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Big benefits expected from digital

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Companies in Europe, Middle East and Africa expect IT optimisation and competitive advantage to be the main benefits of digital transformation, according to a new report from F5 Networks, the 2018 State of Application Delivery (SOAD) report.

Now in its fourth year, the report shows how the growing influence of multi-cloud deployments are helping EMEA organisations better optimise apps, automate and embrace digital transformation. It also highlights the most up-to-date operational and security challenges associated with this shift.

“More than ever before, EMEA is heavily focused on building the foundation necessary for application-driven digital transformation. As a result, many are moving toward multi-cloud environments that will enable them to pioneer platforms for competitive differentiation and innovation in the digital economy,” said Martin Walshaw, senior systems engineer at F5.

Digital transformation inspires new architectures and IT optimisation initiatives

According to SOAD 2018, IT optimisation is the number one benefit expected from digital transformation efforts in EMEA (69 percent of respondents). Competitive advantage came second, with 59 percent, and business process optimisation was a close third, with 46 percent.

Realising these benefits entail a combination of cloud, new app architectures, and IT automation.

Over half (57 percent) of respondents indicated they are employing automation and orchestration of IT because of digital transformation. Almost half (48 percent) are moving to deliver apps from a public cloud, and 48 percent are changing how they develop those applications. Forty-three percent said digital transformation has prompted the exploration of new app architectures involving containers and micro-services.

The multi-cloud challenge

According to SOAD 2018, 54 percent of respondents determine which cloud is best for each application on a case-by-case basis. This is fuelling an uptick in multi-cloud environments, with 75 percent of respondents claiming to use multiple cloud providers.

As ever, security remains a key concern in the cloud. In EMEA, applying consistent security policies across all company applications was deemed to be the “most challenging or frustrating” aspect of managing multi-cloud environments (42 percent). Thirty-nine percent believe the biggest challenge is protecting applications from existing and emerging threats. SOAD 2018 concludes that this has led to an increase in organisations deploying Web Application Firewalls (WAFs), with 61 percent now using the technology to protect their applications.

“As applications drive business, organisations make IT decisions based on the needs of the app, leading many to leverage multiple cloud platforms,” explained Walshaw.

“While multi-cloud environments offer many benefits in terms of speed, scale and flexibility, challenges include providing consistent security across clouds, protecting apps from a variety of threats, and gaining visibility into application health.”

Application services are the gateways to the future

On average, SOAD reported that organisations in EMEA leverage 15 different application services to keep their apps fast, safe and available.

Security is still regarded as the most important application service in EMEA (44 percent, compared to 39 percent globally). Interestingly, as IT organisations prepare for the digital economy, gateway services are starting to emerge as a ‘must-have’.  The top gateway services in EMEA relate to the Internet of Things (34 percent), SDN (32 percent), API (32 percent) and HTTP/2 (28 percent).

Key app service security challenges include the increasing sophistication of attacks (42 percent), employees underestimating the impact of not following security policies (41 percent), the increasing complexity of security solutions (29 percent), mobile app security (35 percent) and lack of IT security skills (28 percent).

“By embracing modern application architectures, cloud models and a wide diversity of devices, EMEA organisations are striving to capitalise on the digital economy,” said Walshaw.

“The deployment plans for gateways clearly show that respondents are putting in place the technologies and tools they need to confidently move forward into an increasingly digital future.”

Automation and orchestration: Full steam ahead

Across EMEA, IT departments are embracing programmability and standardisation within their automation and orchestration environments. Three in four (75 percent) of respondents declare the use of automation in the operation of IT infrastructure to be “somewhat” or “very” important. The majority (72 percent) are using automation to realise leaner IT with the goal of reducing OpEx, while nearly half (48 percent) are looking to scale to meet demand.

“With pressure from Dev and Ops mounting, thanks to increasing use of containers and adoption of cloud, traditional IT is embracing programmability to enable the automation and orchestration required to succeed,” Walshaw added.

“However, organisations seeking to optimise IT through automation and orchestration need to standardise before speeding ahead.”

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VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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