Understanding The Evolving Ecosystem Of Innovation Service Providers

I recently finished the draft of my report on the ecosystem of innovation services providers.  This report, to be published in July, explores the landscape of companies that are unified by a single purpose:  they are dedicated to helping their clients unleash their own innovation potential.  These are not companies who simply use "innovation" as a marketing buzzword.  Rather, they are dedicated to the discipline of innovation – and bring unique innovation expertise to clients in wide variety of corporate roles. This report builds on much of Forrester’s previous work related to Innovation Networks and Innovation Management, but expands the "ecosystem" to consider all of the companies I interact with that have a distinct innnovation focus.  In the report, I explore the offerings of:

  • Strategy consulting organizations
  • Technology service providers
  • Product management firms
  • Outsourced product development firms
  • Idea management/solution generation companies
  • Other niche service providers (including training program, design firms, and others)

 

I argue that this ecosystem of providers will be an increasingly important part of a comprehensive innovation strategy. However, it will be up to very knowledgeable and “connected” individuals within companies to help manage the diverse players, and connect suppliers to the right role, at the right point in the innovation process.  I also argue that this is an opportunity for SVM professionals who want to play a more strategic role  in their organizations.

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Procure-To-Pay Best Practices: Cut The Approval Levels, Improve The Monitoring

Earlier this week I was in Milan, speaking at the CPO Forum event about the importance of good procure-to-pay (P2P) systems to deliver sourcing's theoretical savings into real bottom-line improvements.  As England's ex-goalkeeper Robert Green showed us last week, savings opportunities aren't the same as real savings. :( 
http://news.bbc.co.uk/sport1/hi/football/world_cup_2010/matches/match_05

I had some subsequent discussions with attendees about P2P best practices and how you maximize adoption by business users. One tip relates to the optimum number of approval levels — my conclusion is: the fewer the better. As one procurement director put it, "We empower our people, and show that we trust them, but not unconditionally. We monitor individual expenditure closely, so each person knows that we may subsequently ask him to justify anything exceptional that shows up in the report." His firm had actually cut consumption of health & safety equipment by 20% by eliminating pre-approval and replacing it with exception reporting. He'd also streamlined the MRO procurement process. "We approve the maintenance work order, but then we used to have to separately approve the parts used to do the job.  I convinced my colleagues that the second approval was a waste of time."

In contrast, what can happen if you have too many approval levels?

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New Global SaaS Adoption Data Shows Emerging Geographies Embracing The Deployment Model

Forrester recently surveyed nearly 3,000 technology decision-makers worldwide and found that emerging geographies -- Latin America, China, India, Russia -- are heavy adopters of software-as-a-service. [Source: Forrester's Enterprise And SMB Global IT Budgets, Priorities, And Emerging Technology Tracking Survey, Q2 2010.]

Latin America led with the highest rate of SaaS adoption, with 30% of companies reporting SaaS use. Latin America also reported a high percentage of budget going to SaaS at 12.4%. (For comparison, North America, where many SaaS deployment options initially saw traction, showed 25% adoption and represented 7% of overall software budgets.)

Other emerging geographies that reported high adoption included emerging Asian countries (China/Hong Kong/India/Russia). This group reported 21% SaaS usage and 8.9% of software budget going to SaaS. More established Asia Pacific economies (Japan/Australia/New Zealand) reported only 16% SaaS adoption and only 6.5% of software budget going to SaaS.

For more on the data including more details and more insight into additional geographies, look for our upcoming report.

Also check out our recent report, “SaaS Adoption 2010.”

Follow me on Twitter @lizherbert.

And share your thoughts!

Liz Herbert

Golf, World Cup Tickets, And Other Ethical Dilemmas

I once played golf with an ex-politician who ran Liverpool Council until he had to resign after being caught accepting bribes from local firms tendering for lucrative council contracts. He claimed there was no impropriety because all the bidders paid him the same amount. I remembered this story when the leader of IBM’s sell-side e-commerce program, presenting at Ariba Live this week, talked about moving selling “off the green and into the blue.” His goal is to make IBM customers’ on-line buying experience (the blue) so great that IBM can reduce the time its sales reps spend playing golf with customers (the green).

Of course, that message went down like a lead balloon at a software event packed with sales reps and purchasing managers (not to mention analysts) who regard frequent corporate shindigs as an important compensation for an otherwise overworked and underpaid existence. He is right that suppliers should integrate their order processing system with customers’ eProcurement applications, such as via a supplier network, but not at the expense of the business relationship. Moreover, though it’s a nice tag line, it confuses sourcing (deciding from whom to buy) with procurement (getting things you need from the approved sources).

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Lessons And Observations From IT Forum 2010

I’m back to blogging after a busy month of travel. Two weeks ago I attended Forrester’s IT Forum in Las Vegas, and I am preparing for IT Forum EMEA in Lisbon later this week. 

Unfortunately, this week’s IT Forum is at the same time as the World Innovation Forum, which many of my professional colleagues are attending. But Forrester’s IT Forums still give me a much great opportunity to interact with people who are working on innovation initiatives, so I'm not complaining.  I’m looking forward to reporting on my experience in Lisbon next week. 

 Here are a few of my observations from the Vegas event:

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SaaS Pricing Models In Flux

At Forrester’s recent IT Forum in Las Vegas, we conducted a roundtable with several leading software and services firms focused on SaaS around the topic of SaaS pricing trends. Key takeaways:

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The Ariba Commerce Cloud: Stratus Or Cumulus?

Bob Calderoni and Tim Minahan, Ariba’s CEO and CMO respectively, explained their vision for the future of supplier networks at the company’s Ariba Live customer event this week. The basic concepts, of a B2B community with value-adding services for sellers, such as prospect discovery and multi-customer e-invoicing, is one I’ve advocated to network providers for a long time, including in my report of internetwork interoperability (Enterprises Should Push Supplier Networks To Deliver Interoperability). The community concept is certainly fashionable at the moment, with lots of business-to-business (B2B) technology vendors trying to match the success of Facebook, LinkedIn, Twitter, and the like. The big question is whether Ariba can achieve the universal reach that the commerce cloud will need if it is to deliver value to its members.

Social media consumers don’t seem to be worried by monopolies. As my daughters tell me, people of their age have to be on Facebook to know what’s going on. There’s no point using other services like MySpace or Bebo (or, for older readers, Yahoo Groups, Geocities, Friends Reunited, and their equally overhyped predecessors), because everyone uses Facebook, and the community only works if everyone’s in it. It’s the same with B2B eCommerce — supplier-side members want to know about all the relevant parties (i.e., RFX’s), and party organizers (i.e., buyers) want to publish the invitation in one place yet still reach all their potential friends. In practice, this means the community must either be:
a) a broad stratus formation covering everything, Straus cloud cover

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Telecoms Contracting Best Practices: Success Clauses Help Avoid Fallout From Provider Spin-Offs, Sell-Off, Market Exit

Enterprise telecoms market consolidation can disrupt your service delivery if your service provider is acquired by a competitor. Other disruptions that might have a negative impact on the quality of service delivery and/or account management by your provider of choice include your provider’s decision to spin off or sell assets and business operations that support services you depend on, or if they opt to exit a local market entirely – offering you just 60 days (and sometimes less) for you to make alternative arrangements.

If you don’t have a succession clause in your telecoms contracts today, consider adding one the next time you renew or sign a new contract for network and telecoms services, even if the service provider in question is not providing essential connectivity or other services. If you depend heavily on a single provider for supporting most of your network and telecoms service needs – such as local access, long-distance and international voice, and your data WAN – take the time at the earliest opportunity to discuss your options with your provider’s account team, with the aim of amending an in-progress contract. This should be done if you have more than 12 months remaining on a contract term, or if you have a revenue commitment that is less than 75% met. A clearly spelled out succession clause contributes to a successful commercial relationship between customer and service provider.

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