Future of Enterprise Quality
Reorienting Enterprise Quality to Deliver
Business AssuranceThis document has been licensed to Cognizant

Chirajeet Sengupta, Partner
Alisha Mittal, Vice President
Ankit Nath, Senior Analyst

Copyright © 2022, Everest Global, Inc. All rights reserved.
www.everestgrp.com | EGR-2022-32-V-5559

Contents
Executive summary

03

Evolving business priorities
guiding enterprises’ journeys

05

Newer technology adoption isdriving intense quality challenges

06

Business assurance: the next
frontier for enterprise quality

08

Reorientation of enterprise quality
function drives breakthroughbusiness benefits

10

The capability octagon: enterprisequality success elements

11

Conclusion

18

Appendix

19
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Executive summaryEnterprises are increasing technology investments with a view to transforming their traditional businessmodels, which, in turn, is resulting in rising expectations from the enterprise quality function to realize
the intended benefits, safeguard enterprises from potential risks, and contribute to organizational
business objectives. Our recent survey with global IT leaders indicates that this evolving philosophy
towards the role of the enterprise quality function is pushing enterprises to revisit and reorient theelements of their enterprise quality operating model.
Specifically, our findings show that: 84% of enterprises already have mature quality assurance practices across people, process, andtechnology elements
 However, only 7% have evolved to a future-ready business assurance model for their enterprisequality functions
 Enterprises that have successfully moved from quality assurance to business assurance haveachieved 1.5X better strategic, business, and operational outcomes than other enterprises
As we examined the characteristics of these high-performing business assurance-oriented enterprises,
we found that an effective quality model requires multiple components of the operating model to work
cohesively. Enterprises that realized mature strategic, operational, and tactical benefits had complete
clarity around objectives at the leadership level. The business and IT leaders in these enterprises
displayed remarkably well-aligned thought processes and were focused on investing in quality as
a strategic capability.
This mindset further trickles down to multiple elements, from organization structure, culture, and vision
to technology, talent, and the partner ecosystem: 83% of the business assurance-oriented enterprises have adopted a hybrid quality operating modelwith a combination of centralized and decentralized elements
 These enterprises are 3X more mature in adopting new development practices such as SRE,a product-centric operating model, DevOps, and agile methodologies
 67% of these enterprises plan to increase their enterprise quality budget by 10% or more in the

coming 12 months
 75% of the business assurance-oriented enterprises have increased their engagementwith external stakeholders to meaningfully enhance their enterprise quality propositions
and outcomes
In this report, we examine and identify:
 Perspectives and findings on how expectations from enterprise quality functions are evolving as

digital transformation takes center stage The critical elements of the enterprise quality operating model Interventions and best practices that are required across multiple dimensions to move from quality

assurance to business assurance

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Recommendations for enterprises to attainbest-in-class quality

Our research uncovered the following key recommendations for enterprises to maximize benefits
from quality investments.
1. Establish enterprise quality as a boardroom conversation
Enterprises that have successfully moved to a business assurance model are remarkably alignedon the issue of quality across business and IT leaders and are backed by strong executive
sponsorship. They demonstrate consistent awareness of the business benefits of a strong quality
function, as well as the potential downside of sub-optimal quality in their physical and digitalestates.
2. Stimulate the role of centralized quality function to drive successful next-gen tech adoption
A centralized quality function is well-positioned to drive the initiatives needed to build long-term
reusable quality assets and identify best practices and approaches to benefit the broader
organization. However, the centralized quality function needs to be paired with a decentralized
approach for execution to ensure agility at scale. By establishing standards, seeding innovation,
and acting as a quality custodian, the centralized quality function enables velocity at scale. Purely
decentralized model often fails to scale beyond the initial momentum as they run into problemsof technology proliferation, non-standard methodologies, talent constraints, and misaligned
innovation efforts.
3. Measure enterprise quality function success based on its impact on business and productEnterprises that have successfully moved to a business assurance model emphasize business
improvement metrics (such as user experience, business growth, and user satisfaction) andproduct success metrics (such as TCO, speed to market, and product quality) over functional
metrics specific to development, operations, or tech assurance.
4. Revitalize your partnership ecosystem to include external organizations as yourstrategic extension
Top-performing enterprises have a more sophisticated approach to their partnership ecosystem
and view partners as strategic enablers of innovation and thought leadership, taking them beyond
efficiency imperatives. They proactively nurture and expand their ecosystem, funneling ideas
from partners into implementation.

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Evolving business priorities guiding enterprises’ journeys
Enterprises prioritize their business transformation initiatives across three fundamental objectives:enhancing brand reputation and customer experience, driving scaled innovation, and digitallyenabling new business model creation, as Exhibit 1 describes.

EXHIBIT 1
Top business priorities for enterprises
Source: Everest Group (2022)

61%

of enterprises want to strengthen brandreputation via enhanced CXof enterprises want toand drive new product development

49%

of enterprises want to create digitallyenabled business models

Our research1 shows that a focused enterprise quality function is considered a critical enabler ofthese objectives.
The exhibit below highlights business and IT leaders’ top philosophies regarding their enterprisequality functions.

EXHIBIT 2Enterprise leaders’ philosophy regarding enterprise quality
Source: Everest Group (2022)

58%

Higher quality
strengthens experiencedelivery to end users
and customers

1

54%

Quality is integral
to overall productsuccess andbusiness value

52%

A strong quality
function canaccelerate the paceof innovation

Everest Group survey with 163 global enterpriseswww.everestgrp.com | EGR-2022-32-V-5559

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Newer technology adoption is driving intense quality
challenges
As part of the process of digital scaling, we expect extensive investments in digitalization of
products, servitization of offerings, and automation of processes. This will result in blurring of theboundaries between the physical and the digital.
Our research shows that 47% of enterprises intend to invest in emerging technologies to create
more immersive systems, infuse software and intelligence as part of their core product offerings,
and leverage innovative technologies to ensure business sustenance. Digital twins, Augmented
Reality/Virtual Reality (AR/VR), Internet of Things (IoT), blockchain/distributed networks, andXaaS models are some of the key bets enterprises are placing for the future.
This phenomenon poses a unique challenge for the enterprise quality function as it needs todevelop new capabilities for the phygital world. Exhibit 3 illustrates the key technologies that will
be adopted in the next 12 to 18 months and their key challenges.

“

With digital becoming the core of our business,
we had to invest in building a software quality teamfrom scratch to complement the mechanical side ofour business and ensure product success.
– Global Director – Quality and New Programs, UK-based electricautomotive manufacturer
EXHIBIT 3
Key technologies to be adopted in near future and their corresponding enterprise challenges
Source: Everest Group (2022)

Tech to be adopted(next 12-18 months)

Corresponding enterprise quality challenges(% of enterprises)

Digital twins

56% Challenges associated with physical-digital convergence

Industry of things / Industry 4.0

52% Threat of external cyber attacks

XaaS solutions

52% Delivering consistent CX via new digital channels

Augmented reality / virtual
reality

44% High quality workforce availability

Distributed ledger / blockchain

42% Organization-wide standardization of tech adoption process
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Quality for us is insurance, even beyond assurance;
we are investing in quality now to avoid future issues.
– Global Director – Quality and New Programs, UK-based electricautomotive manufacturer
The exhibit below lists the potential impact of software failure and provides examples of software
failures across various enterprises.

EXHIBIT 4
Impact of software failure
Source: Everest Group (2022)

Declining
competitiveness

Negative brandperception

Regulatory
risk

Revenueloss

ExamplesT-Mobile data breach impacting 50 million
customers’ data

Tesla recalling 12,000 vehicles after a glitch inself-driving software

Technical issues resulted in many accountholders seeing incorrect balances

A software update for Google Nest thermostat
went wrong impacting many customers’ comfort

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Business assurance: the next frontier for enterprisequality
The expectations and responsibilities of the enterprise quality function have continued to evolvewith the changing business ecosystem and risk profiles. What started with independent testing
as a responsibility for enterprise quality function progressed to quality assurance in recent years,
and it continues to change – the evolving business environment requires the enterprise quality
function to assume a broader business assurance role going forward. Exhibit 5 shows theevolution of the enterprise philosophy toward quality and the percentage of enterprises thatalign with that philosophy.

EXHIBIT 5
Evolving philosophy of enterprise quality
Source: Everest Group (2022)

Maturity

Low

9%

84%

7%

High

Maturity spectrum

Business assurance is a discipline that drives
positive business outcomes by orchestrating quality as
a key objective across the enterprise value chain.
Moving to a business assurance model entails
radical changes in enterprise quality’s operating modelsuch as organization structure, governance,
execution methodologies, and talent profile.

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EXHIBIT 6
Evolving role and operating principles of the enterprise quality function
Source: Everest Group (2022)

The following exhibit explains the operating principles of enterprise quality function as it evolves
from independent testing to quality assurance to business assurance.
Business assurance

Independent testing

Quality assuranceStandalone monolithic
testing approach

Integrated application
assurance approach that
adopts theshift-left principle

Assuring business brand value

Scope of work

Test applications forfunctional and nonfunctional accuracy

Broad focus on functionaland non-functional aspectsof applications

End-to-end orchestration of quality acrossthe integrated phygital landscape

Organization
structure

Centralized quality
function

Quality resources aligned
to projects and productteams

Hybrid structure with central quality teamdriving best practices and product-aligned
quality resources driving quality mindset

Methodologies
and technology
adopted

Dominated by manual
testing with minimal
automation

 Testing executed in Continuous assurance in an agile/DevOps

Governancemetrics

Efficiency-centric
metrics at the quality
function level

Effectiveness metrics at
the application level

Impact metrics at the business level

Talent profile

Dedicated manual
testers with limited
development skills

Integrated Dev + Test
teams

Full stack quality engineers and SDETs
working within product teams

Objective“

an agile/DevOps
environment
 Leverages AI/cognitive
capabilities for intelligent
testingenvironment AI/cognitive at the core of decision-making
and intelligent testing Extreme automation to drive execution
speed in the Continuous Delivery /Continuous Integration (CI/CD) model Efficient and scaled validation andverification processes for phygital products
 Emphasis on testing and certification tomeet customer and regulatory expectations

We clearly understand that if we continue to use the oldparadigm of quality, there will be a massive mismatch
between expectations and outcomes.
– Executive Director, US-based multinational investment bankwww.everestgrp.com | EGR-2022-32-V-5559

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Reorientation of enterprise quality function drives
breakthrough business benefits
While the mindset around quality is evolving, most enterprises are still at an interim stage of
quality function maturity (quality assurance). Only 7% of the enterprises that we surveyed have
evolved to a business assurance model; however, for those organizations, this progression has
resulted in meaningful benefits and impact across three key dimensions: strategic, operational,
and business outcomes.

Enterprises focused on business assurance haveachieved 1.5X better strategic, business, andoperational outcomes than other enterprises.
In Exhibit 7, we explore the differences in the outcomes realized by business assurance-oriented
enterprises and other enterprises.

EXHIBIT 7
Comparison of overall outcomes: business assurance-oriented enterprises versus
other enterprises
Source: Everest Group (2022)
Business assurance-oriented enterprises
No impact

Strategic
outcomes

Operational
outcomes

Tacticaloutcomes

Other enterprises

Significant impactIncreasing business sustainabilityEnhancing customer experienceStrengthening brand reputation

Accelerating the enterprise-wide innovation agendaStrengthening regulatory stanceIncreasing business resiliencyEnsuring uninterrupted business operations
and functionality

Accelerating time to market

Enhancing employee productivity

Reducing defects

Business assurance-oriented enterprises have realized
1.6X the productivity output of other enterprises.
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The capability octagon: enterprise quality successelements
A thorough analysis of enterprise investments in the quality function reveals an interesting patternof capability interventions that are critical to achieving these desired outcomes. These
interventions span across the strategy and solution tenets impacting the operating model,
objectives, and mindset of the enterprise quality function.
Strategy interventions are the changes to the enterprise quality function’s overarching
objectives in line with business objectives. Making this change requires the organization to revisit
the vision for enterprise quality function, economics, and funding approach, design a conduciveorganizational structure, and identify relevant metrics to measure and govern the outcomes.
Solution interventions are the internal changes in operating principles such as technology
levers, associated investments in talent, sourcing and partner ecosystem, and a robust approachto drive innovation.
Our analysis of enterprises across these strategy and solution tenets indicates a meaningful
maturity gap in enterprises focused on business assurance versus others. Some interestingobservations from the capability octagon include: Business assurance-oriented enterprises demonstrate genuine strategic clarity

Most enterprises seem to be holding on to their traditional operating principles while also trying
to maneuver to the new way, which is diffusing their benefits. However, enterprises that pivoted
to a business assurance approach have demonstrated absolute clarity on their desired futurestate and the roadmap to achieve it.

 The need for interventions in the enterprise quality function is widely acknowledged, but

only business assurance-oriented enterprises are acting on it
All enterprises seem to realize the importance of undertaking these capability interventions, andmany have made meaningful investments across all dimensions of the capability octagon.
However, the volume of focus and resulting investments to these capability metrics is higher
across all dimensions for business assurance-oriented enterprises.

 Business assurance-oriented enterprises have a strong alignment between their IT andbusiness functions
Our research shows a very strong alignment between the business and IT teams in businessassurance-oriented organizations, with a shared vision, success metrics, and team constructs,
which–in turn–enables business assurance-oriented enterprises to realize significantly better
outcomes than other enterprises.

Exhibit 8 shows the comparison between business assurance-oriented enterprises and others
along eight key capabilities.

Our analysis of enterprises across strategy and solution
intervention tenets indicates a meaningful maturity gap inenterprises focused on business assurance versus others.
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EXHIBIT 8
Capabilities comparison of business assurance-oriented enterprises versus other enterprises
Source: Everest Group (2022)

The following sections elaborate on key differentiating tenets that result in higher-than-averageoutcomes for leading enterprises.
Vision & scope

10.0

TalentEconomics

5.0

Sourcing &ecosystem

0.0

Organization &culturePerformance &governance

Innovation & continuous
improvement

Technology

Business assuranceoriented enterprises

Other enterprises

Strategy and solution
considerations

Strategy and solution considerations
with highest differential impact on
business assurance-oriented
enterprises

Business assurance-oriented enterprises critically differentiate themselves from otherenterprises with their approach to leveraging organization structure, innovation & continuous
improvement, economics, and sourcing & ecosystem tenets.

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1. Organization structure – reorganizing with quality as a mindset
Business assurance-oriented enterprises understand the value of a synergistic organization-wide
technology strategy to support their digital transformation journeys. These enterprises are clear
on their visions and are not hesitant to rally their resources to meet their goals.
When it comes to enterprise-level quality planning, these enterprises are largely focused on
forward-looking parameters such as evolving market expectations, looking beyond internalbusiness strategies and digital investments.

EXHIBIT 9Enterprise quality planning parameters considered by business assurance-oriented organizations
Source: Everest Group (2022)

High

Evolving market expectations

Alignment to business strategy

Digital investments planned

Customer feedback on existing products

Low“

Workforce availability

Nearly 85% of the business assurance-oriented enterprises have a hybrid quality model: thequality function is centralized and plays a prominent role, while responsibility for specific aspectsof quality remains at the functional level. The centralized quality function’s role is to undertake
initiatives to build long-term reusable assets and capabilities and identify best practices andapproaches. The distributed quality function aligned to product teams is the custodian of quality
at the product level and drives the quality mindset within the team.

As an organization, we want to be faster and stronger,
and in that, the role of the centralized QA chapter is very
important; it is the connecting link between the various
squad teams to enable coordination and collaboration.
– Head of Testing, leading European telecom service provider

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EXHIBIT 10
Centralization of enterprise quality in business assurance-oriented enterprises versus others
Source: Everest Group (2022)

Businessassurance-oriented
enterprises“

Centralization of enterprisequality constructs (next 12-24 months)

67%

Innovation and next-gen
tech adoption

67%

Automation and IP development

58%

Support for new
product/application development

58%

Platform/tool selection

Other
enterprises

We have established a hybrid structure for our quality
function. There is a centralized enterprise quality centerof excellence, and at the same time, we have quality
engineers embedded with every product team. It hashelped us in enabling economies of scale, faster time tovalue realization, and stronger alignment with businessobjectives, and at the same time ensured more agility
and autonomy at the product level.
– Service Owner EMEA, US-based multinational healthcare andlife sciences company

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2. Innovation and continuous improvement – from fail fast to
succeed faster
The culture of continuous improvement is deeply ingrained in the working philosophy of businessassurance-oriented enterprises. The innovation charter is driven both at a central IT level as well
as at the individual product teams. Over 70% of these enterprises work in a product-centricagile/DevOps setup. They extensively leverage open-source tools and practice Site Reliability
Engineering (SRE) to ship reliable products.
This positioning is strikingly different from other enterprises. Although many enterprises use anagile/DevOps setup for their projects and leverage open-source tools, they do not follow thesepractices as rigorously as the business assurance-oriented enterprises do.
The following exhibit shows the proportion of enterprises that rigorously practice quality-related
working models.

EXHIBIT 11
Quality-related practices in business assurance-oriented enterprises versus other enterprises
Source: Everest Group (2022)

Other enterprises

Business assurance-oriented enterprises

23%

92%
SRE

23%

83%

Open-source tools

27%

75%

Product-centric operating model

30%

67%

DevOps practice

23%

67%

Agile methodologies

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3. Economics – investing for enterprise quality transformation
Business assurance-oriented enterprises invest disproportionately more than their peers to ramp
up their enterprise quality capabilities. On average, they intend to invest 2.2X more in this area
than other enterprises, as indicated in Exhibit 12. The scale of investments is driven by the needto support new digital initiatives, strengthen their enterprise quality talent pool, and improve theirsecurity and compliance postures.

EXHIBIT 12
Planned budget increase for enterprise quality initiatives among business assurance-oriented
enterprises versus others
Source: Everest Group (2022)

30%

of enterprises will
increase budget for QA
initiatives by
10% or more67%

of enterprises will
increase budget for QA
initiatives by
10% or more

While business assurance-oriented enterprises invest disproportionately in quality, they are
equally keen to measure the impact of those investments. These enterprises have crafted robust
success measurement models that track metrics across multiple dimensions such as business
improvement, product outcomes, agility, and enterprise quality. Business assurance-oriented
enterprises leverage these metrics to fine-tune their operations and investments in accordancewith their overarching business goals. Exhibit 13 shows enterprise quality investment successmeasurement metrics for business assurance-oriented enterprises versus other enterprises.

While business assurance-oriented enterprises
invest disproportionately in quality, they are equallykeen on measuring impact of those investments
using metrics across multiple dimensions such as
business improvement, product outcome,agility, and enterprise quality.
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EXHIBIT 13Enterprise quality investment success measurement metrics
Source: Everest Group (2022)

Business assurance-oriented enterprises

94%

89%
82%

Business
improvement

Business growth, user
satisfaction, ROI

Other enterprises

92%
86%

83%

91%
77%

Product
outcomeSpeed to market,
product quality

Agility

Sprint velocity,
in-sprint coverage

QA centric
Usage, test
effectiveness4. Ecosystem partners: the secret to creating differentiating strength
Across the board, surveyed enterprises acknowledged the need for a strong partner ecosystem.
Three quarters of the business assurance-oriented enterprises and 62% of the other enterprises
have increased their engagement with external stakeholders.
However, the nature of engagement with the ecosystem varies significantly between the twosegments. Business assurance-oriented enterprises seek more transformational value from theirpartner ecosystems and see them as sources of innovation, thought leadership, and accesschannels to the latest tools and technologies beyond cost efficiency imperatives.
The following exhibit illustrates the drivers of external engagement for the business assuranceoriented enterprises.

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EXHIBIT 14
Drivers of external engagement for business assurance-oriented enterprises
Source: Everest Group (2022)

Drive innovation andthought leadership
Access to last tech/capabilities/IP
Access to best practices and processes
Increase focus on core business
Attain cost optimization objectives“

We leverage our partners’ expertise to develop bestpractices and gain access to scarce talent to experimentwith cutting-edge technologies.
– Head of Technology – QA, Australian retail company

Conclusion
In an environment in which every business is a digital business, organizations need to evolvefrom quality assurance to business assurance. This transformation involves significant change
across both the strategy and solution elements of the quality operating model cutting acrossorganization design, tools and techniques, governance, and funding models.
However, the rewards are disproportionate – our research suggests that enterprises that havesuccessfully embraced the business assurance model generate 1.5X more benefits thanorganizations that do not. Notably, business assurance is not a defined end point, but afundamentally different way of “doing” quality. In that sense, it is an ongoing journey that allenterprises will need to undertake – and it will necessarily start with a shared vision of digitaltransformation between IT and business. Beyond product and brand outcomes, businessassurance needs to be viewed as the discipline that safeguards and stewards this vision ofdigital transformation.

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Appendix
The information in this report is based in part on a survey conducted with 163 enterprises inMarch 2022 See the graphics below for demographic details.
OthersMedia & Entertainment
Automotive

3%4%
6%
6%

Travel, transportation, and logistics
Communications

6%

CPG & Retail

7%

17%

Industries

BFSI

12%
11%

9%
Manufacturing

9%

Professional services

9%

Electronics, hi-tech & technology

HLS

Energy & Utilities< US$1 billion> US$10 billion

17%

2%

Annualrevenues

US$5-10 billion

42%

US$1-5 billion

38%

North America

39%

Rest of the World
UK

Asia

8%
13%

14%

Geography

27%
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Everest Group is a research firm focused on strategic IT, business services,
engineering services, and sourcing. Our research also covers the technologies
that power those processes and functions and the related talent trends andstrategies. Our clients include leading global companies, service andtechnology providers, and investors. Clients use our services to guide theirjourneys to maximize operational and financial performance, transform
experiences, and realize high-impact business outcomes. Details and in-depth
content are available at www.everestgrp.com.

This study was funded, in part, by Cognizant

For more information about Everest Group, please contact:+1-214-451-3000
info@everestgrp.com
For more information about this topic please contact the author(s):Chirajeet Sengupta, Partner
chirajeet.sengupta@everestgrp.com
Alisha Mittal, Vice President
alisha.mittal@everestgrp.com
Ankit Nath, Senior Analyst
ankit.nath@everestgrp.com

This document is for informational purposes only, and it is being provided “as is” and “as available” without any warranty of any kind, including any warranties
of completeness, adequacy, or fitness for a particular purpose. Everest Group is not a legal or investment adviser; the contents of this document should not be
construed as legal, tax, or investment advice. This document should not be used as a substitute for consultation with professional advisors, and Everest Group
disclaims liability for any actions or decisions not to act that are taken as a result of any material in this publication.
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