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Forrester: accelerate your Digital Business

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The global pandemic caused by the COVID-19 virus changed our world in so many ways, seemingly overnight. People around the world stayed home for months (and many continue to do so now). Workers in every industry have been forced to figure out working remotely. Processes that were dependent on in-person physical or offline activities came to a grinding halt. The ability to operate digitally became not just a driver for economic success, but for societal success and even survival.

 

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Bart Manuel:
Hello and welcome, everybody. Today, we’re going to talk about how to build and accelerate your digital business. My name is Bart Manuel. I’m the founder of Dept. I’m really happy that today I’m joined by Ted Schadler. Ted is an industry analyst at Forrester. His research agenda focuses on platform business models, digital transformation, digital experience platforms and digital experience agencies. Ted, welcome.

Ted Schadler:
Thank you. It’s great to be here, Bart.

Bart Manuel:
Yeah. Thanks. I did discover that you invented the Forrester Wave Report. It was then called Forrester Tech Rankings. 

Ted Schadler:
Invent is a pretty big word. Sorry, go ahead.

Bart Manuel:
When was that? 

Ted Schadler:
Yeah, invent is a big word. There were lots of folks who made that thing come to life, including the person with the original idea, which actually was not me. But yeah, I was part of the team that launched it. We did it in 1998, launching in 1999.

Bart Manuel:
Wow. Yeah.

Ted Schadler:
Yeah. It was the first time anybody had really gone hands-on with products, and tried to figure out how they work and stack ranked them. It was quite interesting.

Bart Manuel:
Yeah, and it has been around ever since. It would be nice to take a look back at the first reports and see which of the predictions have held true throughout the times. Probably some of them did, maybe.

Ted Schadler:
We have some for sure.

Bart Manuel:
Yeah, okay. Today we have about half an hour. We’ll see how it goes, if there’s any Q&A. Anyone in the audience who wants to pose a question into the Q&A, please do so on your appropriate channel. Our moderators will try to pick it up and feed them to us, and we’ll see what we can do with it. Hopefully, we’ll get some interaction going. That would be great. I wanted to discuss a couple of topics with you today, Ted.

Bart Manuel:
Out of three topics, the first one would be that… A title of one of the reports that you recently made, just before summer I think it was, it was titled The Pandemic Recession Demands a Digital Response. I think we can all agree these days that literally the only certainty we have is uncertainty. I think most of us are watching corona numbers like we are watching the stock exchanges. The word recession might be even an understatement there.

Bart Manuel:
You state in that report, or you try to answer a couple of questions about how to adapt and grow. Businesses must get lean, go all-in on ecosystems and embrace agile skill. Let’s talk about what this all means, all this getting lean and agile, etcetera. First, what do you see now at the stage that businesses are in? Do they have the ability at all to adapt and grow right now, or are things much more dire? What is your view on where we are at right now?

Ted Schadler:
Yeah, no. Boy, that’s a great question. As you might imagine, I think all of us kind of jumped in and tried to figure out how to help the whole sector. The whole technology and digital sector, really I think from vendors and agencies and service providers, and research houses like ourselves, we just wanted to get in and problem solve. Whatever we could do. One of the things we did at Forrester, because we do research, is we got our heads together and we tried to figure out what was going on, before it was clear what was going on.

Ted Schadler:
Everybody knew that there was shock to the system, hospitality collapsed, retail stores. Society changed overnight, remote work. We went out and we did a bunch of research, and talked to a bunch of companies. Then we did a large-scale survey, actually. In the survey, we were able to get some data to validate a hypothesis, which is that some companies are really in survival mode. In fact, it’s about one in seven companies, one in eight companies are in survival mode.

Bart Manuel:
Are those companies also the companies that are being kept afloat by the different forms of government subsidies, et cetera?

Ted Schadler:
Yeah, there’s a lot of contributions to their success or survival, so far. One of which is certainly subsidies by governments, a safety net or loans. Different governments did it in different ways. To provide that sort of protection, whether it was keeping employees paid, or actually subsidizing the businesses themselves. A lot of companies also furloughed employees. They preserved cash, they stopped a lot of tech projects, for sure, of those companies.

Ted Schadler:
The majority of companies, over 50%, are in what we call: adaptive mode. These are companies that are really responding, and responding very directly and I think appropriately to the current situation. We’ll get into that I’m sure as we talk about the importance of digital in that. But then there’s actually a lot of companies, more than 25% of companies, actually growing.

Bart Manuel:
That’s a lot.

Ted Schadler:
Right, exactly. Whereas other recessions, everybody kind of took a hit.

Bart Manuel:
Yeah.

Ted Schadler:
In this recession, if you like, it’s not universal. It’s also not universal by country or by region. Some regions, like America for example, are hit in very, very hard ways. But 27% of enterprises in North America and in Europe are in what we call growth mode, and are actually growing through this challenging time.

Bart Manuel:
During which period was that? That was Q1, Q2 of this year up until May, June?

Ted Schadler:
It’s the last week of April through the first and second week of May. Right when post March, post kind of the early hit on April. We’ll get a refresh on that data in the fall here sometime. That was a very important analysis to do. The advice we would give, or the actions our clients or your clients would take, vary of course based on where they are.

Ted Schadler:
Growth, that’s one thing that I think everybody can kind of get their head wrapped around. Survival, that’s another thing. It’s the adaptive part, which is the majority of companies, where I think the biggest tension, maybe that’s one way to say it, lies. What do you do when you’re adapting? Yeah, that’s a real good slide, yeah.

Bart Manuel:
Yeah, I think this is from the report, where you sort of categorize it in three broad categories. It actually did surprise me a little bit that the picture that you are painting is actually quite not that negative. It’s quite optimistic where you say, “Only one out of six is literally in survival mode.” Meaning five out of six companies would be either in adaptive or in growth mode. You figure that the large middle group adaptive mode should be finding ways to switch out of adaptation and try to recover into growth mode again.

Ted Schadler:
Yeah. I think there’s a lot of actions they’re taking. It would be fun to explore some of them together today. Growth mode means growing, actually. It’s self-reported revenue growth in the last quarter. That was the way the question was worded. Survival is shrinking, for sure. Adaptive is somewhere in between. Not all of those adaptive companies are growing. In fact, quite a few of them are shrinking, but they’re not shrinking by as much. Their revenues have declined, by not by as much. So they are laying the foundation and the groundwork for a return to growth, absolutely. Parts of their business are growing.

Bart Manuel:
When you talk about laying the foundation and taking the actions to adapt and to return to growth. Obviously the title of your report is already sort of answering the question a little bit. We’re preaching to the choir here a little bit, by demanding a digital response. If we zoom in a little bit on that, because it’s easy to say, “Hey, you need to make your business go digital, because that’s the way out of the recession,” It’s easier said than done, right?

Ted Schadler:
Yeah.

Bart Manuel:
What are the things that, if you make it really practical and if you look at the practicalities of the pressure that’s on with a lot of companies in terms of getting the cash cycle flowing again. Making sure that any investment that is made will deliver a return very quickly, because there is no long-term horizon to operate on. The next month is as important as the next year, so to speak. What are the actions and the strategies that you would see in this adaptive mode to make that jump to the digital transformation?

Ted Schadler:
Yeah. I think the way that we have thought about it, and what’s really captured in this report, starts with the reality. The reality was, employees are working at home and customers are not leaving their home. This is back in the March-April timeframe. That persists as well. We’ve hardly returned to life as normal. Companies jumped in immediately and responded by making sure their employees were safe and productive. The remote work was job one, and that happened very, very quickly.

Ted Schadler:
People flocked to the cloud. They jumped on these collaboration tools, for example. They supported and set up network access to the corporate resources. There was a tremendous surge of investment to support productive remote work, which persists and will be maintained even as people start to come back into offices.

Ted Schadler:
The second thing was to make sure customers were safe and getting the service they needed. That’s where the investments really had that sort of outward-facing growth potential, if you like, flavor. The big one is, if you relied on an in-person transaction, sale, whether that’s B2C or B2B, you had to go digital. Things, well curbside pickup in grocery, for example. Most grocers didn’t have curbside pickup, or buy online pick up in the store. They didn’t have that. How would a grocer create that really quickly?

Ted Schadler:
If you are selling a high-tech product for helping a remote or home worker be productive, you need to have the same thing. If you already had an e-commerce channel, well that was good, but now you need to do things like home delivery and curbside pickup. All kinds of things that required these investments in digital. Whether you were in growth mode or in adaptive mode, those were changes you had to make.

Ted Schadler:
Another example, and I’m sure we can find many, in hospitality and restaurants was home delivery. A lot of restaurants found themselves going to a third party, a DoorDash type company, in order to do that home delivery. Which is I think indicative of a change that we want to acknowledge and call attention to. Companies did what they had to do working with existing and new partners, using the cloud resources where they existed, in order to adapt and respond to the need. That was a new behavior for lots of companies.

Bart Manuel:
From my perspective I think it’s fair to say, if this crisis would have happened five to seven years earlier, a lot of the cloud and all the infrastructure as a service, as you have it also in the physical space, like Amazon’s building and all these delivery companies are building, it would have been disastrous, and sort of unmanageable. Right? I mean and it is just providing opportunity.

Bart Manuel:
The only question that you might have, for instance like restaurants as you mentioned, is signing up now all of a sudden for home delivery and maybe turning your restaurant into a dark kitchen. Is that the strategy and the best value add that you would want to have for your business in the long run? It might not have been the case.

Ted Schadler:
Yeah, no, Bart. I think you said it really nicely earlier, when you said the next month is as important as the next year. When you are in a liquidity crunch, when you’re worried about either surviving or adapting, you need to be thinking that way. Making investments for the long-term might feel counter-productive. You might be saying, “Well, why would I spend for things that might only be a year away?” This is a really good point here.

Ted Schadler:
I heard the term just a few hours ago from somebody, “A relentless re-prioritization.” Meaning that the executive teams are not doing quarterly or annual, or even monthly prioritization exercises. They may even be doing weekly or biweekly prioritization exercises, across the company. This is the other behavior that I think we really want to call attention to. In responding to the crisis, companies pulled together all their departments. They worked together in a different way. Marketing and sales, or marketing and commerce, for example, which may have separate missions.

Bart Manuel:
Don’t you think that the fact that all of a sudden everyone was working from home, and the physical compartmentalization of the physical offices all of a sudden gone, might have been a blessing in disguise for finally getting cross-departmental work done?

Ted Schadler:
That’s another thing that I think we should really pay attention to here. People have grown comfortable working in this sort of virtual collaborative way. It does break down a lot of hierarchical boundaries and a lot of departmental boundaries. People come together and everybody has a voice. It also makes it easier to work with a partner. That partner might be bringing expertise or a service in, and they are just another box on the screen.

Bart Manuel:
It’s the great leveler, in a way.

Ted Schadler:
It is.

Bart Manuel:
Just to wrap this up a little bit, and I want to move on to the second part of our discussion also with an eye on the clock here. I do want to get a little bit technical with you. My background is as a developer and an architect. In the beginning of my agency, I’ve been building stuff myself. I have a particular interest in that, and I wouldn’t want to miss the opportunity to discuss it a little bit with you. I’ve been reading your research a little bit.

Bart Manuel:
One of the things that struck me was one of the reports… I hope we can pull the slide up here… A sort of vision or a sort of view you have on technology architecture for the digital world, where you see this evolution of the tech stack in successful digital businesses in three layers. If you work from the ground up, a foundational layer, a differentiating layer and a agility layer. Could you spend a minute and talk us through, what do you exactly mean with this, and explain this a little bit to us?

Ted Schadler:
Yeah. Let’s start with the value aligned word there you see on the left. When we saw how companies responded to this pandemic. In fact digitally mature companies have always done this, which is only about 15% of firms, by the way. They are value aligned internally. They work against a common set of metrics across departments, kind of what we were just talking about. They’re also looking to value aligned technology and business, so that there is a clearer understanding of what’s the impact, the benefit, the return on that technology is.

Ted Schadler:
If we overlay a recession and a need to prioritize tech spend, and to have a rationalization and a prioritization discussion… In the last recession, 2008-’09, into ’10, it basically became the CIO’s job to say no and to cut. Since then, tech has become too vital to business. Spending by marketing, spending by product owner, spending by operations, spending by everybody in tech to actually execute a digital business strategy.

Ted Schadler:
If the CIO were to say be handed the responsibility to do tech cutting now, they couldn’t do it in the old way. They need a new playbook. That playbook that we are offering here we call a new business conversation says, “There will be multiple owners and stakeholders of the tech.” Some tech is pure CIO. That’s mostly the foundational stuff. Some technology and the important technology, about 30% of the spend by the way, is what we call differentiating technology.

Ted Schadler:
Then the last, top if you like, is very often owned and managed by business and marketers and their partners, we call agility technology. That’s about 10% of the spend. It includes the things that change very rapidly, on a quarterly or faster basis than ever. We’re running experiments out there, perhaps. The differentiating layer is sort of shared ownership. There’s a CIO contribution, a technology organization contribution, and a business or marketing contribution to that differentiating technology.

Bart Manuel:
Ted, a couple of years ago when you were reading the industry analyses. I think McKinsey was one of the analysts or the consultants pitching the term two-speed IT, or shadow or core IT split, where you would have two layers. Now all of a sudden, it seems we’re moving from two to three layers. Do you recognize that the two layers were something of the ’10s, and now we’ve moved into a new direction? Is that what you’re saying?

Ted Schadler:
Well look, if I could back up a little bit here. Forrester never quite subscribed to the two-speed thing. We always felt that changes in the core platforms were critical to support the new business models. You see that accelerating now in this digital transformation. I also wrote a book in 2010 called Empowered. That was at sort of the peak of the BYO, the shadow IT world where IT was saying no to mobile devices, for example. Business and marketing were saying, “Well, I’ve got to have it,” so they just brought in their own.

Ted Schadler:
The book Empowered said, “You empower your employees to solve the problems of empowered customers.” The shadow IT, through that lens, became a business enabler. That’s what has happened over the last decade. Business people… We have a lot of data on this, marketers have taken onboard responsibility for technology spend, and also impact. Now the question becomes, how do I do that at scale?

Ted Schadler:
How do I create bedrock where I need it, differentiation that really truly will make me successful as a company, and agility in order to respond to the next, and the next, and the next, and the next? Yes, we’re definitely moving to a more sophisticated, if you like, conversation and shared responsibility and funding model when it comes to technology. I think that that is the future.

Bart Manuel:
I mean, to make a little bit concrete, also for everyone listening and watching this. What sort of platforms or what sort of tools, technologies, should I be thinking of, and the functions that are served by that differentiating layer? What do I need to think of?

Ted Schadler:
Yeah. To not get too contentious here, because it’s really easy for an owner of a technology to say, “Well wait, I’m differentiating.” Let’s look at security, for example. Security is both foundational, it’s differentiating, and it’s required for agility. You have to have an end-to-end view of security, or else customers will not be protected and the firm will not be protected. When you think about the differentiating technologies, the things that customers recognize as valuable, why they come to the company, these are more your front-office facing systems.

Ted Schadler:
That could be your experience layer, for example. It could be your end-to-end customer journey way to do a transaction, from discovery to purchase to use to post-sale engagement. Those kinds of customer journey centric technologies are truly differentiating for companies. A digital platform to take your core competency out to other markets could be very differentiating, if you’re a bank or if you are a business service provider. Yes, absolutely. Then agility, really that’s the rapidly changing technology, like low-code or things that have to do with a new marketing channel support, for example.

Bart Manuel:
Exactly. What we’ve been experiencing in the past couple of years, where we’ve been tasked with developing, for instance, digital experience platforms, API gateways, integration layers, it is mainly also supporting all of the digital touchpoints. Whether it’s an app, whether it’s voice, whether it’s an integration into a marketplace platform. You want to have sort of one place to tie that all together, and to distribute it back out to your ERP and your CRM and your production. That is the sort of differentiating layer. If you build that right, you become flexible in the front-end while maintaining a good alignment with your business architecture and business processes.

Ted Schadler:
I think that’s a good way to look at, as technologies start in agility, sort of get it done, they start to settle into this platform layer, the differentiation layer. They become core, and they become needed across all touchpoints. A CDP is a good example of that, a custom data platform. That’s the only way you’re going to be able to treat a customer consistently from beginning to end. That technology is extremely differentiating if you do it well. 

Bart Manuel:

Then it becomes incredibly useful on all your digital channels.

Ted Schadler:
That’s right. It becomes foundational in the sense that you can apply it in every single channel, new and old, in a consistent way. Yeah.

Bart Manuel:
Yeah. Okay, so we’re not going to be naming any vendors in this space.

Ted Schadler:
Yeah, we’re not actually. We think that’s probably going to get us in more trouble and take us down the wrong path. What we really want is to have a better business conversation, so that we’re using technology for maximum effect. If there’s money to be spent to do it, well let’s tap into those budgets that have that money.

Bart Manuel:
Yeah. One last question, then I would like to move on to the last topic of today. One last point, when introducing this subject, you were talking about the differentiating layer being co-owned. As anyone might be thinking here, anything that has multiple owners is sort of a recipe for disaster. Who’s going to be CTO, CDO, director of digital, CIO? Who’s going to be driving and owning this differentiating layer?

Ted Schadler:
Yeah, no, that is a great question. The answer is that there is a product owner. Somebody owns that differentiating capability, and they get designated as an owner. For example, somebody might own the CDP, somebody might own the shopping cart. Somebody might own the integrated view of the customer lifecycle, that and the lifetime value. Those product owners, they could sit in IT. More than likely, they will sit in more like an operating group. There’s new operating structures and funding structures to support these capabilities. If you bury them in IT, they get junked in along every other priority. That is not the way to go. 

Bart Manuel:
If you want to pull them closer to the business..

Ted Schadler:
That’s right.

Bart Manuel:
Okay. Okay, it makes sense. We have one last question coming in from Ed Kenny, before we switch to the next subject. I’m glad you’re here, Ted, to help me answer this. The question is, “What are your thoughts on the cost benefit of pulling differentiating features out of core products, such as ERP or CRM, and into the differentiating layer I guess?” How do you see that?

Ted Schadler:
Yeah. Certainly, we don’t want the differentiating layer to be an excuse to not fix your core. You have to fix your core. You’ve got to rationalize your ERP, you’ve got to build consistency there. You have to do it, and you have to do it in a self-funding way. There’s no extra budget for it. A journey to the cloud is a big part of that. How do I create a flywheel of returns in a journey to the cloud that helps me really anchor the core?

Ted Schadler:
There are going to be building blocks in that core, in that foundation that need to be exposed up through the differentiating layers up to customer engagement. You mentioned API gateways as part of that. Companies that are doing this well are building these service layers. They’re investing very heavily in middleware, which of course is my old background, in order to expose that core functionality. Here again, there’s an owner of that API.

Ted Schadler:
There’s an owner of that product, if you like, around that API that allows that core technology to be used to expose out through, in differentiating ways out to customer touchpoints. You absolutely need to be able to dip down, reach into that core, and pull it out. Otherwise, you can’t have a new business model. I’ll give you one really quick example. In the media, there used to be bulk sales. You would sell all your media through, we’ll use cable TV as an example. Now, you’re selling direct with a subscription model. Well, that changes your financial system. You have to be able to do subscription billing. 

Bart Manuel:
Yeah. That’s not something that you only want to hold in the differentiating layer, right? I mean, you need to get at your core?

Ted Schadler:
All the way through to your financial systems, yeah.

Bart Manuel:
Exactly, exactly. That’s it. Thanks a lot for that. We should move on from technology, as much as we would love to spend another hour talking about this. Let’s talk a little bit on our last topic of today, and that’s the future of services. Another part of your research is how agencies and other service providers are adapting their own approaches to work better with their clients in building platforms and processes for execution. You have a report coming out. It’s going to be titled The Future of Services is Value Orchestration.

Bart Manuel:
It will try to answer questions about, how do you source innovation, and how do you price value for outcomes. How do you create next-generation ecosystems, and incentives and co-creation, et cetera? Maybe before you answer this and get into this, I want to give a little bit of background of our perspective on this in really broad strokes maybe. The first decade of this century, we as an agency were contracted a lot by businesses.

Bart Manuel:
Literally for them, it would be the only way of getting something done, getting some customers, getting some stuff out there, or getting an app or a social presence. It was all relatively new, and there was no capability in-house. Then I think the next decade, so the last decade, I think every business sort of woke up. They started building their own digital capabilities. In-housing is a big trend. Getting suppliers and agencies to provide the staffing and the bodies to these in-house teams.

Bart Manuel:
From our perspective, we think the best agency not only brought their own people in, but also the tools and methodologies and mindset and the culture to make the digital teams, in-house teams successful. That is I think, you owe it to the clients to add that value as an agency when you provide the staffing for in-house teams. My guess is, from the title of your report, we’re going to be looking forward to a next decade where this relationship between businesses and agencies will change fundamentally. Yeah, please talk us through what you see happening.

Ted Schadler:
Yeah. You can see from this slide that I think there’s a value alignment. There’s sort of a mission and a values statement that is embedded in a relationship that I am going to call co-innovation partnerships. When you think about sourcing innovation, as an example, you want to bring the best of what’s out there. That means, you want to tap into the innovation roadmaps of the best cloud providers, the best business service providers as well.

Ted Schadler:
You also want to work with a partner, like an agency or other service provider, that is thinking bigger than just what a single company is doing, but able to bring that expertise in. If you’re a company, you want to take advantage of that. Then as far as your priorities, and this goes back to that first topic we were talking about, you want to think lean. You want to focus on your core, and outsource what’s non-core.

Ted Schadler:
In-housing agency services could be core, because your marketing performance could be directly tied to a transaction and those things might be tightly coupled. On the other hand, there may be things that you really do want an outsourcer, you do want to have a partner help you with. There’s this core context thing that’s been going on for decades now. It’s resurging here.

Ted Schadler:
The second thing I’ll say is that, in order to work with somebody that can help you maximize your potential as a company, there has to be more than a project based relationship. There has to be a program or a committed relationship with a provider. That exists in some areas, and is starting to happen more and more as companies are realizing that the difference between a strategic partner and a non-strategic partner is not just a word. It’s actually the ability to get the most going, to get the most out of a partner.

Ted Schadler:
Then the co-innovation word says, you’ve got to be in it together. You have to be working to identify and solve problems together. You have to be making sure the right people do the right work, that teams are extended teams. They’re not separate internal or external. There’s a lot of changes in what you look for in the relationship, and you want the partner to bring their own assets, and their own best practices, and their own data methodologies, and their own alliance relationships, so that you can get going faster and get going quickly. That’s really at the heart of what’s going on here. There’s continuous change, deeper relationships, and a lot more exchange of value happening there in the work.

Bart Manuel:
Ted, you talk with businesses, what we would say to our clients, a lot in this industry. I can imagine that many of these businesses would sort of trust you on this. See the same trend, and have the same strategy that wants to build their relationships in these ways. I think the trouble for them would be, how do I find this? How do I do my discovery and selection of the agencies? What are the traits of the agencies that they should be looking for? How do you find these agencies that provide these relationships?

Ted Schadler:
Yeah. That’s of course the $64,000 question. Why bother to do this work at all? What we are proposing to do, what we’re going to publish, is essentially an addition to, call it an RFI or an assessment of consideration process, that probes on these three things you just saw. For value alignment and example would be, what pricing models can you offer me that allow me to offload some risk to you? For you to participate in potentially some benefits that we achieve together?

Ted Schadler:
We’re also going to look at questions that help you illuminate expertise, alliance relationships, assets. Intelligence, what sort of insights and data acumen AI do you bring, and automation. Very specific questions to see if our agency is good at the things you care about, but also brings something to the party beyond just expertise. These questions will help me narrow the scope beyond agencies that might look the same, but actually have very fundamentally different ways of engaging and helping their clients.

Bart Manuel:
You’re talking also about outcome based pricing and differentiating pricing models. Obviously, that’s always a very interesting discussion if you’re one-on-one at the table as an agency with a client. I think from the agency world, there would probably be a surprising number of agencies that would be actually willing and able to get into these sorts of relationships and contracts. The practice of hammering out all the details of, okay, how do you then define that relationship, is in reality quite difficult. Do you see any sort of successful approaches there that could work in reality?

Ted Schadler:
Yeah, well look. This is becoming my life’s work, I’ll say. It’s that hard.

Bart Manuel:
I didn’t know that. I seriously didn’t know that.

Ted Schadler:
It is. I’ve been saying that. This is becoming my life’s work. Everybody needs a third chapter in their life, and I’ve decided this is going to be mine. I’m not saying it’s easy. In fact, it’s quite difficult. McKinsey uses this model a lot, so at the business strategy level it happens. It happens in performance marketing, where you can create a self-funding model. If you increase the conversion rate, which leads to a sale that you can attribute, now you have a funding model that an agency could participate in.

Ted Schadler:
Those are places where the metrics are decided ahead of time, where success has a metric. We need to bring that thinking down into other places. Not everything has to be a financial metric. There could be a milestone metric, or an accomplishment metric. Not everything is going to be about participating in revenue upside or cost takeout. That’s maybe at one corner of the case. A lot of these things are going to be just to move away from time and materials, more toward things that are more value aligned such as milestone based.

Ted Schadler:
What we’re going to do next after this initial report is we’re going to go at that problem. Talk to procurement, talk to the contracting organizations, and identify these best practices and this portfolio approach. Every project, every sort of relationship will have a different flavor and composition. We’re going to tackle it that way.

Bart Manuel:
Yeah. In the private sector, this is one thing. What we experience I think also in the public sector, in the EU there’s all sorts of regulations in terms of tendering, et cetera. I don’t see now, and I don’t know if you see a change coming. That would be really interesting. The current tender rules typically don’t allow for a lot of this flexibility in this. Do you see a change coming in that?

Ted Schadler:
Look, I think it will start in the commercial sector, and in commercial sectors that are transforming rapidly. I think that the sort of non-commercial sectors, government sectors for example, will go much more slowly. However, milestone based, which is an outcome based model, can still work there. The tender may still look quite the same. We need to get everybody moving away from a cost plus type model toward a success metric in selecting their provider.

Bart Manuel:
Yeah. One thing that I would like to add to the discussion as well. What we see in practice is that sort of the days of a single agency taking all responsibility on a single domain, I think those days are quite numbered. In any sort of business process or program, it’s typically a multiparty team, which needs the values of trust, transparency and value alignment all together. I think in practice, if you need to work together with more than one supplier, or agency and the client in one coherent team, you need to have a different discussion on pricing and contracting.

Ted Schadler:
That is quite a bit more complex.

Bart Manuel:
Yeah. It’s going to be more complex. With an eye on the time here, I think we’re running a little bit over the half hour that we allotted for ourselves. I want to close down this part of the conversation. A question has come in. It’s a fairly detailed question, and it’s referring back to the previous section of our conversation. I just wanted to throw it back at you. “Any thoughts on your favorite low-code software?” There’s a concrete question for you. “I’m pretty fond of Notion and Airtable.”

Ted Schadler:
We’ve been doing this a lot at Forrester. Ask that person to reach out to me, and I’ll send them our latest research on it.

Bart Manuel:
That’s good. That’s good. We will show all your contact details in a little bit in the slides. The recordings and the slides are going to be freely distributable to everyone. Anyone that wants to look up this information can do so later on their own accord. Ted, I think we need to wrap up for today. I think today we discussed three topics. We started off first on the states of businesses, on where we are.

Bart Manuel:
I think quite an optimistic view of the world where the adaptive and the growing companies will have the opportunities to transform into digital. Some of the technical architecture needed for that is also thinking about how to layer your tech stack for growth, and to make sure that it aligns with your business processes. Then the third part, I mean when you have that said and done, or when you’ve been thinking about that, also assembling the right teams, and the right suppliers and agencies around it to make it work.

Bart Manuel:
Thanks so much for this conversation. We can get this up. I want to thank you, Ted Schadler, Principal Analyst at Forrester, for this conversation. If there’s anyone wanting to have a follow-up conversation with either you or me, please feel free to reach out. This was a Dept Talks Live. We hope to see you next time. Thanks.

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