What Every Exec Needs To Know About The Future of eCommerce Technology

We are in a highly transformative time as changing customer expectations, commerce capabilities, and technology continue to evolve rapidly. Initiatives that just a few short years ago would have seemed a long way off — such as mobile commerce, app stores, multichannel order management, or embedding shopping on Facebook — are now squarely on the priority list of eCommerce business and technology leaders. And as consumer expectations, client needs, and the competitive environment continue to evolve, pressure on executives to make the right choices in technology and operational capabilities continues to mount. With this research, we highlight what every exec should know as they navigate these choices and position their company to succeed and fully capitalize on the transformation technology is enabling across their business.

As we have talked to many executives across many verticals consistent questions emerge on how to work ahead of these changes and stay ahead of the curve. The report we just published today looks to address these questions, based on many conversations across the vendor and client community and across verticals.

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A Switch And A Miss

You might be surprised to find out how worked up I can get about an issue like switching costs (a.k.a. lock-in). It's a question worthy of at least a little emotion, since it affects the fortunes of technology companies: Under what conditions would a customer switch to a different vendor for the same product or service?

The question has returned with a vengeance with the increased adoption of SaaS and PaaS technologies. Tech vendors are happy to use the cloud as an easy way to attract customers, as long as it doesn't turn into an equally easy way to lose customers. 

What gets my dander up is the simplistic, puerile way in which people sometimes discuss this issue, particularly in regard to SaaS implementations. Here are a couple of examples.

Cost Of Switching
How do the switching costs of an on-demand solution compare to an on-premise alternative? Clearly, the cost of switching from an on-demand solution is not zero, and yet you still find in some discussions of SaaS the assumption that customers will leave willy-nilly. Nor is the cost of switching the same as an on-premise solution, but you'll find people speaking about the two as if they presented the same migration and implementation challenges.

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Getting On The Bus With Cloud Storage

I've been down on vendors pitching half baked cloud storage visions for some time now, which often seem like attempts to avoid being left out of a feeding frenzy, rather than a vision of how the cloud might improve real storage environments. So I've been fairly negative on the hype of the cloud, and the data seems to support this negativity. According to Forrester's 2009 Enterprise And SMB Hardware Survey, 91% of respondents say they have no tangible plans to move forward with cloud storage. But when I stop to consider it, I don't want to look back in 5 years and say that I was the analyst that said cloud was never going to happen. There's a huge amount of pain in enterprise IT, and storage is often the most problematic segment in the data center. It has ever-increasingly high costs, challenging hiring of the right skill sets, and poor efficiency. Chaos is becoming the norm. The prospect of getting effective and secure services from an outside band of experts or of building out a consistent, measurable, and scalable internal architecture resonates strongly with IT buyers. So, there's big pain, budget funds, and a vague vision of an alternative solution. That's a recipe for eventual change if I've ever seen one.

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Zimbra Appliance: VMWare Executes On Cloud-Based Email

VMWare has got it down: Sell a virtualization solution with anchor applications (and seats) that no service provider can live without, starting with email. This is the call we made when VMWare bought open source email and collaboration provider Zimbra from Yahoo! last February. And now they've delivered with the upgraded Zimbra Collaboration Suite Appliance 6.0 targeted at service providers and other virtual cloud hosters. What it means:

What it means #1. VMWare is solidly in the market to provision service providers with email. Service providers that want to resell Google or Microsoft's email have the benefit of low capital costs and rapid deployment. But service providers that don't want to resell another vendors' cloud services need a solution that runs at low cost on cheap servers with easy peasy provisioning. That's what the Zimbra collaboration appliance promises. Will it deliver? Love to hear from service providers on this one.

What it means #2. VMWare drives another nail into the coffin of on-premises business email. At $5/mailbox/month for cloud email, if you take away client software and mailbox administration costs, our analysis shows that it costs twice as much to host a mailbox yourself than to host it in the cloud. This offering gives service providers around the world the opportunity to compete at that price. So who would use on-premises email? Only someone with stringent requirements, massive scale, or a recent upgrade. Even the federal government is moving to cloud-based email as GSA has announced.

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