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Modernized hybrid cloud integration is the key to unlocking the business value of digital transformation

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Modernized hybrid cloud integration is the key to unlocking the business value of digital transformation

Use of APIs[i] and hybrid cloud integration can increase revenue growth and create new revenue streams 

Businesses are pursuing digital transformation to achieve a step change in their speed, agility, and ability to innovate. Realizing the unique offerings of digital transformation rests on an organization’s ability to access data at greater speed and in greater breadth. A new report released today from Capgemini entitled “Unlocking the hybrid integration dividend: How to transform your business with hybrid integration and APIs” reveals how modernized, hybrid integration and microservices-based Application Programming Interfaces (APIs) are the means to empower digital transformation and maximize capabilities to benefit from the API economy.

 Clear business advantages for “Integrators”[ii] over “Deliberators”[iii]

The global survey of 818 senior IT executives working in large organizations with revenues of over €500m, suggests that a mature API-driven hybrid integration strategy is a contributing factor to business growth.

According to the report, 49% of Integrators reported revenue growth of five percent or more over the past three years, compared with just 23% of Deliberators. Furthermore, 41% of Integrators reduced the time needed to upgrade existing products by 50% or more (compared to 33% of Deliberators), and nearly half of the Integrator group (46%) aims to engage in the API economy to create new revenue streams (vs. 25% of Deliberators).

With the strong architectural foundation provided by cloud-based integration tools, APIs can do more than just act as instruments to unlock data. The findings reveal that Integrators are far more bullish about their ability to innovate, with 68% saying they are able to develop new products rapidly and bring them to market quickly (vs. 25% of Deliberators) with greater scalability, reliability and customization. Additionally, APIs can help improve the customer experience. 

Capgemini client T-Mobile, an American telecom operator runs over 300 APIs in the US. T-Mobile, a business with a long heritage in the US, has shaped a successful transformation journey by implementing microservices.

Chuck Knostman, Vice President for Strategy and Technology at T-Mobile says, “C-level executives now ask us all the time: ‘Do we have APIs for this?’ When that conversation is happening at that level, it’s a true sign of transformation to me.”

Complexity of hybrid IT estates remains the biggest barrier to hybrid integration

A hybrid integration approach involves the use of modern, cloud-based integration tools in combination with those on-premise, such as the enterprise service bus (ESB)[iv], to connect applications in different environments. The report found that 66% of surveyed firms use three or more cloud providers, with over three-quarters of their applications running in a private cloud or on-premise (or both). The traditional point-to-point integration approach used within monolithic systems will not be able to cope when hundreds of a company’s applications reside in several different environments.

Hybrid integration is a means of managing this complexity and ensuring that the firm’s technology infrastructure can deliver on business objectives. However, there is a consensus among the respondents interviewed to be cautious of the “piecemeal” approach to integration, and they agreed that companies should not attempt to rip and replace their legacy integration architecture in one fell swoop. On the other hand, the report concludes that it is necessary to take the appropriate steps at the right time, and combat the inertia in order to seize the hybrid integration opportunity effectively.

Building the right capabilities for hybrid integration

The first step to modernizing an organization’s integration capabilities is to identify the requirements based on its business goals and technology roadmap. Six in ten survey respondents say their organization has identified the existing and future integration requirements needed to support their business ambitions. The next step is developing a strategy aligned to the organization’s sights set on ultimately phasing out older integration tools and replacing them with cloud-based ones. Making the right choices based on selection criteria that support business objectives can ensure optimized TCO and greater ROI.

“In companies with multiple units and sites that have done things in different ways using different technologies, standardizing the integrations across the organization is imperative, but it requires a big planning effort even before you start making any changes,” said Charlie Li, Head of Cloud Services, North America, Capgemini. “APIs are controlled, they’re standardized and they’re secure. This allows companies to collaborate in a much bigger way than they have before.”

 To download a copy of the report, click here.

[i]APIs are a set of functions and procedures that allow the creation of applications which access the features or data of an operating system, application, or other service.

[ii]“Integrators” are defined as the most advanced group in the survey in terms of integration modernization, and account for 15% of the respondent firms. They meet the criteria of having developed a hybrid integration strategy; and cloud-based integration and/or microservices are “very prominent” in their integration approach.

[iii]“Deliberators” are respondent firms that do not meet the criteria of having developed a hybrid integration strategy, and account for 16% of the overall survey sample.

[iv]An “enterprise service bus (ESB)” implements a communication system between mutually interacting software applications in a service-oriented architecture (SOA).

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Foxconn chairman says expects “limited impact” from chip shortage on clients

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Foxconn chairman says expects "limited impact" from chip shortage on clients 1

TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.

“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd

“Therefore, the impact on these large customers is there, but limited,” he told reporters.

Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”

The global spread of COVID-19 has increased demand for laptops, gaming consoles, and other electronics. This caused chip manufacturers to reallocate capacity away from the automotive sector, which was expecting a steep downturn.

Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford Motor Co have cut output as chip capacity has shrunk.

Counterpoint Research says the shortage has extended to the smartphone sector, with application processors, display driver chips, and power management chips all facing a crunch.

However, the research firm predicts Apple will face a minimal impact, due to its large size and its suppliers’ tendency to prioritise it. Apple is Foxconn’s largest customer.

Foxconn is looking at other areas for growth, including in electric vehicles (EVs), and Liu said their EV development platform MIH now had 736 partner companies participating.

He expected it would have two or three models to show by the fourth quarter, though did not expect EVs to make an obvious contribution to company earnings until 2023.

Liu also said the company was still looking for semiconductor fab purchase opportunities in Southeast Asia after not winning a bid to take over a stake in Malaysia-based 8-inch foundry house Silterra.

(Reporting by Ben Blanchard and Jeanny Kao; Writing by Josh Horwitz; Editing by William Mallard and Ana Nicolaci da Costa)

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EU seeks alliance with U.S. on climate change, tech rules

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EU seeks alliance with U.S. on climate change, tech rules 2

By Sabine Siebold and Kate Abnett

BERLIN (Reuters) – Europe and the United States should join forces in the fight against climate change and agree on a new framework for the digital market, limiting the power of big tech companies, European Union chief executive Ursula von der Leyen said.

“I am sure: A shared transatlantic commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark,” the president of the European Commission said in a speech at the virtual Munich Security Conference on Friday.

“Together, we could create a digital economy rulebook that is valid worldwide: a set of rules based on our values, human rights and pluralism, inclusion and the protection of privacy.”

The EU has pledged to cut its net greenhouse gas emissions to zero by 2050, while President Joe Biden has committed the United States to become a “net zero economy” by 2050.

Scientists say the world must reach net zero emissions by 2050 to limit global temperature increases to 1.5 degrees above pre-industrial times and avert the most catastrophic impacts of climate change.

The hope is that a transatlantic alliance could help persuade large emitters who have yet to commit to this timeline – including China, which is aiming for carbon neutrality by 2060, and India.

“The United States is our natural partner for global leadership on climate change,” von der Leyen said.

She called the Jan. 6 storming of the U.S. Capitol a turning point for the discussion on the impact social media has on democracies.

“Of course, imposing democratic limits on the uncontrolled power of big tech companies alone will not stop political violence,” von der Leyen said. “But it is an important step.”

She was referring to a draft set of rules unveiled in December which aims to rein in tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for work and social interactions.

They show the European Commission’s frustration with its antitrust cases against the tech giants, notably Alphabet Inc’s Google, which critics say have not addressed the problem.

But they also risk inflaming tensions with Washington, already irked by Brussels’ attempts to tax U.S. tech firms more.

Von der Leyen said Facebook’s decision on a news blackout on Thursday in response to a forthcoming Australian law requiring it and Google to share revenue from news underscored the importance of a global approach to dealing with tech giants.

(Additional reporting by Foo Yun Chee; editing by Robin Emmott and Nick Macfie; editing by Jonathan Oatis)

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Packaged food giants push direct online sales to gauge consumer tastes

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Packaged food giants push direct online sales to gauge consumer tastes 3

By Siddharth Cavale and Nivedita Balu

(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.

Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.

The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.

Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.

Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.

The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.

U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.

PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.

Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”

As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.

“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.

Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.

E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.

Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.

“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.

On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.

Consumers, however, may have to shell out more if they shop directly from brand websites.

Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.

Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.

“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”

Graphic: Direct online sales to cross $20 billion in 2021 – https://graphics.reuters.com/PACKAGEDFOODS-ECOMMERCE/rlgpdexngvo/chart.png

($1 = 0.7137 pounds)

(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton)

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