Transformation happens at the intersection of scale and vision, and we help our clients get there

The tech world buzzed with excitement when generative AI burst onto the scene, promising to transform everything from customer service to software development. Now, as the initial hype settles into practical reality, businesses face a crucial question: how do we actually implement this technology? It’s a question that keeps CTOs up at night. Cloud or on-premises? AWS or other providers? And perhaps most importantly – how do we ensure our investment pays off?

The Capgemini-AWS partnership journey

Capgemini has spent the last 15 years partnering with AWS to answer these types of questions. Our journey has evolved from basic cloud migrations to cutting-edge AI implementations, earning us recognition as AWS’s Global AI/ML Partner of the Year for 2023. But awards aside, what really matters is how this partnership helps our clients navigate the complex world of enterprise technology. Take Amazon Bedrock, for instance. It’s more than just another cloud service – it’s AWS’ answer to the enterprise need for flexible, scalable AI solutions. Through Bedrock, organizations can tap into a variety of foundation models from both AWS and partners like Anthropic and AI21 Labs. But the real magic happens when you combine this technical capability with industry-specific expertise.

Industry-specific expertise, combined with tailored AI solutions

This is where our team of more than 50,000 AWS-trained consultants comes in. We’ve seen firsthand how automotive companies use generative AI to revolutionize vehicle design processes, how financial institutions leverage it for risk analysis, and how manufacturers implement it to optimize production lines. Each industry has its unique challenges, and each requires a tailored approach.

Cloud vs. on-premises: Finding the right balance

But let’s talk about one fundamental truth: not every workload belongs in the cloud. Some organizations face regulatory requirements that demand on-premises solutions. Others have specific customization needs that don’t fit neatly into a cloud-first strategy. That’s why we’ve developed expertise in both deployment models. Our Level 1 MSSP Consulting Competency means we can guide organizations to the right choice for their specific situation, whether that’s cloud, on-premises, or a hybrid approach. The hardware aspect often gets overlooked in these discussions, but it’s crucial. AWS’ infrastructure includes cutting-edge NVIDIA A100 and H100 GPUs, plus the company’s own custom-designed Trainium and Inferentia chips. Through our Migration Center of Excellence in India, we help organizations leverage this infrastructure effectively while keeping costs under control.

Beyond the vendor relationship

Speaking of control – our partnership with AWS goes beyond the typical vendor relationship. With a dedicated global team and regular CEO-level engagement, we’re able to influence product development and ensure our clients’ needs are heard at the highest levels of AWS. This year at AWS re:Invent, we’re showcasing something special. As an Emerald sponsor, we’re presenting our largest and most ambitious program yet, centered around the theme “Scale, meet vision.” It’s not just a tagline – it’s a reflection of what we’re seeing in the market. Organizations don’t just need technology; they need a way to scale their vision into reality.

Immersive experiences, meet real-world transformations

Visitors will experience more than just demos. We’re creating immersive experiences that show real-world transformations across industries. Our interactive client roundtables will dive deep into the three themes that are shaping the future of business: generative AI, innovation, and sustainability. It’s one thing to talk about these topics, it’s another to see them in action. What makes our approach different? We believe transformation happens at the intersection of scale and vision. Anyone can dream big, and anyone can implement technology. But bridging that gap – turning ambitious digital aspirations into practical, scalable solutions – that is where we at Capgemini excel.

The future of enterprise technology isn’t about adopting the latest tools. It’s about finding the right balance between innovation and practicality, between speed and security, between cloud and on-premises. Through our partnership with AWS, we’re helping organizations find that balance. Ready to explore how AWS and Capgemini can transform your business? Stop by the Capgemini Client Experience Center at Yardbird at The Venetian at reinvent. Let’s talk about your challenges, share some success stories, and explore what’s possible when scale meets vision. Because in the end, technology is just a tool. It’s what you do with it that matters. And with the right partners, the possibilities are endless.

Capgemini’s exclusive Emerald sponsorship at AWS re:Invent 2024 -where scale meets vision.

Capgemini is excited to announce its participation as an exclusive Emerald Sponsor at AWS re:Invent 2024! This prestigious sponsorship enhances our reputation as a premier partner in business transformation with AWS. At this year’s event, we will showcase our innovative solutions at the AWS Industry Village, featuring interactive demos across aerospace and defense, automotive, energy, and financial services. Attendees can also look forward to four client speaking sessions and engaging lightning talks focused on energy and industry transformation. Additionally, we invite you to join us at the Capgemini Client Experience Center at Yardbird, at The Venetian, for Gen AI solution demonstrations, a client appreciation event, and a Cloud Realities LIVE podcast session. Join us as we explore the future of technology together!

As cyber threats evolve in complexity, organizations face an urgent need to bolster their defenses. From phishing and ransomware to the rising danger of deepfakes, the landscape of cyberattacks is becoming increasingly sophisticated. Our recent research reveals a concerning trend: Over 90% of organizations experienced a security breach last year, a staggering increase from just 51% in 2021. The impact of these breaches is profound, with nearly half of the organizations reporting direct and indirect losses exceeding $50 million over the past three years. 

The escalating threats from AI and Gen AI 

Artificial intelligence (AI) and generative AI (Gen AI) are double-edged swords in cybersecurity. While they offer powerful defense tools, threat actors are also weaponizing these technologies. Gen AI, in particular, is lowering the barrier to entry for cybercriminals, enabling more sophisticated and targeted attacks. A striking 97% of surveyed organizations reported security incidents involving Gen AI in the past year alone. 

The rise of deepfakes is especially alarming, with over 40% of organizations experiencing financial losses due to these AI-generated deceptions. Additionally, there’s a growing concern around “prompt injection,” where attackers manipulate Gen AI models to compromise the integrity of their outputs. Internally, the misuse of Gen AI tools, such as employees inadvertently uploading sensitive information to external platforms like ChatGPT, further exacerbates the risks. The phenomenon of Shadow AI – the unauthorized use of Gen AI tools outside of IT’s oversight – adds another layer of vulnerability. Moreover, issues like AI hallucinations and vulnerabilities introduced into the code generated through AI tools introduce new challenges, making it imperative for organizations to rethink their security strategies. These threats are being recognized; about 60% of organizations acknowledge the need to increase their security budgets in the current landscape. 

The AI Advantage: Enhancing cybersecurity 

Despite the challenges, AI is proving to be a formidable ally in the fight against cybercrime. Organizations are increasingly integrating AI into their cybersecurity frameworks, with three out of five leaders believing AI is crucial for effective threat response. AI’s ability to detect and respond to threats faster than any human could is a game-changer. It enhances data security, application security, and cloud protection, allowing organizations to stay ahead of potential threats. 

Generative AI is also showing promise. Over half of the organizations surveyed believe that Gen AI will significantly enhance their cybersecurity strategies, particularly in enhancing threat investigation. By automating complex tasks, AI and Gen AI enable cybersecurity teams to focus on more strategic activities, making them more efficient and effective. 

AI and Gen AI in action: Real-world applications 

AI is already being deployed across various security use cases, from IT to operational technology (OT) and the Internet of Things (IoT). Organizations are leveraging AI to identify and neutralize threats in real-time, with many experimenting with Gen AI for generating threat intelligence and conducting vulnerability assessments. These advanced capabilities are helping to create a more resilient cybersecurity posture, enabling businesses to defend against a wider range of threats. 

Building a resilient cyber defense strategy 

To fully harness the power of AI and Gen AI, organizations must adopt a comprehensive cybersecurity strategy: 

• Develop a clear roadmap: 
  Integrate AI and Gen AI into existing security systems. Evaluate the benefits and risk mitigation these technologies offer compared to the investment. Ensure there is a robust incident response protocol with clear, actionable steps for rapid intervention. 
• Continuous reassessment: 
  The threat landscape is constantly evolving. Regularly reassess security measures to identify emerging risks and adapt defense mechanisms accordingly. 
• Invest in infrastructure: 
  Acquire advanced communication systems, data management solutions, and cloud computing resources that can support AI and Gen AI applications. 
• Establish a robust framework: 
  Implement strong governance policies to protect data integrity and foster trust in AI models. Focus on selecting and training models that align with organizational needs. 
• Integrate AI solutions: 
  Gradually incorporate AI and Gen AI solutions into your security operations center (SOC) to automate threat detection and response. Ensure continuous monitoring and updating of AI systems to keep pace with evolving threats. 
• Employee training: 
  Educate employees on the capabilities and limitations of AI and Gen AI, ensuring responsible usage and fostering a culture of cybersecurity awareness. 
• Foster a culture of risk awareness: 
  Make cybersecurity a top priority by promoting a culture of risk awareness. Empower employees to be vigilant and proactive in safeguarding business processes. 

Conclusion: Navigating the future of cybersecurity with AI and Gen AI 

As AI and Gen AI continue to evolve, so too do cybercriminals’ tactics. The volume and sophistication of cyber threats are increasing, and organizations must leverage these same technologies to mount a robust defense. While Gen AI introduces new risks, particularly from internal and external actors, it also offers significant opportunities to enhance security measures. 

To stay ahead in this dynamic landscape, organizations need to adopt a proactive approach – continuously reassessing their security posture, investing in the necessary infrastructure, and building a robust framework that incorporates AI and Gen AI. By doing so, they can unlock the full potential of these technologies, creating a resilient defense system that not only protects their most valuable assets but also fosters trust across their value chain. 

For more insights, download our latest research New defenses, new threats: What AI and gen AI bring to cybersecurity

A shift in thinking from “life cycle” to “use cycle” can help eliminate e-waste  

Instead of seeing ESG programs as an add-on, enterprises are increasingly recognizing that creating a culture of sustainability – and investing in technological advancements to support it – can have positive impacts on the business, brand, and bottom line. And in part one of this blog series, I discussed how to use ESG data strategically, efficiently, and effectively. 

Transitioning toward a sustainable economy 

Global regulations regarding ESG targets have become stricter, requiring companies to be more accountable for how they address the adverse impacts of their operations. This push for additional accountability is seen in Europe, with environmental directives pushing companies to be more sustainable with their supply chains. The Corporate Sustainability Due Diligence Directive (CSDDD), or CS-Triple-D, is aimed at larger EU enterprises, and will be gradually rolled out, with a compliance deadline starting in July 2027. Across the US, meeting ESG rules also requires a company-wide commitment to change.  

Even without regulatory pressure, it can be overwhelming for enterprises to think about the individual elements of ESG – environmental, social, and governance – and how it’s critical to address each interconnected area. Companies can always do more, but one immediate ESG solution that might be overlooked involves auditing your own IT resources. Although it’s only one function within the corporate realm, it underpins everything in an enterprise’s operations. 

Assessing the impacts of e-waste  

When considering your company’s IT systems, you need to start with human resources. Every staff member likely uses some hardware to do their day-to-day work – laptops, desktop computers, monitors, and mobile phones – and often more than one of each. Also, routers, servers, storage, adapters, cables – the list seems limitless. It’s not hard to imagine the energy use and e-waste inherent in simply outfitting a company’s internal technology needs, just so people can do their jobs. 

But when any of these tangible items reach the end of their life cycle, they’re typically dumped into the landfill. By 2030, it’s projected that e-waste will add up to 82 million tons to global garbage piles. And when you go beyond the immediate environmental impact and consider the social repercussions of disposing of hardware, the problem becomes more complex. E-waste is often shipped to areas where citizens live lower down the socioeconomic ladder. That means vulnerable people, like women and children working in the informal recycling sector, are often exposed to dangerous chemical substances like lead. 

All of this is further complicated when the hardware a company needs to replace is remanufactured. Manufacturing the latest laptops or smart phones involves sourcing minerals and rare earth elements. This disrupts the natural landscape and also impacts people who don’t have the means to resist this continuous encroachment. 

Shifting from life cycle to use cycle 

Ideally, products should be thought of as useful in perpetuity – from manufacturing to the time when valuable materials can be extracted from them for future use. Before enterprises can start putting this ethos into practice, they need a clear accounting of their IT resources. ServiceNow has a system for tracking assets, which provides companies with a solid foundation for strategically managing resources. They can determine not only what assets and systems are consuming in the form of energy but also plan for optimizing their use cycle. 

Tracking tools must be robust and extend into all areas of the corporation. Enterprises must first self-assess their sustainability metrics, identify problems, develop a baseline for change, and then continuously report on the improvements. ServiceNow’s workflow engine breaks down siloed data to speed up sustainability reporting and improve the reliability of the results.  

Leveraging the power of integration 

Currently, companies will still require stacked solutions from multiple software vendors to address carbon management, ESG reporting, SEC reporting, and statutory compliance; however, ServiceNow acts as a powerful integration platform to support it all. It allows enterprises to access data and information across a range of corporate functions and bring it together in one place for further analysis.  

Another beneficial outcome is that companies can spend less time trying to decipher disconnected data and dedicate more resources to implementing corrective action plans. Naturally, enterprises can extend these sustainability principles to other areas that go beyond tracking assets to optimize IT resources and reduce e-waste.  

As a ServiceNow consulting partner, Capgemini is helping enterprises across industries develop long-term strategies and mobilize programs and practices to help them on their journey to a sustainable future. 

Companies with integrated data and automated workflows are leaders in achieving climate targets 

With every hurricane, forest fire, or flooding event, climate-change targets and the associated deadlines seem to loom larger. Companies around the world in sectors from energy to finance have become increasingly motivated to track the progress of their environmental, social, and governance (ESG) programs. And not meeting regulatory standards has led to lawsuits and financial penalties for some.  

An automative giant was sued in 2021 for “delayed sharing of emissions-related reports” while, the following year, the US SEC fined an investment bank $4 billion “for failing to follow ESG investment policies and misleading its customers.” As the saying goes, you can’t manage what you don’t measure, and organizations amplify their risk when their ESG programs aren’t keeping up with the pace of change in regulations. 

How to achieve ESG maturity with ServiceNow  

Although any reduction in carbon emissions, terrorist financing, or cybercrime (to cite some ESG examples) is a step in the right direction, C-level executives are facing increased pressure, including from key stakeholders, to accelerate their progress along the ESG maturity spectrum. 

ESG programs at many companies aren’t as effective as they could (or should) be. Consider hindsight and foresight. Some review ESG data solely for compliance reporting; that’s a hindsight view of the data use. Farther ahead on the spectrum, foresight comes into play. Companies with advanced EGS maturity seek insights from the data to inform corrective-action initiatives to drive climate-change reductions. Enterprises even farther ahead use data for modeling and scenario planning in ongoing efforts to support ESG practices.  

ServiceNow’s integrated platform is an all-in-one solution that can help organizations use ESG data more strategically, efficiently, and effectively by eliminating corporate functional silos, improving workflows, and enhancing transparency. It offers a holistic approach to ESG programs across an enterprise’s operations, enabling cross-functional teams to work more cohesively to achieve large-scale sustainability goals. 

Take action to move ESG plans along the spectrum  

The cultural shift toward ESG maturity can be a game-changer. However, many enterprises aren’t far ahead in their journey. They’re still using energy-draining hardware that contributes to emissions, rather than curtailing them. And the systems and tools that legacy technology supports make it onerous and time-consuming for business units to analyze the disparate streams of data. Other organizations are well into their overall digital transformation but haven’t fully embedded ESG into their end-to-end operations. They might still see ESG data as an add-on rather than an untapped source of real-time intelligence.  

As a ServiceNow consulting partner working with companies to help them achieve maturity in their ESG journey, Capgemini first leverages our industry-specific experts for a two-part discovery process. Our qualitative assessment evaluates the organization’s readiness for change, while our quantitative assessment involves baselining the empirical data, they’ll use to drive their ESG program. 

Capgemini is leading by example. We’ve already embedded leading ESG practices and behaviors into our own operations. By continuously improving our programs over just 15 months, we are now on track to reach net zero by 2040, a 10-year improvement from our original target. Moreover, we are on record in our commitment to help our clients decarbonize through our advisory services, the engineering of sustainable products, the optimization of supply chains and operations, the deployment of sustainable technology solutions, and finally, ESG reporting. 

Shift from assessment to implementation 

There’s a tremendous volume of data that companies can access and draw insight from, and ServiceNow has developed specific solutions, including an ESG module for carefully assessing an organization’s risks. It gathers data sets from disparate locations – such as ERP and CRM systems, financial general ledger, and cloud systems – and pulls it into automated workflows. Then the data can be processed and synthesized to produce seamless and secure ESG reporting.  

ServiceNow is also using the power of generative AI to make the technology itself more efficient by only accessing essential data sets. This ensures that what could be a resource-taxing solution is sharpened and fit for purpose. Then Capgemini can get very granular in the ways we help our clients drive more effective programs and scenario plans for improving ESG practices. 

Our expertise, technological know-how, and understanding of the global marketplace presents an excellent opportunity for Capgemini and ServiceNow to drive comprehensive ESG programs for our partners, complete with robust workflows and transparent reporting to lower carbon emissions and reduce your risk exposure. 

In part two of this blog, I explore the importance of auditing your own IT resources. 

American automakers and battery partners are supercharging domestic battery manufacturing to meet sustainability and EV goals

President-elect Donald Trump will likely revisit many of the Biden administration’s clean energy policies. But these have already had a massive impact on the automotive industry.

The priorities of automobile original equipment manufacturers (OEMs) operating in the US shifted to electrification after President Biden’s 2021 executive order mandating that 50 percent of all new vehicle sales be battery electric, plug-in hybrid electric, or fuel cell electric vehicles (BEVs, PHEVs, and FCEVs respectively).

The vision of the executive order is to increase market share of zero-emission EVs to gain important climate benefits and promote local clean-energy jobs. Yet consumer adoption of EVs requires affordably priced offerings and widely available charging infrastructure.

The most expensive component in an EV is the battery, so the pivot by the US federal government and automotive OEMs toward domestic manufacturing capacity aims to drive EV prices down and get vehicles to market faster with lower costs.

The US federal government and many state administrations support the transition from internal combustion engine (ICE) vehicles and have funded a variety of tax credits and incentives. The Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law, both passed in 2022, provide funding to assist automakers and partners to scale manufacturing capacity, establish a domestic battery supply chain, and build a national charging infrastructure.

In large part due to these incentives, business leaders have identified the US as the top location for setting up gigafactories. According to a recent Capgemini survey, 54 percent of automotive, battery, and energy executives are building or planning to build at least one gigafactory in the country.

Tax credits, grants, and partnerships drive investment

To support BEV retail sales, the federal government established an EV sales tax credit program in 2008. This popular initiative offered tax credits up to $7,500 for new EVs, with few restrictions. Due to battery supply-chain constraints during the COVID-19 pandemic, leading automakers committed to local production of lithium-ion batteries for BEVs. The 2022 IRA supports this strategy by encouraging sourcing of critical minerals and assembly in the US, rather than relying solely on external supply chains.

The IRA also introduced revised retail-sales eligibility rules and other incentives:

• Manufacturer’s suggested retail prices cannot exceed $80,000 for vans, sport utility vehicles, and pickup trucks, or $55,000 for other vehicles.
• A certain percentage of the critical mineral and battery components must have been extracted or processed in the US or a country with which it has a free-trade agreement.
• Used vehicles are now eligible for tax credits up to $4,000 for sales up to $25,000.
• New income limits restrict who qualifies for the new and used vehicle retail sales incentives.
• Commercial vehicles are now eligible for sales incentives ranging between $7,500 and $14,000 depending on gross vehicle weight ratio (GVWR). There are no battery or mineral sourcing requirements.

The revised incentives were designed to encourage the purchase of domestically manufactured clean-energy vehicles and batteries. The new eligibility limits target the broad “middle of the market” and now include used BEVs and commercial BEVs.

Since the passage of the IRA, leading automobile manufacturers have redoubled their battery manufacturing and sustainability commitments, investing billions of dollars and constructing massive campuses dedicated to producing lithium-ion batteries for EVS and PHEVs in the US.

Tesla. Before the passage of the IRA, Tesla opened its gigafactory in Nevada in 2017 with partner Panasonic Energy. The factory can produce 37 gigawatt hours of output and provides more than 11,000 jobs. Tesla also plans to build at least two new manufacturing facilities with Panasonic Energy to produce Tesla’s new 4680 battery cells by 2030. The 4680 design is touted as being less expensive. Tesla is also investing in a lithium refinery in Texas in Corpus Christi. It is expected to provide 50 gigawatt hours of battery cells to support sales of up to one million EVs annually.

Ford. With an incentive from the Michigan Economic Development Corporation’s Michigan Strategic Fund, Ford is increasing production at an existing assembly plant and building BlueOval Battery Park Michigan, a 1.8-million-square-foot facility that’s on track to produce approximately 20 gigawatt hours annually starting in 2026. These projects are expected to create or retain 5,000 jobs.

Meanwhile, Ford is also working with SK Innovation, an energy and chemical company based in Seoul, South Korea, on a joint venture called BlueOvalSK. They are building three large EV battery plants – two in Kentucky and one in Tennessee – which are expected to produce 129 gigawatt hours annually.

With production slated to begin in 2025, BlueOvalSK’s $11.4 billion investment is expected to create 11,000 new jobs: approximately 6,000 in Tennessee and 5,000 in Kentucky.

General Motors. GM has invested in three battery plants with partner LG Energy to manufacture its Ultium brand batteries in Ohio, Tennessee, and Michigan, with approximately 1,700 jobs created in each location. Through the LG Energy partnership, GM plans for over 130 gigawatt hours of EV battery cell output when all plants are at full capacity. GM has recently announced a fourth battery assembly plant in partnership with Samsung SDI in Indiana that will produce 30-gigawatt hours of output, bringing the automaker to 160-gigawatt hours total.

Stellantis. Stellantis’ vision includes a commitment to build five gigafactories (three in Europe, two in North America) to achieve at least 400 gigawatt hours of capacity by 2030. This capacity will underpin its plan for 50 percent BEV mix in North America by 2030, whereas the goal for Europe is 100 percent BEV. In North America, Stellantis and Samsung SDI are investing in a venture named StarPlus Battery to build two battery gigafactories in Kokomo, Indiana, which will generate 67 gigawatt hours of output and 2,800 jobs, and a proposed third battery manufacturing plant in Belvidere, Illinois, which will provide between 4,000 and 5,000 jobs.

Mercedes-Benz. Mercedes-Benz built a battery manufacturing plant in partnership with Envision AESC in Bibb County, Alabama, which provides 600 jobs. This is just a few miles from its assembly facility in Tuscaloosa. This plant is part of its global network of battery manufacturing, producing a total of 200-gigawatt hours of output for the automaker around the world. The company is also investing in Boston-based start-up Factorial, which plans to sell commercial solid-state batteries by the end of the decade.

BMW. BMW is building a battery manufacturing plant in Woodruff, South Carolina, close to its Spartanburg assembly plant. The “Plant Woodruff” investment will create 300 jobs and produce 30 gigawatt hours of output. BMW is working in partnership with AESC, which is also building a facility in Florence, to supply the auto company with battery cells to support its “local for local” manufacturing approach.

VW. VW created a wholly owned subsidiary named PowerCo that is building a North American battery manufacturing plant in St. Thomas in Ontario, Canada, which will produce 90 gigawatt hours of output and create up to 3,000 jobs.

Toyota. Toyota is investing nearly $14 billion into the construction of a seven-million square-feet EV battery plant in North Carolina, which will create more than 5,000 jobs. The automaker says the mega site will generate a total of more than 30-gigawatt hours annually after the phased launch of multiple production lines is complete in 2030.

Honda. Honda has entered into a joint venture with LG Energy Solution named L-H Battery Company to manufacture batteries in Jeffersonville, Ohio. This will produce 40 gigawatt hours of output. The location will provide 2,200 jobs and is near Honda’s auto manufacturing facilities in Ohio.

Hyundai. Hyundai Motor Group and LG Energy Solution formed a joint venture to manufacture battery cells in Bryan County, Georgia, which will produce 30 gigawatt hours annually and provide 8,500 jobs. Hyundai has also formed a joint venture with SK On to manufacture battery cells in Bartow County, Georgia, which will provide 3,500 jobs and deliver 35 gigawatt hours of battery cells per year.

The EV transition is a marathon, not a sprint 

Importantly, strategic decisions to build domestic battery manufacturing will pay the US economy and consumers dividends in the long run. A US battery supply chain that can serve the public will help automakers build a range of vehicles at more price points and make them available to consumers faster. This will help to drive sales and minimize the need for heavy incentives, ultimately bringing EV pricing in line with ICE vehicles.

And while short-term demand for EVs has cooled from a period of “early adopter” buzz, sales continue to increase. In H1 2024, EV sales were up 7.3 percent compared with H1 2023, and the US BEV market share stood at 8 percent (CarEdge) compared with 7.6 percent BEV market share in 2023.

Accelerating EV battery gigafactory manufacturing

Building out a gigafactory is complex and the right tools can drive productivity, efficiency, and sustainability in operations. Our Capgemini team has developed market-tested solutions that can help automakers and battery partners leverage leading technologies to reduce waste, increase productivity, and monitor sustainability. Our teams have the skills and resources – gigafactory accelerators, battery passports, and laboratories dedicated to battery-cell innovation – to help our clients manufacture at scale.

Buckle up, America. It’s time go electric!

Driving value-based care solution strategies

In brief

• The regulatory impact on cost containment is shifting rapidly.
• Operational success hinges on a streamlined provider management approach backed by Gen AI solutions.
• The future of healthcare depends on the strength of the payer-provider partnership and the ability to innovate in a rapidly changing landscape.

In today’s constantly shifting healthcare landscape, payers face increasing pressure to manage costs while maintaining or improving the quality of care. This balancing act has become more difficult due to rising system costs, regulatory changes, and shifting patient expectations. The key to success lies in building a robust provider cost-containment strategy that optimizes the payer-provider partnership. By implementing provider network management, payers can drive cost efficiencies while enhancing collaboration with the provider community.

Rising healthcare costs and regulatory pressures

Healthcare costs are rising at alarming rates. The national health expenditure (NHE) is projected to grow by 5.4% annually from 2022 to 2031, reaching $7.1 trillion by 2031. The percentage of hospitals ending 2022 with negative operations surged to 53-68%, compared to just 34% in 2019. This crisis is amplified by staffing shortages and clinician burnout, which drive up the cost of resources. Adding to the burden, regulatory activity has increased 8% year-over-year due to new mandates like the No Surprises Act and Price Transparency Act.

In 2023 alone, payers faced over $50 million in federal penalties due to legal arbitrations and payment disputes. The price transparency rule has also caused a spike in out-of-network provider payments, which further challenges payers to control costs while ensuring access to care. These developments highlight the urgent need for effective cost-containment strategies that support regulatory compliance while maintaining high-quality care.

The need for provider cost-containment strategies

Payers must navigate complex challenges to control escalating healthcare costs. Rising costs for medical services, pharmaceuticals, and advanced technologies place a significant financial burden on health plans. To maintain competitive health plans while managing costs, payers need to focus on three key areas: controlling costs, meeting regulatory requirements, and managing member expectations.

Key strategic levers:

1. Optimize network management:

• Payers face several challenges in provider contracting, including acquiring and maintaining accurate provider data, which is imperative for negotiating complex agreements that balance cost control with fair compensation. Regulatory compliance and setting clear performance measures metrics can also add complexity, especially in a fast changing market. To address these challenges, payers need to take a thoughtful approach, using data and working closely with providers to find solutions.
• Payers should negotiate value-based contracts that share risk, aligning provider incentives with cost control and improved quality outcomes.
• Implementing tiered networks can help direct member traffic toward high-value providers.
• Ensuring that provider networks maintain both adequate access and cost control is essential to balancing member satisfaction and cost management.

2. Streamline utilization management

• Enhanced pre-authorization: Implementing pre-authorization requirements for high-cost services helps ensure medical necessity while containing costs.
• Leverage AI: AI can generate numerous data points and establish a precise scoring range for utilization management. The threshold for approval can be collaboratively determined by both payer and provider thereby reducing administrative costs.

3. Transition into value-based care models

• Improved care: Payers face significant challenges in transitioning to a value-based care model, including data management, risk adjustment, and provider engagement. Accurately measuring outcomes and balancing cost with quality care are also critical concerns. By addressing these issues through effective strategies like shared saving programs, payers can enhance collaboration with providers and ultimately improve patient care.

4. Data analytics and reporting

• Next-gen analytics: Generative AI can significantly optimize provider data management by automating data validation and ensuring accuracy across multiple systems. Gen AI can identify inconsistencies, outdated information, and duplicate entries, improving data quality and reducing manual efforts. Additionally, AI-driven analytics can predict provider trends, helping payers proactively manage provider networks and streamline processes such as onboarding, credentialing, and contract management.

5. Fraud, waste, and abuse prevention

• Advanced predictive modeling: Real-time systems can generate a high volume of false positives, overwhelming investigative teams and increasing administrative burdens. Advanced analytics and AI can identify unusual billing patterns and detect potential fraud early through predictive models that flag outliers, such as upcoding, unbundling, or duplicate billing.
• Provider education: Educating providers on effective billing practices reduces errors and minimizes the risk of fraud waste and abuse

6. Improve member engagement

• Transparency: Providing clear, easy-to-understand information on cost-sharing and quality ratings helps members make informed decisions about their care.
• Incentives: Offering incentives for preventive care encourages members to engage with high-value providers and reduces the long-term costs associated with avoidable conditions

Key takeaways for payers

There are a few strategic priorities for payers to bear in mind. First, continuously assess the cost-effectiveness of covered services using data-driven insights to ensure financial sustainability. Additionally, technology such as advanced data analytics, AI-powered predictive models, and automation can optimize operations, enhance care coordination, speed up claim processing, and improve the management of patient outcomes. Collaborating with providers in value-based care models and shared savings programs is key to aligning incentives and enhancing the quality of care. Finally, integrating clinical and financial data allows for a deeper understanding of cost drivers and the development of targeted strategies, ensuring operations are both efficient and effective.

By adopting a forward-thinking, data-driven approach, payers can lead the way in transforming healthcare delivery while effectively managing costs. The future of healthcare depends on the strength of the payer-provider partnership and the ability to innovate in a rapidly changing landscape.