Executive Insights for Supplier Intelligence

The FAO industry is experiencing a significant transformation, marked by an increasing emphasis on specialized capabilities to meet clients’ evolving needs. This reflects an increasing demand for  comprehensive solutions that extend beyond traditional outsourcing, encompassing technology, advanced analytics, strategic consulting  and industry-specific expertise. In response, FAO providers are developing diverse capabilities to enhance their service offerings. This strategic shift not only streamlines financial processes but also offers tailored solutions to address client’s specific challenges. By integrating specialized expertise and advanced tools, FAO providers are positioning themselves as essential partners in their clients’ journey toward operational excellence and strategic growth. This comprehensive approach ensures that providers can deliver value-added services, helping clients navigate complex financial landscapes and achieve their business objectives.

Artificial intelligence governance is a concern for many enterprises. In our recent ISG Market Lens study on generative AI, 39% of participants cited data privacy and security among the biggest inhibitors to adopting AI. Nearly a third (32%) identified performance and quality (e.g., erroneous results), and an equal amount (32%) mentioned legal risk.

There is a lesson to be learned for enterprises as they strive to make use of analytics and data to out-compete their rivals. Just as all 100-meter runners are fast, all enterprises strive to be data-driven. Making decisions based on data is not enough to be successful, however. The winners are those that can process and act upon data at the speed of business. This is easier said than done, given the overwhelming historical reliance on batch data processing. As I have previously stated, the execution of business events has always occurred in real time. Batch data processing is an artificial construct driven by the limitations of traditional data processing capabilities that require enterprises to process data minutes, hours or even days after an event. Processing and acting on data at the speed of business necessitates a change of approach by enterprises to make real-time data processing a central component of their analytics and data strategy, rather than an exception.

It is unfortunate that business-focused digital communications are sold under three different headings: Contact Center as a Service (CCaaS), Unified Communication as a Service (UCaaS) and Communication Platform as a Service (CPaaS). (And that just counts the cloud options—let us acknowledge the huge, continuing, installed base on premises.) These are terrible ways to describe complex, varied and overlapping offerings.

The latest ISG Buyers Guide for Cloud Computing Platforms uncovers the market evolution of regional and global cloud providers. Buyers Guides for Public Cloud Platforms, Private Cloud Platforms and Hybrid Cloud Platforms are part of the recent software provider evaluations. ISG Software Research defines Cloud Platforms as a software service for organizations to access virtualized IT resources via the internet on a pay-per-use basis. These resources include servers, data processing power, data storage, networking infrastructure, virtualization capabilities and more. Cloud platforms are an enterprise alternative to operating on-premises data centers and compute environments. However, not all cloud platforms are suitable for all enterprise use cases. Multiple capabilities remain underrepresented and will keep enterprises from accelerating the adoption of cloud-powered services and broader migration of workloads. This analyst perspective highlights opportunities for cloud service providers to better meet enterprise requirements in the coming years.

ERP systems have been the central nervous system of enterprises for more than three decades, handling business-critical process management and recordkeeping. While their basic outlines are unchanged, today’s systems are far more capable in their functional depth, adaptability, usability and manageability. Especially for cloud-based systems, they are far easier to maintain. Decades of refinement and focused development to support specific industries, and even specialized categories within these industries, have increased their utility while decreasing the total cost of ownership, especially in implementation expense and maintenance. Artificial intelligence (AI) is the latest supporting technology to increase the business value of the software. So, when considering replacing existing ERP software, it’s most important to understand and evaluate how a new system can add to the capabilities of the incumbent and how to manage the organizational change that will become possible and necessary with that change.

Compensation practices are currently experiencing a substantial transformation, driven by evolving workforce expectations and rapid technological innovation. This shift is fundamentally reshaping how organizations approach rewards and recognition for workers. Technologies like data analytics enable more precise and personalized compensation management strategies while also fostering greater transparency and equity in how performance is measured and rewarded. These changes reflect a broader effort to adapt compensation practices to meet the dynamic needs of today's workforce and maximize technology to optimize every aspect of rewards systems.

The U.S. retail sector is at a crossroads. Regulatory changes, evolving consumer expectations, and rapid technological advancements continue reshaping the marketplace.

This report summarizes ISG’s analysis of significant regional developments from 2023 through 2025. It offers actionable guidance for retail and consumer packaged goods (CPG) clients seeking technology and services to improve their ability to address critical challenges and operate the business profitably while exploring new ways to do business — and for new businesses entirely.

As competitive differentiation narrows, retailers scramble toward harnessing their data assets to offer improved and personalized customer interactions and stay ahead in the race. However, traditional retail analytics cannot fulfill this completely, and over-the-shelf products promise little to no differentiation. Hence, to thrive, retailers apply their understanding of challenges and business acumen to codevelop tailored AIbased analytics solutions with leading analytics providers to infuse the needed flexibility and ensure rapid responsiveness into their  planning, execution and customer processes.

Data breaches are costly. The average U.S. cybersecurity breach cost across the public and private sectors is $9.5 million per breach. U.S. government agencies are not exempt from this, despite the government spending substantial sums on cybersecurity. At the federal level, the budget for 2024 is projected at $12.7 billion. The largest allocation is for the Department of Homeland Security (DHS), with a budget of over $3 billion. The federal government funds the State and Local Cybersecurity Grant Program (SLCGP), which allocates funds to states. The budget for this program was $400 million in 2023. This amount is typically matched by state funding for cybersecurity projects, reflecting the high degree of spending required to allow agencies to stand still from a cybersecurity perspective.

As enterprises increasingly rely on cloud applications, remote workforces and interconnected systems, the complexity and sophistication of cyberthreats have escalated. This dynamic environment requires advanced security measures that go beyond traditional perimeter defenses. As cyberthreats continue to grow in  sophistication, the adoption of such cutting-edge security measures will be essential for maintaining a strong cybersecurity posture.

Spring and fall are conference seasons, and this spring I was fortunate to be invited to several software provider events that are part of my coverage of the Office of Revenue.

And while artificial intelligence (AI) and generative AI (GenAI) were front and center, there were other announcements where the focus was more on the potential changes that these technologies would enable within enterprises and their revenue teams.

The artificial intelligence and machine learning landscape was profoundly altered by the emergence of generative AI into the mainstream consciousness during 2023. The widespread availability of GenAI models and cloud services has lowered the barriers to individuals and enterprises engaging with AI for various use cases, including generating content, querying data, writing code, preparing data for analysis, documenting data pipelines and using software products more effectively.

Embracing artificial intelligence technologies opens doors for innovation and efficiency. Alongside these opportunities, however, come risks. Threat actors are keenly aware of the potential impact of AI systems and are actively exploring ways to manipulate them. In this Analyst Perspective, I explore the world of adversarial machine-learning threats and provide practical guidance for securing AI systems.

In 2023, several high-profile data breaches and cyberattacks strengthened and drove the growth of the U.S. cybersecurity market. Data breaches in 2023 catapulted to 3,205 compared to 1,802 in 2022, affecting over 353 million individuals with compromises, including data breaches, leakage and exposure. The healthcare sector remained the primary target, witnessing more than double the number of data breach incidents compared to 2022, followed closely by the financial services industry, which experienced 744 incidents and marked a substantial increase.

ISG research indicates that U.S. public sector organizations, including state, local and educational (SLED) agencies, are using colocation, managed hosting and hybrid cloud managed services 20 to 30 percent more than they were in 2020. This means that SLED agencies need more help than ever with private/hybrid cloud and data center environments.

The clinical trials landscape is undergoing a significant transformation with the rise of decentralized trial methodologies. A growing recognition of the limitations of traditional trial approaches, such as centralized site-based monitoring and patient visits, drives this shift. Decentralized trials offer a promising alternative by leveraging digital technologies to conduct certain trial activities remotely, including patient recruitment, consent, data collection and monitoring. This approach enhances patient convenience and participation and enables real-time data collection and analysis, leading to more efficient and cost-effective trials.

Enterprises are gradually recognizing the limitations and challenges of relying solely on public cloud services. As a result, they are shifting toward adopting private and hybrid cloud infrastructure solutions. Various factors, including concerns about data security, compliance requirements, performance optimization and the need for greater control over IT resources drive this transition. By embracing private and hybrid cloud environments, enterprises can enjoy the benefits of cloud computing while addressing specific operational, regulatory and security concerns more effectively. Therefore, ISG has observed that they are increasingly relying on hybrid cloud infrastructure, as it offers the required flexibility, scalability and agility along with the needed control over data residency, security and costs.

Today’s insurance industry is facing a tumultuous environment, which requires a paradigm shift in rating, quote, underwriting and bind, claims processing and settlement and policy servicing methodologies and practices. In order to achieve this, it is necessary to move away from legacy models by upgrading core systems and deploying advanced technologies that drive better outcomes and transparency. This will require a fundamental rethinking of the industry’s traditional insurance practices and processes and a commitment to modernizing systems and processes that have been in place for decades. By adopting these new approaches, insurers can better navigate the changing landscape, improve their risk management, acquire potential customers easily and cater to the existing policyholders’ fast-evolving and rapidly changing needs.

In the last four quarters amid the prevailing economic uncertainties, enterprises have been actively seeking ways to enhance the efficiency and cost-effectiveness of their IT investments. This has made it increasingly
hard for CTOs to justify IT spends. Enterprises are exploring strategies to streamline their IT expenditures, rationalize budgets and maximize returns on technology investments. This entails evaluating existing IT infrastructures, identifying optimization and cost reduction areas and adopting innovative approaches such as hybrid cloud computing, automation and outsourcing to achieve greater operational efficiency and financial resilience. They are also maximizing their investments in cloud resources through various methods such as FinOps by placing responsibility on the IT teams for cloud resource consumption.