Maggie Slowik
Maggie Slowik (Research Manager, IDC Manufacturing Insights)
Giulio Raffaele
Giulio Raffaele (Research Manager, European Retail Insights)

The industry collaborative cloud (ICC) market is young, yet growing fast, with dozens of new industry collaborative clouds emerging each year across many industries. While manufacturing is among the leading industries of ICC adoption, along with healthcare and financial services, we are starting to see growing interest within retail as well.

Though the market’s tipping point is still a few years away, IDC is expecting significant growth, and believes the industry cloud market represents one of the largest vertical growth opportunities for technology vendors and professional services firms through 2025.

A market on the rise…

The acceleration of digital transformation has fueled the ICC market, which is growing rapidly throughout several industries including financial services, healthcare, life sciences, manufacturing, retail, energy, and even government. Across these industries, ICCs already represent over $1 billion in revenue, and by the end of 2020, they are expected to generate revenue exceeding $20 billion.

IDC defines the industry collaborative platform as an industry-specific, cloud-based pre-integrated, scalable set of capabilities/resources/information that complies with industry information security-level requirements, offers APIs, and is delivered as a service. At the centre of the industry cloud market resides a fast-growing sub-segment in which multiple companies in an industry collaborate toward a common goal, through a cloud-based services platform, to improve enterprise and industrywide insight and/or capability.

Industry cloud business models typically resemble one of three possible constructs: information driven, operations driven, and technology driven.

  • Pooling and sharing information is one of the common drivers for ICC deployment across verticals. In such information-driven ICCs the participating parties, usually multiple companies, use the ecosystem for data aggregation to maximize transparency and thus create additional value, for example shorten new product development cycles.
  • Operations-driven ICCs are used by companies with similar operational needs (such as supply chain, HR, or monitoring), with the aim of optimizing the use of pooled resources and maximizing operational benefits.
  • Technology-driven ICCs are built around IT functionalities, such as datacentre or analytics.

…But at different speeds

It is no surprise that the industry collaborative cloud market is growing fast. In order to stay competitive, companies need to collaborate rather than act in isolation, and this is especially true for manufacturers and retailers that face speed-to-market and operational efficiency pressures.

The platform facilitates information exchange and processes, at scale, simplifying connectivity and ensuring a level of security and trusted business interactions. As such, consuming ICC services enables an organization to stay focused on its core competencies. But beyond that, ICC platforms offer the opportunity for companies to get involved as both buyers and suppliers in an ecosystem, which fosters new revenue and innovation generating activities.

At the moment, European manufacturers seem to be ahead of European retailers with respect to ICC adoption, suggesting that retail has yet to leverage the benefits of ICCs when compared to manufacturers. If security is what holds retailers back (with the complexity brought by GDPR compliance and increasing risks of breaches of customer data), these concerns should be overcome as soon as possible or companies risk losing out on the business benefits that lie ahead. According to the latest IDC European Digital Transformation Survey, interest in ICCs varies noticeably between the retail and manufacturing verticals. 27% of European manufacturers are already using ICCs compared to only 18% of European retailers.

In fact, ICC use in retail is among the lowest across all verticals. Furthermore, compared to the average across verticals, almost twice as many retailers do not consider ICC relevant for their business, though 30% of them are currently evaluating ICCs. The low interest in ICCs in retail is also reflected by the amount of ICC providers targeting retailers. There is a wide range of companies focusing on the manufacturing customer, such as Chainalytics, Exostar, SAP Ariba, and NOVO Optimized. On the other hand, the ICC trend has not reached the retailers to the same extent yet, with fewer companies, such as Bamboo Rose, E2Open, and SAP, offering collaborative platform solutions for retail.

Discover more about adoption of Industry Collaborative Clouds in the recently published IDC Perspective: Industry Collaborative Clouds – Creating New Business Value in Manufacturing and Retail where IDC provides an overview of the Industry Collaborative Cloud (ICC) market with a particular focus on the European manufacturing and retail verticals as adopters. The document discusses adoption trends, perceived risks and benefits, followed by two case studies highlighting the operational and strategic capabilities gained by ICC deployment.

We welcome your comments and look forward to discussing this new and exciting topic with you.