For the last several decades, organizations have been focused on creating solutions that allow them to reach the maximum number of customers with the minimum cost, with a focus on growing global, scalable operations. Cloud computing and reduced complexity in integrating services have enabled tech organizations to support the growing global ambitions of organizations. For example, organizations can have development teams in Estonia and network teams in the United States. However, as we move into the new decade, Forrester is identifying forces that will require organizations to rethink the one-size-fits-all model and move to an approach that shifts the balance to more local-specific services and delivery.
External Forces And Market Demands Are Testing The Benefits Of Global Scale
Even prior to the pandemic, global leaders had started to identify broader geopolitical threats, such as trade conflict, cyber threats, and protectionism, as risks to business. While there are still benefits to certain elements, such as global sourcing, firms are realizing the competitive advantage of tailoring offerings to local customer needs. Forrester calls this drive to create and deliver solutions that are tailored to specific customers, markets, or regions “hyperlocal.” The forces driving toward local solutions are:
- Increased restrictions resulting from protectionism. Brexit was the first battle cry of rising demands for nationalism and protectionism around goods and services. While protectionism introduces significant complexity for organizations, populism continues to be a growing political force across Europe and beyond, and political leaders are under growing pressure to introduce country-first economic policies.
- China’s relationship with the rest of the world. There will continue to be tensions in the US-China relationship that will be difficult to predict, particularly when it comes to availability and usage of technology, but the US is not the only country to have restricted China’s technology and trade. Australia was the first country to ban Huawei technology, and many others, including the US and the EU, have followed suit. Other Chinese companies are also potential targets, including DJI drones, Hikvision security products, and NUCTECH. While specific technology companies may be targets for regulation, trade disagreements will also impact technology supply chains, creating delays and uncertainty in sourcing.
- Increased regulatory requirements in managing data. The California Consumer Privacy Act and the General Data Protection Regulation were just the start of regulations that control how and where data can be used. The UK has already diverged from the EU standards after Brexit, and further regulations such as ePrivacy are on the horizon, meaning that organizations will have to come up with approaches for multiple regulatory requirements of data management.
- Localization of brand values. Organizations are rapidly realizing that customers want their brands to reflect their own values and interests, which vary across geographies and cultures. By using technology, including edge computing and more localized development teams and AI, organizations can tailor products and offerings to customers across unique geographies, gaining a competitive edge as they drive the virtuous cycle of delivering better products to their customers and, in turn, gaining greater insights about customer needs.
Technology Gets You Closer To The Customer And Employee Than Ever Before
Tech leaders can enable how businesses operate and provide local offerings by leveraging emerging technologies that are positioned to provide more scalability and more personalization and are more responsive to customer and employee needs.
- Evolving cloud-native technology platforms are making it easier to manage complex or differentiated services for different geographies. Kubernetes and other software containers enable technology providers to manage platforms that can run in any cloud provider, improving infrastructure efficiency, speeding up software development, and enabling organizations to pick different cloud solutions to suit different regions.
- Edge computing and Edge AI are providing more powerful insights and can take action more quickly, closer to the customer, leading to a highly personalized, high-value experience for the customer. Edge capabilities are increasingly targeting edge images, video, and voice recognition with enhanced intelligence, creating more powerful recommendations and outcomes.
- Moving the product development closer to the consumer is easier than ever before, resulting in faster and more responsive development. Low-code platforms empower citizen developers to make rapid changes in business apps in response to local market needs, while advances in cloud-native technology management enable more local product teams to easily tailor products and AI specific to regional needs.
Hyperlocal delivery is going to be a challenge for all leaders, as the market demands increasingly local offerings. The most successful organizations will be the ones that manage to find the right balance in their operations and offerings that allows them to leverage efficiencies of global scale, while delivering customer-centric, personalized products. Technology leaders will be key partners as they utilize emerging technologies and operating model practices that drive adaptiveness in the rapidly changing market landscape. Stay tuned for our upcoming report on hyperlocal, where we will dive deeper into this emerging opportunity.