Indonesia,Vietnam and China have less than 3 hospitalbeds per 1,000 population.Therefore, in less developedcountries, the role of the government is paramount.1 “Independent Market Research on the Global Healthcare Services(HCS) Industry”, June 2012, Frost & Sullivan2 IMF,The Economics of Public Health Care Reform in Advanced andEmerging Economies, June 2012, www.imf.org/external/pubs/ft/books/2012/health/healthcare.pdfHealthcareGlobal healthcare spend in USD billionSource: Economist Intelligence Unit, accessed January 201326 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 29. Change in footprint over the decade3 US Department of Health and Human Services, http://www.hhs.gov4 “Global Healthcare InformationTechnology (2009 - 2014)”, October2009, Markets and Markets, Research and MarketsThe healthcare sector stands at the inflection pointand is witnessing a transformation due to governmentregulations and initiatives to bring down the healthcarecosts. Regulations such as Health Insurance Portabilityand Accountability Act (HIPAA) and the Health InformationTechnology for Economic and Clinical Health Act (HITECHAct) are emphasizing on the increasing role of IT in healthcaresector.3It is because of this that the dynamics of the entirehealthcare industry are increasingly becoming IT driven.The IT market in healthcare is estimated to be nearly USD 54billion by 2014, witnessing a CAGR of 16.1 percent between2009 and 2014.4IT is getting interwoven in the industry in theform of electronic medical records, electronic health records,clinical trial management systems, clinical decision supportsystems, data mining systems, hospital information systems,e-prescribing systems, ambulatory care managementsystems, patient management system, computerizedphysician order entry system, and non clinical systems toname a few.Consumers are increasingly using web, connected devicesand innovative health information technologies for self-monitoring, facilitate interactions and information exchangewith doctors, and support treatment adherence.Six converging technology trends | 27© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 30. Key components of healthcare industrySource: KPMG in India analysisCustomertouch pointsPatient on-boarding Treatment & Care Billing InsurancePost-DischargeServicePast Present Past Present Past Present Past Present Past PresentPhysical location 4 4 4 4 4 4 4 4 4 3Traditional media 0 0 0 0 0 0 0 0 0 0Peer group 0 0 0 0 0 0 0 0 0 0Home 1 1 2 2 1 1 1 1 1 1Telephone 3 1 0 0 0 1 3 1 3 1E-mail 0 1 0 0 0 1 0 2 0 1Web 0 2 0 2 0 2 0 1 0 2Mobile 0 1 0 1 0 1 0 1 0 1Call centre 0 1 0 1 0 1 0 3 0 1Social media 0 1 0 1 0 0 0 0 0 2Ease of access is the primary driver to healthcare. In this context, the use of mobiletechnology is very well suited and hence role of mobility as a technology is paramount.Given the high mobile penetration, it serves as a convenient and acceptable method tocommunicate with the patients.Since accessibility is the primary driver, there is an innate need for agility and scalabilityin IT systems to expand the reach of healthcare.The Cloud is an obvious choice butconcerns around security particularly in the context of healthcare privacy standards haveinhibited the large scale adoption of Cloud until now. Going forward, as the industryworks towards addressing this challenge, sector would witness wider adoption of cloud.In addition to this, it also must be considered that no technology can delivereffectiveness in isolation. All these disruptive technologies are complementary andwhen used in the right mix they are bound to bring in efficiency and effectiveness in thedelivery of healthcare services. It is also an expectation that the convergence wouldreduce the cost and help healthcare firms in reaching out to their target audience.Arvind SivaramakrishnanCIO, Apollo Hospitals Enterprise Ltd.28 | Six converging technology trends4 Very high 5 High 6 Medium 7 Low 0 Absent© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 31. Enabling technology transformationsIT is playing a critical role in changing the face and fate ofthe modern healthcare sector.Technology trends such asmobility, cloud, augmented reality, social media, etc. aremaking significant strides and are propelling the sector forincremental growth.Big dataWhile the healthcare sector is poised for growth, at thesame time, it is plagued with challenges.The primitivestate of healthcare, especially in developing economies,can still be associated with paper prescription and manualhealth records.This brings in a challenge of managing largeamount of unstructured data coming from various sources.In more developed economies, because of the emergenceof electronic health records (EHRs) and patient care devices,patient data is getting digitalized leading to data deluge. Inaddition, healthcare costs are rising in countries such asUS, where healthcare providers suffer the constant financialstrain of providing treatments that are often not paid for orpaid for only in part. Insurance industry is also facing a similarchallenge, wherein, finding genuine claims and compensatingproviders for high-cost treatments is becoming increasinglychallenging. It is because of all this that the healthcare sectoris witnessing a three-pronged data challenge in terms of5 “Big Data –The Next BigThing”, September 2012, NASSCOMvolume (large quantities of data), variety (structure andunstructured), and velocity (rate of data generation).Thisinduces a need for big data analytics platforms to get usefulintelligence from tens of thousands of patient records.For example, a number of US’ largest integrated deliverynetworks such as Cleveland Clinic, MedStar, UniversityHospitals, St. Joseph Health System, Catholic HealthPartners and Summa Health System use the big dataplatform for real-time exploration, performance and predictiveanalytics of clinical data.5IBM recently launched big data softwarecalled Patient Care and Insights, anapplication that processes health recordsfrom hospitals, physicians and insurers andthen models outcomes and treatments.It also automates workflow and paperprocesses.Source: “IBM eyes vertical applications for big data”, October 2012, ZDnetSix converging technology trends | 29© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 32. CloudDespite skepticism due to compliance with regulationssuch as HIPAA, the healthcare sector is now witnessingthe increased adoption of cloud computing.6Offeringbenefits such as lowered costs and reduced clerical effortof maintaining data, cloud computing makes it possible forhealthcare organizations to access and retrieve informationstored in scattered systems in real time.Thus, personnel canfocus increasingly on critical matters cost-effectively andefficiently.Therefore, solutions such as electronic medical records(EMR), telemedicine, patient management, and medicalimaging are gradually shifting to cloud.These cloud servicescan now also be integrated with special medical hardware(embedded systems) for remote patient monitoring.7Due to benefits like these, cloud market is poised for growth.Healthcare spending on cloud is nearly USD 1.8 billion asof 2011, despite market penetration of merely 4 percent,indicating immense potential for growth.8Social mediaSocial media tools are gaining popularity, serving as an easyand cost-effective solution for both healthcare providersand patients.The internet, which was once a source ofone-way communication only, has transformed into onethat facilitates two-way interaction and information sharing.Healthcare providers can now monitor their patients in avirtual environment, thus giving impetus to remote patientcare and monitoring. It also transforms the patient-doctorcommunication from ‘one-to-one’ to ‘one-to-many’; wherein,doctors reach out to a number of online users using theinternet.MobilityIncreasing integration of mobility with healthcare is givingrise to ‘mHealth’. From a physician’s perspective, a physicianno longer has to rely solely on bedside terminal to retrievepatient health or medical information, while from a patient’sperspective; a patient can seek medical advice more oftenand have flexibility in terms of point of care. mHealth can beuseful in serving a variety of purposes, ranging from resultsviewing, to ordering, to e-prescribing, to reference dataaccess, and to remote monitoring.Mobility can play an instrumental role in efficient patientmanagement and quicker handling of emergency situationswhich in turn can save treatment costs and early cure.Blurring lines and convergence of wireless communications,embedded systems, social networks and enabling technologyof cloud computing will further propel the adoption of mobilehealth technologies. It is because of this that the market formobile healthcare applications and devices is on a rise.6 Techtarget, "HIPAA cloud computing advice: Ensuring cloud computingcompliance", 2012,7 KPMG in India analysis8 “Healthcare Industry to Spend Upwards of $5B on Cloud Solutions by2017”, October 2012, MarketsandMarkets, HealthTechZoneA May 2011 Pew Research Center’s Internetstudy showed that, of 3,001 US adultssurveyed, approximately 80 percent ofthe internet users use online media forhealthcare information.The same studyalso revealed that 15 percent of US adultsuse their cell phone to access healthcareinformation.An online survey conducted by Max BupaHealth Insurance in 2010 revealed that of1,004 Indians surveyed, 39 percent use theinternet for general healthcare information.Source: “Increasing importance of social media inhealthcare”, October 2011, KPMGSource: “Kentucky rural healthcare provider uses cloud-based EHR”, October 2012, EHR IntelligenceRural healthcare provider Carroll CountyMemorial Hospital (CCMH) in Kentuckyselected iSALUS Healthcare’s cloud-basedsolution OfficeEMR as it begins its ElectronicHealth Records (EHR) transition.Source: ” Increasing Importance of Social Media in Healthcare”, IssuesMonitor, October 2011, KPMG InternationalHealthcare Magic, started in 2008, is a healthcareportal which helps patients find doctors by specialtyin India, the UK and the US.The portal providesinformation on diseases and conditions and facilitatesonline communication between patients and doctors.It gets funding from sponsorships and advertisementsand also sells different membership plans to patientsfor interaction with doctors.http://www.marksandspencer.com/30 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 33. Source: “Apollo plans 100 Sugar Clinics in 90 days”, November 2011,Business StandardSource: “Mobile Applications for the Health Sector”, December2011,World BankApollo Hospitals Group provides health informationservices via contact centres staffed by doctors andspecialists using an IT platform with structured querydatabase to give appropriate health response.Theservice is being offered in collaboration with leadingtelecom companies. It is also running a diabetesmanagement program called SUGAR, wherepatients may upload their blood sugar count to theclinician through SMS and mobile applications. AnSMS text is delivered back to the patient explainingthe readings and advising whether further action isrequired.WelTel provides SMS-based messaging to monitor andsupport antiretroviral (ARV) therapy in Kenya.WelTel‘sSMS communications are estimated to have raised ARVpatients adherence to their treatment regimens by aquarter.This increased adherence and associated viralload suppression lowered health system costs by 1-7percent (as reported byWelTel in 2011).Global revenue for mobile healthcare applicationsSource: Research2GuidanceSix converging technology trends | 31© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 34. Embedded systems and M2MEmbedded systems and M2M technology have madeautomated medical devices that focus on disease preventionand healthy living a reality. As a result, doctor and hospitalvisits have also reduced significantly. Applications in thefield of remote monitoring and telehealth, being used forearly detection and health warnings, are changing the facehealthcare sector.A number of embedded software companies and telecomoperators are developing technologies to improve patientcare.The market is increasingly becoming crowded with anumber of start-ups in SiliconValley, application developers,carriers such asVodafone, DeutscheTelekom, AT&T,Verizon,China Mobile, and FranceTelecom and giants such as IBM,General Electric and Philips.9Applications such as a heartmonitoring program, call emergency services device installedin cars, etc. are now a common play in this area.Think of achip that can be inserted into a pill dispenser in a patientshome.The machine would then read the data stored in thechip and automatically dispense the required prescription.That can be the power of embedded systems in Healthcare.10Augmented realityIn the field of academics, augmented reality can be usedby medical students to practice surgery in a controlledenvironment.With 3D imagery and interactive display,complex medical conditions can be explained to patientsusing visualization aids. It can also provide improvedsensory perception to the surgeon and reduce the risk of anoperation. It can also be combined with MRI or X-ray systemsand bring everything into a single view for the surgeon.Augmented Reality can play an instrumental role in the fieldof neurosurgery, wherein, augmented reality can be used toimage the brain in 3D on top of the patients actual anatomy.9 KPMG in India Analysis10 “The healthcare case for big data”, November 2012, ZDNetSource: “Beyond mobile:Telcos hook up hospitals, cars andcoffeemakers”, December 2012, ReutersIn hospital del March in Barcelona, Spain, patientsrecovering from heart attacks use equipment installedin their homes byTelefonica to weigh themselves,take their blood pressure and answer a few questionson their symptoms via a touch screen.The informationis transmitted to nurses at the seaside hospitalscardiac unit who follow up by phone if they have anyconcerns.The program has had a positive effect onmortality rates, reduced hospital visits and saved9,000 euros per cardiac patient since it began twoyears ago, according to doctors.Source: “Medical app uses augmented reality and camera phone todetect skin cancer”, May 2012, iMedicalAppsAugmented reality applications have immensepotential in general wellness and care. One suchexample is of DoctorMole, a free Android app thatuses augmented reality to analyze suspicious molesusing the standard ABCDE approach in order todetermine risk.The risk feedback is given on thebasis of Asymmetry, Border, Color, Diameter andRisk (ABCDE). It also allows users to save photostaken to compare for evolution changes at a laterstage.32 | Six converging technology trendsOutsourcing as an industry has evolved andhas moved far beyond just cost arbitrage.Given the shift towards digital consumerismdriven by proliferation of disruptivetechnology trends like Social media ,Mobility, Cloud, Big Data, Augmented Reality,Embedded Systems the dynamics thatdrive the industry are undergoing significantchange.This is leading to the outsourcingplayers to explore hybrid models or verticalspecific business platforms aided bytechnology.Susir KumarCEO and MD, Intelenet Global Services© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 35. 11 KPMG in India AnalysisCurrent state and way forwardThe adoption of disruptive technologies in the healthcaresector is inconsistent.While technologies such as cloud,mobility and big data are witnessing rapid adoption indeveloped nations, social media, AR and embeddedsystems are yet to take significant strides. Most developingeconomies have yet to experience widespread digitizationand are lagging in terms of the adoption of most technologies.Other than mobility and, to some extent, cloud, developingeconomies continue to maintain a ‘wait-and-watch’ approachtill they see a clear return on investments from theseinvestments.In future, the industry is expected to witness a convergenceof such technologies, leading to an increased demand forconsolidated platforms. However, it is expected to takeat least 24–36 months before this trend starts becomingevident in the industry.While players have already startedheading in this direction through the introduction ofconverged platforms in areas such as SOMOCLO (socialmedia, mobility and cloud), the trend is yet to gathermomentum on a large scale.In the healthcare sector, the convergence is likely to bemore in the areas of cloud, mobility, social media and bigdata as there is a clear upcoming trend ofTele-health andWeb-health.11Embedded systems can have a myriad ofapplications in healthcare as digitization picks up steam;embedded systems may find convergence with technologiessuch as cloud, mobility and big data to give access auto-generated patient information. Augmented reality wouldalso have applications, however, lesser in comparison toother disruptive technologies. AR applications would bemore focused in medical education rather than actual patienttreatment and care.ITTrends in healthcareSource: KPMG in India analysisEmerging solutions inhealthcareKey disruptivetechnologies that shallshape the healthcaresectorFuturistic trends toinvest inm-HealthBig DataSocial MediaAugmented realityCloudMobilityEmbedded systemsTele-HealthWeb-HealthSix converging technology trends | 33© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 36. The dynamics of the telecommunications industry have changed rapidly overthe years. From a being mere carriers providing voice services; telecom playershave evolved into becoming an interface, a window and a platform through whichconsumers interact and transact with the virtual world. Convergence betweenphysical devices and online services is fuelling the growth of new applications.These applications can take personal data and turn it into useful, personal, socialand visual representations using the disruptive technologies mentioned earlier.Other industries like BFSI, Healthcare, and Government are also increasinglyadopting digital technologies which have madeTelecom players an integralpart of their digital strategies.Telecom players themselves also leverage thesetechnologies to reach out to their end consumers and interact with them.With voice servicebecoming ubiquitous, thenext round of growth isexpected to be driven bydata.Areas such asm-Governance,m-Commerce, m-Health,etc. are driving the usage.There is increasing mobilepenetration in rural areaswhich promises immensepotential for growth.Key drivers ofgrowth in thetelecom industryTelecommunicationWith per unit processing cost of data going up and the need forfaster processing time, big data is going to be a crucial technologyfor the telecom sector. It is expected to have wide utility intransaction-intensive domains such as CDR (Customer DataRecords) processing, BI and Data warehouse. Social media isanother important domain which is being seen from both employeeand customer perspective.The drivers are primarily enhancementof customer satisfaction and better employee engagement. Otherthan this, Cloud can be an important technology considering theinfrastructure-intensive nature of telecom business. However,there is need to address a few challenges such as flawless datamigration from legacy systems and ensuring information securityand data privacy to have wide adoption of cloud platforms.Convergence is more likely to be in the areas of Social Media,Cloud and Big data. However, depending on the magnitude ofimpact, companies will decide whether to go for stand-alone orcollaborative platforms.The current scenario is more in a proof-of-concept stage.”Vinod KamatVice President, IT, atVodafone Essar34 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 37. This distinct nature of this industry throws opena multitude of options for IT-BPO vendors astelecom players need to integrate themselvesinto technology value chains of other industriesas well as utilize these technologies for their ownbusiness.As shown in the figure above, telecom actsas a medium and an enabler for the variousindustries to interact with their end-customers.These end customers have access to a numberof mediums, channels and devices to interactwithin themselves and with the industries.Whilesocial media, cloud, big data, augmented reality,embedded systems and mobility are touted as thegame changers currently and over the next fewyears; the role of telecom is vital in the successfuladoption of these technologies.Thus while reviewing the effect of these disruptivetechnologies on telecom as an industry, we alsocannot neglect the role of telecom as an enabler.Isolating the effect and looking at it from an ITdemand perspective, telecom sector is poisedfor growth. Global mobile subscribers reached6.2 billion as of March 2012 , with growth mainlystemming from developing economies such asChina, India, Brazil, Indonesia and Bangladesh.12The dual role of telecommunication – as a user and as an enablerGlobal wireless subscriber base and net additions (Q1 2012)Source: KPMG in India analysisSource: Gigaom, "Ericsson: 85% of the world will see 3G/4G in 2017", June201212 Gigaom, "Ericsson: 85% of the worldwill see 3G/4G in 2017", June 2012, http://gigaom.com/2012/06/05/ericsson-85-of-the-world-will-see-3g4g-in-2017/Six converging technology trends | 35Telecom as an enabler© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 38. Change in footprint over the decadeThe telecommunication sector has witnessed a seismicshift in the past decade.The decade that started withwire-line services dominating the sector both in terms ofsubscriber and revenue share, has progressed to the era ofsmartphones, tablets and other handhelds. Ever since 2007,when wireless revenues surpassed wire-line revenues, thestate and implications of the sector changed for good.Today IT and telecom are getting interwoven; telecomproviders have sufficiently matured in terms of availabilityof network bandwidth and IT infrastructure to provide ITservices. Similarly, IT vendors are entering erstwhile telecomterritory as they take their solution offerings to a mobileplatform.In addition to this, from a customer perspective, telecomoperators are increasingly facilitating new web-enabledchannels through which customers can interact/transact withthem or among themselves. It is being done with the aim ofaligning operations with the trends in changing lifestyles ofcustomers. It is due to this that of late,Web has emergedas a key subscriber service channel for telecom operators,especially for younger generation. As per a survey conductedby Oracle in 2011, subscribers, irrespective of the age-group they belong, have shown the desire for their telecomoperator provider to offer live help options on theirWebsite13.The survey also highlights that subscribers of differentage-groups prefer different methods of interaction with theirmobile provider.While older subscribers prefer in-personor over-the-phone interactions, their younger counterpartsprefer online or self-service options.13 Oracle, MobileTrends: ConsumerViews of Mobile Shoppingand Mobile Service Providers, April 2011How consumers prefer to interact with their mobile providerSource: MobileTrends, Oracle36 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 39. Moreover, subscribers have started to demand personalized online experience and improved waysto research mobile products. As different age-groups favor different ways of interacting, leading toconvergence of traditional and online channels, telecom operators have started to create a cohesivecross-channel customer experience.Key components of telecommunications industrySource: KPMG in India analysisCustomer touchpointsNew ProductDevelopmentTariff-plans andPoint of SalesMarketing Customer ServicePresentation andpayment of billsPast Present Past Present Past Present Past Present Past PresentPhysical point ofinteraction (eg:helpdesks, outletsetc)0 1 4 2 4 2 3 2 4 2TV 0 0 0 0 4 2 0 0 0 0Peer group / friends 0 0 1 2 1 2 1 1 0 0Home 0 0 3 2 2 1 2 1 4 2Telephone 0 0 1 1 1 1 1 1 0 0E-mail 0 2 0 2 1 2 0 2 1 2Web 0 2 0 2 1 2 0 2 1 2Mobile 0 2 1 2 1 2 4 2 1 2Press & media 0 0 0 0 4 3 0 0 0 0Call center 0 1 2 1 2 1 4 2 2 1Social media 0 1 0 1 0 2 0 1 0 0Six converging technology trends | 374 Very high 5 High 6 Medium 7 Low 0 Absent© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 40. Enabling technology transformationsThe role that telecom/mobility plays in the enablement ofdisruptive technologies has far reaching implications thanthe role that disruptive technologies have to play in telecom.From a B2B perspective, telecom/mobility plays an importantrole in the uptake of these technologies:Cloud: one of the key characteristics of cloud is the mobilitythat it provides to enterprises.The data/applications on cloudcan be accessed from anywhere, any device.Big data: big data is becoming more pertinent becauseof volume, velocity and variety of data generated fromincreasing number of mobile devices.Social media and augmented reality: potential of social mediaand augmented reality cannot be explored to the fullest ifthey are not delivered over mobile devices.Embedded systems: most embedded systems now come asmobile devices.However, from a B2C perspective, these technologies areindeed enabling a transformation in the telecom sector.Big dataTelecommunication, as a business, involves trillion of smalltransactions on a daily basis. Add to this, with adoption ofsocial media and analysis of real-time consumer behaviorgaining pace, flow and variety of data on networks hasincreased manifold.Telecom operators are increasingly leveraging big data toolsto convert all the data into actionable information. Globally,operators are deploying predictive analytics and big data toolsto make proactive use of the data.This has helped operatorsto improve quality of service (QoS), increasing customersatisfaction, and thereby making business more profitable.Big data tools can be used to measure and analyze customeractivities, customer churn, reasons for churn, call handlingand management time at customer care call centres, amongnumber of other things. Moreover, the emergence of cloud-based open source platforms, coupled with big data hasresulted in faster processing and analysis of data.CloudTelecom, by its very nature, is an infrastructure intensivesector. Network infrastructure is the key component andforms the backbone of any telecom business. A significantportion of telecom businesses’ expenses can be accountedto network and infrastructure management. Other thanthe cost angle, scalability is another challenge thattelecom operators face. For example, it is somewhat like amanufacturing plant concept. In order to manufacture 100additional cars, a manufacturer will have to install a machinewhich would have production capacity of 1,000 cars. Capacityof 900 cars would remain idle until the manufacturer getsdemand for those 900 units. Similarly, while scaling up tocater to demand from additional subscribers, a telecom firmoften needs to undertake heavy network deployment whichis both cost and time consuming.To address challenges like these, telecom operators are nowincreasingly migrating to cloud environments to achieve costefficiency, scalability and agility.Telecom operators are also fast embracing cloud to opennew revenue streams.This new revenue stream can bein the form of telecom operators offering cloud servicesto enterprises. Because of the availability of networkinfrastructure, telecom operators are well equipped tooffer cloud orchestration services, including automatedarrangement, coordination, and management of applications,middleware, and services over the cloud.Moreover, telecom operators are also collaborating withindependent software vendors (ISVs), which due to theirsmaller sizes look out for infrastructure without committingsignificant capital investments. Operators, globally, areleveraging this opportunity by offering their networkbackbone to ISVs who can offer cloud services.Source: InformationWeek, "Analytics enables marketing to delivercampaigns to targeted customers on a daily basis", November 2012,Source: Arabnet, "LebaneseTelecom OperatorTouch IntroducesTouchCloud", December 2012BhartiAirtel – Using analytics to deliver campaignsBharti Airtel, the largest operator in India, uses analyticsto enable marketing department to deliver campaignsto targeted customers on a daily basis.The analyticsfunction processes more than five billion transactionsdaily, contributing to the top line.Touch Cloud – a Backend as a service solutionfor app developersTouch, a Lebanese telecom operator, incollaboration with Element N launchedTouchCloud which serves as building blocks for HTML5and mobile developers.Touch Cloud enables theapplications to connect with 3rd party services,such asTwitter or Facebook.Source:TelecomAsia, "SingTel, Progress launch cloud platform forISVs", August 2012,SingTel launched cloud platform for ISVsSingTel, one of the largest telecom operatorsin Asia, in partnership with Progress Softwarelaunched a cloud-based infrastructure forISVs to build, test, manage and deploy theirapplications for businesses.38 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 41. Social mediaWith customer conversations over social media growingat an exponential rate, it is imperative for the telecomoperators to prepare for a social revolution of sorts. Socialmedia applications have now become a standard; devicemanufacturers are embedding them in devices as built-inapplications and service providers are providing them throughproprietary/3rd party applications stores.Other than demand-side push, availability of high-bandwidthnetworks, enabled with technologies such as Long-termEvolution (LTE) andWorldwide Interoperability for MicrowaveAccess (WiMAX), has created an environment conducive forprovisioning of social media services.In addition to this, major telecom operators, globally, notonly look atWeb 2.0 as a communication and collaborationtool but also as a strategic marketing tool. Service providersworldwide are using social media to learn more about theircustomers and explore new revenue opportunities.Augmented realityAdoption of smart devices has increased to a point wherethey rival the power of PCs, ensuing the need for content-rich media applications such as Augmented Reality (AR).As the adoption of AR rises, the implications are clear forstakeholders at each level in the value chain. From a devicemanufacturer’s perspective, augmented reality is somethingthat they just cannot ignore.The devices of today need tobe augmented reality-enabled in order to stay relevant in themarket.Telecom operator needs to have sufficient networkbandwidth to give room to such rich-content applications andapplication developers will have to find new ways in whichaugmented reality can be used across different categories ofapplications.Augmented reality today has utility in location-based serviceapps, entertainment and gaming apps, videos, utility relatedapps and many more. Stakeholders in various segmentsof telecom sector need to be prepared of these marketdevelopments.Source: InformationWeek, "In today’s marketing scenario, interactivity interms of ROI is measured with subscriber responsiveness", November2012,Source: Gigaom, http://gigaom2.wordpress.com/2012/09/11/old-lumias-get-nokias-new-city-lens-augmented-reality-app/Source:T-Immersion, "BouyguesTelecom Augmented Reality Brochureto Experience Latest Smartphones Functions", March 2011Source: DynamicCIO, "Vodafones Response to Social Media", April 2012,Loop mobile – Measuring ROI based onsubscriber responsivenessLoop, a regional Indian telecom operator,is leveraging the social media to createbuzz for the brand. In addition to increasein fans, response or conversations andlikeability, it also looks at other factorssuch as contest participation, generationof leads, lead conversions, clicks on videosor posts and conversations to measure thesuccess of this strategy.Nokia – City LensTMNokia’s ‘City Lens’ is a location-basedapplication that provides an AR overlayview of buildings and instantly highlightsplaces of interest.The company is now pre-installing the ‘City Lens’ application on therange of its newWindows Phone 8-basedsmartphones, Lumia 820 and Lumia 920.BouyguesTelecom – ExtendingARexperience to sales brochureBouyguesTelecom, a French telecomoperator, added an AR feature to thesmartphone purchasing guide available at itspoints of sale.This feature allows customersto test and discover the functions of newsmartphones by placing the printed pageof the 3D guide in front of a webcam.Thechosen smartphone is viewed in 3D as if itwere coming out of the page.Vodafone – Leveraging mining andlistening tools to manage customersupport over social channelsLarge volumes of social media chatter aboutVodafone were untracked and unattended,entailing the need for a system to scan socialmedia to gather conversations aboutVodafone.In response, the company developed a socialmedia listening and mining tool based onJava and MySQL hosted on Enterprise LinuxServers.The tool analyzesTwitter feeds,Twitter trends, Facebook posts, RSS feedsfrom various blogs and articles, and ties intofeeds for third party sites like forums.The toolsalso classify the conversations as queries,complaints and request.Six converging technology trends | 39© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 42. Social Media, Mobility, Augmented Reality, Big Data and Cloud Computing are the keydisruptive technologies that have redefined the global business environment in thepast few years. Looking at the changes from a BPO point-of-view, the service offeringsand business models in the industry have changed drastically. It is no longer aboutproviding back-office and voice-based processes.Today leading BPO service providersare managing far more complex and end-to-end processes for clients. Most C-levelexecutives and Business Unit heads across all industries are increasingly looking atsolutions that:• Address the challenges of meaningful engagement with the consumer on digitalmedia• Help meet regulatory demands and address risk and compliance needs• Yield enhanced business outcomes in terms of gaining competitive advantage,leading to customer satisfaction and improved ROIAs these changes continue to shape the business landscape, companies will have towork closely with clients to create solutions that yield enhanced business outcomes.Keshav MurugeshCEO,WNS Global Services40 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 43. Current state and way forwardTelecom sector is considered to be aninfrastructure intensive industry and thereforerole of technologeis such as Cloud Computing andEmbedded Systems is paramount. Because ofhuge volumes of data generated, both at the OSS(Operational Support System) and BSS (BusinessSupport System) layers, big data also holdsimmense importance for this sector.Technologies such as social media and augmentedreality are used more at the customer interfacelevel and hence have limited utility in the sector.The utility of social media and augmented realityis mostly around the customer applications, whichare developed by application developers andmobile network operators to some extent. Otherstakeholders in the telecom ecosystem, whichincludes network equipment manufacturers,resellers, etc., do not find much utility of socialmedia and augmented reality in routine operations.However, going forward, both these technologieswill find much greater use. Social media isincreasingly being used to connect telecomcompanies to their employees. Demand foraugmented reality applications is also expected togrow as it finds its way in more utility/productivityrelated applications.Telecom is an interesting segment as it acts asa horizontal enabler which cuts across multipleother verticals. ‘Mobility’, which acts as anenabling technology for advancements in otherverticals, comes as an integral part of the telecomvertical.Therefore, beyond the uptake of disruptivetechnologies in telecom sector itself, telecomsector would still witness huge investmentsflowing into these technologies as stakeholdersin the ecosystem will have to cater to demandfrom other sectors. Be it a device manufacturer,a network operator, a content publisher, atechnology provdier, an app developer or a reseller,all of them will have to fulfill changed demandpattern from other verticals which is increasinglybeing driven by disruptive technologies.Going forward, the industry would also witnesssignficant convergence of these technologytrends.Technologies such as cloud, embeddedsystems, big data are expected to come togetherto build cost effective solutions for back-end.Firms may also use cloud platforms to build andhost social media and augmneted reality appsfor customers. It is due to this that demand forconverged platforms is expected to rise in the nearfuture.Six converging technology trends | 41© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 44. Government cannot be called an industry vertical per say, however, consideringthat it is the largest spender in any economy, it becomes one of the importantconsumer segment from an IT perspective. From a spending perspective inan overall economy, two broad heads that every vertical may have are privatespending and public spending and hence the role of government in catapulting thegrowth of an economy cannot be ignored.Government is coming up as one of the major spenders on IT systems tomodernize its processes and extend its reach to the masses across the world.There is an increasing need for digitization in government processes to make theoperations more effective and transparent. It is due to this that Governmentsacross the world are spending billions of dollars every year on IT.Government/Public sectorGrowing GDP is leading to higher governmentexpenditure every year.Sectoral reforms and revolutionary projects aredriving investments by government on IT andselect sectors.Need to streamline process, expedite operationsand bring in greater transparency induces a needfor system overhaul and increased spending on IT.Growing population coupled with government’smotto of social welfare drives spending on criticalprojects which need a scale-up.Key growth drivers for thegovernment spendingSectoral reforms and e-Governance programs worldwide arecreating greater demand for IT systems. Governments worldover are also looking at uplifting the rural and underservedpopulation by working on themes such as financial inclusionand catering to the bottom of the pyramid. IT technologiescan play an instrumental role in servicing the bottom tier ina cost effective manner. For example, in India, reforms suchas APDRP (Accelerated Power Development and ReformsProgramme), and transportation reforms, and revolutionaryprojects such as MGNREGA (Mahatma Gandhi NationalRural Employment Gurantee Act) and JnNURM (JawaharlalNehru National Urban Renewal Mission), Aadhaar (a UniqueIdentification initiative), IT-enabled Passport Seva Kendra,CCTNS (Crime and CriminalTracking Network & Systems),among a number of others, are creating greater demand forIT systems.14In addition to this, to overcome the challenges of increasingurbanization, governments across the world are also makingsignificant investments in creating IT-enabled smart citiessuch as Amsterdam (Netherlands),Yokohama (Japan), andMasdar (Abu Dhabi).14Worldwide Government spend on IT services and BPOSource: NASSCOM14 KPMG in India analysis42 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 45. Change in footprint over the decadeGovernments are heightening their focus ontransparency in processes and are striving toreduce administrative and commercial losses dueto lack of centralized and consolidated systems.While the vertical has remained low on IT maturity,governments are adopting measures to breakinformation silos and lower administrative hurdles.The government sector is among the largestspenders on IT and is witnessing rapid growth. Keyareas for civilians — including health and humanservices, home and security services, treasury,transportation and justice — are becoming focusareas for IT enablement. e-Filing, automated tax/fee calculation, and interconnectivity to haveunified view of data are some of the potentialareas where service providers are witnessinggrowth, specifically in developing economies.15Government’s mandate to provide better citizenservices with the help of IT is driving significantinvestments in e-Governance and projects. Forexample, the Indian government plans to investINR 340 billion15over the next five years to providebetter citizen services and technology wouldbe the key enabler for efficient delivery of theseservices.15 NASSCOM Strategic Review 2012Key components of Government services in the pastSource: KPMG in India analysisCustomerTouchPointsApplicationProcessingVerification Issuance DeliveryLogistics &OperationsPost-deliveryServicesPast Present Past Present Past Present Past Present Past Present Past PresentPhysical location 4 4 4 4 4 4 4 4 4 4 4 4Traditional media 0 0 0 0 0 0 0 0 0 0 0 0Peer group 1 0 0 0 0 0 0 0 0 0 0 0Home 0 1 2 2 1 1 2 2 0 0 1 1Telephone 0 0 1 1 0 0 0 0 0 0 1 1E-mail 0 1 0 1 0 0 0 1 0 0 0 1Web 0 1 0 0 0 0 0 0 0 0 0 1Mobile 0 1 0 0 0 0 0 0 0 0 0 1Call centre 0 1 0 2 0 0 0 0 0 0 0 1Social media 0 0 0 0 0 0 0 0 0 0 0 1Six converging technology trends | 434 Very high 5 High 6 Medium 7 Low 0 Absent© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 46. Enabling technology transformationsGovernments are leveraging disruptive technology toolsto promote openness and improve engagement withtheir citizens. Governments across the globe are adoptinga number of initiatives to improve accountability andtransparency and thereby, the quality of public services.Big dataWith the increased digitization of information, nations arefacing pressing challenges in the wake of significant volumesand disparate varieties of data. Be it digital records of citizens,their activities, or service delivery, data is being generated,accessed and retrieved across government activities.The sheer volume, variety and velocity of data make datamanagement an arduous task. Most governments spendmore time collecting and organizing the data than analyzingit. Considering the kind of data governments hold, if analyzedcorrectly, such data has the potential to take fact-baseddecisions and, thus, address some of the biggest challengesthat prevail.To make the most of this data deluge, governments acrossthe world are now building a big data roadmap. Big data toolsand technologies have a significant role to play in the areasof delivery of public services, defense & security, managingtransportation and logistics, science and R&D. For example,Indian government is making extensive use of big datatools to power its Aadhaar project.To capture and processsuch significant volumes of data, UIDAI (the UID Authority)runs three duplication servers powered by MySQL andHadoop.The open source architecture of Hadoop ensuresfast processing of large volumes of unstructured data, highscalability, and enables adding interfaces based on APIs.Hadoop also enables UIDAI to provide real time informationabout enrollment data across states.16CloudCloud computing provides service oriented architecture tousers which is cost-effective and scalable, making it a suitableplatform to host e-Governance services.While security wasconsidered to be a concern in the past, many governmentsare now building their own private cloud/community cloud tomaintain minimum security standards.Two essentials for success of any e-Governance initiativeare reach and availability. Cloud enables service deliveryover internet making it accessible to all and service levelagreements ensure that the services are available at nearlyall times.Therefore, use of cloud for collaboration andcommunication between departments and with citizens holdthe maximum potential, followed by use of cloud to facilitateinformation management (such as record-keeping).Social mediaIn the era of digital citizens who are all over social media,governments need to have a presence on social media toconnect with them. Governments world over are now usingsocial media to ensure effective citizen engagement andcommunication with all stakeholders in real-time. Socialmedia can not only enhance the outreach of government butcan also help in managing the perception of the users to avoidpropagation of unverified facts and rumors with respect togovernment policies.Government agencies are using Facebook,Twitter, andother platforms to inform and interact with the public.Governments are using social media for everything fromhandling 911 service requests to hosting real-time interviewswith public officials to crowd-sourcing ideas around publicpolicies. Governments also monitor social channels forthreats to national security.1716 “Aadhaar is Indias app store: Nilekani”, May 2011, CIOL17 InformationWeek, "Top 14 Government social media initiatives", February2012, http://www.informationweek.com/government/enterprise-applications/top-14-government-social-media-initiativ/232601128Source: “Obama administration unveils “big data” initiative: announces$200 million in new R&D investments”, March 2012, Office of ScienceandTechnology Policy, United States of AmericaSource: “State of New Jersey (New JerseyTransit Authority)”, Info.Apps.GovObama administration recentlyannounced “Big Data Research andDevelopment initiative which entailsinvestments of more than USD 200million on big data tools and techniquesand R&D.The program aims at advancingthe big data technologies, harnessingthese for welfare and progress, andexpanding the workforce needed todevelop and use big data technologies.New JerseyTransit Authority uses ahosted CRM system from Salesforce.com which provides workflowrules that route incoming customerquestions to the subject areaexperts.The system’s applicationsare linked to a data warehouse,employee information, an e-mailmanagement system, and a dataquality system. During its use, andwithout an increase in staff, theaverage response time to inquiriesdropped by more than 35 percent andproductivity increased by 31 percent.44 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 47. MobilityMobility is coming as a channel or a medium for effectivedelivery of government services. From giving mobiledevices to government officials, to advanced data collectionusing mobile devices to wireless networks and unifiedcommunication, mobility is touching every aspect ofgovernment operations.Mobility plays a pivotal role in making e-Governance initiativessuccessful as rural and tier-II/III cities lack the infrastructurenecessary for every citizen to haveWeb access. In such asituation, mobility plays a critical role as it enables e-mobilitywith e-governance for the uninterrupted data sharing process,making information available on a real-time basis. Mobilitycan also play a role in materializing financial inclusion andreaching the unbanked population using applications suchas mobile banking, mobile money, etc. Moreover, since thedelivery of services get mobile-enabled, instances of briberyand leakage gets reduced.For this reason, often governments create m-Governanceframework a part of their national e-Governance plan toutilize the massive reach of mobile phones and harnessthe potential of mobile applications to enable easy andeffective public service delivery especially in the rural areas.Government of countries such as US have also launched theirown mobile application store for effective delivery of variouspublic services through mobile phones and are undertakinginitiatives to make sites of all government departments andagencies mobile-compliant using ‘one-web approach’.Embedded systemsEmbedded systems are witnessing fast growth in theGovernment sector.The last decade has seen a major shift inthe way embedded systems are being used by governments.Initially, embedded systems used to find their way in safety-critical applications such as rocket & satellite control, energyproduction control, telephone switches and air traffic control.However, in the current scenario, demand for embeddedsystems is much more broad-based. Be it railways, roadways,mobile communications, or electronic payment solutions,the use of embedded systems in various governmentdepartments is only increasing. Embedded systems arebeing used extensively in following areas:• Establishing process controls in areas such as energyproduction and distribution, factory automation andoptimization• In satellites, mobile phones and telecom networks• For better energy management by establishing controlover production and distribution, and for optimum usage ofenergy• For secured e-commerce transactions• In identity and access management through use of smartcards• In healthcare through embedded systems enabled hospitalequipment, and mobile monitoring.Source: “Top 14 Government Social Media Initiatives”, February 2012,InformationWeekSource: “Indias first mobile government initiative launched by MadhyaPradesh government”, m-GovWorldSource: “Mars Rover: System Block Diagram”, Bradley UniversitySource: “GappaGoshti: Experiences in Rural Social Networking”,TCSNewYork City launched social mediastreams on Facebook, Foursquare,Tumblr, andTwitter to engage the publicin a variety of ways, from providinginformation on government servicesto emergency response. For example,Twitter feeds ofNewYork City includeTweets on city news, links to pressconferences, responses to citizen questions about citypolicy, and more. Its also frequently re-Tweeted by otherNewYork City government agencies.The city has a full-fledged social media strategy and alsohas a Chief Digital Officer who designs a roadmap for theuse of social media.Madhya Pradesh government in Indialaunched a pilot project using SCOMobile Server that enables electronicprovisioning of services and access togovernment information using a cellphone over the cell carrier network.Mars Rover sent by NASA (an agency ofUS Government) uses embedded systemas one of its sub-block.This systemdetermines the distance travelled by rover,obstacles in the path, voltage and chargeacross battery terminals, and speed of themotors.GappaGoshti, is a mobile platform forrural population which allows themto socially network, collaborate andobtain access to contextually relevantinformation. It has been designedkeeping in mind that rural folks maynot be digitally savvy and wouldrequire an easy user interface withlocal language support and voice asprimary means of communication.Theplatform was used by a small group ofrural farmers in a focused manner toaid their agricultural activities.Six converging technology trends | 45© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 48. Augmented realityThough the adoption of augmented reality has not beenmuch in government vertical till now, there is an increasinguptrend. Augmented reality applications can offer a numberof opportunities for the delivery of important informationfor citizens in an interactive manner. One of the most basicexamples of usage of augmented reality can be citizenspointing their cameras installed in mobile phones towardsa particular building and get information about that building(such as name, location, opening time, etc.) and near-byplaces.However, this is not all that augmented reality has to offer.Some of the key application areas where augmented realitycan be used in government domain include sectors such asdefense, R&D, education, tourism, among others. Promisingimmense potential, defense is one of the key focus areasfor augmented reality applications. From the times whenaugmented reality was used in heads-up displays in militaryaircrafts, augmented reality has come a long way and is nowbeing used to create augmented reality contact lenses fordefense use.The US department of defense is working on asystem, called iOptik, that gives humans the ability to focuson the near foreground and distant background at the sametime.18Augmented reality also has signficant potential inmilitary training exercise systems which may have featuressuch as friend/enemy identification, multiple sensoryinterfaces, location intelligence and interactive battlefieldmedical support.1918 “US military developing multi-focus augmented reality contact lenses”, April 2012, ExtremeTech19 “Augmented Reality in the Battlefield 2012-2016”, October 2012, DefenceTalkSource: “Augmented reality adds a new dimension to planningdecisions”, May 2012,The GuardianSource: “Google Project Glass”, April 2012,TechCrunchEuropean Union funded project calledARTHUR (Augmented RoundTablefor Architecture and Urban Planning),allows architects and customersto review designs before they arebuilt. It created computer-generatedmodels on augmented-reality,head-mounted displays that enabledparticipants to view 3D virtual modelson a planning table, tweaking theirsize and scale in real-time.Google is working on developing apair of augmented reality glassesthat seek to provide users real-time information right in front oftheir eyes. It will give a completenew dimension to concept ofmobility in augmented realitywhere the technology would beworn as a wearable.46 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 49. Current state and the way forwardConsidering the sheer size of government sector, the potential for growth ofemerging technologies is immense. Since government interacts with almost allthe stakeholders in an economy – be it a citizen, a community, or a corporate – allthe disruptive technologies find utility in some government segment in one or theother way. However, in our opinion, technologies which can help in reaching out tothe masses in a better way will have the highest impact on the sector.Therefore,Mobility, Social Media, Big data and embedded systems will have the highestimpact for citizen services in the government sector.Cloud can be a significant enabler to power all the systems; however, the adoptionrates may remain lukewarm as concerns around data security continue to loomlarge. Nonetheless, KPMG in India predicts, that the sector is likely to witnessmore and more cloud deployments in the near future, especially in the communitycloud model.Augmented reality is another breakthrough application area that will find majority ofits use in sectors such as Defense,Tourism and Academia. However, it is still earlyfor the technology to find significant scale, till then it will continue to flourish in afew niche areas.Going forward, the sector is also likely to witness convergence of varioustechnologies for a better service delivery to citizens. Convergence is likely to beseen in areas including embedded systems, mobility, social media, and cloud froma service delivery perspective.Six converging technology trends | 47© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 50. Five years since the outbreak of the global economic crisis, the financial servicesindustry has yet to recover.While the banking sector has risen from the depths of2009, it is still buffeted by long-term frailties that still remain unaddressed. Banksin the United States and Europe remain on a weak footing, and are still weigheddown by a large volume of bad debts, regulatory pressure on their business model,and a decrease in consumer confidence in the functioning of the banking industry20.The huge losses brought about by the financial crisis and ensuing bank failures andtax-payer bailouts shook public confidence in the banking sector.Financial servicesA relatively strong economic growth in China andother developing nations is driving demand forcredit and other financial products.Emerging markets are still showing strong demandfor financial services.Drive towards financial inclusion of the unbankedstrata of the population.Key growth drivers for thefinancial services industryAs per a Boston Consulting Group analysis of leading globalbanks across geographies shows that cumulative profits havedecreased from USD 107 billion in 2007 to a loss of USD 189billion by 2011, with banks in the Asia-Pacific region being theonly ones to make a profit over the period21.However, in the faster growing developing nations, thereare selective opportunities for the banking industry. Risingincome levels and a growing middle class with moredisposable income will create increased demand forbanking products to support both individual and corporatecustomers22. Moreover, multi-national firms will be focusingmore attention and investment capital on these markets andmore local and regional firms will begin to emerge as globalplayers.Over the next 2-3 years, the financial services industry will befaced with challenges as it tries to implement key programsto essentially redesign the business and redefine the targetoperating model.Economic profit generated by banks inAsia-Pacific, Europeand the United States, 2007-11, in USD billionSource: NASSCOM20 http://www.federalreserve.gov/publications/annual-report/files/2011-annual-report.pdf21 Boston Consulting Group, An Inflection Point in Global Banking: RiskReport 2012–201322 KPMG in India analysis48 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 51. Retail banking customer channel evolutionSource: http://www.perfectsen.com/retail-banking-evolution-a-need-for-retail-banks-to-constantly-keep-up-with-customers-technology/291/Change in footprint over the decadeThe last few years have witnessed a rapid increaseof InformationTechnology (IT)-based programswhich have transformed the banking sector of thecountry.Technology infrastructure has played avital role in enabling timely availability and givingaccess to vital information in a quickly changingeconomy.What began as a mere automationof some everyday work processes in banks inthe mid 80’s has moved on to become businessprocess re-engineering which has resulted inmaking banking services branchless, anytime andanywhere; facilitated new product developmentand; enabled near real-time service delivery.Technology has helped banks to reach thedoorsteps of the customer by overcoming thelimitations on physical reach in branch banking andeasing the resource constraints posed by the brickand mortar model23.There has been a phased and gradual penetrationof IT in the banks. In the first phase, bankscomputerized their labour intensive back officeoperations to trim down costs. In the secondphase, banks focused on improving customerexperience to gain competitive advantage. Inthe third phase, banks have implemented CoreBanking Solutions (CBS) combining both frontoffice and back office.This phase marked aparadigm shift and branch customers are nowbank customers as they can access their accountsfrom any branch.The spread of the internet and mobile technologyhas also had a transformational impact on thefinancial services industry.These technologieshave not only increased the quality of serviceprovided to existing customers, but also enabledthe inclusion of economically weaker sectionsof the society into the organized banking sector.At the same time, they have reduced the cost ofservice delivery, contributing to the bottom lineof the industry. It is estimated that the cost to thebank of a financial transaction carried out at a bankbranch was approximately USD 2.50 while thecost of the same transaction, if undertaken from amobile phone, would only be USD 0.5024.CustomerchannelsBank branch ATM Phone Internet MobileInternaldrivers• Sales andtransactionchannel tocustomers• Reduce loadon customerservice staff• Convenienceanddifferentiation• Lowers costof servicingcustomers• Naturalprogressionfrom phonebanking• Extensionof internetbankingExternaldrivers• A point ofcontact• Personalized,face-to-faceneeds• Speed• Reluctanceto queuefor simpletransactions• Convenience • Customersare internetsavvy• Necessity fortoday’s world• Anytime,anywhereaccess23 http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?id=73824 http://www.adlittle.com/downloads/tx_adlreports/ADL_2010_M_Payments_in_M_BRIC.pdfSix converging technology trends | 49© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 52. Key components of financial servicesSource: KPMG in India analysisCustomerTouchPointsCustomeracquisitionCustomer on-boardingCustomeractivitiesFundmanagementCompliance CustomerServicePast Present Past Present Past Present Past Present Past Present Past PresentPhysical location 4 4 4 4 4 4 4 4 4 4 4 4Traditional media 3 0 0 0 0 0 0 0 0 0 0 0Peer group 0 0 0 0 0 0 0 0 0 0 0 0Home 0 1 0 2 0 1 0 0 0 0 0 2Telephone 0 2 1 1 0 1 0 0 0 0 1 2E-mail 0 1 0 1 0 0 0 0 0 0 0 2Web 0 2 0 2 0 0 0 0 0 0 0 2Mobile 0 1 0 0 0 0 0 0 0 0 0 2Call centre 1 2 0 2 0 0 0 0 0 0 1 3Social media 0 0 0 0 0 0 0 0 0 0 0 1Enabling technology transformationsAlways connected, omni-channel customers are driving theerosion of boundaries in the financial services industry.Thesecustomers demand an engaging customer experience.For the industry, where products are becomingcommoditized, the customer experience has evolved as adifferentiator. Banks are increasingly focusing on adoptingmeasures to develop stronger relationships with theircustomers with the primary objective of gaining trust,building engagement and creating value to give customers anenhanced user experience. Banks are looking to differentiatethemselves based on customer experience with online,social media, mobile and cross-channel initiatives.The cruxof the strategy revolves around engaging customers at theirconvenience and through their preferred channels.Big dataThe financial services industry is amongst the most datadriven industries.The regulatory environment that financialservices firms operate within requires them to store andanalyze several years of transaction data.The pervasivenessof electronic trading has meant that capital markets firmsboth generate billions of messages every day. Moreover, theincreasing proliferation of social media is driving banks tokeep track of their customers on these platforms to generateadditional insights25.This would require intensive analyticsof volumes and velocity of data. In addition, as data drivenas banks are, it is estimated that 80-90 percent of the datathat they have is unstructured, i.e., in documents and in textform26.Banks are also discovering uses for big data outside of frauddetection. One way of using them is to try to sell customersmore products. Santander Bank in Spain sends out weeklylists of customers who it thinks may be attracted to particularoffers from the bank, such as insurance, to its branches27.In Singapore Citigroup keeps an eye on customers creditcard transactions for opportunities to recommend themdiscounts in restaurants. If a customer who has signed upfor this service swipes a credit card, the system can look atthe time of day, the location and the customers previousshopping or eating habits. If it finds that he enjoys Japanesefood, it is almost lunchtime and there is a nearby sushi joint, itcan send a text message offering a discount at the restaurant.That may give the bank a second transaction and a share ofthe extra spending.25 http://www.oracle.com/us/industries/financial-services/bigdata-in-fs-final-wp-1664665.pdf26 http://www.americanbanker.com/magazine/122_9/swift-reimagines-banks-role-in-commerce-for-a-data-driven-future-1051886-1.html27 www.economist.com/node/21554743Source: Alpine Data Labs, "CHINA CITIC Bank Case Study"By using big data on huge volumes ofcomplex business data directly in thedata warehouse, the Chinese bank CITICwas able to uncover useful information &predictions. It was also able to use datafully & collaboratively across a dedicatedcredit card centre setup especially forleveraging customer insights acrossthe other bank departments. As a result,CITIC is accelerating its growth, and isnow planning to leverage big data acrossits other functions as well.50 | Six converging technology trends4 Very high 5 High 6 Medium 7 Low 0 Absent© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 53. Cloud computingA financial services firm can benefit from cloud computingin numerous ways. Perceived cost savings, ease of scaling-up and scaling-down, faster time-to-market for deployingsystems, virtualization of enterprise-wide data-as-a-service,enterprise technology standardization, and the ability toaccess data and applications on the move are all criticalfactors that can drive financial services firms to adopt cloudcomputing28.Newer banks, unburdened by legacy costs have alreadystarted using cloud to support core banking applications.However, for most banks, public cloud and cloud-basedshared services will dominate non-core activities, fromworkforce collaboration to document management due toinformation security and data privacy concerns.Banks are required to comply with regulations and lawswhich restrict the movement of client data outside theirgeographies.The lack of standard security practices,concerns about the implications on compliance frameworksand operational risk worries have led many users in thefinancial services industry to adopt a hybrid public-privatecloud strategy.Cloud computing can also play an important role in customerservice delivery. Private cloud-based solutions can bedeployed across the entire range of key banking functions.KPMG in India estimates that cloud computing could provevery attractive to banks and other financial institutions,mainly due the fact that it provides the next generation valuein IT with innovative and flexible business models.Banking function Optimal cloud offeringATM, Customerservice centrePrivate Cloud delivering servicesacross the enterpriseBranch and internetbankingPrivate cloud supporting standardfunctional suiteMobile bankingPrivate cloud supporting standardfunctional suiteContent managementPrivate cloud delivering enterprise wideservices28 http://www.sapient.com/assets/ImageDownloader/1315/Cloud_Computing.pdfSource: “Google persuades Spanish bank BBVA to use the cloud”; BBCNews; 11 Jan 2012In a landmark deal for the bankingindustry, the Spanish bank BBVAadopted Google Apps for 110,000employees spread across 26countries. As part of the deal, allcustomer data would remain on thebank’s servers with the move toGoogle services only applying tocommunication among staff.Optimal cloud solutions for key banking functionsSource: http://www.tcs.com/resources/white_papers/Pages/Cloud-Computing-Strategic-Considerations-for-Banking-and-Financial-Institutions.aspxIn 2008, as part of a massive core banking modernizationprogram, the Commonwealth Bank of Australia (CBA)realized its existing IT infrastructure spend wasn’tdelivering enough business value — half of the moneyspent went to basic infrastructure maintenanceand provided no measurable strategic advantage.Confronted with these issues, CBA launched a massivetransformation project to change the fundamental natureof its IT infrastructure from a cost center to a driver ofvalue through business innovation.To accomplish this,CBA built a large-scale private cloud architecture onwhich IT now delivers everything-as-a-service.This meantvirtualizing existing resources, developing a standard setof well-defined IT services based on those resources, andthen making services portable.Six converging technology trends | 51© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 54. Social mediaSocial media has emerged as the platform that will decidemany of the winners of tomorrow’s connected enterprise.In the area of financial services, initial initiatives saw banksseeking to understand customer opinions about bankproducts and service experiences. Later it evolved to a moreproactive role of responding to customer feedback quickly.Today the needs and uses are clearly left to the imagination ofthe most fertile minds as banks world over work overtime todevelop a connected customer strategy29.The emerging BRIC nations, which are going to be the nextgrowth engines for the financial services industry, are alsosome of the fastest adopters of social media.With a strongbase of more than 517 million social media users in theBRIC nations30, it is clearly a segment that in many waysrepresents the customer of the future. Banks will have todevelop a channel and interaction strategy that is able toaddress the needs of a diverse set of customers, each ofthem with their own set of preferences and demands. Byunderstanding the forces underlying social networkinginteraction, banks will be able to craft their interactionstrategy with both their current and future customers.MobilityMobile is increasingly becoming the focal point of thechannel strategy for banks, not only for its own adoption butalso for its role as a gateway for other channels like telephony,internet or Near Field Communication (NFC). Early adoptionof mobile banking was slow due to technological challenges,limited standardization, fragmented commercial efforts, andmost importantly, and the lack of a sustainable businessmodel32. Even though some of these challenges still remain,a rise in commercial m-Banking initiatives across the worldis a leading marker for the sustained interest of the channel’spotential. Mobile financial services are experiencing aglobal surge, especially in emerging markets. Global totaltransaction volume is expected to reach approximately USD280 billion by 2015.A recent survey of 35 global banks showed almost two-thirdsbelieve that the adoption will grow to ‘medium adoption in afairly structured way’ in the next 2 to 3 years. Also, nearly 90percent of respondents used social networking to achievecustomer engagement, with the promotion of products/services and the coverage of events coming not far behind31.The opportunities for social communication, a mechanismto obtain feedback and the promotion of corporate socialresponsibility (CSR) strategy follow further down the peckingorder.29 “Social media in financial services”, Apr 2012, KPMG in India30 “More than 80% of internet users in Russia accessed social media inFebruary 2012”, Feb 2012, NewMediaTrendWatch31 GlueReply, CompanyWebsite32 Capgemini: How Mobile banks can seize the opportunitySource: http://thefinancialbrand.com/19315/akbank-facebook-social-media-strategy/Turkey’s Akbank established a Facebookfan base of over 508,000, making it oneof the “most liked” financial institutionsin the world. Akbank, which has 913branches and 15,300 employees servingover eight million customers, is effectivelyreaching 6.35 per cent of its base throughits Facebook page, far outpacing theindustry average of 0.14 per cent.Social media adoption in 2-3 years timePurpose of using a social networking platformSource: Social media in UK financial services in 2011; Glue reply52 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 55. Globally, while banks in emerging nations have been earlyadopters in m-Banking alerts, actual transactions on themobile are rare. Most banks have not gained a foothold inthis arena because of a lack of marketing and sales effort,security concerns, as well as the failure so far to utilizechannels beyond their bank branches to acquire consumers.Banks, however, have a competitive advantage over non-banks because they can capitalize on the cross-sellingpotential via micro-loans and can offer both disbursementnotification and options to repay via mobile.Therefore, non-banks face an uphill task in monetizing their cost of consumeracquisition.Current state and way forwardThe financial services sector has traditionally been one ofthe fastest adopters of new technological trends. Overthe decades, banks have continuously launched newproducts, from ATM’s to smart cards to internet banking;products which were possible due to the adoption ofcutting-edge technology of the day.While most financialservices institutions are under stress due to the prevailingglobal economic turmoil, they have continued to investin technology. KPMG predicts that analytics and bigdata will see widespread adoption in the industry,with banks combining data from disparate sources togenerate customer insights and reduce fraud. However,cloud computing will see slow adoption, with focus onimplementing a private cloud model to asset rationalization.Regulatory factors and data privacy fears have restricted thewidespread adoption of public and hybrid cloud models inthe industry.With financial inclusion being an increasingly importantobjective for banks globally, mobile devices will emerge asthe next growth driver, especially in Asia, Africa and otherdeveloping regions. Reducing the cost of providing bankingservices is just one of the uses of mobility; mobile devicesare also being increasingly used as wallets to processfinancial transactions. Customer will be able to use theirmobile device as a substitute for a multitude of credit anddebit cards that they currently carry.When it comes tosocial media, its use has been restricted to mainly customerservice functions, with banks being hesitant to use it acrossother functions.KPMG in India predicts that the Core Banking Platformis unlikely to be impacted by these new disruptivetechnologies, with most of these new technologies beingkept separate from the core platform.This not only makesfor quicker adoption of these technologies, but also reducesintegration headaches and keeps the core platform focusedon its critical tasks.Over the next 24-36 months, financial service institutionswill need to adapt to the convergence of these disruptivetechnologies.With cloud, mobility, social media and bigdata increasingly coming closer, and many of their usesstretching across the traditional technological boundaries,implementing solutions that take advantage of this unionwill emerge as a competitive advantage.Augmented realityThe use of tablet devices creates new possibilities as productpresentation becomes more interactive and transparent.Banks will be able to demonstrate and explain complexproducts without face-to-face contact. As a result, customerswill become more independent of branches and theiremployees, of limited hours and physical locations.Several banks in the United States already use augmentedreality capabilities to power certain services. PNC Bankand U.S. Bank offer iPhone apps that find bank branchesand ATMs.When the user points their iPhone in a certaindirection the app displays the actual environment anda graphic that points to a branch or ATM in that generaldirection33.33 “PNC Bank taps augmented reality tech for ATM finder app”,Dec 2011, Finextra.comSource: SBIWebsiteSource: CBAs Can relaunch taps augmented reality ;TechnologySpectator; May 2012State Bank of India offers mobilebanking service over application as wellasWAP (Wireless Application Protocol)with GPRS connection. Using mobilebanking, a user can transfer funds,make inter-bank mobile payments, makebalance enquiries, request chequebooks, pay bills, recharge mobile phone,and do all other m-Commerce activities.The Commonwealth Bank of Australia (CBA)has continued its efforts to put a digitalspin on its brand with the bank utilizingan augmented reality app integrated withcontent in local papers. Readers can use theNews Alive app for the iPhone and iPad toexperience a fully animated 3D mastheadfor each title and watch the bank’s newTVadvertisement directly on the pages of thenewspaper. ‘News Alive also showcasesthe featured property of the week as a3D interactive display embedded with adownloadable CBA property guide app.Six converging technology trends | 53© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 56. Organization level decision driversEvery organization, however big or small is driven primarilyby a set of business goals with technology as an enablerto achieve them.The key concerns for all organizations is access toauthentic customer information,24x7 connectivitybetween customer and industry, an enhancedcustomer experience and dependence on analytics .This has led to a change in the way platforms andtechnology solutions are offered. Disruptivetechnologies such as big data, mobility, socialmedia, Cloud, augmented reality and embeddedsystems have proved to be game-changersfor the industry.While in the past, processautomation was core for technology platformsand solutions, the need today is based moreon customer expectations and experiences.Impact on decision making process54 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 57. Interlinked business and technology goalsSource: KPMG in India analysisToday we find ourselves in an environment where everything we need is available at ourfinger tips, especially information.The consumer decision making and purchase processhas been completely revamped due to advent of technologies like cloud, mobility andsocial media.Delivering the digital experience of the future will call for new skills, technologicalcapabilities such as cloud, analytics and mobility backed by new organizationalapproaches.The investment to ensure relevance and availability coupled with creativitywill be justified by the returns organizations will reap over the next few years.AvinashVashisthaChairman and GU Managing Director- India, AccentureSix converging technology trends | 55© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 58. Shift in decision making from cio to cmo/business headsWhile CIO’s in the past led various technology initiativesand solutions with automation being the primary focus, thescenario today is very different.Today, when a technologysolution is being designed for an industry, input is gatherednot just from the CIO’s desk, but also from various businessheads.There is a greater emphasis on business and functionsproviding key requirements based on demand of the hour.This new ability to turn capital IT spending into a predictablypaced operational expenditure line in the budget has certainlymade a difference.34Forward-looking CIOs are witnessinga shift in their roles from being infrastructure providers tobeing service providers and strategists.The role of a CIOhas undergone major change, wherein they now superviseoperating expenditures, not capital expenditures.This has ledto the CIO being perceived and valued as a strategist at theboard level rather than just a technology enabler. Similarly,role of business heads has also undergone a paradigmshift. From being a leader of their business unit, they nowact as partner, having major say in IT solution selection &implementations.In this era where disruptive technologies play a major rolein shaping customer expectations and experiences, it is theresponsibility of the CIO to make business heads awareof the options (solutions / platforms) that are available.Businesses need to define their requirements clearly andtheir expectations from the solutions / platforms and providethe same to the vendors.The technology solution purchase decision process shownabove, illustrates the role of CIO and business heads in thesame and how the impact of influencing channels on theprocess is critical.34 “How the Cloud Changes the CIO-CFO Conversation”, (MaryfranJohnson,June 14, 2011)Role of CIO and Business Heads in solution selectionSource: Social media in UK financial services in 2011; Glue reply56 | Six converging technology trends
  • 59. Shift in prioritiesGlobal businesses in this age of digital marketing and multiple web channels perceive informationtechnology as the differentiators for success. IT plays an even more pivotal role as business begins toadapt to what is being coined “the new normal” as it refers to customer experience management andevolution of the social customer.The challenges that business faces in the new competitive landscape ofthe millennium are diverse and CIOs need to adapt to these changes fast to ensure that the organizationdoesn’t lose its place in the race for survival.35Cloud, big data, analytics, social media and other disruptive technologies can offer huge opportunitiesfor business heads and CIOs to help their organizations collaborate to work better, smarter and faster.Growing market dynamism coupled with continuous new technology upgrades has also led to a shiftin decision making from the CIO to the business heads, especially CMO, considering that marketingfunction is one of the largest spenders on IT.36The figure above illustrates the key business and technology goals for a firm and how the decision makinghas witnessed a significant shift with time from the CIO to the business heads’ desk.While earlier thetechnology vendors looked up to the CIO’s as the final authority; today, the final decision making lies withthe business heads, while CIO acts as a key decision maker and strategy enabler for the firm.35 “The Business Software Decision Power Shift”, Aug 2011, Social MediaToday36 “The Cloud : Changing the Business Ecosystem”, (KPMG, 2011)Shift in the Role of CIO & CMO / CFOSource: KPMG in India AnalysisSix converging technology trends | 57
  • 60. The changing demand of the consumers and the attempt ofindustries in satisfying the same have increased pressureson IT vendors. Platforms and solution offerings are evolvingnot just from a technology standpoint but also from anoffering and outreach perspective.While earlier thesolutions and platforms were developed mainly withautomation as the agenda, today it is imperative forthe industry to cover all the consumer touch points,gather data from multiple channels, process thesame and analyze the findings in a format that canadd provide value to the industry stakeholders;going forward, the exponential rise in data volumesizes shall strengthen the case for greateradoption of cloud. Every industry needs to beconnected with its customers while they areon the go.This need shall witness the rise ofmobility as a result of the smart-phone andtablet boom worldwide.Impact on IT vendors58 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 61. As technology becomes more central in people’s lives, consumer technologies have beensteadily entering the workplace and increasingly blurring the lines between home and work.This “Consumerization of IT” is increasing playing an important role in enhancing productivity,agility, job satisfaction and workforce retention in the enterprise.With the proliferation ofemployee owned devices, ubiquitous information access and the growing influence of CXOs intechnology decisions, CIOs need to strike a balance between user expectations and enterpriserequirements & institutionalize governance to secure business information while enhancingefficiencies. I believe there are five focus areas every business must evaluate:• Establish policies for security and manageability of these devices, including minimumqualifying criteria to become a part of the corporate network. Policies need to be aligned tothe user or the role rather than to the device.• Encourage technologies that have a defined roadmap and backward compatibility to improvesupportability.• Embrace the cloud:Your employees are already using it as ‘consumers’. Its time you enableyour applications as services rendered from the cloud.• Educate and empower business decision makers on incorporating technology requirements intheir initiatives to derive maximum business value.• Build a unified application development and delivery strategy that makes it easy to design anddevelop applications that secure data being shared, yet deliver it in a way that respects deviceform-factors and purpose.The consumerization of IT is an important transformational force, and organizations shouldembrace it for the benefit of both the users and the enterprise.Bhaskar PramanikChairman, Microsoft IndiaWay forward for IT vendorsSource: KPMG in India AnalysisSix converging technology trends | 59© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 62. Shift in offerings by vendorsIt is critical for IT vendors to bring about changes in theirofferings and solutions to cater to this dynamic marketplace.The key focus needs to be on better customer experienceand 24x7 connectivity with the customer through channelsand touch points. Businesses worldwide have moved tothe online business models. IT vendors need to build strongbusiness models with focus at the end state.There needsto be a supportive ecosystem for the new platforms andsolutions incorporating the disruptive technologies in aseamless manner. Evolution needs to take place and vendorsneed to think ahead of the current times to ensure that theirsolutions support industry players to be ahead of the curve atall times.Implication for indian IT-BPO services providersDigital Consumerism as a trend is playing with the consumermindsets, patterns of purchase and decision making.Toclaim the larger wallet share of the customer in the future,organizations needs to cater to this new buying pattern.IT-ITeS vendors need to re-examine their business goals andstrategy and ensure customer touch-points and disruptivetechnologies form the key inputs for solution and platformdevelopment.37Digital consumers have major impact on organizationsbusiness processes.This compels organizations to re-lookat company processes, delivery mechanisms and mediumsof marketing and communication.While in the past, thetraditional means of communication and channels wereunable to capture how the customer thought, decided andacted upon his decision; the newer technologies such a BigData, social media, mobility and augmented reality helpthe customer take a more informed decision and alloworganizations to capture the customer feedback.This formsa vital input for future development strategies and paves thepath for growth.Going forward, the demand forecasts predict high demandfor leveraging structured and unstructured analytics,facilitating an active interface between enterprises and theirconsumers and by formulating new innovation platforms.To cater to the ever-changing demands and expectationsof the digital consumers, IT-ITeS vendors need to provideappropriate and bespoke solutions and platforms to the clientorganizations.38Vendors need to identify the budget allocation at anorganization level on core platforms and disruptivetechnologies in silos and in tandem. Based on the analysis ofthe need of the industry for a certain disruptive technologies,the IT players need to take a call on whether they wouldlike to bridge the gap by providing an all inclusive solutionplatform that caters to the end to end need of the customeror would they look at alliances/ partnerships and mergersas the way forward. Based on the propensity to spend andwillingness to alter their bouquet of service offerings, thevendors need to decide on the next steps.Digital Consumerism is here to stay and it is not possiblefor any vendor to be oblivious of the same.The next decadebrings with it a plethora of opportunities aiming at customerretention and low IT solution cost for an all-encompassingplatform addressing the industry as a whole.To enjoy thefirst mover advantage, vendors need to work towards a longterm horizon wherein their strategies and solutions are notlimited by the myopic challenges faced by the client industrytoday, but a more long-term, futuristic solution catering to thedemands that might rise going forward.37 “Digital Consumerism”, Infosys (Sept.2011)38 “The Global InformationTechnology Report 2012: Living in a Hyper-connectedWorld”,(INSEAD, 2012)60 | Six converging technology trendsZensar has been a leader in enabling clientsto adopt Cloud Social Media and Mobilityinto their enterprise IT architecture.Themove towards cloud is inexorable and weare there in the middle of the action withmany of our clients. Mobility extensionsare also happening at every touch pointwithin and outside the enterprise andmany of our clients, particularly retailersare implementing a multi-channel strategyand incorporating social media into theirmarketing programs.Ganesh NatarajanVice Chairman and CEO, ZensarTechnologies© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 63. Six converging technology trends | 61© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 64. The brisk pace of technology advancements, innovationsand an even faster adaptation of digitization, has catapultedthe industry in an era led by convergence and connectivity.Industries are making big bets on social media, cloud, bigdata, mobility, embedded systems and augmented reality.Focus is shifting from providing support services tostrategic services, from offering business improvementsto offering differentiation through innovation.Companies across the globe are looking at ways toleverage these technologies to – introduce change,build competitive structure and propel the industryin new phases of growth. Coca Cola, for example,spent 20 percent of its annual advertising budgeton social media in 2011.39On the other hand, banksincreasingly are seeing cloud computing as waysto bring in new capabilities to market quickly witha variable cost structure.There is a paradigm shiftin company’s strategies to stay relevant andefficient to the end consumer.Roadmap39 India goes Digital Report 2011- Avendus62 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 65. Transformation in the buyer and end consumer landscapeSource: KPMG in India AnalysisIT-BPO firms are deploying structured approach to gauge theimplication of these new developments on customers andmarket through various channels:LeadershipTeam: Firms interact with multilateral bodies toget a perspective on thisBusiness Units: Industry/domain forums; throughvarious ‘Customer Meets’ across geographiesCorporateTechnology Organization: R&D connects withacademic research, emerging technology companies andinnovation networkMarketing Sources: Consumer studies on emergingtechnologies and inputs from analystsSix converging technology trends | 63© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 66. What is driving the transformation in the technology buyer landscapeRoadmap for the IT-BPO firms to tap the new growth opportunitiesSource: KPMG in India AnalysisSource: KPMG in India AnalysisSource: KPMG in India AnalysisIT-BPO firms are focusing on reviewing their own capabilities against changingclient needs and adding new capabilities either through organic or inorganicinvestments. Firms are successfully combining various strategies to drive rapidtransformation in – implementation, service delivery and support.Organic capability enhancementIT-BPO firms are constantly looking at avenues for buildingcapabilities. As a part of the strategy, firms identify the gapsin the portfolio across business units. Based on the optimal fitin the strategy, firms build – platforms and extended modulesaround verticals, horizontals or products.Several IT-BPO firms are investing in building acomprehensive, integrated platform of services to capturethe entire value chain of IT-BPO requirements and alsoincorporate extended capabilities around the disruptivetrends.This provision the firms to present a compelling valueproposition for enterprises/clients across verticals, makingthem a one-stop shop for many key clients, significantlydeepening the relationship and boosting the wallet share.Advantages of organic capability building:• Leverage internal expertise and sustained level ofoperational excellence• Stickiness in the business through cross-sell and up-sell• Enable collaboration across various enterprise functionsthrough cross-pollination• Reduce the risk of lack of integration• Innovation and Intellectual Property linked growth64 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 67. Integrating core platforms with extended capabilitiesSource: KPMG in India AnalysisTCS - iON,TCS Small and Medium Business Solutions 40DisruptiveTechnology: CloudDescription: iON - a next generation “IT-as-a-Service”business model that uses emerging technologies like cloudcomputing and virtualization to create a holistic, fit-for-purpose solution stack for Small and Medium Businesses(SMB) integrating hardware, network, software and services.iON services verticals, common business applications,common office applications and niche verticals.Pricing: iON pricing is structured on a pay- per-user basisdepending on industry verticalValue Proposition: Pre-integrated platform with standardcapabilities; Embedded business process;On-demand model;Compliance and Cost efficiencyOracle41DisruptiveTechnology: Social Media, Cloud, Big Data andEmbedded SystemsDescription: Oracle has built Social RelationshipManagement Solution. It is a cloud-based enterprisesocial media offering.These solutions enable companiesto leverage social interactions that help build strongerrelationships with customers, deliver consistent and relevantbrand experiences across touch points, and better engageand connect employees and partners.Pricing: Oracle offers its product on a license based modelValue Proposition: Provide superiorTotal Cost of Ownership;deliver next generation cloud applications; help clientsinnovate faster as they adapt to a world of mobile devices,cloud computing and huge amounts of dataIndustry examples for organic capability enhancementInfosys - Cloud Ecosystem Hub42DisruptiveTechnology: CloudDescription:To unify the complex Cloud environment andbring to life the set of offerings from strategy throughsustenance, Infosys has developed a solution calledCloud Ecosystem Hub.The Infosys Cloud Ecosystem Hubhelps enterprises build and manage a unified hybrid cloudenvironment. It helps clients to rapidly create, adopt, andgovern cloud services across their ecosystem throughofferings such as Professional services for cloud and Industryleading business platforms for cloud.Pricing: It is available in conjunction with the service offerings.The solution is priced and licensed either based on the IP orby transaction outcomes.Value Proposition: Cost saving, accelerated time to market,improved productivity and end to end solution integratingplatform, application and infrastructure.TechMahindra43DisruptiveTechnology: MobilityDescription: Saral Rozgar is a mobile service seamlesslyconnecting Blue CollaredWorkers (like drivers, Masons, etc)to jobs of their choice. Saral Rozgar addresses the gap thatexists today – creation of an organized market place for theblue-collared segment. It provides multi-language supportand is a scalable platform.Pricing:The service is marginally priced for Job Seekers atRs/-1 per day.Value Proposition: Rural masses can connect to the relevantjob opportunities directly through their mobile phones fromtheir villages itself. Saral Rozgar helps them bypass theirliteracy and awareness barrier and get employment withoutbeing exploited by the touts.40 http://www.tcsion.com/dotcom/TCSSMB/tcs_smb.html, Industry research & Industry interviews41 "Oracle Unveils Oracle Social Relationship Management Suite at Oracle OpenWorld", October 2012, Industry interviews42 http://www.infosys.com/newsroom/features/pages/cloud-ecosystem-hub.aspx, Industry interviews43 Industry research & Industry interviewsSix converging technology trends | 65© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 68. Adding capabilities through alliance or partnershipsSource: KPMG in India AnalysisInorganic capability enhancementAlliancesTo meet the needs of fast evolving customer landscapeit is imminent for IT-BPO firms to accelerate the processof transforming the solution offerings. Firms are forgingalliances across geographies/verticals/horizontals to speedup the process of deployment of new capabilities around –social media, cloud, big data and mobility. Several largeIT-BPO firms on an average have 100-150 alliances to providetheir clients specialized skills and tailored solutions.44Alliances are a flexible alternative to building organically, andbring synergy and decades of industry expertise together.The joint solutions offered leverage the best software,hardware and services. It provides quick and measurablereturn on investment by improving productivity and reducingcosts.Industry examplesCognizantTechnology Solution - Monetise45Solution: Mobile MoneyHow it works:The alliance combines Cognizant’s financialservices and mobility expertise with Monetise’s mobilemoney platform.This helps the clients leverage aninteroperable platform instead of solutions from disparateproducts and mobile operating systems.Value Proposition: LowerTCO and newer revenue streams forthe clientsMicrosoft - EMC46Solution: Cloud, Storage and Big dataHow it works: Microsoft software including Microsoft Office,Microsoft Unified Communication & Exchange Server, andWindows Desktop and Server are optimized on EMC storagesystems.This helps the clients leverage the power of Cloudand Big data.Value Proposition: Business process, core, and applicationplatform information optimization.Accenture – Salesforce.com47Solution: CRM and CloudHow it works: Accenture and Saleforce.com synergy providesa novel approach for CRM that helps organizations offertimely identification and support of service issues, whethercustomers choose to interact via phone, email, theWeb oreven via popular social networking platforms such asTwitterand Facebook.Value Proposition: Improved customer satisfaction; simplifiedimplementation; swift project delivery.Advantages of alliances:• Decrease time to market• Optimize IT efficiency and offer the best in classservice/solution• Decrease operational and management costs• Drive business growth• Extend ROI on existing IT investment44 “Source: KPMG Analysis based on the number of alliances ofTop 5Technology companies Globally45 Cognizant CompanyWebsite; “Cognizant and Monitise Form Mobile Money Alliance to Help GlobalFinancial Institutions Capitalize on the Mobile Money Opportunity”, Oct 2012, Cognizant46 Microsoft website; Alliance brochure47 “Service Alliance – Salesforce.com”Source: KPMG in India Analysis66 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 69. Evolution of acquisitions over the last decadeSource: KPMG in India AnalysisAcquisitionsThrough acquisitions, IT-BPO firms seek to strengthen theirproduct offerings, accelerate innovation, meet customerdemand more rapidly, and expand partner opportunities.In an attempt to achieve financial return objectives andcreate value; focus on- innovation, non-linear and disruptivetechnology has now become an integral part of firm’sphilosophies.Based on the trends and drivers fuelling acquisitions, it canbe segmented in three categories: market acceleration,market expansion and new market entry.The nature of the acquisitions over the last decade indicatesthe way industry has evolved. Companies are defining trends,ready to bear the risk and transforming the business model.Advantages of acquisitions:• Attain Critical mass• Faster on-boarding of customers• Retain existing clients with innovative solutions &compelling portfolio• Capture the delta opportunity created by convergenceof disruptive technologies• Get “seat on a table” for end to end deals whichdemand a complete functional portfolioSource: KPMG in India AnalysisSix converging technology trends | 67© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 70. 48 “SAP Completes Acquisition of SuccessFactors, Inc.”, Feb 2012, SAP; “Top 10 Reasons for SAPAcquisition from SuccessFactors CEO Lars Dalgaard”, Aug 2011, Forbes.com49 “Accenture Strengthens Digital Marketing CapabilitiesWith Acquisition of avVentaWorldwide”, Oct2012, Accenture50 HP website51 “IBM Makes Big Data Deal forVivisimo and Supports Cloudera Hadoop”, Apr 2012,Ventana Research;“IBM Advances Big Data Analytics with Acquisition ofVivisimo”, Apr 2012, IBMIndustry examplesSAP - SuccessFactors48Capability: CloudTarget firm portfolio: SuccessFactors is a cloud-based Business ExecutionSoftware company. It offers solution around Human Capital Management (HCM)like - business alignment, team execution, people performance and learningmanagement solutions.The solutions are scalable and support 60 countries.SAP’s gain: Cloud capability; Large customer base; Application suite in 35languages.Accenture - avVentaWorldwide49Capability: Digital MarketingTarget firm portfolio: avVentaWorldwide offers digital production servicesto leading brands and agencies across multiple industries. It strengthenedAccenture’s services/solutions for the CMO.The joint solution helps the clientmanage content from its initial creation to distribution.Accenture’s gain: Full range of services (Interactive marketing); Cost effective &quick solutions for the CMOs.HP - Palm50Capability: MobilityTarget firm portfolio: Palm webOS platform and Palm Synergy provides intuitiveand powerful mobile experiences.This enables the consumers and businesses toconnect to their information in more useful and usable ways.The combination ofHP’s with Palm’s webOS platform has enhanced HP’s ability to participate moreaggressively in the fast-growing, highly profitable Smartphone and connectedmobile device markets.HP’s gain: Expansion of HP’s mobile strategy; IP assets.IBM-Vivisimo51Capability: Big DataTarget firm portfolio:Vivisimo provides software to capture and deliver qualityinformation across the broadest range of data sources.The software automatesthe discovery of data and helps employees navigate it with a single view across theenterprise thus providing valuable insight. IBM is leveragingVivisimo capabilitiesto offer a solution, with ability to explore big data stored in - internal, external andInternet-based sources.IBM’s gain: Accelerate big data and smart analytics initiatives; Capability in – datanavigation and visualization.68 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 71. Six converging technology trends | 69© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 72. Marketing to consumers has undergone a significant change.Consumer demographics have changed and so have thepsychographics. Last couple of decades has witnessed anexplosion of the ‘new middle class’ in emerging marketswhich is expected to mirror the consumption patternof developed markets which are technologically moreadvanced. Many developing markets are witnessing agrowth in birth rate and decline in death rate leading togrowth of young population, while developed marketsare witnessing declining births and aging population.With these changes in the demographics, thepsychographics and spending pattern of consumeris also changing.Today the consumers are active,informed and assertive of the choices they make.Consumer mind-sets, their patterns of purchaseand their decision making is being redefined bythis new digital wave.Conclusion70 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 73. 52 “Digital Consumers”, Infosys,2012Digitally active consumers have embraced the Internet,telecom, media, and social space; changing the wayconsumers communicate, transact and make purchasedecisions.This is leading to the birth of an era of digitalconsumerism.There is a major shift in consumerism whereinthe consumer today demands solutions that are unique andcustomized and are created taking their participation andinputs into account.52With such significant changes taking place in the marketplace,enterprises need to update themselves in order to stayrelevant. Giving digital channels to consumers, providingopportunities to network within the consumer community,enhancing their buying experience, offering personalizedservices & products, enabling self-service mechanisms, andengaging consumers in the co-creation innovation processare no more value added services but have become theneed of the hour. Enterprises will have to go wherever thecustomer is going.Today’s customer is using a number oftouch-points, be it mobile, web, or a social media platform.Enterprises will have to follow their customers on everymedia and ensure that they have a positive experience atevery point. Organizations must realize the potential of thistrend, broaden their outlook, and institute necessary culturaland organizational changes to become truly digital consumer-centric.As the enterprise landscape changes, IT-ITeS vendors andservice providers will also have to adapt to this new wave ofconsumers to stay ahead. IT vendors will have to enable theirenterprise customers to stay prepared for these changingconsumer dynamics.There is a need for IT vendors toworks around technologies such as cloud, big data, mobility,embedded systems, social media and augmented reality toprovide the new-age solutions to their enterprise customers.Going forward, organisations need to leverage structured andunstructured analytics, ensure active enterprise-consumerinterfaces, and decide on innovative platforms to reach outto the Digital Consumer. KPMG in India estimates that thefuture of IT-ITeS players in India and globally is dependent onhow fast they adapt to these changes in customer demand.There needs to be a strategic shift in solution offerings andsupportive ecosystem going forward wherein vendorsprovide not just the standard core industry platforms, but alsothink ahead of the curve.The need to bridge the gap betweensolutions available and the customer expectations is greaterthan ever before. ‘Co-created bespoke solutions’ are away forward for vendors in this market for survival.Thesesolutions build not just on technology but on inputs fromconsumers and are backed by the disruptive technologies oftoday and the future.Through this report, we have tried to research and analyze thekey disruptive technologies such as Big Data, Mobility, SocialMedia, Embedded Systems, Cloud and Augmented Reality;and their effect on key industry verticals such as FinancialServices, Retail, Healthcare, Public Sector / Government andTelecommunication.The table below illustrates the level ofdisruption that we perceive that these technologies may haveon the respective sectors.KPMG in India interviewed with over 20 leading IT-ITeSvendor organizations and CIO’s and other C-level executivesat client organizations.Through our discussion we havewitnessed a significant shift in the requirement generationfor solution creation, from the CIO’s desk to the businessheads (including CMO’s and CFO’s desk).This change inrequirement generation is felt significantly by vendors.Anumber of leading vendors predicted a change in theirstrategies and solution development methodologies goingforward in the near future.While some vendors felt thatdeveloping capabilities organically, to cater to the changingdemands of the customers due to exposure to disruptivetechnologies, was the best way forward; there was a parallelopinion wherein vendors favored partnerships/ alliancesor mergers as the way forward.While both the optionsare viable; it is based on the vendor’s appetite to spend onsolutions and platform development and their strategies forgrowth.The future holds a plethora of opportunities for IT-ITeSvendors.They need to realize the potential that the futurewithholds across verticals and work towards creatingsolutions that service the digital consumer optimally andcater to the disruptive technologies that have the potential toreshape the industry going forward.Source: KPMG in India analysisKey disruptive technologies & their effect on industriesIndustryVerticalEffect of DisruptiveTechnologies in the futureBig Data Mobility Social Media CloudEmbededSystemsAugmentedRealityFinancial services 4 3 2 3 1 1Retail 4 4 4 4 2 2Healthcare 4 4 1 4 1 1Public sector/Government4 2 1 2 1 1Telecommunication 4 4 4 4 2 1Six converging technology trends | 714 Very high 5 High 6 Medium 7 Low 0 Absent© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 74. About KPMG in IndiaKPMG is a global network of professional firms providing Audit,Tax andAdvisory services.We operate in 156 countries and have 152,000 peopleworking in member firms around the world.The independent memberfirms of the KPMG network are affiliated with KPMG International, aSwiss cooperative. Each KPMG firm is a legally distinct and separateentity and describes itself as such.KPMG in India was established in September 1993.The firmsin India have access to more than 4500 Indian and expatriateprofessionals, many of whom are internationally trained. Asmembers of a cohesive business unit they respond to a clientservice environment by leveraging the resources of a globalnetwork of firms, providing detailed knowledge of local laws,regulations, markets and competition. KPMG has offices inIndia in Mumbai, Delhi, Bangalore, Chennai, Chandigarh,Hyderabad, Kolkata, Pune and Kochi.We strive to providerapid, performance-based, industry-focused and technology-enabled services, which reflect a shared knowledge ofglobal and local industries and our experience of theIndian business environment.72 | Six converging technology trends© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 75. AcknowledgementThis document has been released at India Leadership Forum 2013organized by NASSCOM.The report would not have been possible without thecommitment and contribution of the following individuals:Concept and DirectionPradeep Udhas – KPMG in IndiaSaurabh Jha – KPMG in IndiaSpecial thanks to Mr. Rajiv Prakash for his advice and help.KPMG Report DevelopmentTeamSidharthTewari, Shashank Shetty, Shireen Khan,Aditya Shangloo,Ankit Gupta,PriyankaAgarwal and SandeepYadav.Six converging technology trends | 73© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 76. kpmg.com/inThe information contained herein is of a general nature and is not intended to address the circumstances of any particular individualor entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information isaccurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such informationwithout appropriate professional advice after a thorough examination of the particular situation.© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliatedwith KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.Printed in India.NASSCOM ContactsAchyuta GhoshHead-ResearchT: +91 11 2301 0199E: research@nasscom.inKPMG in India contactsPradeep UdhasPartner and HeadMarketsT: +91 22 3090 2040E: pudhas@kpmg.comKumar ParakalaHead of Management Consultng -ITAdvisory, KPMG in EMAChief Operating Officer,Advisory,KPMG in IndiaT: +91 80 3065 4600E: kumar@kpmg.comSaurabh JhaAssociate DirectorIT-BPOM: +91 99871 09550E: saurabhjha@kpmg.com