5G towers are rising on every corner of the cities around the world like McDonald’s restaurants in the 90s. And while the revolutionary network is shrouded by conspiracy on one hand and excitement on the other, the facts speak for themselves: 5G is not so much an inevitable future anymore, but rather a reality arrived at the doorstep. 

What does this mean for the average consumer? How does the new technology standard affect the advancement of the Internet of Things? And most importantly what is its role in global digitization? Let’s find out.  

First things first

Before anything else, what exactly is 5G? 

5G stands for fifth-generation wireless cellular connection, which network companies began widely deploying as recently as last year. It is the successor of the well-known and widely applied 4G, which dominates the Internet consumer market today. 

Technically speaking, 5G utilizes radio waves to transmit data – just like other wireless technologies. What makes it distinct from the competition, is a higher frequency of the radio signal that 5G operates on (up to 2.7-39Ghz, against 0.7-2.7Ghz for 4G). Sound clear: the higher the frequency the higher the data bandwidth. That said, it’s not all that simple in reality. 

Here’s how network speed has changed over time: 

The physical consequence of using high frequencies is a shortened wavelength that inevitably comes along. And a shorter wavelength means a smaller distance the signal can travel without quality loss. And when it comes to creating an Internet network, this means that 5G requires a far more dense cellular geography to achieve even coverage. In simple words, it requires installing a lot more cellular towers per area to effectively penetrate buildings and landscape irregularities in order to reach the consumer. 

When fully set up, 5G can support up to a million devices per sq kilometer (as opposed to just a 100,000 for 4G) and offers a whopping broadband speed measured in Gigabits per second – similarly to the cable internet capabilities.    

Why 5G?

So, what exactly do we need 5G for? Does the opportunity of watching 4k online really drive all of the hype around the new network standard alone?

Well, the main reason behind the introduction of 5G is indeed the increased download speed it offers. However, there are a few equally important things that come out of achieving faster web access.

IoT

First of all, apart from your evening movie-watching routine, 5G is highly beneficial to the development of the IoT. By increasing connection speed and coverage, as well as the number of supported devices per area it allows surpassing the present limits to establishing a mesh of connected devices. 

Internet of Things is among the fastest growing and most important layers of the new digital realm that we are entering nowadays. So, it’s quite hard to overestimate the importance of facilitating IoT with a radically better type of web access. Btw, you may read more about IoT and it’s part in creating the future today, in our previous article. 

Global wi-fi

Secondly, and this is far less obvious, 5G has the potential to replace local internet service points (like cable internet and wi-fi) with a single, universally applicable technology. Yes, you heard that right. A universal wi-fi will be here before the universal basic income (who’s to judge what is best?). 

Check out Ookla’s up-to-date map of 5G rollouts in cities around the world. 

Indeed, why bothering with installing cable internet (which requires digging / boring / drilling) and extend it via countless wi-fi routers when you can have a wi-fi cover the entire globe? 

It sounds perfect! 

Yet, there are actually some concerns…

5G troubles

However great the technology is, it’s a lot like a troubled teen in a household. 

Your neighbors don’t like it.

Ever since the introduction of 5G, rumors, disbelief, and even fear and hate just won’t let it go. In this regard, it is (rather widely) believed that the increased density of radiofrequency electromagnetic fields (RF-EMF) caused by a web of 5G network towers may be harmful and poses a threat to people and the environment exposed to it. 

In fact, hundreds of scientists from over 30 countries have signed an appeal to the European Union Commission, warning about the potential consequences of rolling out the new 5G cellular network. It should be noted that these claims do not come with no evidence behind it. A number of substantial studies by some of the reputed health protection organizations have found a link between elevated RF radiation exposure and DNA damage. 

This point of view, of course, rests at a polar opposite side on the specter of speculation surrounding 5G – as opposed to the obviously arrogant yet surprisingly widespread theory that the cell towers cause COVID.    

Whichever reasoning came more convincing for the radical protesters against the new technology, the fact that many 5G cell towers were knocked down and set on fire in the UK indicates that a part of the public does not welcome 5G into their lives yet.  

It’s expensive… 

Costs are always an important part of the discussion when evaluating a project. When it comes to 5G, the price is not its strongest feature.

Current 4G carriers use 3-4x fewer towers than needed for 5G, and setting up those additional network points is not free. Not only the equipment costs a pretty buck, but it also has to be located somewhere. This means that placing a 5G transmitter requires either building a new tower or attaching it to an existing tower or building. This comes along with land use right, permits, construction, etc. – all kinds of associated costs. 

Now, these costs are difficult to estimate precisely since each carrier has its own ways. That said, independent experts estimate an average installation cost of up to $200k per microcell. Each of these transmitters has a reach between 0.2 and 2 kilometers and can support up to 2000 devices. Read more about the 5G network structure here. Now, you can compare these figures with the number of potential users, along with the areas of their distribution… Avoiding to delve into complex math, it’s safe to say that setting up a next-gen broadband Internet system is quite expensive even for the industry giants. 

As for the average consumer, replacing one’s old smartphone with a new one that supports 5G, in addition to advanced carrier plans, is also a hefty investment to consider.   

Here are T-Mobile’s 5G plan options, just to have a clue:

… and immature.

Last but not least, it does seem like the revolutionary technology that’s been promised is just not ready yet. Yes, there are a lot of towers in major cities around the world. Yes, the new smartphones support the new technology. And yes – carriers are already offering us that lightning-fast 5G Internet “for just $69.99”. 

All that being the case, the coverage is not great, neither are the 5G smartphone prices, nor the actual Internet speeds. There are still connectivity issues in buildings and densely-built areas, and providing 5G to urban areas is just economically disastrous. 

Unfortunately, but this is the 5G’s harsh reality we have to face.

Starlink 

Speaking of dreams and reality, another obstacle on the 5G’s way to a bright future may be posed by one of the most daring entrepreneurs in modern history – Elon Musk.

The tycoon’s advancements to create his own universal data network called Starlink is a heavy counterforce to the “mainstream” 5G. What sets Starlink apart from other similar technologies is that it is meant to operate through a web of satellites circulating on a lower Earth’s orbit, as compared to most current space objects. In fact, the satellites fly so low you can see them in the night sky – just like the stars. And since they are linked (it seems so) the network is called Starlink.

Pretty creative, isn’t it?

What’s valuable for considering Starlink as an opponent to 5G is the history of the inventor’s startling projects, which daring, revolutionary, and most importantly – successful every time. Giants of the payment, automotive, and space industries have already fallen prey to Musk’s ambition. And given that 775 Starlink satellites already orbit the Earth – this is definitely something to watch for. Both for the average consumers and the key industry players.

So, is 5G overrated?

5G is clearly a promising technology throwing a lot of benefits on the table. However, the technical part of it is still underdeveloped. Definitely, a great idea, it has fallen victim to big business’s greedy advancements and is just overmarketed for the moment.

All in all, there’s still a long way for 5G to make to live up to the people’s expectations. And given the alternatives that emerge in the global Internet services market, it is not quite clear where will this path end.    

Continuing to discuss evolutionary processes in business, let’s look at a crucial driver of enterprise progress like workflow automation.

In general, it is a set of practices aimed at streamlining routine activities to improve business efficiency. The approach is implemented through various digital solutions and is considered essential across most industries and business domains.

Want to learn more about workflow automation?

Scroll down to get all the answers!

Why automate business processes?

Ever since industrialization, abandoning manual work in favor of streamlined production has helped to boost outputs, cut shift hours, and improve working conditions. Today, we are in the digital era, but automation is even more relevant to businesses of all shapes and forms.

Robotization of business processes aims at essential business goals like increased service quality, wider audience reach, and reduced spendings. And with over 45% of paid activities worldwide suitable for automation, this is a trillion-dollar question. 

I know what you’re thinking, but don’t rush to hire an IT development team just yet! First of all, you must understand the key advantages of business process automation and things it can improve. 

Advantages of business process automation

If you’ve never dealt with workflow automation, it may sound like yet another thing you didn’t want to do in the first place. Or, you may have heard that it’s expensive or troublesome to implement. 

In both cases, you’ll be pleasantly surprised. 

When it comes to complexity, automating business functions is not nearly as cumbersome as executing all of it in the “good old” manual way. Moreso, the average cost of automation systems is nothing compared to the monetary equivalent of the time, effort, and risks associated with abstaining from them. 

Digging deeper into the topic, there are 5 main reasons why you should automate business processes:

Cost reduction

You don’t need expert analysis to see how performing routine tasks quicker and better can positively impact your company’s budget.

Automation can save a fortune in the form of paid working hours and salaries, improved customer relationships, better order processing and inventory management, higher operational transparency, and much more. So, it’s no wonder that businesses spend a whopping $20 billion a year on automation.

Optimization of human resources

Delegating the grunt work to algorithms, you allow your employees to focus on purely human-related issues. We’re talking about direct customer assistance and care, creative business challenges, and the entire range of non-computer-related activities.

In most cases, these tasks also bring the highest value to the company.    

Employee satisfaction

Employee satisfaction is yet another thing automation can improve. Very few of us genuinely enjoy the menial tasks usually taken over by algorithms. At that, alleviating these responsibilities from your workers’ shoulders can boost their work satisfaction and loyalty, which is a key driver of business growth. 

Increased accuracy

Regardless of how brilliant, attentive, and responsible your staff is, we are all just human beings. Even if a team’s workflow is smooth like Swiss clockwork, something will go south now and then. Whether it’s a scheduling mishap, a missed customer’s question, or a misdirected email – you can never predict the human factor. 

On the other hand, machines have no bad days, never distract, and have nowhere to rush on a Friday evening. This makes one a poor buddy, but a perfect assistant to sort through the multitude of daily tasks.   

Better performance

Last but not least, a natural outcome of the four automation benefits mentioned above is better overall business performance.

Carefully tuned processes that empower your workers, bolster back-office operation and ultimately satisfy the clients – inevitably boost business performance. If that’s not your main goal at the moment – you can skip business workflow automation. Otherwise – think twice.

Business Workflow Automation Pitfalls

Naturally, nothing is perfect in the business world, and there are several nuances to workflow automation, just as well. So, if you do decide to streamline your company processes, try to avoid the following traps:

Wrong goals

While it may seem that more automation is always better, it’s important to carefully choose which business functions you improve. Some of your company activities may suffer from excess robotization (see next paragraph) or aren’t worth the investment.

To avoid this, ask yourself the following questions:

What are the most complex processes I can automate? Which of them is most time-consuming? And finally, which of them will have the greatest business impact?

These would be the processes you should automate first.

Dehumanization

Streamlining all of the processes can dehumanize your services, which is not nearly the goal of automation. Conversely, automation takes care of tasks to free the staff’s time, ultimately making your business even more humane.

Similar to a car, it’s not there to take walking away, but rather to take us to the best place to walk at.

Team resistance

Just like any innovation, automating business workflows can meet resistance from both executives and staff. The first may not see the point of additional investments in software, while employees may fear losing their jobs.

Overcoming such obstacles, you need to dispel people’s fears. Describe your goals and clarify how automation is beneficial for all parties involved – the owners, the clients, and the workers.

Overspenditure

Last but not least, expenses are a valid thing to consider whatever business initiative you undertake.

This goes in line with the aforementioned point about setting the right automation goals. Even if your budget allows streamlining virtually all of your company’s processes, it does not mean you should do it. Focus on essential, and go from there.

Business Process Automation Solutions

Now that we’ve covered the curses and blessings of workflow automation, let’s go over the processes that can be improved via algorithms.

As already mentioned, automation can aid almost half of the global paid activities, potentially saving $2 trillion in wages.

At that, there are 4 main types of business processes where automation can play a key role: 

Executive management

Automation can simplify managing large teams with multiple departments and decision-makers.

It allows you to track, manage, and supervise operational activities, see task progress, issues, and deadlines – all in one place. The decision-making process becomes much more simple, transparent, and quick, too. With automated approval from managers on each executive level, your business won’t stall whenever important questions arise. 

Time is money so you can waste none in the business world.        

Team communication

Those who have worked in teams without task management and communication tools will recognize the following picture: responsibilities mixed up, tasks fulfilled incompletely, deadlines missed, and an overall mess in the production process. Team communication established through Skype… 

Sounds familiar, huh?

We’ve all been there. Forget about efficiency, just having the tasks done is already a challenge under such conditions. 

A far better idea is to automate these processes with tech solutions like Slack or Trello. Such software allows teams and departments to stay on the same page when fulfilling complex tasks and continuous objectives. Plus, it ensures overall transparency of the working process.

Customer relationship

Customer relationship is crucial to businesses in the digital realm. It can be a win or lose strategy for your business by affecting your client’s loyalty big time.

Now, the more customers – the harder it is to address all the requests and issues manually. And while keeping your prospects on hold is a questionable option, relying on CRM solutions might do wonders.

These systems aggregate consumer data, analyze their behavior, and ensure smooth interaction. They help to resolve customer issues, meet their desires and needs, and generate beneficial deals and upsells. Like that you can acquire, convert, and retain more customers.

As for direct customer support, chatbots not only cover the gap in employee resources but even outperform people in resolving client issues. 

Inventory management

Speaking about efficiency, automation can improve inventory management, too.

If you are an active vendor or a retail store owner (or a drop shipping company) – a lot is going on in the warehouse. You’ve got to stock, sell, and monitor your inventories daily. This is a rather complicated task for a human being, especially for big marketplaces and product hubs.

Automation can help with inventory management. These systems keep track of stocked goods, update availability information, evaluate consumption, and remind about ending products. So, you never run out of or oversupply items.

Document turnover 

Very often, paperwork takes the time and attention it really shouldn’t. 

A smart document management solution like the one built by our team can save both your time and nerve cells. It enables you to view, share, and sign documents on the go, effortlessly, and without delays. 

Such tools are especially useful when dealing with extensive documentation to be shared or signed by multiple parties. Great for employee onboarding, budget approvals, contracting, legal issues – you name it. 

Social media

Last but not least – the automation of social media marketing activities. 

While you can hire a dedicated SMM specialist, sometimes there are better ways to invest a few thousand a year. That said, spending your employees’ precious time on posting to Facebook, Linked In, and Instagram may turn out even more costly.  

In this case, an SMM automation tool like Buffer seems more than legit. Kt allows scheduling and posting to all of your social media marketing channels simultaneously and hassle-free. 

Digital Transformation Across Industries

Business process automation solutions are a means to the wider notion of digital transformation. And although it is quite similar across industries, there still are distinctive features with each one.

For specific digital transformation insight, explore our niche-dedicated articles:

• Insurance
• eCommerce
• Healthcare
• Real Estate
• Education
• Logistics
• Banking
• Investments
• Fundraising
• Venture Capital

The bigger picture 

The points covered in the article are mere landmarks to navigate your digitization strategy.

Very probably, you’ll find it possible to automate most of your business’s specific processes. The rule of thumb here is that anything that’s recurrent and requires predictable actions – can be automated to your benefit. In any case, it will probably fit in with the bigger strategy of your business’s management or improvement. 

Need help automating your business activities? Our team is always here to help! 

The global IT industry evolves rapidly in size, shape, and form, and so do the software development practices applied all along. Like any evolutionary process, this one strives to maintain efficiency while gaining capabilities. To keep the progress going, the traditional ways of doing things have to be replaced. 

For IT development, this means there is a point along the journey of software enhancement where we cannot continue to add structures upon structures of ever-increasing complexity, without sacrificing performance. 

Historically, this point fell on the edge of 2011-2012, when software experts from a prominent workshop in Venice came up with the term Microservices to define a new architectural style they have been exploring at the time. Dubbed the fine-grained SOA (service-oriented architecture where app components connect via a network), it wasn’t an entirely new approach to product design, but rather a refined way of building service-oriented applications.

Strictly speaking, microservices divide the bulk of a product’s functionality into independent chunks of software, while preserving the cohesiveness of the system. 

Here’s a general idea of the architectural difference when it comes to comparing microservices vs monolithic software:

Microservice vs Monolithic: Which software architecture is best? 

With just above half of the enterprises out there adopting the loosely coupled services approach, it’s a tough one to crack. 

The short answer is – well, it depends. 

Microservices are much like government decentralization, which gives power and responsibility to the regions while maintaining essential relations to keep the state solid. The opposite of that is centralized governance – where the decision-making is concentrated.      

Now, the choice of a suitable model is dictated by your needs and setup. 

A small project will hardly see the advantages of using microservices, just like a small state does not need decentralization. Bigger and more complex projects, on the other hand, may very well benefit from a more advanced design approach. 

MintyMint has built several microservice-based products, and we consider it a convenient and productive software model. One of the bright examples is 4friends – a crowdfunding platform for generating recurring donations.

That said, it is not all that simple when you dig deeper. There are many factors to consider when comparing microservices and monolithic architecture.

In-detail comparison

Comparing Microservices and Monolithic software architecture is not an easy task. We have to remain scientifically objective, after all.

For that reason, a point system seems just right. 

1. Performance

When it comes to the inherent performance of application architecture, there are two key indicators – network latency and data throughput. Latency represents the amount of time data takes to travel between two destinations.

Here’s how it works: 

To pass information, bytes convert into an electromagnetic signal. It then travels via wires or air and is reassembled back into bytes by the receiving party. Now, we can cut down the decoding time. But since the signal takes time to travel, data transfer will always have a slight delay. It is a natural consequence of the basic laws of physics.

In this regard, having a localized, single-core system is superior to a network of interconnected clients operating with each other, often at long physical distances. While the latency of a microservice call is minuscule (around 25ms), the more calls – the higher the delay. 

There are, of course, solutions that can minimize this gap, like running all calls in parallel or using a so-called fan-out pattern. In this case, the difference tends to zero as the calls increase. And still, Monolithics turn out slightly quicker every time. 

The same is true for absolute data throughput (the amount of data processed over time).

A close call in the first standing, but still a point goes to the Monolithic architecture.  

Moving on.

2. Resource usage & scalability

Now that we’ve touched on performance, let’s examine resources usage.

This is a tricky one. 

At first glance, microservices calls use more resources than the monolith ones when doing the same amount of work.

However, since microservices can allocate resources as needed, they use them a lot smarter, decreasing the memory and CPU load. In addition, the more instances performed – the greater this difference is in favor of loosely coupled services. 

Monolithic software can come ahead in individual cases (when a call transfers large amounts of data) but falls behind in all other scenarios. 

The same principle works when you need to upgrade the computing capabilities as the requirements increase. By managing resources more efficiently, decentralized software easily scales the power up and down, adding or removing cloud computing servers as needed. 

Clearly, a win for Microservices. 

3. Development complexity

Speaking about the complexity of the development process. 

While the good old monolithic apps call for greater skillsets from individual developers, microservices projects can be spread into smaller tasks between highly specialized devs. 

Here’s an illustration to help you understand why:

At that, the overall amount of work is in often considerably greater with Microservices.

Unlike single-core projects, assembling multiple modules may involve several source codes, frameworks, and coding languages for that matter.

Data synchronization also adds up to the complexity of running dispersed software as opposed to its locally-contained rival. Once again, some tools tackle the issues. Nevertheless, a monolithic architecture is innately more clear and transparent.   

Another point in favor of Monolithics. 

Are you still there? Great!

4. Deployment & reliability

One of the main reasons why companies prefer microservices are the stunning deployment opportunities it provides. 

Compared to the bulky structure of monolithic software, its counterpart is simple and flexible enough to have updates as frequently as desired. In fact, you don’t have to roll out the entire system after changing some of the functionality. All you need to do is redeploy that particular service. 

More so, modifying a microservice does not affect the dependent services. Therefore, it won’t threaten the entire system’s work should there be a program malfunction. Whereas even a minor code error can stall the entirety of software built with a monolithic approach. 

This boosts the software’s reliability, eliminating a whole bunch of critical operational issues.

Something like having more engines on a plane…

In addition, microservices are a lot easier to test. A limited number of features dedicated to each of the services substantially decreases the number of dependencies involved. This makes it much more simple to write and run tests. Therefore, you can release the product a lot earlier. 

In this one, Microservices come out ahead. 

So far the score is 2 – 2. 

5. Technological flexibility

This is where things get interesting. 

There are countless development technologies on the market. Some of them are quick, some – are easier to build. A part of them is better for billing, others are a good suit for data processing, or have better security… You name it. 

Microservices empower you to add all of it to the arsenal, taking the best from each technology. 

It’s like having all of the superpowers at one’s disposal. 

Like that, a piece of software can be quick, rigid, capable, and secure all at the same time. It’s no wonder why the method is so popular among architects of complex IT projects like Netflix, Medium, and Uber.

This will, of course, require hiring a whole bunch of specialists to implement, as mentioned earlier. But hey, that development complexity point is already granted to Monolithics, so we can’t complain. 

Another win for microservices.

6. Team communication

Finally, team communication plays a key part in the process of IT product development, and it can be affected by software architecture choice.  

Here’s the thing: by dividing the software into smaller chunks, Microservices not only distribute the tasks but also the teams, decreasing the number of individual communication channels between devs. 

This goes in line with Amazon’s well-known “pizza rule”, which states that a team is too big and inefficient if it can’t be fed with two pizzas. 

You decide what’s right.

I sure wouldn’t be arguing with Amazon’s expertise in project management. 

So, the final round goes to the Microservices architecture, too, and the score is: Microservices – 4, Monolithics – 2

Monolithics, it was a fair battle…

Part 2: How do microservices work?

While it did seem like a logical conclusion, it wouldn’t be the ULTIMATE software architecture guide if we didn’t dig deeper into the subject.

So, let’s move on.

Now that we’ve explored how microservices are different from the traditional monolithic software, let’s examine the technology behind the revolutionary architecture.  

Just like monolithic apps, modular software can be built with a wide range of coding languages and frameworks. Therefore, most of the rules for choosing a tech stack apply here as well. That being the case, a microservices tech stack is effectively larger and much more versatile than that of traditional software. 

Loosely-coupled apps are very complex structure-wise. So, many aspects of the system’s cohesiveness have to be thought through before jumping into the whirlpool of the dev process. 

In our case, it is worthwhile to go over all of it gradually – one functionality at a time. So, let’s jump in!

Infrastructure

First of all, any software has to run somewhere. 

There are three main hosting options to consider for microservices: 

• Local server – a traditional enterprise computing model. Companies maintain equipment and software in a confined data center, having direct control over its operation. 
• Public cloud – a rather modern approach. Here, shared computing resources are provided over the internet and are managed on the side of the cloud provider. We’ve already written about on-demand software recently. 
• Private cloud – offers opportunities similar to the public cloud. In this case, though, companies own and manage remote server capacity in-house (for security or compliance reasons, mostly).

It should be noted that there are also hybrid cloud-hosting solutions, but that is a topic for another blog post…

In most cases, public cloud hardware is the go-to choice for running microservices. It offers virtually unlimited processing capabilities on rather flexible terms. 

And while there is an array of remote infrastructure providers, the most popular of them are represented by: 

• AWS (Amazon Web Services) 
• Microsoft Azure
• Google Cloud Platform 
• Oracle Cloud
• Pivotal   

VMs & container management 

Now, there are two principal ways of using cloud resources – virtual machines and containers (each containing individual functionality). 

Both use remote hardware to perform tasks. Now, VMs emulate entire systems along with the operational systems. Whereas containers share the OS and therefore have a lot of common functionality that needs not be executed separately. 

This saves a ton of resources, providing a tenfold launch-time difference and a major cut in RAM and CPU usage, in favor of containers, of course. Having less overhead and close to zero weight, it is a much more favorable environment for complex applications. 

However, while it’s very convenient to have individual containers for each of the services, it is another challenge to successfully manage it all. Crucial tasks like automation of deployment, scaling, and networking, add up to the complexity of running loosely coupled software. 

This is where container orchestration tools come in handy, effectively tackling these kinds of issues. 

In this regard, the most popular choices on the market are: 

• Kubernetes
• Docker 
• Apache
• Other solutions from major cloud providers like Amazon, Google, and Azure.   

Interaction

We have already learned that microservices allow using different tech for individual software components. 

On one hand, this gives the flexibility to assign the best-fitting technology for tackling different tasks within the system. On the other, however, it requires establishing effective interaction between those app components. 

This is exactly what a service mesh is there for.

A dedicated infrastructure layer, it enables the services to interact with each other via local “sidecar” proxies instead of calling each other directly over the network. In essence, it is an interpreter between services that often “speak” different programming languages.

Service mesh facilitates horizontal (service to service) communication, as opposed to the API gateways that control vertical (client to server) networking. It is also different from container orchestration tools, which are responsible for resource management only. 

Some of the widely-applied service mesh solutions include: 

• Istio
• Linkerd
• Consul
• App Mesh

Interface

When designing modular apps, it is crucial to determine how program components will communicate with the system. 

Typically, this task is executed via APIs. 

API stands for Application Programming Interface. It enables communication between two systems (for example – your laptop and an app), determining the data transfer protocol. Something like a moderator of the client-to-service conversation who ensures that the message “gets through”. 

APIs operate via ‘requests’ and ‘responses’. When a system receives a request it returns a response. The destination of that response represents an endpoint – essentially, one end of a communicational channel between a server and an external device. 

Now, what comes down to one communication channel in a monolithic app, may generate an array of those in microservices. This is because splitting software into multiple pieces implies that a single client request may call for separate responses from the services, resulting in multiple endpoints. An API gateway sorts it all up by providing a single point of entry into the system…

Ok, I know that just spilled over the sane limit of tech terms per paragraph. 

Let’s break it down. 

API gateways

Imagine a typical blog page like this one. It contains a text field, a list of recommended articles, a comment section, a login form, a sharing functionality, etc.

In microservices, a separate module owns each of the described components’ data sets. So, when you open up that page you actually communicate with a set of micro-apps. 

If these calls were direct, your browser would have to send separate requests at all of those services (each with an individual web address) in order to assemble the page. For a number of reasons that furtherly exceed this article’s threshold for heavy terminology, such an option is inefficient. You may read about network latency here. 

Another option is to have a distributing entity to sort through multiple client requests and return a single, “comprehensive” response. Kind of like the packing assistant in a grocery store. You know, the one gathering your stuff while you talk to the cashier and check out – to save everyone time. 

That’s API getaways. 

Some of the best API Gateway solutions are provided by Amazon, Ambassador, Kong, Microsoft, Akamai, Mulesoft, Google, and Express.

Security

Privacy issues accompany any IT product development process. 

At that, the nature of microservices poses an elevated threat of security breach, putting additional pressure on software architects.

More so, securing the containers in which microservices run joined the list of the industry’s main data-protection challenges in 2018. 

This is happening for two reasons. 

For first, it is a well-known fact that a system’s complexity is inversely proportional to its reliability. This is especially true when it comes to software vulnerabilities. Increased interaction between microservices comes hand in hand with additional communication channels – which means more points of potential penetration.  

To make things worse, microservice apps are often hosted along with third-party software, on the same physical server. Even the word combination “shared environments” does not sound too safe. Forget about the multitude of less obvious ways things can go wrong in a complex cloud infrastructure hosting disintegrated software.  

Luckily for IT enterprises, there are solutions for these issues, too: 

• Twistlock
• Tigeria
• Aopreto
• Aqua

Other middleware

Last but not least on the list of the main technologies behind microservices is the so-called middleware. These tools are responsible for additional coherence-related tasks like load-balancing, proxies, caching, and routing. While somewhat similar to the already mentioned gateways, it doesn’t expose microservices as an API does. 

In terms of microservices middleware, these are the market leaders: 

• NGINX 
• Envoy
• Zuul
• HA Proxy 

Final Word

Although there are no reasons for smaller teams and projects to give up the well-established and proven monolithic software architecture, Microservices are more progressive and seem to be staying around for the foreseeable future.

Yes, the approach is more resource-demanding and complex than traditional program development techniques. However, its benefits outweigh the cost, especially for big projects where software reliability and production speed play a key part. The array of technologies backing microservices-based apps is stunning. From design and implementation to deployment and maintenance – versatile program tools are there at one’s aid on every step of the microservices development process. 

Software outsourcing is gaining momentum in Europe and North America these days, and it is no wonder why. As more and more industries require digitalization or an update of the existing software solutions – the demand for IT expertise increases exponentially. 

IT development agencies are there to help companies shape their future in the digital realm. They analyze the client’s strengths and weak points and define an effective tech strategy. This, in turn, helps to automate data processing and manual everyday tasks like accounting and logistics, increasing the overall efficiency of the operation as a result.

Most of these goals are achieved through developing new and fine-tuning the existing software. 

At that, not every company can afford to hire and maintain a team of software experts usually required for executing such tasks. Of course, this doesn’t mean businesses should give up on the idea or eliminate their budget altogether. 

This is where outsourcing teams come in handy, providing the opportunity to cover the companies’ digital needs pain-free. 

Outsourcing is one of the fastest-growing trends in the IT world. Its global market size approached a $100BN mark in 2019, according to Statista. But, why is it so attractive to businesses of all shapes and forms? And what are the main benefits of shifting your digital tasks out of the state?

Let’s find out.

Benefits of outsourcing software development

When it comes to the benefits of IT talent oursourcing, there are 4 key points. 

Those are:

IT talent acquisition

The first and foremost advantage of leveraging developers from outside is the extensive pool of experts that becomes available to your business. 

The software world is vast and complex, so it makes no sense for businesses to try and fill all of their potential tech needs via in-house developers. You’d have to employ an entire state of IT experts to achieve that. Definitely unrealistic.

In such a situation, relying on third-party software production capabilities is a great and effective choice. 

This is why, even established enterprises like Microsoft resort to outsourcing to pump up their workforce, forget about smaller companies. 

Efficient workflow

Here’s another point in favor of delegating some of your coding work to external specialists. Even if you are willing to reserve extra space in your office and budget for a team of devs, the challenge remains to manage all of the working processes and people. 

Do you have the time and knowledge to oversee all of it? 

It’s a good question to ask yourself. 

Very often, it is more efficient for executives to focus on indispensable business activities like marketing and client acquisition – something they are experts in themselves, and leave the technical issues to the others.  

In fact, Harvard Business Review found that a lot of managers admit feeling incapable to understand, let alone – manage – the technical part of the IT development processes. Instead, they choose to maximize flexibility and control by finding a good outsourcer to rely on to solve these issues. 

Lower production costs

If balancing the budget is anywhere on your business’ agenda, then outsourcing is definitely a worthwhile option to consider. 

For a number of reasons, remote software production will usually cost fairly less than the same amount of intellectual work executed in-house. Not only the aforementioned management nuances and greater talent access play a part in this. The economical diversity between places and regions of the world is drastic. So, what costs a dollar in NYC may be sold for less than a fifth of that, just across the Atlantic ocean.  

Difficult to believe? 

Check out these stats from SalaryExpert, but take a comfortable position/seat first: 

This is how much devs earn (and thus – charge) on average in Manhatten: 

And here’s how much the same type of work costs in Eastern Europe, Ukraine: 

You may do the calculation yourself. 

When this article was written, this equaled $19,345.

Divide the two numbers and you get a stunning 6.58x difference in costs for the same type of service. And we’re not talking about rent prices – a piece of code surely doesn’t change in a fancy location. 

Are you on Upwork already? 

Don’t rush, there is another crucial factor when it comes to our topic… 

High-quality software services

Last but not least on our list of the outsourcing benefits, is consistent product quality provided by dedicated dev teams. 

Naturally, nobody can give a 100% cashback-if-you-don’t-like-it guarantee that the team you choose will satisfy all of your project’s needs exhaustively. Actually, it’s the same with in-house workers. You would have to do research and run through a few options before finding the best solution for your goals and setup.

That said, just like with air travel – the statistic is on your side in this one. Over 78% of business owners are fully satisfied with their outsourcing partner, according to Deloitte. 

Most of the remote teams out there consist of high-skilled professionals operated by seasoned PM’s. This ensures a smooth development process and above-average quality of the end-product – two of the clients’ most common pain points. 

IT outsourcing challenges

Looking for the drawbacks of hiring remote dev teams, one will have a rather hard time finding one.

Time difference? Perhaps.

Not meeting each other at corporate events? Possibly another benefit.

Most of the time, the working process with outsourced partners is virtually the same as with in-house ones. However, you need to consider the following when outsourcing IT services:

Remote communication

The first seeming issue with outsourcing contracts is communication. Talking to colleagues online is slightly different than in real-life meetings, but not nearly big enough to worry about. A time difference may shift daily/weekly calls slightly, but you can always negotiate a comfortable time.

In fact, we’ve got a short read that’ll help you make the most of online meetings. So go and check if you have any concerns about communication over distance.

Legal regulations

Another obvious issue with ordering products services from abroad is versatile legal regulations and taxes.

The laws are different everywhere, and it may be a lot more or less expensive to outsource depending on your partner’s location.

Moreover, the rules keep changing.

Like that, Britain’s controversial IR35 corporate tax law reforms have complicated a lot of things for businesses not only inside the country but also those working with British companies. Meanwhile over in Ukraine, on the other hand, the taxation scheme has been rather simple and beneficial for international partnerships lately.

So, you have to explore current laws for each particular location individually when looking for outsourced services.

Political situation

One more challenge in international talent sourcing is geopolitics.

Unfortunately, we have seen government tensions around the world harm the informational technology sphere here and there.

One of the biggest IT talent outsource pools, India is breaking records with nearly a hundred cases of nationwide internet outages this year. Another major player in the international outsourcing arena, China is known for radically limiting web access for its citizens, too. Now, the web access pandemic has reached a primary provider of outsourced talent in Eastern Europe – with the recent web access outages in Belarus.

In fact, you may find it interesting to check this up-to-date map of global internet restriction levels – just to have a vague image.

For the local IT businesses under such circumstances, this can mean anything from missed deadlines and postponed work to compromised production and lost contracts. And for their clients, it is clear that outsourcing to a politically unstable country may cost one a business, so they look elsewhere. 

Where to source IT services?

MintyMint’s extensive team of experts is always at your hand when it comes to IT services. Otherwise, it may be helpful to check out this list of the top eastern European software development companies to paint a better picture of what the market has to offer.

We’re on that list, too, in case you wonder.

Final word 

With international enterprises and leaders of software production investing more and more into the remote workforce, it is fair to say that the practice is approved by the giants of the industry. 

IT outsourcing can help to access great talent, improve management, and save the budget. It takes a lot of stress away and allows you to focus on high-impact work. 

You make the bet as what’s best for you and your business. If it’s quality, convenience, and efficiency – our team is here to help! 

Here’s a question: 

When was the last time you had to install a piece of software on your computer’s hard drive? Can you name more than two? 

The OS and Google Chrome don’t count! 

I bet that it’s hard to tell.

Most probably, a very tiny percentage of the digital products you have recently used required installation. At the very least, there must have been the option of running an online version of the service. 

The truth is that from data storage and communication to business management and finance solutions – the tools we depend on are relocating to the cloud, pulling industries worldwide in the same direction. In fact, companies have explored centralized computing since the mid-1980s, so the trend is not young.

Today, the reasons why over a third of all IT budgets are allocated to cloud technology lie on the surface: it is progressive, convenient, and cheap. 

Now, where does SaaS fit in all that?

SaaS stands for Software as a Service.

It can be considered a subcategory of the wider notion of cloud computing, which refers to a variety of web-based software. 

Yes, cloud solutions and SaaS are essentially two sides of the same coin. The tool and the method for executing the same task, they both aim at providing information technology products remotely. The difference is that with SaaS you no longer have to maintain neither the servers nor the service available online. 

At its core, SaaS is a subscription-based product distribution model that utilizes central hosting as opposed to the traditional on-premise software with a perpetual license.  

In simple terms, it is the software you can access via a web browser.

I know what you’re thinking – “Well, that’s a bombshell…”

However, SaaS is an industry-defining trend with over 73% of IT businesses worldwide expected to incorporate it this year. 

Why is it so?

Here’s an example to give you a better picture of why this is happening: 

Think back to the times when the locally-hosted MS Office was the primary document editing platform for your daily activities. 

The whole experience was kind of nightmarish. 

• First of all, it came with a limited number of devices you could run it on, at a relatively high price ( ~ $150 per license). 

• To use it you had to buy a disc or (later on) download and install it. 

• Switching to another computer meant you have to ensure that a relevant version of MS Office is installed there. Otherwise, it didn’t work. 

Once again, enjoying all of these “conveniences” did cost hundreds of dollars.

This is simply hard to imagine today. And few would argue that we are lucky to have things like Office 365 and Google Docs. 

I surely do not complain.

A closer look at Software as a Service

Now that we’ve looked at on-demand software from an average user’s point of view, let’s add the business variable into the equation. 

In general, SaaS solutions can be divided into two main categories – horizontal and vertical. The first group meets the needs of a particular industry like fintech, engineering, or healthcare. The second one is focused on a specific task like management or analytics.

Some of the big SaaS names you must have heard of include: 

• Slack – multi-featured business communication platform.
• Figma – web-based vector graphics editor and prototyping tool.
• Google Drive –  file storage and synchronization service.
• Netflix – media-services provider and production company.

…as well as more narrow-ranged tools like:

• Amazon Web Services – on-demand cloud computing platforms and APIs.
• Salesforce – popular CRM that can be accessed online.
• Quickbooks Online – accounting records available from any place in the world.
• Citrix GoToMeeting – web conferences via a web browser.

See? 

You could be using SaaS on a daily basis without ever noticing it.

A rare case in the business world, on-demand software is a win-for-all type of scenario. 

Just like your favorite food places, it is a mutually beneficial solution both for the service providers and their clients. While the first get an opportunity to do business at scale, the latter ones can enjoy the product hassle-free and quite often at a lesser expense.  

You choose what’s best for you and your business. 

That said, let’s move on to the perks clearly provided by SaaS technology.

Benefits of sticking with SaaS

When it comes to the advantages of sticking with SaaS over the good old packaged software – the list really goes on and on.

Here are the main points:

Accessibility

Easily accessing digital products is among the key factors driving the rapid growth and development of on-demand software. 

In this regard, SaaS offers an impressive degree of flexibility since you are no longer restricted to using a particular platform, device, or location. All you need to access the service is an internet connection and your login information. 

This is very convenient for users as it allows switching between places of work, simplifying the daily grind big time. 

At that, SaaS is even more fruitful businesses-wise. Bridging the technological gap between the service and its consumers, it expands the product’s potential audience beyond a particular platform or device family.

Budget

SaaS is great at cutting costs for all parties involved. 

First of all, enjoying a pay-as-you-go subscription model for your favorite service is very convenient and attractive to the users. 

However, remote hosting is even more profitable for entrepreneurs: 

By eliminating the need for complex hardware setup, it lifts the weight of server maintenance from businesses and places it onto the shoulders of the hosting provider, along with the electricity bills. 

This can radically lower the operational costs and allow you to invest in essential marketing activities or reduce the product price tags to attract clients.  

Quality

There is no such thing as a final product version in the IT industry. All software is constantly revised and improved in order to meet the ever-changing user demand.

SaaS makes it a thousand times easier to do. 

Сentrally-hosted products take much less effort to update and troubleshoot and help to avoid unexpected bugs or compatibility issues.

To the users, this means worry-free access to the latest version of the software they rely on, with no issues. 

Flexibility

Last but not least, flexibility is another item in the basket of SaaS strengths.

Unlike traditional software, on-demand solutions allow you to tweak the software to your favor. So you can change the parameters or even the design of the software at wish. 

Businesses using SaaS can always change the hosting size, processing load, or the very hosting provider to their favor. 

As for the clients of SaaS-based services – the choice is also there to upgrade the plan, get additional features, or roll back to the basic (often free) version of the software.  

Summary

Everything summed up, Software as a Service is not just an advanced product distribution model. It is also a convenient and cost-effective tool for both businesses and their clients alike. 

While there are similar technologies like IaaS and PaaS, they represent slightly different kinds of IT solutions. Meanwhile, software as a service provides access to a specific, ready application. 

What does the market say? 

With the public SaaS market exceeding $150B in 2020, numbers show that global enterprises are making a heavy bet on web-based digital products. 

So, there is no reason to exclude it from your own business strategy, too. Especially if you’re looking for long-term profits.   

They say that customer is always right. 

Indeed, it doesn’t take Gary Vaynerchuk to see that every business or service revolves around the client. The stumbling stone here is guessing exactly what the customers want, and while market analysis and research can surely contribute to that, nothing paints as accurate a picture as a field study would.

Now, how do you do it without wasting a fortune on running the show? The answer is a Minimum Viable Product, or simply – an MVP.

What is it and how to make a minimum viable product your most valuable player? Read on to find out!

What is an MVP product?

Defined in The Lean Startup by Eric Ries, MVP is a functional version of a product that enables gathering maximum customer feedback with the least effort. It can be a landing page, a promotional video, or even a Kickstarter campaign.

The idea is to produce a practical learning tool that’ll help to craft the best solution for a target audience’s issue. So, instead of assembling a complex business plan and relying on expert estimates, you introduce a ready solution using the least amount of resources possible and observe the actual user behavior. The insights gathered then suggest whether you are moving in the right direction or need to change course.

MVP development process typically consists of the following stages: 

1. Idea
2. Research
3. Conceptualization
4. Implementation
5. Feedback

In general, it looks something like this:

Before moving on, let’s get clear with the terminology. 

The word viable means capable of working successfully. This is something many entrepreneurs miss, yearning for perfection. A successful MVP resolves a key user issue and is neither fancy nor sophisticated. Moreso, it can be plain out boring (unless you’re making a game, of course), as long as it provides value.

Here’s an example: 

Say, you’re making a dating app. The perfect scenario here would be a responsive multi-platform app with ratings, interest-matching algorithms, and an in-built messenger. However, the minimum value of a dating app is for a user to find a date.

In this case, a possible MVP looks like a serverless web service with profiles that include a picture, location, and an email (or a public messenger link).

MVP vs final product

A minimum viable product is very different from the final product, mainly in its goals. It’s not there to sell, but rather to test the market. 

Here’s a real-life case in point everyone is familiar with:

McDonald’s founders jump-started the now-global chain of restaurants by combining two of their customers’ main values – top-demand food and low lead time. They reduced the menu to just 3 food positions (with a few choices of drinks) and managed to cut the order time down to under a minute.

Like that, their clients’ favorite meals were ready for takeaway in a blink of an eye. No friction, and ultimate efficiency. 

Years later, McDonald’s menu grew back to include dozens of positions and is available in every corner of the world. But they had to strike that MVP offer first, in order to take off.   

MVP benefits

Creating an MVP can help you to: 

• Cut costs.
• Save the production time and resources.
• Build up an initial client base.
• Get feedback from the market.
• Collect insights on focus features. 
• Attract early investments.

Doesn’t all that sound great?

Naturally, there is rarely a one-fits-all solution in the IT industry, even more so for startup MVP development. Different approaches to building a minimum viable product will fit better or worse depending on your main goals and project stage.

For that matter, MVPs are divided into low-fidelity and high-fidelity ones. 

The first approach is good when you need to:

• Get to know your target audience and their issues.
• See if your product satisfies the customers.
• Evaluate the overall market demand for your offer (smoke testing).
• Find the best solution to the clients’ need. 

Whereas high-fidelity MVPs are helpful to: 

• Assess the optimum price for your offer.
• Get early adopters that’ll recommend your product.
• Optimize your promotional strategy.
• Spot further business growth opportunities.

Before you start building a minimum viable product, consider your main goals and risks, the potential time to market, and your budget and/or funding sources. These questions will help you to paint a clear roadmap of the MVP development process, hopefully, the one to success. 

Types and examples of an MVP

Now that we’ve covered the definition and the main benefits of our subject today, let’s look into the common MVP types along with some notable examples from history to back up the point.

Landing page MVP

Unsurprisingly, a landing page MVP implies creating a simple landing page to present your product or service. The goal is to provide potential clients with a general image of what you offer along with a call to action, whether it’s to sign up or make a pre-order.

In this case, you don’t even need to have the business going on. The idea is to smoke test your offer. Once people discover your “website” and begin interacting, you can evaluate the numbers to learn whether the target audience likes the solution at all.

Like that, your spendings are down to the cost of a landing page plus your ad campaign budget. It is the strategy Joel Gascoigne applied when launching his two-page LP (description & pricing) for Buffer, with no actual functionality behind it.  

Video MVP

Another option of a minimum viable product comes down to recording a promo clip or an explanatory video, putting it up on YouTube, and watching if it gets the views and feedback. The good news is that engaging videos often get viral, automatically launching a word of a mouth promo campaign. The bad news is that few videos hit that mark, and it’s impossible to predict which one will. 

You have to climb a tree in order to get the fruit. After all, producing a video clip is not nearly as cumbersome as developing a complete product. It worked for DropBox, so why wouldn’t it do the same for you? 

Btw, here’s the award-winning video: 

Crowdfunding MVP

Another great way to get your project up and running without eliminating the family budget is to launch a crowdfunding campaign.

In this case, what you do is prepare a concise presentation of your idea, a prototype, or a visual design. Then, share it at either of the popular crowdfunding services like Kickstarter, SeedInvest Technology, or the one developed by our team – 4Friends.

A crowdfunding MVP is really a win-win option. If your idea gets the attention, you receive the funding to invest in something already favored by the market. If it doesn’t – you lose nothing. The only drawback here is that your idea can potentially be stolen and compromised. But hey, you don’t have to give away all the key ingredients. And plus, if the idea is that good – you’ll get the funding before the plagiarists jump out of bed. 

One of the most impressive crowdfunding MVP success stories is that of Pebble. Back in 2012, Eric Migicovsky decided to try his luck on Kickstarter after running out of the initial funding for his revolutionary smartwatch. Guess what followed? A $10M investment and almost half a million watches sold in two years.

Impressive, huh?

Actually, the brand repeated its success a couple of years later, scoring another eight-figure. 

And yes, it didn’t quite survive the competition as time passed, but that is the topic of a whole another discussion…

A Piecemeal MVP

A piecemeal MVP simply means using a free digital platform to provide your service. 

You can throw a promo campaign on social media, launch a special offer email campaign for existing contacts, or explore new audiences via mass-mailing. The key thing is to use a free platform to reach your customers. 

Uber is a great example of applying such a strategy, famously requiring the initial customers to email or SMS one of the founders in order to access the service.

As they say, all is fair in love and war… and business, of course. 

Similarly, you can leverage the power of social media platforms in the same way as Uber did with emails. With billions of users spending half of their free time on social media every day, who said a thoroughly worked out Instagram page can’t be your minimum viable product at the first stages?

Concierge & Wizard of Oz MVPs 

These two minimum viable product types imply using human resources to manage what should potentially be automated. 

With the concierge method, you act like a concierge – greeting guests in person and opening the doors on their way to the value provided. Meanwhile, you are able to collect direct feedback from working closely with the clients.

The Wizard of Oz scheme applies a similar approach. The main difference is that while using manual work to execute the task, it is visually indistinguishable from a complete, finished project. Therefore, users see it as an end product while it’s actually not so – behind the curtains. 

For example, you make a website with a catalog of products, without stocking it. Once an order comes in you get that item from the original supplier and ship it to your client. Believe it or not, this is how Jeff Bezos initiated Amazon back in the day. 

Single-Feature MVP

Last but not least, a single feature product can be your best bet type of MVP. The idea here is to offer a service with nothing but one key feature.

Say, you want to make an online photo editing tool with lots of cool filters, albums, crop tools, etc. Just to kick things off and prove there is potential, you choose one supreme filter and develop an app where users can process and share one pic at a time. 

This will require minimum investments, low server capacity, and overall production simplicity. If people love it, you can always scale up. 

A good example of a successful single-feature MVP is the way Richard Branson’s Virgin Airlines took off by flying just one plane en one route between two major airports in London and Newark, New Jersey. You know where it’s taken sir Branson since.

How to build a minimum viable product for my business?

Now that you know everything about the concept and types of minimum viable products, it’s time to dive into the process of startup MVP development for your own business.

On this path, there are 5 main steps:

1. Allocate the budget

Before launching any product development process, it is crucial to assess how much exactly you will need (1) and are willing (2) to spend on it.

Speaking of MVP, we naturally imply a constrained budget. That said, everyone has their own limitations, and what may be just enough for a mobile application or a web service is probably way above the line for a simple landing page or online business card.

Therefore, evaluate your possibilities and set out a realistic budget for the project first!

2. Determine the type of MVP that suits your purposes the best

As mentioned above, different projects require a different type of MVP to kick-start, no pun intended. Which one suits your purposes is, of course, for you to determine, but here are some general guidelines:

If you promote a product or service and just need to reach your customers and provide them with web space to explore your offering – then a landing page MVP is really all you need.

Looking to mass-produce a product you already have or can make a prototype within your budget to present to potential investors? Then a crowdfunding MVP is the perfect choice for you to amass the funds needed to scale up.

Have a great idea and want to see whether it’ll rock the market? Consider a video MVP where you present the concept in plain words or with minor graphic design to let the world know about your idea and evaluate whether it has the potential to blast.

Should you have the initial budget to invest in a simple mobile or web app to present your business and are willing to take care of the back office work manually – then a concierge or wizard of OZ MVP is your best bet.

Finally, if you’re just starting out a side-hustle like a small retail shop or some sort of beauty nail studio from home, and especially if you target youth and young adults for the most part, then a Social Media MVP is a great point to start from in order to present your service and try to gain the initial client base, without eliminating your budget.

3. Define your target audience

Once you get clear with the budget and the best MVP type to fit your needs, proceed to paint a vivid picture of your target audience. What is your typical customer like, what are his needs and desires, and most importantly – how can your product or service help him achieve it? What features would appeal to your clients the most?

Think about the key benefits you can hook your potential clients with and focus on delivering those. The rule of thumb here is that of space travel voyages – only take the very essential on board.

4. Hire a qualified team

Now that you know exactly what kind of product you need and what does the target audience looks for in it, it’s time to bring it about.

At this stage, it is extremely important to have a qualified team or seasoned individual experts in the field of your project backing you up on the technological (and creative) frontier. Whether it’s a graphic designer, a video editor, a voice-over narrator, or a professional software development team – you’re going to need that expertise to make your MVP stand out and win the hearts of the crowd.

5. Invest in marketing

Last but not least – marketing. They say that a good product will sell itself, which is entirely true. Just think about Apple, for example.

That said, unless you’re making a world-leading digital gadget in bulk or anything of that grade, your product or service will definitely need at least the initial push before the word of mouth picks it up and carries your name around the world.

So, PPC, SEO, SMM campaigns, or influencer marketing – any advertising tool valid in 2021 is at your service, once again, highly dependent on your budget and targeting audience.

Your Minimum Viable Journey

All in all, creating an MVP allows you to save time, cut spendings, understand potential customers, and build up the initial client base. This is an efficient marketing tool not only for startups but for existing companies introducing new services just as well. 

A common mistake to avoid here is confusing the idea with a minimum value solution, which is a totally different thing. By implying a minimum product, an MVP actually offers ultimate value.    

Contact our team if you need help with minimum viable product development!

Spike of popularity among contactless payment during Coronavirus pandemic

Coronavirus poses a huge threat to the economies and populations of all countries in the world. One of the sources of the virus’s spread is cash, which carries a huge amount of bacteria. ATMs with cash-recycling functions become a channel of disease transmission. A way out of it is making contactless payments, which allow you to pay instantly and avoid endangering yourself.

Even the World Health Organization recommends ditching cash in favor of contactless payments to prevent the spread of COVID-19. WHO issued this recommendation after China and Korea began separating and disinfecting used banknotes known to carry viruses and bacteria.

A representative of the World Health Organization noted in a recent interview with The Telegraph:

“We know that money often passes from hand to hand and can collect all kinds of bacteria and viruses. We advise people to wash their hands after handling banknotes and try not to touch their face. Wherever possible, it is advisable to use contactless payments to reduce the risk of the infection spreading.”

When will the economy recover?

Opinions vary greatly on how slow the global economy will grow.

The conclusion of the American Institute of International Finance looks quite pessimistic. IIF estimates the global economy to grow by a maximum of 1% in 2020 – the lowest since the 2007-2008 crisis. In China – the source of the virus – GDP growth will slow to 4% instead of the previously expected 5.9%.

Consulting company McKinsey&Company has outlined three scenarios of crisis development.

The softest scenario is the elimination of coronavirus outbreaks up to the second quarter of 2020. In this case, the global GDP will grow by about 2% instead of 2.5%. If the pandemic persists beyond the first half of the year, global economic growth will not exceed 1.5%. In case the pandemic continues to the second or third quarter, global GDP could fall by 1.5%.

So, how can you help the world? One of the options is by using contactless payments. A safe way of using money, its popularity is increasing tenfold due to the COVID-19 pandemic.

How does the technology work?

In most cases, contactless payments are enabled by NFC chips that are found in most modern smartphones and tablets, as well as in many smartwatches and smart bracelets. These chips can transfer encrypted data from a customer’s bank card to another chip, for example, in a POS terminal at a store. The data exchange takes 1-2 seconds, followed by a successful payment. 

The contactless connection between the devices is conducted via radio signal (Radio Frequency Identification technology). NFC-chip uses a special radio frequency (13.56 MHz), which works only if the devices are close to each other.

There are two main options for using NFC technology in retail payments:

1. The first way is payments by banking cards supporting contactless technologies (for example, MasterCard PayPass/ Visa PayWave).
2. The second way, which is gaining popularity, is by mobile devices through paying services (Apple Pay, Android Pay, Samsung Pay).

Smart payments

To use a smartphone as a contactless payment tool, you need to tie a banking card to your smartphone using a special application. At this stage, the app generates and stores an encrypted “key” (token). After that, you can pay with your smartphone without using the card.

Contactless payment is becoming more and more entrenched in mobile devices. Near Field Communication (NFC) technology is already available in Apple, Samsung, and other mobile devices. In addition to NFC, Samsung has introduced magnetic security transfer (MST) technology for smartphones to interact with terminals that accept magnetic stripe cards. 

Wearable devices also influence contactless payments. Some of the leading tech companies like Apple and Samsung produce watches with an embedded NFC chip. Traditional watchmakers, like Mondaine and Swatch, are also keeping up.

Now NFC technology is not only extremely convenient.

Contactless payments offer settlements security provided by the global digital tokenization platform Mastercard Digital Enablement Service (MDES). MDES allows turning any device with an NFC chip and an Internet connection into a secure payment tool, through creating a unique token to protect transactions. A token is a 16-digit combination tied to a user’s bank card number, which is unique for each connected device.

Tokenized payments hide bank card details. To verify the payer by the bank during the payment process Mastercard transforms the token into the card number.

Benefits of Contactless Payments

The main advantages of using contactless payments:

• Protection from COVID-19. Using contactless payments you avoid contact with things (money) that potentially can be infected with the coronavirus.
• Simplicity. One-touch purchase payment without pin code and signature. You need less time to pay for the purchase. 
• Quick. Payment using contactless technology occurs almost instantly. This saves time for the client and makes the work of the cashier more effective.
• It’s an innovation. The most modern payment technology. If a business uses contactless payment – it gains respect from customers.

But how contactless payments affect business and economy? What are the examples of successful implementation of contactless payment technology?

Here’s a map of the contactless payment limits in various parts of the world:

Amazon initiatives

In 2016, eCommerce giant Amazon launched a new type of Amazon Go offline store in Seattle – with no cash registers or cashiers. In there, buyers just pick up the products and leave the store, and payments are done automatically, contactless, and discreetly.

The company combines RFID (radio frequency identification technology) with smart video cameras. The system records when a customer takes an item off the shelf, while video cameras locate the customer inside the store. Combined data analysis allows the system to identify who took which items and record it in a shopping list in the Amazon mobile app.

This approach allows customers to perform a reverse operation, return a product to the shelf and thus automatically exclude it from the virtual shopping basket. Products can be carried out in pockets or hands. Once a person goes through the turnstiles, the money is automatically deducted from his Amazon account.

Amazon Go, where the whole process of shopping (from selection to payment) is carried out by the buyer, brings 50% more profit than traditional stores.

Palm payments

The company is developing a new payment method that will allow consumers to pay for their purchases using the palm of their hand, without using a bank card.

Amazon had filed a patent for a “contactless biometric identification system” with a palm scanner. The tech giant is developing this project together with Visa and Mastercard. Major banking institutions, like JPMorgan and Wells Fargo, are also taking part in its development.

The company plans to offer customers an opportunity to tie the data of a bank card to their palms. This would allow them to make a purchase with one touch, without using “plastic”. Also, the company plans to introduce such payment in the supermarket chain “Whole Foods”. Clearly, Amazon is the leading contactless payment developing company in the world. 

On-demand Economy

Contactless payments are becoming part of the “on-demand economy”. Taxi applications such as Uber, Bolt, Gett can be used for reference. These services allow users to tie a card to a mobile application once and then automatically pay for their trips without touching neither cash nor the interface of the application itself.

Besides mobile platforms, functions of contactless payments are available both on social networks (Facebook, Twitter) and messengers like Telegram, WhatsApp, and Viber.

Over the next decade, we will see more changes in the banking industry than in the last 100 years. KPMG Global’s research “The Future of Digital Banking” confirms that technologies such as Artificial Intelligence, Blockchain, Biometrics, 5G, AR/VR will have the greatest impact on the financial services industry in the next 10-15 years. So, voice command and biometrics can replace contactless payments pretty soon. Thanks to the “Internet of Things”, any device can become a digital channel for paying for goods and services.

Examples of successful implementation of contactless payments into banking systems are Monobank, Revolut, N26. All these banks are mobile, they have no offices, but are incredibly popular. Of course, among youth mostly. 

These banks are actively competing with each other.

For example, N26 is one of the most highly regarded startups in the world. Revolut has attracted more than $350 million in investments for its development, valued at over $2 billion. Monobank reached the mark of 2 million users in just 3 years – an impressive result. 

Effect on business and economy

The sphere of contactless payments is huge and is backed by eCommerce companies, blockchain platforms, mobile developers, financial projects, banks, and even companies specializing in passenger transportation.

The rapid development of mobile technologies and contactless payments is creating a new model of user behavior. This behavior model prefers the active use of smartphones, contactless payments and various connected devices in everyday life.

Banks that do not think about the development of contactless payments may lose both clients and time in the future. 

One of the main factors that stimulate the development of contactless payments in the world is the desire to lead innovation. Contactless technologies are a sign of the modernity of banks and businesses. 

The future of contactless payments

Many countries have already adopted cashless technology. Some experts even compare the number of NFC payments a country has to its economic potential. Although cash payments are still prevalent in developing countries, high-population states like China, India, Brazil, and the USA are already entering a contactless future.

According to Business Insider, the flagship for developing countries is China with its unique payment technology integrated into a local social network – WeChat. This subsidiary of China’s giant Tencent is a mix of services, one of which is WeChat Pay, a contactless payment system for more than 1 billion users. It allows sending money directly from one smartphone to another within the app, furtherly boosting the commercial boom in China.

According to the Merchant Savvy web service too, China dominates in contactless payment development. In February 2019, 1 out of 9 people on the planet used Chinese payment systems to send and receive cash during the Chinese New Year. 

According to Worldpay’s 2018 Global Payment Report, mobile payments will continue to grow and become the second most popular method of payment after bank cards in the world by 2022. 

In the US and Europe, card payments are still more popular than mobile payments. There are various reasons for this, but among the main ones are conservatism, as well as firmness of the authority of EMV chip cards, which are very popular among middle-class people.

Conclusion

Contactless payments are the future of money transfers. The coronavirus outbreak and its worldwide spread significantly increase the popularity of contactless payments because cash is transmitting COVID-19. Contactless payments are the best way to prevent the spreading of COVID-19.

Contactless payments are a very convenient way to transfer money. The business actively implements new technologies in its own work and increases NFC popularity. The cases described in this article demonstrate the potential for spreading contactless payments in the world.

It’s fair to say that the insurance industry has never been an early adopter when it comes to tech innovation.

However, the conservative and traditionally product-centric insurance market is steadily becoming technologically advanced, even though this transformation takes time. Insurance companies, as well as banks and other financial providers, are facing new challenges and are forced to respond to digital disruption by providing a new kind of customer experience.

As customers prefer digitalized communication, clarity, and transparency, this is the right time to be a part of the trend. Gone are the days with 30-page application forms that clients fail to understand. Previously, consumers could hear from insurers once a year about the renewal of their policy not even understanding the coverage provided. Now, with a customer-oriented business focus, they are aware of every change that is going on. 

Of course, no transformation is easy.

Insurance leaders are having a tough time responding to this new set of needs. Nearly 40% of them feel uncomfortable and are extremely concerned about the pace of shifting to the new approach. In addition, AI, ML, IoT, Blockchain, and other emerging technologies are enabling InsurTech startups to enter the market. While insurers still have an advantage in knowledge and expertise, they can’t sit still and walk a fine line in order not to lose their bread-and-butter businesses.

Insurance challenges 2020

People don’t look for insurance, they want to protect themselves and the stuff they care about. Insurance companies constantly face regulatory changes, macro-economic uncertainties, innovations, decreasing loyalty, and commoditization.

That said, in 2020 they will have to deal with the digitalization of business processes. This leads to the following challenges:

Grow business via customer experience.

Many insurance carriers fail to meet policyholders’ expectations. 84% of customers are looking for immediate accuracy and responsiveness that they receive in other markets. 40% of them continue insurer relationships based on the quality of experience. Attracting new customers and keeping existing ones is crucial so easy-to-use friendly solutions should be at the top.

Maintain legacy systems.

Many companies, especially established ones, trust their business to complex disconnected legacy systems that require major financial and human resources. Another problem lies in finding the right talent: 65% of insurance organizations find the process long and expensive.

Information and workflow management.

Insurance carriers struggle to handle manual process steps including repetitive tasks, creating reports, managing claims, and requests. Finding and processing the required data becomes harder, longer and less efficient;

Staff lack.

In the US only, just 2% of university alumni plan to work in insurance. It means that many insurance companies lack the skilled staff required to follow, apply and develop new insurance innovations;

Fraudulent claims cost.

Fraud costs the insurance industry $30 billion annually, pushing insurers to seek smarter, effective, and more secure solutions. Today, fraud analysis is mostly done after-the-fact and includes rather conventional management approaches. In other words, nobody is trying to invest in fraud prevention.

Cyber risks management.

As technology evolves, understanding cyber threats will help companies meet their customers’ associated needs. Things like covering the value of losses from data breaches, loss of reputation, settlement costs, and cyber extortion.

Rise of digitalization.

With tech giants already entering the market, insurers need to take care of web and mobile-first platforms and brands. As 68% of consumers buy auto insurance on the web, an online presence is a must in this niche. It means delivering solutions via web/mobile, call centers, and chatbots anywhere and anytime. In line with the global regulations, of course.

In 2020 the balance of power is shifting from product to consumer.

Social trends are going to disrupt traditional business patterns and strategies in the insurance industry, mainly due to technological innovation. Although the insurance sector has a bad reputation for falling behind with tech advancements, it is important to stay up to date for your company’s growth and your customers’ satisfaction.

Not every technology needs to be used, but being knowledgeable of the trends will help you be on the same page with your customers. And when you share their concerns, you can offer relevant solutions.

Insurers and InsurTech

With companies like Amazon, Google, and Apple providing their customers with rich digital experience, users are demanding the same individual approach from insurance companies.

Now more than ever they feel the presence of newer startups that meet customers’ expectations in the shortest terms – the InsurTech. New technology-led players are entering the insurance sector to provide coverage to a more digitally savvy customer base. They create a competitive threat and potentially valuable opportunities for partnering on the changing terrain.

In response, insurers must embrace change and rethink their business approach to move forwards to an agile, digitally-enabled, customer-centered experience and achieve competitive advantages by meeting tomorrow’s customer needs.

Although insurtechs have not yet paved their way in the field, they are growing fast enough to capture a good share of value pools within a few years. The size of insurance companies’ share depends on how quickly they can adapt to the new market rules and become scalable.

Now, there are two primary types of insurtech, with a number of others rapidly catching upon:

Insuretech type 1: Blockchain

Insurance firms have started to slowly but surely integrate Blockchain in their processes over the last few years, and 2020 expects to see this flow sped up a few times. Blockchain enables creating a digital ledger that cannot be changed, becoming a giant audit trail of all transactions. With its help insurers can reduce admin costs that come from numerous claims and billing usually made by third parties. 

Blockchain technology ensures sharing, protecting, and verifying all data via smart contracts, saving insurance companies around $5-10Bn yearly by excluding a lot of unnecessary actions. The main value here is to avoid fraud and make customers’ claims resolved much faster.

Try to think of insurance as a smart contract which is exactly what it is: people pay money to be covered on the terms specified in a contract.

Breaking down blockchain for fintech

To understand better how it all works, let’s imagine you’ve decided to buy a house from a retailer:

1. A customer adds all house information to Blockchain to create a smart contract and indicates their preference with the insurance company X. Prior to closing, a smart contract integrates all the data about the house (number of floors/rooms, location, quality of construction, etc.) with the insurance company X;
2. Insurance company X uses these details to underwrite the policy, generate a binder, and a payment request, which adds as a block to the customer’s chain. The invoice request then adds to the closing costs and then paid from the closing proceedings;
3. A customer creates a block that has the following information: the date, dollar amount, and other details of the transaction. Using all this data, the system generates a complex encrypted hash function with a unique digital signature. This block adds to the public chain interlinked with previous blocks of this chain;
4. A hacker wants to change the past data. To do this, he/she has to change not only this block but all the previous and following blocks at the same time and stay undetected by the network, which is nearly impossible;
5. Both the retailer and customer are protected with a smart contract of the insurance company X which is activated based on a set of conditions or business agreements. If any claim appears in the Blockchain network and the terms are met, a decision is made instantly. It happens because X uses Blockchain to automate large parts of their manual processes keeping their customers and wallets satisfied.

Usage statistic

According to statistics, 44% of insurers have no idea how Blockchain can be useful. 21% are thinking about implementing it to simplify the claim process and reduce fraud. Only 2% actually apply technology.

Using Blockchain in insurance can cause a fundamental shift in all processes. Although its future still depends on legal hurdles and public acceptance, it is too powerful to ignore.

Insuretech type 2: Artificial Intelligence

Insurers believe that AI will significantly transform the industry in the next three years. Functions like fraud prevention, price and risk identification, and policy and claims processing are based on removing the human factor. It allows to access data faster, predict risks, produce more accurate reporting in tight timeframes, improve turnaround cycles, identify new revenue sources, and change the underwriting process fundamentally.

In the insurance world, machines that can learn independently are becoming game-changers in several important areas:

Autonomous vehicles.

Autonomous (driverless) vehicles are no longer the future as they slowly integrate into society, changing the face of auto insurance. These days, in case of a car accident the fault lies fully on either of the human drivers, but with fewer people involved who will be guilty then? Google, Mercedes, Tesla, and Volvo already stated they would accept liability for any accidents with their cars while Uber created a need for ridesharing insurance instead of typical auto coverage. It makes insurance agents reconsider their current policies to bridge the gap between them and technologies;

Personalization.

In 2020 personalization and customer-centered approach will prevail which means that insurance companies need to supply personalized premiums. That requires diving deep into data: 77% of customers are ready to provide it if they can benefit from a cheaper premium package. For example, smart home technology that allows people to monitor their electricity and water usage and check the cameras while they are away is the case to provide a personalized premium as there is less chance of theft. Another case is wearables that are used for health insurance personalization: if a person takes 10K steps a day it may be a reason for a cheaper premium as the risk is lower;

Enhanced customer experience.

AI will keep improving customer experience across all sectors in insurance:

• In claims settlement, there is no place for manual work: in addition to processes automatization for employees, AI allows customers to manage their claims via self-service. For example, in case of a flight cancellation that becomes a reason for a high volume of claims, customers can log in to the AI-powered platform to check the details of cancellation and be instantly paid on the claim. Only if the request fails, it involves a human’s review;
• Chatbots. As insurance is usually pretty complicated for customers to understand, it leads to a great number of clarification requests. This problem can be solved by trained conversational AI bots handling customers queries: by 2025, 95% of customer interactions will be powered by them. The ability to work 24/7 significantly cuts the costs compared to human employees and immediate reaction improves customers’ experience. Some companies even think of chatbot agents integrated into the process;
• All-in-one. Traditionally customers have different insurance providers for travel, auto, residential, life, health, pet, and legal insurance. By data analysis, companies can gather all customer information in a single profile and provide a single package for all insurance types.

This is just a short list of basic AI values for insurance companies.

Additional values

We can also add the use of telematics in car insurance to collect real-time driving data. It encourages safe-driving drivers and penalizes those that are speeding. Natural language processing can extract necessary data from unstructured piles of documents, emails, chats, and other sources of our day-to-day interaction, reducing the time for processing the claim. 

At the same time, the computer vision used by 20% of insurers already allows us to extract meaning from visual data.

For example, users take pictures of the damaged vehicle. Then, an AI Auto Damage Estimator (trained on thousands of car accident photos) can assess the damage and costs of the claim within seconds. All this is supported by real-time analytics, fraud prevention, and smart suggestions to deliver better service and increase incomes.

Thinking ahead 

Although AI-based insurance is still in its early stages, insurers have to already start thinking about its implementation in their current processes in order to stay ahead.

These technologies are just the tip of the iceberg with more coming soon. The internal processes across the industry are overly complicated right now. Over 1 million jobs in the US alone can be automated, saving costs by up to 40%.

Of course, transitioning from paper to online is not easy. 9 out of 10 insurance companies say they are struggling to develop the technology infrastructure they need, blaming legacy software and outdated IT systems. However, digitalization is not always enough as it requires the complete transformation of existing business models.

To overcome these problems and enable new efficient offerings, insurance companies are developing modern solutions using offshore talents. To boost data-harvesting capabilities, internal workflow automation, and keep the right balance, they focus on building customized software solutions. These can be claimed processing functionalities, claim and policy management platforms, peer-to-peer insurance, APIs, personalized pricing, chatbots, fraud detection software, and even insurance marketplaces.

Getting the most from insurtech

Insurtech has shaken up the insurance business with new solutions and better experiences. One of the biggest challenges for the traditional insurers is to combine their years of experience (something insurtech companies lack) with new ways of interaction between customers, agents, and partners. That said, almost 90% of insurance executives state that they have a clear long-term plan for technology innovation.

Of course, this is not done overnight, but some of the companies have already started the process:

• In 2019, almost 80% of insurance companies’ CEOs agreed that AI should soon become a part of their business model;
• Increased use of IoT sensors, AI, ML, and Blockchain combination has already helped businesses move forward towards proactive operations;
• Over 30% of insurers already use these technologies in their business.

Tranformation limitations

However, the integration of innovative technologies and reconsideration of current business models isn’t the logical next step for everyone yet.

Understanding the essence of the customer-centric approach has been a struggle for many insurers. They have to get the necessity of breaking their legacy shells to grow with the changing times. What does it mean?

• What used to be a sign of success may be not so anymore. Large companies no longer mean trust and stability;
• Speed matters more than ever. Customers require next day delivery and claim decisions in less than a minute;
• Being agile is a must. Successful digital transformation means implementing agile ways of working not only in IT departments but beyond.

Yes, data is the king: being able to collect, clean, store, transmit, protect, predict, and analyze data is essential. Making use of this data, there are priorities to set off from:

Understand your customers.

Discovering the customers’ needs is still the heart of any successful innovation. Speak the language of Millenials to have a relevant approach based on their behavior;

Make a SWOT.

In addition to understanding your customers, you need to have an idea about your strengths, weaknesses, opportunities, and threats. It is crucial to stand out and offer your customer a different service in terms of innovation and customer experience;

Explore your business model.

Say hello to insurance as the industry with multiple business models. The ability to build supply and demand chains, revenue models, and control points is as crucial as underwriting today. However, there is a difference between the model on paper and the MVP with initial customers to target;

Create a connected digital ecosystem.

A variety of insurance companies expand their businesses and broaden markets by accepting other companies in their ecosystem – the so-called big to small collaboration. Both startups and insurers have strengths and both are hungry so why not work together for a mutual interest based on agility?

Build the right platforms.

To ensure that your business can support tech change, you require the right digital architecture and cloud infrastructure. Today many insurers have a pile of complex outdated  IT systems, so the idea of changing it seems risky and expensive.

However, this is the first step to build a technology foundation ready for the future. As many traditional IT departments struggle at this stage, insurers often find help in hiring an offshore development team.

These are some very good waves for change-makers to ride in the market and future-proof the insurance venture. Customer expectations for real-time communication, individual approach, convenience, and transparency are re-shaping the industry. So, wherever you choose to place your bets, don’t expect a change and new status to emerge right away.

Keep in mind that:

• Great products are still essential. To build one you need a deep understanding of who your customers are and what they care about;
• Servicing claims still matter – you just have to use real-time data to keep the consistency;
• Underwriting is still crucial – you just need more complex data to fuel it.

Final word

Digital transformation is the journey from existing legacy systems to a customer-centric approach and one of the biggest challenges on the way is to trust technology and integrate it into daily operations. The fear of job loss still exists while the goal is not to replace a human but to make them focused on high-value tasks allowing customers more direct access to the information and self-service.

Insurance companies still have many hurdles to overcome as they look to remodel their businesses and retain market leadership status. That is why they need to have a coherent strategy, understand the cultural fit, and manage innovation.